Copyright 2000 eMediaMillWorks, Inc.
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Federal Document Clearing House
Congressional Testimony
March 16, 2000, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 11294 words
HEADLINE:
TESTIMONY March 16, 2000 ROBERT S. KRIPOWICZ ASSISTANT SECRETARY FOSSIL ENERGY
HOUSE SCIENCE ENERGY AND ENVIRONMENT ENERGY DEPARTMENT BUDGET
BODY:
Statement of Robert S. Kripowicz Principal
Deputy Assistant Secretary U.S. Department of Energy Subcommittee on Energy and
the Environment House Committee on Science March 2, 2000 In the coming century
when energy demand will continue to rise in this country and the world, imagine
the benefits of- A pollution-free power plant. A plant that emits no airborne
pollutants, no solid wastes, no wastewater, perhaps no greenhouse gases. A power
plant that has no negative impact on the environment. A technology that captures
and stores carbon dioxide and other gases that can cause global warming. A way
to remove greenhouse gases from the exhausts of energy facilities or directly
from the atmosphere on a massive scale at costs both developed and developing
nations can afford. A 11rigless" drilling process with a "footprint" no larger
than a pickup truck. A process that searches for oil and gas using thumb- size,
downhole geophones, that uses artificial intelligence to pinpoint the best
production prospects, that constantly analyzes for hydrocarbons using a solid
state "laboratory-on-a-chip" embedded in the drill pipe. A virtually
sulfur-free gasoline that allows the catalytic
converters and high- performance engines of tomorrow's automobiles to operate at
peak effectiveness, dramatically cutting airborne pollutants from mobile
sources. These are some of the important programs supported in the Department of
Energy's FY 2001 Fossil Energy budget. They continue the emphasis on cleaner,
more efficient, lower cost use of our traditional fuels - an emphasis that can
keep our economy growing, provide a cleaner, healthier environment, and enhance
our country's energy security. Our FY 2001 Budget at a Glance chart found on
hard copy only The Fossil Energy Budget - In Detail Chart Found On Hard Copy
Only Research and Development Coal and Power Systems - A "Greener, Sooner"
Strategy "High tech" innovations can make our current and next-generation fossil
fuel plants dramatically cleaner while keeping consumer costs affordable. About
70 percent of the electricity generated in the U.S. is fueled by coal, natural
gas, and oil. As promising as renewable and other alternative fuels are, several
decades will be required before they approach the energy contributions of our
traditional fuels. A "greener, sooner" strategy means that we don't have to
wait. By applying technological advances, we can continue to improve
environmental quality and reap the economic benefits of the fuels we count on
most while alternative energy resources move into the market. As Energy
Secretary Richardson said recently, "There is just as much opportunity for
high-tech innovation in fossil fuels as there is for solar, wind or any other
energy resource. Here are some examples in our FY 2001 budget- Vision 21 - the
Power Plant of Tomorrow: It may be possible to virtually eliminate the
environmental concerns of using fossil fuels to generate energy. Already we can
turn some pollutants, such as sulfur, into marketable
chemicals. Tomorrow, virtually every impurity once released into our air and
water might be converted into useable commodities - in effect, turning pollution
into products. The major emphasis of the FY 2001 Coal and Power Systems budget
is on this pollution-free power plant of tomorrow. Termed Vision 21, it could be
fueled by coal or natural gas, perhaps combined with biomass or even the
discarded wastes of cities. In one configuration, it would generate electricity
at unprecedented efficiencies, perhaps twice those of today's plants. For other
markets, it could be configured to produce fuels and chemicals, or perhaps a
combination of power, fuels and other products. Vision 21 was introduced in the
FY 1999 budget, and in concert with industry, a detailed program plan was
developed. In FY 2000, the program moved into the initial stages of development,
focusing on the key technology modules and the best approaches to tie these
modules together. This latter focus - system integration - is especially
important because it will tell us how to deal with the complex engineering
challenges involved in linking advanced modules such as gasifiers, turbines,
fuel cells, etc., into an ultra-high efficiency, super-clean power facility. In
October 1999, DOE opened its first major competition for Vision 21. The first
project selections were announced in February 2000. In FY 2001, the 3-year
projects resulting from this competition will be in their 2d year. FY 2001
budget incorporates funding from several different Coal & Power categories
(see box) to fund these projects and other Vision 21 activities. A preview of
the Vision 21 concept could come from the "Early Entrance Coproduction Plant,"
an effort begun in 1999. Three companies were selected to develop ways to
combine electric power generating technologies with liquid fuels/chemicals
processing (in a refinery, for example). Although this early effort will not
incorporate the ultra-high efficiency innovations being developed for Vision 21,
it could provide an early model for tomorrow's multi-feedstock, multi-product
energy facilities. In FY 2001, the companies will complete their assessments of
the technical, economic and environmental feasibility of their concepts and
begin research and engineering that will guide the designs of the future plants.
In addition, Vision 21 funding will go to upgrade the computational capabilities
of DOE's newest national lab, the National Energy Technology Laboratory at
Morgantown, WV, and Pittsburgh, PA. High performance computer simulation may be
one of the most significant innovations for the 21" century power industry.
Using state-of-the-art computing systems to design, model and simulate the
operation of futuristic power plants before committing to "bricks and mortar"
construction could save millions of dollars and years of development. DOE
intends to be the leader in this new computing frontier, not only assisting
industry in developing "virtual demonstrations" but also using the new computer
processes in the Vision 21 and other development programs. The ultimate payoff
of Vision 21 may be several years into the future, but like the nation's man-
in-space program, we expect beneficial "spin-offs" much earlier. For example, a
revolutionary way to make oxygen - the Yd most marketed chemical in the U.S. -
could emerge from the Vision 21 program. In FY 200 1, a small-scale version of
one of the key 44 enabling technologies" for Vision 21, a ceramic "ion exchange"
membrane that separates oxygen from the air, is scheduled for a key 3,000-hour
performance and stability test. This membrane, once scaled up, could eliminate
the expensive, energy-intensive refrigeration processes in use today. If
successful, it could cut the cost of producing oxygen by 30% to 40%. The FY 2001
Vision Budget chart found on hard copy only Carbon Sequestration - Is it a
Viable "Third Leg" of a Climate Change Strategy? - Only a few years ago,
concepts for capturing and storing carbon dioxide and other greenhouse gases
were considered laboratory curiosities. Today the opinion is much different. DOE
has set a goal of removing carbon dioxide from the exhausts of energy plants or
from the atmosphere itself and permanently storing or recycling it at costs as
low as $1 0 per ton of carbon, equivalent to only 2/1Oths of a cent per
kilowatt-hour in the cost of electricity. At these low costs - and because no
massive' overhauls of today's energy infrastructure would be required -
sequestration could offer a climate change solution that both industrialized and
developing nations could afford. But will it work? Can climate change gases be
safely locked away in underground rock formations or deep within the ocean? Can
processes be developed to enhance or mimic the gas-absorbing phenomena of photo-
synthesis? Might scientists one day develop a practical way to solidify carbon
gases into artificially-created carbonate mineraIC9 Is. The only way to find out
is to experiment. In 1998 DOE offered its first grants for innovative ideas. In
August and September, 1999, we expanded the program, offering up to $18 million
for industry projects and another $143 million/year for national lab research.
Winning projects will be supported by the FY 2001 budget. In FY 2001, the
department is requesting $19.5 million for carbon sequestration R&D,
significantly more than the $9.2 million appropriated this year. Why the
increase9 Because the next step is to move the most promising ideas beyond paper
studies and laboratory experiments and into the first field trials. This is a
more expensive stage of development but a necessary one if policy makers are
ever to know whether the global potential of carbon sequestration is real.
Turning C02 into Rocks In Building 17 of the DOE's Albany Research Center, a
pressure vessel is whirring away. Like a high-speed blender, it stirs a slurry
of water and ground up rock into a frothy mixture at temperatures of 185 degrees
C and pressures of 2000 pounds per square inch. Carbon dioxide - the gas
suspected of being the principal culprit in global warming - is pumped into the
vessel. Later the mineral broth will be filtered and dried. What's left will be
magnesite, a mineral that has absorbed the carbon dioxide and permanently
"sequestered" it. Today it takes 24 hours for the slurry to absorb 90 percent of
the carbon dioxide - much better than the 144 hours when the Albany scientists
started their research. But to make the process viable, the time will have to be
cut to 30 minutes or less. If it can, "mineralization" - the process of making
rocks - could help solve one of the world's most pressing environmental
problems. To date, our climate change strategy has emphasized energy efficiency
and the greater use of lower carbon fuels - both promising options. But as
Secretary, Richardson said, "I believe we can and should look to ... new ways to
capture and control the release of carbon. This should become the third option
in our 'menu' for future greenhouse gas controls. , If our tests in FY 2001 are
encouraging, we could be well along the path toward this "third option."
Cleaning Up Existing Plants. In setting our sights on tomorrow's innovations, we
must not overlook today's power plants and the innovations that can make them
much cleaner and save consumers billions of dollars. In FY 2001, we are
proposing $18.2 million to develop better technologies for existing power
plants. Acid rain, urban smog, haze and unhealthy ozone were the focus of our
research through much of the 1980s and 90s. Today, the environmental challenges
also include microscopic particles called PM 2.5 - tiny specks so small that it
would take 70 of them to equal the width of a human hair. These airborne
particles are formed not only from the soot of combustion but also from trace
sulfur and nitrogen pollutants condensing in the atmosphere. To
reduce PM 2.5 levels, it may be necessary to further control
sulfur and nitrogen emissions. The first step, however, is to
have .scientifically sound data. In FY 200 1, we will deliver to the
Environmental Protection Agency (EPA) the first data taken from our PM 2.5 air
sampling stations in the Ohio River Basin. This could provide the first
definitive "fingerprints" of PM 2.5 particles, giving regulators important clues
as to the origins of these particles. Since these particles can originate from
power plants, auto exhausts, agricultural practices and other activities, this
information is extremely important if future regulations and pollution control
research are to be targeted at the right sources. A Track Record of
Environmental Progress Our environmental technology program is building on a
solid track record of success. Thanks largely to our research efforts with
industry: - Today, 3/4ths of all U.S. coal-fired capacity is equipped with
"low-NOx" burners that are 1 /1Oth the cost of nitrogen oxide pollution controls
in the 1980s. - Investment in better flue gas "scrubbers" has saved Americans
$40 billion in the last 30 years. - One-fourth of U.S. coal-fired capacity now
uses scrubbing technology. R&D turned a concept once thought to be too
expensive and unreliable into a U.S.-product sold throughout the world. As a
result of technological innovation in the last 30 years, we have cut
sulfur pollutants by more than 40% while tripling the use of
coal - all while keeping the cost of electricity to U.S. consumers the lowest of
any industrialized nation. Mercury is another pollutant that exists in trace
quantities in coal. When coal is burned, it is released as a gas. By December
2000, EPA must determine if mercury emissions from power plants should be
regulated, and if so, to adopt regulations by December 2003. Early in FY 2001,
we expect to deliver to EPA an update on mercury controls. We provided the cost
data on control systems used in EPA's 1997 Report to Congress on Mercury; the FY
2001 updated and enhanced data will comprise the most comprehensive report ever
on mercury emission controls. Also, since today's pollution control technologies
were not designed to reduce mercury, a fast- track control R&D program may
be necessary. To prepare for this, in March 2000, the Department will issue a
solicitation for innovative control technologies to capture gaseous mercury
before it is released into the atmosphere. The FY 2001 budget provides funding
to begin testing the winning concepts from this competition. Largely because of
the Fossil Energy R&D program, electricity consumers in the next decade
could expect to save nearly $5 billion per year from lower cost compliance
technologies for sulfur and nitrogen pollutants. If new
standards are imposed for mercury, additional savings of another 4-5 billion per
-ear y- could be realized from our air toxics control R&D program. Energy
Efficiency at the "Front End" - More Power Made More Affordable. Improving
energy efficiency is a key element of our "greener, sooner" strategy. Most
people relate 44efficiency" to energy-saving appliances or automobiles that get
more miles per gallon. But efficiency also works at the "front end of the energy
path - for example, at the power plant where fuel is converted into electricity.
The Vision 21 concept is a prime example of "front end" energy efficiency -
potentially doubling the amount of electricity that can be generated from a
given amount of fuel. Before Vision 21 is ready, however, the nation will need
additional electrical power - perhaps as much as 100,000 to 200,000 megawatts
between now and the year 2OlO. This is equivalent to adding the entire
electrical grid of Germany to the U.S. power sector. Most of this new electric
generating capacity - perhaps as much as 90% - will be fueled by natural gas.
The technology of choice will be the gas turbine. Tomorrow's Gas Turbines - The
state-of-the-art gas turbine for the 2 1 " century will be a revolutionary
machine - surpassing anything available today in terms of efficiency and
environmental performance. Because of a joint government-industry program now on
the verge of its most significant technology success, this turbine will carry a
"Made-in-the-USA" label. On February 18, 2000, the Department announced that an
eight-year partnership with industry has produced the most advanced utility-
scale gas turbine in the world, a machine that breaks the 60% efficiency
threshold - the "four minute mile" of turbine technology. The new turbine will
also cut nitrogen oxide emissions in half from today's average, releasing less
than 9 parts per million with no expensive post-combustion controls. Having
completed a major test run in February, the 400-megyawatt, GE-developed 7H
turbine incorporates breakthrough advances in materials, cooling systems, and
environmental controls. Following the DOE program, it will be shipped to a power
plant near Oswego, NY. The GE turbine - along with a comparable turbine being
developed by Siemens-Westinghouse that will be on the test stand in FY 2001 -
will position the United States in the forefront of the trillion-dollar,
worldwide power equipment market in the coming decade. As much as half of the
projected demand for gas turbine systems in the United States, however, could be
for units in the "mid- size" range- 30 to 200 megawatts. This scale of turbine
development has been missing from our R&D program. In FY 2000, we began to
fill this gap. In December 1999, we started a competition to select five or six
"system studies" for the next- generation of smaller-size turbines - units that
could be especially suited for distributed power applications. Our goal is to
achieve the same benefits as our larger scale effort for this other, major
segment of tomorrow's turbine industry - more affordable and climate-friendly
power generation, and more jobs for Americans. Tomorrow's Fuel Cells - In using
natural gas (or other hydrogen- nich fuels) to generate electricity, the fuel
cell is ideal. Virtually pollution-free, highly-efficient, and relying on a
clean electrochemical reaction rather than combustion, fuel cells are especially
suited for distributed applications where power generators are sited close to
the power customer. But there is one drawback: cost. Today's "first generation"
fuel cells are three times more expensive than other types of power generators.
Costs are coming down, however, as a result of technological innovations that
continue to be made in our advanced fuel cell program. For example, in FY 2001,
redesigned molten carbonate Direct FuelCelITM systems will be installed in Los
Angeles and Tuscaloosa, AL. Manufactured by FuelCell Energy (formerly Energy
Research Corp.), the 250-kW units feature a cost-saving, more compact design
than previous systems. Now being pre-tested in the firm's Connecticut facility,
the unit is a U.S.-customized version of a system installed in Bielefeld,
Germany, in November 1999. Another approach to reducing costs is to combine a
fuel cell and turbine into a high- efficiency, "hybrid" power unit. In FY 2000,
a solid oxide fuel cell/microturbine hybrid will be tested at the University of
California- h-vine's National Fuel Cell Research Center. The FY 2001 budget
emphasizes a new approach that could make even more dramatic cost reductions.
This effort, begun in 1999, will capitalize on remarkable progress made recently
in ceramics manufacturing, much of it by the microchip industry. These advances
create new possibilities for innovative fuel cell designs, efficiencies of
greater than 80%, and ultimately costs as low as $400 per kilowatt, roughly a
third of the projected cost of today's most advanced systems. In September 1999,
DOE selected four companies to begin applying these innovations. These, and
others to be selected in FY 2000, will develop core fuel cell modules for
civilian and military applications, an effort that will continue into FY 200 1.
NYPD ... Green! The only police station in the nation's most visited urban park
- New York's Central Park - is also one of city's oldest. But since April 1999,
it has been powered by one of the newest types of power generators - a fuel
cell. Painted "Central Park green," the onsite mini- power plant, no bigger than
a large garden shed, supplies 200-kilowatts of electricity to the New York
Police Department's 22 nd precinct station. Prior to installing the fuel cell,
police in the pre- Civil War'era building couldn't use modern electronic
fingerprinting equipment or even keep the air conditioner on during hot summer
days. Running a new transmission line through the park was too expensive and
environmentally disruptive. Putting a fuel cell in a corner of the station's
parking lot solved the power problem. The product of nearly 30 years of
government-industry R&D, the quiet and pollution-free fuel cell now supplies
enough electricity to run the police station and recharge a fleet of electric
vehicles used to patrol the park. Also, the National Energy Technology
Laboratory and Pacific Northwest National Laboratory have created the Solid
State Energy Convergence Alliance to bring industry, national laboratories, and
universities together to encourage high-volume manufacturing of solid-state
components for a variety of fuel cell applications. "Mass custornization" of
components for stationary, mobile, and military fuel cells can lead to much
lower unit costs. Natural Gas - WM We Have Enough? Natural gas is the domestic
energy resource being counted on most to meet our increasing energy demands,
certainly for the first decades of the new century. Between now and 2015, U.S.
gas demand could increase by 40% or more - from 22 trillion cubic feet (TCF)
annually to 30-32 TCF. Climate change measures could place even greater demands
for natural gas. Can our gas industry meet this challenge? In December 1999, the
National Petroleum Council' said yes, but not without surmounting significant
challenges. For example, by 2015, almost $1.5 trillion in private sector
financing will be required to pay operating expenses and invest in new
infrastructure. Over 38,000 miles of new transmission pipelines will have to be
built along with 263,000 miles of distribution mains to serve 14 million new
customers. The number of wells drilled annually will have to double from 24,000
in 1998 to more than 49,000 by 2015. New resources will have to be found.
Natural Gas Budget FYOO Approps Request Exploration & Production $14.3 $12.4
Gas Hydrates 3.0 2.0 Infrastructure Reliability 1.0 13.2 Processing Technology
10.2 8.5 Environmental Protection 3.2 2.6 Total $31.6 $38.8 Dollars in Millions
The Council also stressed that the technology for locating and producing natural
gas must continue to advance. Advanced diagnostics and imaging systems will be
needed to locate gas hidden from today's technologies. Production will have to
come from deeper, denser, and more complex reservoirs, requiring higher strength
materials to be used in advanced drilling systems. Innovative pipeline designs
and new fabrication and installation methods must be developed. Better
technology will be needed to improve reliability of the gas transmission and
distribution system. Each of these presents significant technological challenges
- made more difficult because the nation's investment in future gas technologies
is declining. Within the next three years the Gas Research Institute will phase
out its traditional regulatory- funded research program. DOE's gas R&D
program will be the last remaining, nationally-funded gas research effort.
Recognizing this, Energy Secretary Richardson announced in December 1999 the
creation of a new Center for Advanced Natural Gas Studies within the Energy
Department. Located at the National Energy Technology Laboratory, the Center
will coordinate gas technology development and gas-related analyses for the
Department. It will work with the gas industry to identify and implement
critical areas of research from "the borehole to the burnertip." In FY 2001,
funding for the Center will be drawn from existing sources. Infrastructure
Reliability - Filling an R&D Gap. The integrity and efficiency of our aging
gas infrastructure may be the most critical barrier to achieving a 30-TCF gas
economy. Not only will thousands of miles of new pipelines be needed, as the
National Petroleum Council stated, but much of the current 300,000-mile
interstate pipeline network could need future upgrading. In FY 200 1, the
Department proposes to begin filling a critical gap in our gas research
portfolio that addresses these needs. Our request allocates $13.2 million for
projects that can help assure a reliable gas transmission and delivery
infrastructure. Our increased budget request for FY 2001 will support the
development of advanced materials and technologies needed for longer life,
high-strength, non-corrosive pipelines. We also propose to develop new obstacle
detection systems that can speed the boring of tunnels for gas distribution
pipes, along with advanced sensors that can inspect and seal leaks from inside
of pipelines. Gas storage will become increasingly important, especially if
pipeline constraints (access rights, construction lead times, etc.) require
greater reliance on gas storage near market centers. In the FY 2001 budget, we
will continue to study ways to improve the deferability of gas from storage
fields. We will also explore the technical and economic feasibility of novel gas
storage methods such as the use of artificially-created hydrates and steel-lined
rock caverns. Also included is $5.9 million for an international infrastructure
effort recommended by the President's Committee of Advisors on Science and
Technology (PCAST). Concerns over the U.S. gas pipeline system pale in
comparison to those in eastern Europe, especially in the former Soviet Union.
Russian gas pipelines may leak as much as 20% of their throughput, releasing as
much as I to 2 trillion cubic feet of methane (natural gas) into the atmosphere
annually. Methane is 20 times more potent (by volume) than carbon dioxide as a
greenhouse gas, making the leaks from Russian gas pipelines equivalent to the
carbon dioxide exhausts of more than 500 average U.S. coal-fired power plants.
Locating these leaks with conventional technology in the rugged Russian terrain
is too expensive to be practical. But innovations in portable and aerial remote
gas sensing - some of which were developed for military use during Operation
Desert Storm - could offer a more affordable and effective approach. A major
portion of the international gas infrastructure budget in FY 2001 will be used
to help U.S. equipment makers adapt these remote sensors for peacetime use both
within and outside the U.S. The result could be a new commercial opportunity for
U.S. companies that could produce both energy and global climate change
benefits. Exploration and Production - Deeper, Faster, Smarter. We also plan to
direct funding to projects that can improve the exploration and production of
natural gas while, at the same time, reducing the environmental impact. The
Department of Energy helped pioneer the polycrystalline diamond drill bit, the
measurement-while-drilling technology, the "thru-casing" logging system, and
several other innovations that have allowed the hydrocarbon industry to probe
deeper into more hostile environments searching for oil and gas. But if
tomorrow's producers are to keep pace with the steadily growing demand for
natural gas and oil, even more impressive innovations will be needed. The
drilling systems of the future will likely be "smart systems," incorporating
rugged integrated circuitry to monitor conditions at the drill bit, analyze for
hydrocarbons, and steer the drill bit through rock that is deeper and denser
than has ever been encountered before. Our FY 2001 budget includes funding for
these and other "high-tech" exploration and production systems. For example, one
of our key projects in FY 2001 will complete the development of two
measurement-while-drilling" electronics packages that can withstand up to 400
degrees F of heat and vibrations near the drill bit and transmit a steady stream
of data during deep drilling. The Mystery of Methane Hydrates - the "Ice that
Burns." Methane hydrates are a tantalizing future source of natural gas.
Potentially vast amounts of gas - possibly 5, 000 times larger than the world's
known conventional gas reserves - are locked in ice-like formations beneath the
ocean floor and the Arctic tundra. But hydrates are also a possible safety
threat to offshore drilling rigs and deep-sea pipelines. Releases of methane
from hydrates could also pose a possible global warming concern. Many questions
remain unanswered. DOE in 1998 restarted its hydrate research program, joining
other federal agencies (the U.S. Geological Survey, Naval Research Laboratory,
and others), to begin answering these questions. A multi-year program plan,
distributed to the research community in 1999, called for laboratory studies
followed by a series of field tests to drill into and study an actual hydrate
formation. Field tests are expensive, however, costing upwards of $5410 million
per well. Therefore, before committing to major expenditures for production
tests, it may be more beneficial to apply our $2.0 million request to improving
our scientific understanding of hydrates. We will also examine opportunities to
leverage our funding with other international research initiatives. For example,
the Japanese are drilling an offshore hydrate well and have indicated interest
in future wells in the Canadian arctic. This could provide an opportunity for
future partnerships. Assuring Environmental Protection. One way to help enhance
future gas availability is to assure that gas operations are environmentally
sound. In FY 2001, as part of the "Effective Environmental Protection" portion
of our natural gas budget , we will provide the science expertise to a coalition
of Federal and State agencies to complete the first-ever model of air emissions
from natural gas (and oil) field equipment in the Rocky Mountain region. Using
this model, the agencies will be able to assess the true impact of oil and gas
operations on the region's air quality and make leasing and permitting decisions
on the basis of sound science. Processing Natural Gas - Tomorrow's "White
Crude." Natural gas not only can be burned but also used as a source of chemical
"building blocks" for synthesizing clean liquid fuels that might one day
supplement conventional crude oil. Converting natural gas on the North Slope to
this form of "white crude" could offer a way to keep the TransAlaska Pipeline
System (TAPS) flowing well beyond its currently projected economic lifetime. In
FY 2001, a key gas-to-liquids research effort (part of our Gas Processing
Program) will move into an important scale-up stage. Two years of research have
now reached the point where several new classes of ceramic membrane and seal
materials appear suitable for separating natural gas into gases that could be
recombined into liquid fuels. Cost savings of up to 30% over conventional gas
separation processes appear to be within reach. In FY 2001, a prototype membrane
unit capable of processing 24,000 cubic feet per day of syngas will be built and
tested. Design and engineering will be started on a larger, 500,000 cubic-
foot-per-day unit, and tests will begin on ceramic modules that eventually will
be incorporated into the unit. We also hope to scale up a unique technology that
liquefies natural gas using sound waves. The innovative concept grew out of
research at our national laboratories. Preparations are underway for testing a
small 500-gallon-per-day prototype, and in FY 2001 work will begin on a larger
10-20,000 gallon per day system. Petroleum - Producing More at Home and Making
It Cleaner Sometimes overlooked in concern over the rising level of U.S. oil
imports is the declining quality of crude oils now arriving at U.S. refineries.
Most of the nation's lighter, lower sulfur, easier-to-process
crude oil has been extracted. Crude oils now being recovered - and those
received from many of our suppliers in this hemisphere - are heavier, thicker
and more sulfur-laden. This decline in crude oil quality poses
both technical and economic challenges for refineries. It is also likely that
air emission standards for the nation's automobiles and trucks will tighten
significantly in the coming years. In December 1999 President Clinton announced
the toughest air emission standards ever for the nation's vehicles. By 2005, the
nation's gasoline suppliers must meet an average
sulfur level of 30 parts per million (ppm), down from the
current average of more than 300 OPM. More stringent diesel standards will be
issued later this year. Petroleum Budget FYOO FY 01 Approps Request Ultra Clean
Fuels $ 0* $10.0 Exploration & Production 28.4 20.8 Reservoir Life Extension
14.7 11.1 Environmental Protection 10.8 10.7 Processing- Desulfurization 3.3 0
Total 57-3 $52.6 Dollars in Millions - $1.2 million derived from Coal, Gas,
Petroleum fuels-related programs to start initiative in FY 2000. The Ultra Clean
Fuels Initiative. In February 2000 DOE announced a major new research effort to
assist the nation's fuel suppliers and engine manufacturers meet the new
environmental standards. The Office of Fossil Energy and the Office of Energy
Efficiency and Renewable Energy will pool funding in a $75 million, 5-year
effort to develop lower cost, more effective ways to produce "ultra clean" faels
and better pollution control devices for tomorrow's cars and trucks. The effort
will be conducted in conjunction with the Partnershipfor a New Generation of
Vehicles, a government-industry initiative to develop vehicles that achieve fuel
efficiencies of up to 80 miles per gallon. Ultra-clean diesel fuels could offer
a way for these new vehicles to meet the tighter emission standards without
compromising safety, performance or affordability. The Office of Fossil Energy's
portion of this program is expected to be $50 million; $ 1 0 million of which is
in the FY 2001 budget. Proposers can submit three types of projects: (1) scale
up of fuel processing advances now on the drawing boards, (2) development of
innovative emission control systems that use cleaner fuels, and (3) research on
new, virtually sulfur-free fuel forms. The first proposals will
be due this summer, and winning projects could receive up to $15 million in
federal matching funds for projects that could result in the construction of
pre- commercial prototype fuel processing facilities. The majority of the
research projects would likely begin in FY 2001. As Secretary Richardson said in
announcing the new initiative, "Americans will breathe cleaner air in the future
not only because we supported tougher regulations but because we also invested
in better technologies. " Producing More Petroleum from U.S. Fields. The
remainder of the Petroleum R&D budget continues to focus on ways to assist
U.S. producers - especially smaller, independent producers - with advances that
can keep oil flowing from domestic reservoirs. The independent producer is
already the dominant producer of natural gas in the United States and is rapidly
becoming), the dominant producer of crude oil. The vast majority of the nearly
8,000 independent oil producers in the U.S. are small companies - typically with
less than 20 employees. Many are family-owned businesses. The price plunge of
1998-99 put more than 30,000 oil workers - nearly I out of IO - out of a job and
idled scores of drill rigs. Even though prices subsequently rebounded, many of
the lost jobs and much of the lost production has not come back. Price swings
have made lenders cautious, and small companies are finding it difficult to
raise the financing to reopen shut in wells. Secretary Richardson took several
actions during the price fall to maintain the nation's oil productive capacity.
Included were several initiatives to develop and deploy better oil field
technology - not only providing near-term help but also positioning small
producers to be more productive in the future and perhaps dampen price swings.
Chief among the initiatives was the restarting of the Reservoir Class Field
Demonstration Program, a program to provide cost- sharing to producers willing
to try innovative approaches to keep endangered oil fields in operation. On
October 5, 1999, the department announced that IO winning projects, all
involving independent oil producers, would receive $23 million in federal
matching funds for projects that will last, in some cases, up to 6 years. The FY
2001 budget includes $4.8 million as the last funding increment for these
projects. Also, in FY 200 1, the Department will continue its "Preferred
Petroleum Upstream management Practices " (PUMP) program. This effort, funded at
$2 million, is a targeted, near- term effort to convey "best practices" that tie
together reservoir management, environmental compliance, and other operations in
a way that helps producers quickly increase production. The goal is to try to
reverse the decline in domestic oil production by midway through this decade.
Microdrilling - DOE graphic found on hard copy only FY 2001 funding will also be
used to develop longer-range innovations. Candidate projects include the
continued development of artificial intelligence techniques that can be
integrated into computer models producers can use to make better assessments
before drilling. Miniaturization is also an area of interest in FY 2001. DOE and
industry scientists have developed a thumb-size geophone that can be lowered
into a "micro-borehole" to search for oil and gas or to track the progress of
oil and water flowing through reservoir rock. Micro-boreholes are only I 1/2to
2- inches in diameter and can be up to 70% cheaper than the typical 81/2-inch
diameter wellbores. Other Elements of Our Research and Development Program The
Fossil Energy R&D budget also includes funding for the scientists,
engineers, technicians and administrative staff that conduct in-house research
and oversee nearly 600 projects carried out by industry, universities and other
research organizations. The budget includes funding for Cooperative Research and
Development projects at the University of North Dakota Energy and Environmental
Research Center and the Western Research Institute. These projects are jointly
financed by the Energy Department and private sector research organizations.
Other R&D Budget Items FYOO FY01 Approps Request Program Direction $75.5
$75.1 Plant & Capital Equp. 2.6 2.0 Cooperative R&D 7.4 5.8 Adv.
Metallurgical Research 5.0 5.2 Environmental Restoration 10.0 9.0 Export-import
Authorizations 2.2 2.3 Black Liquor Gasification 13.5 Total, Other $116.2 $99.4
included in FY01 Energy Efficiency Budget Dollars in Millions Our budget also
supports advanced metallurgical research at the Albany Research Center in
Oregon. Since this Center transferred to the Energy Department from the former
Bureau of Mines, it has become increasingly involved in our Vision 21 program
and in addressing other materials-related challenges of the energy and
transportation industries. We also include funding for Environmental Restoration
to support environment, safety, security and health improvements at our field
facilities and the cleanup of sites where former Fossil Energy-funded activities
were conducted. We also carry out several regulatory functions funded in the
budget request for Export- Authorizations. For example, we are responsible for
authorizing the export of electricity, issuing permits for electric transmission
facilities at our international borders, and authorizing natural gas imports and
exports under Section 3 of the Natural Gas Act of 1938. One budget item - black
liquor gasification - was funded in the Fossil Energy account in FY 2000 by
Congressional direction. On January 7, 2000, our National Energy Technology
Laboratory issued a call for projects to demonstrate this process as a way to
improve efficiencies of the nation's pulp and paper mills. In the FY 2001
budget, funding for these projects is proposed in the Energy Efficiency budget
request. The Clean Coal Technology Demonstration Program A significant portion
of the FY 2001 Fossil Energy budget request is offset by funding proposed for
deferral or rescission from the Clean Coal Technology Program. The budget
proposes that $22 1.0 million be deferred until FY 2001 and that an additional
$105.0 million be rescinded. We are proposing a deferral because some of the
last projects in this program have been -- or are being -- restructured, and
schedules have been delayed. The proposed rescission reflects savings from the
restructuring of a Clean Coal Technology pr 'project that originally had been
proposed by a subsidiary of the Duke Energy Corp. On November 15, 1999, Energy
Secretary Richardson approved the use of $78 million in Clean Coal Technology
funding as the federal share of the $432 million Kentucky Pioneer Energy Project
planned for Clark County, Kentucky, by Global Energy Inc. This represented a
$105 million cost savings compared to the projected government cost of the Duke
Energy project which had encountered siting difficulties in southern Illinois.
At the close of FY 2001 @ 32 of the 40 projects in the program are expected to
be completed; one will be in the final stages of operation and final report
preparation; two projects are likely to be in construction; and two projects
will still be in the design phase. Funding obligations will have been completed
for all but the final two projects. Two of the most successful Clean Coal
Technology projects will complete their government- cosponsored programs in FY
200 1. The Tampa Electric Integrated Gasification Combined Cycle project in
Florida has established the engineering foundation for a new generation of high-
efficiency power technologies, while the Liquid Phase Methanol Synthesis project
in Tennessee has shown an advanced method for converting coal-derived gas into
liquid fuels and chemicals. Together, these two pioneering projects provide
early glimpses of technologies that could one day for the core of the Vision 21
pollution-free energy plant of the future. This completes my prepared statement.
I will be pleased to answer any questions Members of the Subcommittee may have.
LOAD-DATE: March 22, 2000, Wednesday
