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U.S. Oil, Gas Producers Concerned Over Administration's Federal Budget Proposal for Energy Department

The Independent Petroleum Association of America (IPAA) is disappointed with the Bush Administration's federal budget proposal that would cut all funding for oil and natural gas research and development programs at the Department of Energy (DOE).

"It doesn't make sense to have an Energy Department that doesn't have a portion of its mission directed to America's largest energy resources," said IPAA Chairman Mike Linn. "Certainly it's important to develop new fuels and clean coal, but domestic oil and natural gas development is essential, too -- particularly to pursue the President's objective of reducing dependence on foreign oil." Oil and natural gas account for 65 percent of the nation's energy supply.

"The main customers of DOE's oil and natural gas technology programs are not major, integrated companies," said Linn, who is also president of CEO of Linn Energy, Pittsburgh, Pa. "Eighty-five percent of the Energy Department's research efforts are directed toward independent producers who drill 90 percent of the nation's oil and natural gas wells. These companies are providing American energy."

Just last October, the Administration praised the importance of DOE's oil and natural gas programs. In an October 17, 2005 press release, Secretary of Energy Samuel Bodman commented on funds that would be directed toward new oil and natural gas research and development programs. He said: "This Administration continues to seek out and develop new energy options to support our growing economy. The projects we are funding today are an investment in our Nation’s energy security and economic security, and will help us obtain the maximum benefit of our domestic energy resources in an environmentally sensitive way.” For a copy of that release and examples of R&D projects, visit: http://www.energy.gov/news/2217.htm.

Significantly, these projects were being managed primarily by universities. IPAA's Linn said: "Maintaining strong university programs to educate the essential engineers and scientists to meet the workforce needs of the domestic energy industry is critical and consistent with the President's American Competitiveness Initiative."

Linn continued: "To meet the President's national challenges as described in his State of the Union speech last week, America's domestic producers of oil and natural gas must be included, and federal oil and gas research and development must be a part of the mix."

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IPAA is the national trade association representing oil and natural gas producers that drill 90 percent of the nation's oil and natural gas wells. These companies account for 68 percent of America's oil production and 82 percent of its natural gas production.