HGS Government Affairs Update

Legislation affecting the geoscience professions has been minimal this year owing to the presidential elections. The campaigns are now over, and as this report is being written (mid-December), it appears that George W. Bush has been elected President of the United States. This change of administration affords the country with an excellent opportunity to establish a coherent, realistic and workable “National Energy Policy.” Prior to this time, the federal government has largely relied upon wishful thinking and military force as a substitute for energy policy. Although no policy can hope to deal with every energy-related contingency, a well crafted plan can at least deal with the more serious issues of supply disruptions, access to federal lands (both onshore and offshore), and the creation of tax policies that will encourage domestic exploration and production.
A number of policies have been put forward for discussion and most contain similar elements. The following is a summary of the more common ones.
Access to Federal Lands
The prevention of access to certain public lands has stymied oil and gas exploration in areas with enormous potential for domestic oil and gas reserves. Two prime examples are the Arctic National Wildlife Refuge (ANWR) and the outer continental shelves of the East Coast, West Coast, and the Florida Gulf Coast. Much has been debated about ANWR and the possible environmental problems that could arise from oil and gas exploration and production. The Refuge covers 19 million acres, but industry focus is only on the 1.5 million acres (8%) along the coastal plain. The petroleum industry has an excellent record for environmental safety to the west at the Prudhoe Bay field and in the National Petroleum Reserve. Modern drilling and production practices have dramatically reduced the size of the pad from which multiple wells are drilled, and more improvements will no doubt be made for activities conducted in ANWR.
With regard to offshore drilling, our industry has an excellent environmental record for activities conducted in the Gulf of Mexico. If the current moratorium on drilling along the outer continental shelf of the East Coast is lifted, industry experience indicates that environmental risk would be held to an absolute minimum. Our industry simply cannot afford any costly environmental mishaps, from either a monetary or a public relations standpoint.
Expansion of the Strategic Petroleum Reserve
The Strategic Petroleum Reserve is an invaluable source of emergency petroleum for the United States. Withdrawals of oil from these stockpiles can provide for substitute supplies during times of disruptions. Over the long term, the Reserve should be expanded and filled during times of low oil prices. Ideally, domestic producers could sell their oil to the Reserve for a “fair” price during these times. This in turn could help to stabilize our domestic industry and fill and expand the Reserve at the same time. It has been reported that the last major filling of the Reserve was with relatively high fixed-price Mexican crude oil, at a time when oil prices were near historic lows, and many domestic oil companies were struggling to stay in business.
Tax Policies
The United States tax code could be changed to encourage more domestic exploration and production. The current tax code contains disincentives rather than incentives. Some of the items that should be considered for change are the Alternative Minimum Tax, tax treatment of delay rentals, accounting classification of costs associated with geological and geophysical evaluations, and percentage depletion allowances. In addition, tax credits and royalty holidays should be considered for new domestic exploration and production.
Greater Funding for Research and Development into Alternative Energy Sources Currently, alternative energy sources, such as hydroelectric, wind and solar, account for less than 4% of our energy needs. In anticipation of dwindling supplies of hydrocarbon fuels in the future, greater funding for research and development of alternative energy sources should be encouraged.
Streamline Environmental and Regulatory Restrictions to Construction of Modern Refineries and Pipelines Too often, vital natural gas pipeline projects are put on hold or stopped altogether by radical environmental groups and over-zealous government agencies. These pipelines are necessary to our national well being and energy needs, and the government should act to streamline the processes and cut short the time required for obtaining necessary permits and environmental clearance for these projects. Much of the same can be said for the construction of refineries. No large refineries have been built in the United States in many years, and much of the recent shortfall in gasoline and heating oil supplies can be attributed to a lack of refining capacity nationwide. We now find ourselves importing gasoline and fuel oils to make up for these capacity shortfalls. Increasing our dependence on foreign sources for our basic fuel needs undermines our national security, and steps should be taken to reverse this situation.
Develop an Efficient Policy for Putting the Information and Analyses from the U.S.G.S. and the Department of Energy to the Best Use
The general public is ignorant of the petroleum industry, and if a national energy policy is to succeed, it must be educated and informed about the basic energy requirements of our modern industrial society. The U.S.G.S. and the Department of Energy have amassed volumes of information concerning energy topics, and an effective methodology should be devised to easily transfer this information to the public. This is a task that public schools, local governments, and the general media could undertake, along with the assistance of petroleum professionals able to donate their time and knowledge.
These are the more common topics usually addressed in the ongoing debates for a national energy policy. In the coming year, petroleum professionals should take the time to communicate their concerns and positions on the various aspects of energy policies as they are being formulated. Contacting and working with your local and national geological/geophysical societies is an ideal way to have your opinions heard.
Your suggestions and comments are most welcome by the Government Affairs Committee. I can be reached at the following email: rvmil@hotmail.com . Additional information can be found in the AAPG’s policy statements available at www.aapg.org/divisions/dpa .