. "Appendix J Report of the Panel on DOE's Natural Gas Exploration and Production R&D Program." Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press, 2007.
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Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two)
TABLE J-1 DOE’s Performance Targets for Expanding Domestic ERR by 50 Tcf Through 2015
Contribution to Target (Tcf)
Develop technologies to increase gas finding efficiency, increase well productivity, reduce well abandonment, and address excessive water production from existing fields
7 by 2015
Develop technologies to reduce the cost of drilling for unconventional and other gas by 5%
13 by 2015
Provide technologies for hydrate avoidance or seafloor stability mitigation to assure the safety of ongoing deepwater hydrocarbon exploration
2 by 2015
Develop improved reservoir imaging systems to increase finding efficiency in unconventional gas reservoirs
11 by 2015
Develop reliable E&P systems for gas located 20,000 ft below the earth’s surface
5 by 2015
Develop integrated deep drilling system that reduces drilling cost by 30%
10 by 2015
Develop environmentally sound approaches that minimize the gas E&P footprint, enabling expanded access to gas in environmentally sensitive areas
2 by 2015
SOURCE: DOE. 2004b. Natural Gas Technologies Program Plan. Washington, D.C.: Office of Fossil Energy.
ergy.” The objective shown in the Program Plan is to develop technologies by 2015 that expand the nation’s economically recoverable resources (ERR) by 50 trillion cubic feet (Tcf) while minimizing environmental impact.3Table J-1 lists the performance targets for expanding the domestic ERR by 50 Tcf through 2015.
A variety of R&D projects are carried out in the three areas, which range widely in funding levels and duration; their descriptions are available on the National Energy Technology Laboratory (NETL) Web site.4 As noted in the “Introduction,” even though the E&P program may change as a result of Section J of the EPACT-2005, it is likely that R&D will continue in a number of the areas covered in the panel’s evaluation.5 In the President’s Budget Request (PBR) for 2007, the administration proposes to cancel the requirements in Section J of the Energy Policy Act of 2005 by means of a future legislative proposal.
The FY05 budgets for the key subprograms for enhancing domestic supply in DOE’s program were as follows:
Existing fields subprogram, $1.6 million;
Drilling, completion, and stimulation, $7.3 million;
Advanced diagnostics and imaging, $3.8 million; and
Deep Trek, $1.5 million.
These subprograms are described in more detail in the following sections. The PBR for FY06 did not ask for money for subprograms assessed by the panel; it requested $10 million for closeout of the natural gas technologies program. Nevertheless, the Congress appropriated a total of $33 million to the program. For the subprograms addressed by the panel, these appropriations include $9 million for advanced drilling, completion, and stimulation, including Deep Trek; $4 million to continue work aimed at expanding the recoverability of natural gas from low-permeability formations; and $2 million for stripper wells and technology transfer.
ASSESSMENT OF THE NATURAL GAS EXPLORATIONAND PRODUCTION PROGRAM
The committee’s methodology suggests that an assessment of the benefits of a specific subprogram should explicitly consider the role of DOE funding and the technical risks and market risks that can affect the outcome and the value of that subprogram’s activities. The methodology also requires that benefits be estimated under three different global scenarios representing possible future states of the world.
Role of DOE Funding
DOE defines the goals for its natural gas exploration and production R&D program in terms of additions to ERR that can be attributed to the success of DOE-funded research.
Economically recoverable resources are resources, both discovered and undiscovered, that are economically extractable under a given set of price-to-cost relationships and technological assumptions. DOE defines ERR as resources that can be found and produced profitably at a given point in the future at prevailing prices estimated by the Energy Information Administration (EIA) in its Annual Energy Outlook.
The $50 million per year of funding from federal oil and natural gas royalties starting in FY07 will be divided as follows: (1) conduct R&D for ultradeepwater E&P and integrated systems (35 percent); (2) conduct R&D for unconventional oil and gas resources (32.5 percent); (3) assist small producers with production problems of complex and unconventional resources (7.5 percent); and (4) conduct complementary R&D at NETL (25 percent). Technology transfer will be included, and DOE will award a consortium contract by May 2006.