TESTIMONY OF MICHAEL BALY III BEFORE THE SUBCOMMITTEE ON INTERIOR Mr. Chairman and Members of the Subcommittee: The American Gas Association (A.G.A.) is a national trade association comprised of some 250 natural gas distribution and transmission companies serving over 166 million natural gas consumers throughout the United States. We appreciate this opportunity to present our views on natural gas-related research and development (R&D) conducted or sponsored by the Department of Energy (DOE). The natural gas industry recommends an appropriation of $112.40 million for all DOE gas-related R&D in Fiscal Year (FY) 1990 under this Subcommittee's jurisdiction. This total is broken down as follows: $73.40 million for fossil energy R&D; and $39.0 million for conservation R&D, which includes $9.5 million for a natural gas vehicle R&D program. THE IMPORTANCE OF GAS-RELATED RESEARCH The United States needs an adequately funded DOE research program not only to meet future energy needs, but also to remain competitive in today's world economy. Gas-related research may be the most important component of DOE's research program. Natural gas has an important future role because its attributes favor its use in a myriad of applications. First, gas is the cleanest of all fossil fuels. Gas can be used for pollution control by itself and to reduce sulfur and nitrogen oxide emissions of other fossil fuels. Gas can also be used as a vehicular fuel. other single fossil fuel can be used in as many applications as natural gas without major negative environmental consequences. No Second, natural gas can be delivered quickly, efficiently and without major environmental impact, through the existing million-mile transmission and distribution system. Third, natural gas can be converted into usable energy more efficiently and inexpensively than other fossil fuels. DOE's support of gas supply-related research will ensure the recovery of a larger percentage of the total gas resource base, which is several thousand times larger than the presently recoverable gas resource base. The amount of gas that may be recovered from the total gas resource base is directly contingent upon our ability to develop new tools and techniques to recover this gas at commercially viable prices. In May 1988, the Department of Energy released a study entitled, "An Assessment of the Natural Gas Resource Base of the United States." This study concluded that, in the lower 48-states, there are 1,059 trillion cubic feet (Tcf) of gas that can be tapped with existing technology. At the 1987 level of nationwide gas consumption, this amount is equivalent to a 62-year supply. While the number is encouraging, and is indeed conservative, if natural gas is to be the cornerstone of the Administration's energy policy, technological breakthroughs will be necessary to increase long-term gas supplies dramatically. Federal funding is necessary to develop the long-term, high-risk technology base necessary to achieve these breakthroughs. While Congress has recognized the need for a stronger geoscience program, the funding has not nearly been sufficient. To truly implement a geoscience program as envisioned by ERAB in its 1987 report to DOE, "Geoscience Research for Energy Security," we recommend that Congress provide a strong funding base for crosscutting geosciences research which will benefit both gas and oil exploration and production. -2 DOE funding is also needed to make significant improvements in the area of energy efficiency. Such improvements are at the cornerstone of many bills introduced in both the 100th and 101st Congresses. DOE can and must play a central role in gas technology development, in order for the U.S. to reduce its reliance on foreign oil, improve its energy efficiency to enable industry to compete in the global marketplace, and reduce pollution. SPECIFIC FUNDING RECOMMENDATIONS FOSSIL ENERGY R&D: $73.40 Million (1) Unconventional Natural Gas Recovery ($15 Million) Devonian shales and tight sands are estimated to contain more than 1,800 Tcf and 900 Tcf of gas, respectively. Tight formations gas is produced using unconventional recovery techniques. A.G.A. estimates that favorable economic conditions and substantial investment in advanced recovery techniques could result in annual "incremental" production of up to 4.0 Tcf of gas by the year 2000, while the current rate of technology would produce approximately 1.0 Tcf by that year. In order to optimize the amount of gas recovered from our abundant resource base, basic geoscience research must be expanded. This research should be aimed at increasing our knowledge of the geological/geochemical/geophysical characteristics and parameters of both conventional and unconventional formations. Moreover, because of the potentially enormous size of what we call advanced unconventional gas resources, extensive research is necessary just to verify how much may be technologically and economically recoverable. To enhance the development of technology necessary to recover the gas from unconventional gas formations resources, more research must also be conducted to develop and refine advanced stimulation and drilling techniques. Field testing and a technological database must also be established. We are recommending funding of $15 million in the unconventional gas recovery program to continue DOE's secondary gas recovery program and ongoing research activities in western tight sands, Devonian shales, and other complex formations and to support expanded geosciencetype research. For surface coal gasification to make a significant contribution to gas supplies, techniques must be developed to accommodate high-sulfur Eastern coals and combustion-inhibiting coal fines. Research must be conducted to develop techniques for gasifying these "fines," for disposition of liquid byproducts, and for consolidating "fines" and tars for utilization. Scientific and engineering feasibility studies of advanced generation gasification processes must also be conducted to develop a technological database for such processes. (3) Fuel Cells ($36.5 Million) The electrical conversion efficiency of gas-powered fuel cells is approximately 15-20 percent greater than the conversion efficiency of traditional electrical generation. Combining fuel cells with certain cogeneration applications could achieve combined electrical and thermal conversion efficiencies of 80 percent, compared to conversion efficiencies of 30-35 percent by conventional central station electric plants. Fuel cells are also environmentally benign, emitting virtually no pollutants. Because of its importance, we recommend a total of $36.5 million for fuel cells of which $25 million should be used to support development of the molten carbonate fuel cell and $9.5 million for advanced concepts such as solid oxide fuel cell technologies. The second and third generation fuel cell concepts are still years away from commercial use and therefore, are critically dependent upon federal R&D support to supplement industry efforts. (4) Heat Engines ($10 Million) -3 Because of their contribution to the environment and energy conservation, we recommend a research and development program in DOE's Heat Engine Program for the development of high efficiency natural gas-powered turbines for electric generation. Such a program should include advanced combined cycle gas turbines, steam-injected gas turbines (STIG) and intercooled steam-injected gas turbines (ISTIG). The ISTIGS, in particular, are fifty percent more efficient than conventional powerplants, and cost half as much as new coal or nuclear plants. $2 million of this is for research on combustion systems emissions control. (5) Underground Coal Gasification ($2.5 Million) Underground coal gasification could substantially increase the coal resource base, 93 percent of which presently cannot be recovered economically using conventional mining techniques. Moreover, underground coal gasification offers potential environmental, economic and safety advantages over conventional mining. Extensive field testing, data analysis and environmental monitoring is necessary to understand the technological basis for linking the vertical wells through the coal seam and controlling the movement of the reaction zone. (6) Advanced Research & Technology Development ($6 Million) We recommend continued support for Advanced Research and Technology Development research activities that provide a technology base for such gas-related technologies as coal gasification and fuel cells. CONSERVATION: $39 Million (1) Gas Heat Pumps ($10 Million) More The gas heat pump provides heating and cooling in a single unit using less energy than a conventional or high efficiency furnace uses for heating alone. research is necessary to develop highly-efficient, reliable and cost-effective gas heat pumps for residential and commercial applications. In order to improve durability, maintenance and endurance, such research must include the evaluation of promising technical approaches, fundamental research in basic heat pump concepts, processes, phenomena and materials, and research on generic component development. These activities must be integrated into overall heat pump system development and analysis. (2) Natural Gas Vehicles (NGVs) ($9.5 Million) First and foremost, we recommend full funding for the alternative fueled vehicle demonstrations authorized in P.L. 100-494, the Alternative Motor Fuels Act of 1988. In addition, certain research is needed to improve the use of natural gas as a vehicular fuel. Fundamental research is necessary to acquire a thorough understanding of the intricacies of gaseous fuel injection, carburetion, manifolding, combustion, power optimization and emissions control so that natural gas can become broadly accepted as a transportation fuel. Further research into novel gas compression concepts is necessary to advance the development of compressor technology. Research must also be conducted on advanced storage systems (e.g., sorbent materials) to increase the understanding of gas storage technology, particularly the fundamental principles of natural gas adsorption, absorption, clathration and catalysis. (3) Other Projects ($19.5 Million) Other research projects that are included in our conservation recommendaton of $39 million are: (a) $3.0 million for DOE research on indoor air quality; (b) $8.5 million for tribology, ceramics, and other materials-type research for the energy conservation utilization technology program (ECUT); and (c) $8.0 million for research on desiccant technology that is used in gas cooling. -4 CONCLUSION The natural gas industry recognizes that the continuing budget deficit places severe constraints on federal energy research dollars. Our total recommendation this year for programs under this Subcommittee's jurisdiction of $112.40 million is higher than previous years because of the increasing urgency to promote energy conservation through more efficient end use technologies. With the focus of the Administration, Congress and the public at large turning towards clean air problems, and a general consensus that natural gas has a major role to play in solving this problem, increased federal funding for research and development is necessary to implement the national goals. However, our recommendation is still conservative, requesting funding for only those technologies that are essential and prudent for the orderly development of new, domestic gas supply and utilization technologies. If Congress adopts our research recommendations, the nation will, over the long term, improve its energy supply security and energy efficiency. |