3
Program Balance

Current ERP Program

Given the variety of energy resources and the variety of aspects that are important, the development of an energy resource program requires strategic decisions about content and emphasis. Coal, oil, and natural gas are the most important fuels for the present and will remain important fuels for decades to come (PCAST, 1997). Hence, the current ERP focuses primarily on these energy sources in three subprograms, as described briefly below.

National Oil and Gas Resource Investigations and Assessments. The primary purpose of this subprogram is to provide assessments to enable stewardship of the nation's resource endowment onshore and in state waters. This subprogram also conducts research on geologic framework and process studies that contributes to a broad geologic understanding of the resources present in sedimentary basins. The domestic oil and gas program also provides basic research in support of its resource assessments, and it provides the expertise and information needed to assess environmental impacts of the production of oil and gas.

National Coal Resource Investigations and Assessments. This subprogram is charged to assess national and global coal resources: quantity, quality, geologic distribution, availability, and recoverability. In addition, it has the responsibility to provide the expertise and information needed to assess the environmental impacts of the extraction and use of coal resources. Like the oil and natural gas element, the domestic coal subprogram is also charged to provide basic research



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--> 3 Program Balance Current ERP Program Given the variety of energy resources and the variety of aspects that are important, the development of an energy resource program requires strategic decisions about content and emphasis. Coal, oil, and natural gas are the most important fuels for the present and will remain important fuels for decades to come (PCAST, 1997). Hence, the current ERP focuses primarily on these energy sources in three subprograms, as described briefly below. National Oil and Gas Resource Investigations and Assessments. The primary purpose of this subprogram is to provide assessments to enable stewardship of the nation's resource endowment onshore and in state waters. This subprogram also conducts research on geologic framework and process studies that contributes to a broad geologic understanding of the resources present in sedimentary basins. The domestic oil and gas program also provides basic research in support of its resource assessments, and it provides the expertise and information needed to assess environmental impacts of the production of oil and gas. National Coal Resource Investigations and Assessments. This subprogram is charged to assess national and global coal resources: quantity, quality, geologic distribution, availability, and recoverability. In addition, it has the responsibility to provide the expertise and information needed to assess the environmental impacts of the extraction and use of coal resources. Like the oil and natural gas element, the domestic coal subprogram is also charged to provide basic research

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--> in support of both its resource and its environmental assessments through the study of geologic framework and processes. World Energy Investigations and Assessments. World oil and natural gas resources are critical to the economic well-being of the United States. With only 5 percent of the world's identified oil reserves and 7 percent of the identified natural gas reserves in this country, there is substantial national benefit from ERP world oil and natural gas assessments. The ERP's world oil and gas assessment products include assessments by region, by continent, by country, and by basin; regional summaries (e.g., Africa CD-ROM); and digital maps and data. In addition to the focus on assessments, the subprogram also conducts petroleum systems framework and process studies, economic and availability studies because of geopolitical uncertainties, and some environmental studies. The ERP's international coal work is primarily a reimbursable activity and, therefore, restricted to projects of opportunity (e.g., U.S. Agency for International Development Armenia coal resources). Examples of outcomes of ERP's world energy research include use by the Central Intelligence Agency (CIA) of oil and gas assessments for the analysis of future political hot spots and use by the EIA of energy results for modeling global carbon emissions. This ERP subprogram also serves to enhance the assessment capabilities of foreign geologists. Energy Supply Options: A Portfolio Approach The emphasis on oil, gas, and coal is appropriate given their current importance to the U.S. primary energy supply, but other geologically based energy resources also offer potential for future use. Two recent studies of U.S. energy policy (PCAST, 1997; SEAB, 1995) recommend strongly that federal agencies concerned with energy adopt a robust portfolio approach to energy research and development activities. The same idea was expressed clearly in a 1988 NRC report by the Committee Advisory to the U.S. Geological Survey (NRC, 1988). As the President's Council of Advisors on Science and Technology (PCAST, 1997) put it: The challenge to energy research and development . . . is to provide additional energy-supply and energy-efficiency options that can reduce U.S. dependence on the imported oil supplies that are subject to sharp price increases, to develop options that can shrink the cost of reducing emissions from fossil fuels (which includes the possibility of replacing some fossil fuel use with nonfossil options less costly than those that would be available for this purpose today), and more generally to develop options that can "backstop" existing energy-supply technologies—that is, provide the possibility of substituting for them if their costs escalate beyond the cost of the backstop option. (p. 1–7) The same report recommended:

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--> The portfolio should include a diversified set of R&D projects with a balance across technologies, time frames, and degrees of technical risk. Such diversity hedges against major failures and changing assumptions and external conditions, including a range of environmental scenarios. (p. 7-1) A similar rationale can be applied to the primary energy resource options considered under the ERP. Because it is impossible for policymakers to foresee how economic and environmental pressures will interact in the decades to come, the only prudent course is to develop the best available scientific evidence concerning primary energy supply options. The remainder of this chapter reviews the issues of balance among the energy sources, between research and assessment, and between resource and environmental issues in the context of a portfolio of energy supply options. In addition, the panel considers the related issues of the balance of research and service and the multiple audiences the ERP must serve. Need for a Balanced Energy Portfolio The ERP, which conducts research that uses basic science to provide information for policy decisions, needs to be shielded from transitory shifts in public interest, emphasis, and fashion regarding energy resources. At the same time, it has to be responsive to potentially enduring changes in national energy resource priorities that would call for a major shift in the program's array of activities. This obligation requires continuing evaluation of the deployment of ERP resources among energy sources. The current ERP recognizes the reality of a U.S. primary energy mix, heavily oriented to fossil fuels. Figure 3.1 shows the distribution of budgets among the three current subprograms—oil and gas, coal, and world energy—as well as three past subprograms. The coal subprogram involves about half of the funding, the oil and gas subprogram about 40 percent, and the world energy effort about 10 percent. This resource allocation will undoubtedly shift over time as the cycle of resource assessments in each area is completed. In addition, the panel believes that a continuing examination of the research and assessment portfolio should be undertaken. The objective of this examination is not to achieve an exact balance in the level of effort among particular energy sources at any one time. Instead, it is more appropriate to talk in terms of a mix of program elements that provide unbiased, science-based estimates of future resource availability across the spectrum of energy resources. Resource assessments should be available for very heavy oil, oil shale and carbonaceous shales, geothermal resources, and uranium as well as conventional oil and gas, coal, coalbed methane, and methane hydrates, although the depth of the assessment will vary by energy source, given variable probabilities of economic use on equally variable time scales. Many of these energy resources exist on federal lands, another reason to make

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--> Figure 3.1. ERP subprogram funding, 1982–1998. Source: Data provided by USGS. sure that appropriate scientific understanding is available as these assets are catalogued. Although the ERP now deals with hydrocarbons and coal, an opportunity exists to play a significant role in other energy resources as the federal government reevaluates its energy policies. Major challenges to the United States include how to maintain energy security in a global energy economy directed by market forces; how to respond to concerns about greenhouse gas emissions and climate change; how to successfully harness competition in domestic electricity markets; and how to take advantage of significant advances in alternate fuels technologies. At a time when the United States has the opportunity to develop responses to the challenges of its energy future, the panel believes that the ERP should contribute its expertise on the geological settings of energy resources to the lively debate that is certain to continue. The panel is fully aware that this broadening of the ERP's portfolio would require reallocation of existing resources and, quite possibly, new resources.

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--> Also, it is clear that some of these energy sources will involve collaboration with other programs within and outside the USGS. Geothermal energy is currently considered in the Volcano Hazards Program, for example. Furthermore, the spectrum of energy sources should be studied in projects that span a range of research time frames. A careful planning process is needed to craft a multiyear research and assessment strategy that develops appropriate priorities for the broadened research agenda. Instructive examples of energy resources whose prospective importance may grow as perceptions of environmental trade-offs change are uranium, coalbed methane, and methane hydrates: •   Nuclear power is a small but significant element in the energy portfolio of the United States, but it could be used to reduce growth in greenhouse gases and other emissions from the electricity-generating sector. Expansion of the use of nuclear energy rekindles worry about the adequacy of domestic sources of uranium to meet increased demand, an issue of resource assessment. Because concerns about waste disposal, fuel reprocessing, cost, reactor safety, and nuclear proliferation are likely to limit such expansion in the near term, the appropriate level of effort in this area is likely to be modest, but policymakers should be aware of the potential. Existing data sets on uranium and thorium should remain accessible. •   Coalbed methane now accounts for about 5 percent of natural gas production in the United States (EIA,1997). Because coalbed methane is a potent greenhouse gas, an evaluation of the potential for capturing, rather than releasing, methane is of interest to the current debate on global warming. However, questions remain about an evaluation of this resource, with its geographically dispersed incidence and highly variable characteristics. For the federal government overall, coalbed methane funding is small—barely $5 million a year—and a large part of this total is directed to coal mine safety rather than methane capture (EIA, 1997). There is no designated agency in which coalbed methane research and assessment are concentrated. Within the ERP, there is one major coalbed methane project, funded at about $750,000 per year. In addition, ERP has several small collaborative projects with the BLM and the States of Wyoming and Alaska. Coalbed methane resource assessment requires the close cooperation of the oil and gas and the coal subprograms, and careful consideration of the impacts of coalbed methane extraction on the future development of coal resources. •   Seismic surveys and scientific drilling offshore indicate that large quantities of methane may be stored in ocean sediments in icelike structures known as hydrates. Research to understand the occurrence of methane hydrates is now included in the Marine Geology Program. Continuing collaboration between the ERP and the existing program will improve the quality of future estimates. There is also significant activity on hydrates in other parts of the federal government, particularly DOE and the Navy. The MMS has access to seismic data and drill-

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--> ing records that could be used in future assessments. The recent PCAST (1997) report recommends, for example, that a major research program involving the USGS, MMS, Environmental Protection Agency (EPA), and Department of the Navy be developed to advance understanding of the potential of methane hydrates worldwide (see DOE, 1998b). A related opportunity exists in the area of CO2 sequestration. The PCAST report notes that fossil fuels will be essential in the next century, even if concerns about CO2 emissions assume greater importance following the results of the Kyoto conference in 1997. As a result, PCAST argued that a significant research effort on the disposal of CO2 (known as CO2 sequestration) should be developed to provide disposal options should they be required. Three of the options proposed relate to USGS activities. One is the injection of CO2 into oil and gas reservoirs. A second is the injection of CO2 into deep saline aquifers. The third is the storage of CO2 in coal seams (with appropriate attention to future mineability). Carbon dioxide adsorbs quite strongly on coal surfaces, replacing adsorbed methane. Hence, a coalbed methane research and assessment program could mesh nicely with work on CO2 sequestration. The PCAST proposal for CO2 sequestration research offers, therefore, an opportunity for the ERP to collaborate in a program of potential long-term significance. The importance of the portfolio approach to energy supply options discussed in this section is a theme that runs through several recent evaluations of federal energy policy. It is an approach that the panel believes would be quite useful as a way to think about future activities of the ERP. Accordingly, the panel recommends that the ERP portfolio be broadened to include geologically based energy resources beyond oil, gas, and coal, and that the ERP develop priorities for long-term balance among the various energy resources as part of the implementation of its strategic plan called for in Chapter 2. It is clear that this planning effort will require substantive communication with other programs within the USGS and beyond its borders as well. Thus, the evolution of priorities within the ERP should be developed in consultation with DOE, the White House Office of Science and Technology Policy, congressional staff, states, federal land managers, relevant private-sector groups, and nonprofit organizations. The result will be a portfolio of research and assessment activities appropriate to ERP expertise with broad support inside and outside the USGS. Other Issues of Balance Research Versus Assessment Versus Service: False Distinctions The ERP is in a challenging period of transition as it strives to meet the needs of its diverse audiences. Among the challenges facing the ERP are the dynamic evolution of a unique fossil-energy program; the pressure to find ways

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--> to work through and with other organizations to leverage limited resources; the obligation to produce, maintain, and distribute data products and information for a broad range of users; and the problem of maintaining high-level, specialized expertise. However, one of the most important challenges of all is the need to nurture a program of basic research on energy resources in an environment of short-term justification and fiscal pressures. The balance between research, assessment, and service is an issue that pervades the GD and all geologic research within the USGS. This nettlesome issue manifests itself in the ERP in terms of research and assessment. The principal function of the USGS is to bring earth science to the service of society in a changing world. Research is one of the most important tools that makes this possible. However, some individuals within the USGS regard service as the price scientists pay for being allowed to do research, whereas others consider service a primary activity. Information provided to the panel at its meetings and in supporting documents indicates that the most visible, praised, and widely used products of the ERP are the assessments and the supporting geologic databases, such as those on oil and gas fields on CD-ROMs. The panel did not document quantitatively the use of the results of research-based geologic framework studies outside the USGS. However, written statements to the panel indicate that these studies are valuable to outside users. Moreover, these studies contribute significantly to knowledge that is useful in resource assessment activities within the ERP. The panel agrees that basic research on energy resources is one of three essential functions of an energy resource program appropriate for the ERP. The other functions are to provide credible, impartial scientific information related to energy resources and to provide scientific advice and analysis as requested by other federal agencies, such as DOE and EPA. An NRC report Mineral Resources and Society: A Review of the U.S. Geological Survey's Mineral Resource Surveys Program Plan (NRC, 1996) points out, correctly in the view of the panel, that basic research is the ''basis on which the other two functions, advice and information, are founded. In addition, basic research addresses the strategic needs of a nation by investigating resources that are uneconomic today but are technically recoverable if needed in the event of a crisis'' (NRC, 1996, p. 21). The report goes on to state that "all three functions are considered legitimate responsibilities for a federal agency, such as the USGS" (p. 21) and that the "balance among these functions will depend on user requirements and will vary over time" (p. 22). The panel also believes that the question of research versus assessment is a false dichotomy. High-quality resource assessments involve high-quality scientific research. At the very least, the debate about the preeminence of either research or service is counterproductive. Research and service are inseparable. The quality and usefulness of the resource assessments depend on the fundamental understandings of hydrocarbon and coal occurrence gained through basin, strati-

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--> graphic, and structural studies or research. In turn, most of the data necessary to gain these understandings come from the resource assessment process. The variety of interests of the customers for ERP products also argues for a mix of assessment and research products. Understanding facies relationships and fluid movement in sedimentary basins has applications beyond coal and hydrocarbon assessments and provides justification for research efforts that go beyond the ERP. The panel recommends that the ERP in particular and the USGS as a whole maintain the strong research and knowledge base that is essential to the provision of services the ERP is uniquely qualified to provide . Increased demand for USGS information and expertise by the DOI and other agency programs is a healthy sign. It suggests a greater recognition of the need for geoscience contributions that support decisionmaking on energy resource issues. The professional staff of the ERP recognizes that USGS scientists have been expected to engage in both research and service. There is no reason for this expectation to change in the future. The appropriate mix should be the product of the strategic planning process rather than a preconceived basis for the planning. Environmental Research: How Modest or Large an Effort to Pursue? The environmental component of the ERP consists chiefly of data gathered as part of the assessment process. Information gathered about coal composition, for example, includes sulfur content, which is helpful in understanding and predicting the need for acid-mine drainage treatment and in selecting fuel sources that will minimize sulfur dioxide emissions. Stratigraphic and basin studies develop information about overburden that is useful in planning mined land reclamation. The produced water project within the oil and gas subprogram gathers data about produced water quantity and chemistry, information that can be useful in the assessment of environmental impacts of water disposal. All of the ERP subprograms list environmental studies as part of their mission, but the ERP lacks a strategy to implement an environmental focus. Clearly, environmental problems connected with resource extraction and use are a national concern. It is currently not feasible for the ERP to put a price tag on potential environmental impacts because such an evaluation is outside the program's capabilities. Accordingly, the ERP should consider the extent to which, in its assessment of a given resource play, the identification of geologically based environmental factors should be viewed as integral to the assessment, so that those equipped to deal with environmental impacts and related economic impacts would have a basis for incorporating such information. The ERP is a program whose traditional emphasis is geology, not economics and other social sciences. Hence the ERP should adopt a partnership approach in its environmental work. This strategy would require a close and continuing dialogue between the ERP and those agencies and groups that deal with environmental impacts of

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--> resource extraction and use. The ERP needs to know what its clients want, and its clients need to know what the ERP can provide. Thus, rather than broadening the scope of the environmental effort, the ERP should conduct a thorough assessment of the types of data now being collected that are useful in environmental applications and of what additional data could be collected that would have environmental applications. Without doubt, the ERP's data have value to its stakeholders; however, developing the full environmental and economic significance of these data would draw on costly and scarce resources. Consequently, there is, at the very least, an implicit balancing act that weighs the costs and benefits of information. Facing up to benefit-cost dilemmas is far from trivial in the light of budget constraints and possible changes in the nation's energy priorities. The proportion of the ERP devoted to environmental issues is small but appropriately limited to the collection of data needed for subsequent environmental and economic work. Environmental and economic issues are important ones, but they should be addressed by appropriate collaborations and partnerships as a way of expanding the ERP expertise for the benefit of all governmental decisionmaking related to research extraction and national energy needs. The ERP's Audiences The activities of the ERP are shaped to an important extent by the needs of user groups that depend on its research and assessments. The range of organizations and interested stakeholders includes the following: •   other programs and divisions within the USGS; •   other agencies within DOI, such as BLM, the National Park Service (NPS), MMS, and BIA; •   Congress; •   other federal agencies, principally DOE, USFS, and EPA; •   local and state government agencies, particularly state geological surveys, as well as state oil and gas boards; •   tribal organizations, such as the Council of Energy Resource Tribes; •   the education community, including faculty and students at universities, colleges, and K-12 schools; •   professional societies, such as the American Association of Petroleum Geologists, American Geophysical Union, Geological Society of America, and Society of Exploration Geophysicists; •   the private sector, including corporations and other businesses that explore for, produce, and consume energy resources; •   nonprofit organizations, such as the World Resources Institute and Resources for the Future;

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--> •   foreign governments, international organizations, and other institutions abroad with interests in energy resources; and •   the general public. DOI management believes that a top priority of the ERP is to serve the science needs of other DOI bureaus. This belief is consistent with the view that the primary function of the USGS is to serve the DOI as its science arm. There is no question that the ERP must well serve other DOI bureaus such as the BLM, NPS, BIA, and MMS. Nonetheless, the ERP also has significant responsibilities that support other government agencies, industry, academic institutions, and the public. Because the USGS is a national resource, these responsibilities should not be ignored. The assessment of oil and gas resources for the Arctic National Wildlife Refuge (ANWR; see Sidebar 3.1) is an example of a USGS product that is of interest to a wide range of audiences. Interest in and concern about earth processes, resources, and environments are reaching more segments of the population, and the ERP's expertise should feed this interest. The panel urges the ERP to take all possible steps to make its data and expertise available to its multiple audiences, both inside and outside the DOI. Domestic Versus International Energy Assessments Today the energy market is a global market. As indicated previously, the fraction of U.S. oil that is imported will grow substantially over the next 20 years. Increasing dependence on energy resource supplies from outside the country, in an era of rapidly increasing world energy use caused by a combination of population growth and economic development, calls for a clear understanding of the energy resource endowments of nations that supply the United States with resources. Information about the energy resources of other nations has been gathered by the former U.S. Bureau of Mines, DOE, USGS, and CIA and, at varying levels of detail, by other domestic and foreign public and private organizations. Information provided by these organizations includes reserves, production, consumption, exports, imports, and resource distribution. Within the context of the USGS interest in international geoscience, the ERP has developed a world energy research subprogram that presently focuses on the assessment of world oil and gas resources. Approximately $2.4 million of the current $25 million annual budget is expended on the activities of this subprogram. The subprogram involves many partners, among them DOE, the Department of Defense (DOD), CIA, industry, and foreign governments. Because the balance of domestic and international energy will continue to shift in the decades to come, and because the prices of energy sources will affect crucially what other energy sources are viable, the panel encourages the ERP to evaluate whether the effort on world energy resource assessment and supporting research

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--> SIDEBAR 3.1 A Question of Balance: The Arctic National Wildlife Refuge Balance issues within the ERP are generally not highly political or newsworthy. However, there are specific exceptions when party or government branch differences mesh with public awareness and concern. The development of oil resources in the 1002 area of the Arctic National Wildlife Refuge, which has been a subject of environmental debate for years, is an issue that meets all the criteria for sensitivity and raises balance issues. Administrations and Congress, federal agencies, state agencies, the oil and gas industry, and a wide variety of public interest groups have continuously been at odds over the development of this area on the northern edge of Alaska. The reason for the interest in its development, and the starting point for the debate, is the magnitude of the resource available for development. The USGS believes that its role as the provider of objective resource assessment Information calls for it to develop the most sophisticated and reliable resource estimates possible. This led to a three-year effort involving approximately 40 professionals from the USGS, with collaboration from other experts inside and outside government. The new estimate was larger than the USGS estimate in 1995. Criticism of this effort came from inside and outside the federal government. DOI officials and some members of Congress questioned why such a large effort was undertaken at a time when there were no foreseeable plans to reopen the issue of ANWR development. Others suggested that providing resource information that encourages interest in development is inappropriate for an agency (i.e., DOI) whose primary role is perceived to be a steward of the land and its aesthetic and living resources. This leads to questions of balance. Should significant resource assessment efforts be put into an area that the current administration does not intend to offer for development? Does the interest of the congressional committees in objective resource estimates outweigh this? Is a balance between current policies and long-term need to know appropriate, or should the balance always tilt in favor of developing objective information on a schedule not influenced by the present political climate? Should any DOI analysis about an area's resources be balanced with an assessment of the environmental consequences of developing them? Is it the duty of the USGS to provide this balanced assessment? should be increased above present levels. This evaluation should be performed as the strategic planning effort recommended in Chapter 2 is implemented. Summary The panel recommends that the ERP adopt a portfolio approach in its work on geologically related energy sources. This approach will help the ERP develop its strategic plan to prioritize its work among energy sources and to

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--> determine what level of effort is appropriate in environmental aspects of energy. It also will help the ERP to identify the areas that require continuing effort in basic geological research and to identify its needs for professional expertise across the portfolio range. Successful ERP portfolio development will have a significant and positive impact on the energy future of the United States.