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	<title> - DOMESTIC NATURAL GAS SUPPLY AND DEMAND: THE CONTRIBUTION OF PUBLIC LANDS AND THE OCS</title>
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	[House Hearing, 107 Congress]
	[From the U.S. Government Publishing Office]





	DOMESTIC NATURAL GAS SUPPLY AND DEMAND: THE CONTRIBUTION OF PUBLIC
	LANDS AND THE OCS

	=======================================================================

	OVERSIGHT HEARING

	before the

	SUBCOMMITTEE ON ENERGY AND
	MINERAL RESOURCES

	of the

	COMMITTEE ON RESOURCES
	U.S. HOUSE OF REPRESENTATIVES

	ONE HUNDRED SEVENTH CONGRESS

	FIRST SESSION

	__________

	March 15, 2001

	__________

	Serial No. 107-6

	__________

	Printed for the use of the Committee on Resources



	Available via the World Wide Web: http://www.access.gpo.gov/congress/
	house
	or
	Committee address: http://resourcescommittee.house.gov

	_______

	U.S. GOVERNMENT PRINTING OFFICE
	71-208 WASHINGTON : 2001


	____________________________________________________________________________
	For Sale by the Superintendent of Documents, U.S. Government Printing Office
	Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800
	Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

	COMMITTEE ON RESOURCES

	JAMES V. HANSEN, Utah, Chairman
	NICK J. RAHALL II, West Virginia, Ranking Democrat Member

	Don Young, Alaska, George Miller, California
	Vice Chairman Edward J. Markey, Massachusetts
	W.J. ``Billy'' Tauzin, Louisiana Dale E. Kildee, Michigan
	Jim Saxton, New Jersey Peter A. DeFazio, Oregon
	Elton Gallegly, California Eni F.H. Faleomavaega, American
	John J. Duncan, Jr., Tennessee Samoa
	Joel Hefley, Colorado Neil Abercrombie, Hawaii
	Wayne T. Gilchrest, Maryland Solomon P. Ortiz, Texas
	Ken Calvert, California Frank Pallone, Jr., New Jersey
	Scott McInnis, Colorado Calvin M. Dooley, California
	Richard W. Pombo, California Robert A. Underwood, Guam
	Barbara Cubin, Wyoming Adam Smith, Washington
	George Radanovich, California Donna M. Christensen, Virgin
	Walter B. Jones, Jr., North Islands
	Carolina Ron Kind, Wisconsin
	Mac Thornberry, Texas Jay Inslee, Washington
	Chris Cannon, Utah Grace F. Napolitano, California
	John E. Peterson, Pennsylvania Tom Udall, New Mexico
	Bob Schaffer, Colorado Mark Udall, Colorado
	Jim Gibbons, Nevada Rush D. Holt, New Jersey
	Mark E. Souder, Indiana James P. McGovern, Massachusetts
	Greg Walden, Oregon Anibal Acevedo-Vila, Puerto Rico
	Michael K. Simpson, Idaho Hilda L. Solis, California
	Thomas G. Tancredo, Colorado Brad Carson, Oklahoma
	J.D. Hayworth, Arizona Betty McCollum, Minnesota
	C.L. ``Butch'' Otter, Idaho
	Tom Osborne, Nebraska
	Jeff Flake, Arizona
	Dennis R. Rehberg, Montana

	Allen D. Freemyer, Chief of Staff
	Lisa Pittman, Chief Counsel
	Michael S. Twinchek, Chief Clerk
	James H. Zoia, Democrat Staff Director
	Jeff Petrich, Democrat Chief Counsel
	------

	SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

	BARBARA CUBIN, Wyoming, Chairman
	RON KIND, Wisconsin, Ranking Democrat Member

	W.J. ``Billy'' Tauzin, Louisiana Nick J. Rahall II, West Virginia
	Mac Thornberry, Texas Edward J. Markey, Massachusetts
	Chris Cannon, Utah Solomon P. Ortiz, Texas
	Jim Gibbons, Nevada, Calvin M. Dooley, California
	Vice Chairman Jay Inslee, Washington
	Thomas G. Tancredo, Colorado Grace F. Napolitano, California
	C.L. ``Butch'' Otter, Idaho Brad Carson, Oklahoma
	Jeff Flake, Arizona
	Dennis R. Rehberg, Montana
	------

	C O N T E N T S

	----------
	Page

	Hearing held on March 15, 2001................................... 1

	Statement of Members:
	Cubin, Hon. Barbara, a Representative in Congress from the
	State of Wyoming........................................... 1
	Prepared statement of.................................... 3
	Kind, Hon. Ron, a Representative in Congress from the State
	of Wisconsin............................................... 4
	Prepared statement of.................................... 5
	Markey, Hon. Edward J., a Representative in Congress from the
	State of Massachusetts..................................... 6
	Otter, Hon. C.L. ``Butch'', a Representative in Congress from
	the State of Idaho, Prepared statement of.................. 63

	Statement of Witnesses:
	Alberswerth, David, Director, Bureau of Land Management
	Program, The Wilderness Society............................ 91
	Prepared statement of.................................... 94
	Downey, Marlan W., President, American Association of
	Petroleum Geologists....................................... 75
	Prepared statement of.................................... 77
	Fisher, Robert W., President, Montana Petroleum Association,
	and Senior Vice President/Managing Partner, Ballard
	Petroleum Holdings, LLC.................................... 83
	Prepared statement of.................................... 85
	Hackett, James T., Chairman/President/Chief Executive
	Officer, Ocean Energy, Inc................................. 12
	Prepared statement of.................................... 14
	Papa, Mark, Chairman & CEO, EOG Resources.................... 29
	Prepared statement of.................................... 32
	Simmons, Matthew R., President, Simmons & Company
	International.............................................. 8
	Prepared statement of.................................... 10
	Speer, Lisa, Senior Policy Analyst, Natural Resources Defense
	Council.................................................... 45
	Prepared statement of.................................... 47

	Additional materials supplied:
	Cavaney, Red, President and CEO, The American Petroleum
	Institute, Statement submitted for the record.............. 114
	Powder River Basin Resource Council, Statement submitted for
	the record................................................. 50


	DOMESTIC NATURAL GAS SUPPLY AND DEMAND: THE CONTRIBUTION OF PUBLIC
	LANDS AND THE OCS

	----------


	Thursday, March 15, 2001

	House of Representatives

	Subcommittee on Energy and Mineral Resources

	Committee on Resources

	Washington, DC

	----------

	The Subcommittee met, pursuant to call, at 2:00 p.m., in
	Room 1334, Longworth House Office Building, Hon. Barbara Cubin
	[Chairman of the Subcommittee] presiding.

	STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS
	FROM THE STATE OF WYOMING

	Mrs. Cubin. The oversight hearing by the Subcommittee on
	Energy and Mineral Resources is meeting today to hear testimony
	on domestic natural gas supply and demand and the contribution
	of the public lands and the OCS.
	Under rule 4(g) the Chairman and the Ranking Minority
	Member can make opening statements. If any other Members--and
	you can see there are so many up here, we really need to worry
	about it--have statements, we will include them in the record.
	So, with that, our first hearing for the 107th Congress, we
	meet today in our oversight function for issues concerning
	public lands and mineral resources. Last week the full
	Resources Committee began this inquiry by looking at the role
	of our public lands and power marketing administrations to
	provide a broad spectrum of energy supplies. Our hearing today
	will focus upon the natural gas availability issues, both from
	onshore Federal mineral estate and from the outer continental
	shelf.
	Fifteen months ago an advisory body to the Secretary of
	Energy completed a report entitled ``Meeting the Challenges of
	the Nation's Growing Natural Gas Demand.'' This study examined
	demand-side projections and supply-side forecasts and concluded
	that coordinated action by the Federal Government will be
	necessary to stave off an impending imbalance. That was 15
	months ago. That is, gas producers and pipelines may not be
	able to meet consumers' expectations for this fuel if we don't
	get our act together soon.
	Perhaps the key recommendation of this panel was for the
	President to establish an interagency working group within the
	White House to bring industry representatives and various
	Executive Branch agencies together to discuss the place for
	natural gas and an energy strategy for the Nation. The panel
	believed that interagency squabbles were inhibiting supply,
	particularly from Federal mineral estate in the West and on the
	outer continental shelves. A primary finding of the supply-side
	team was that while sufficient resources exist to meet growing
	demand well into the 21st century, many access restrictions are
	denying significant volumes of gas today, and will continue to
	do so unless administrative and/or legislative action to reduce
	permitting delays occurs.
	I don't need to tell everyone what happened this winter,
	but the NPC guys look like they were pretty good forecasters,
	better than the local TV weathermen actually anyway, the ones
	that said that the 50-year storm was headed our way a week or
	two ago, and then we had a half an inch of snow here. So, the
	NPC did a good job. They warned of this problem by the end of
	this decade, and it is here now.
	One of the President's first initiatives was to ask Vice
	President Cheney to lead an energy policy development group at
	the White House level. He will report on the current state of
	the Nation's energy situation and make recommendations for a
	national energy strategy. The Vice President's report is
	expected next month.
	But, today I would like our Subcommittee to listen to the
	views of industry and economists and the environmental
	community about the role for natural gas. This energy source,
	nicknamed ``the fuel of the future'' by some of the past
	administrations, is an increasingly important fraction of our
	domestic demand. But unlike crude oil and refined petroleum
	products that we import by the tankerload, natural gas is a
	commodity that we must get from North American supplies by way
	of pipeline. Yes, there are a few mothballed LNG port
	facilities in this country, but even if they were refurbished
	and operating, it would still represent a small fraction of the
	demand. And the proposed reopening of just such a facility on
	the western shore of the Chesapeake Bay, right now, is causing
	concerns among Maryland officials because of the proximity to a
	nuclear power plant.
	So, we are talking about getting our gas from the United
	States and Canadian sources, as Mexico is currently a net
	importer of natural gas. So far our neighbors to the north have
	been willing to sell us their gas from Western Canada and more
	recently from offshore of Nova Scotia. Still, this is not
	enough. Perhaps stranded gas from the North Slope of Alaska is
	finally becoming economic to transport to the lower 48 markets,
	but that gas won't make it here for several years to come at
	best.
	But, significant amounts of the estimated natural gas
	resource base is on Federal land or the submerged lands beneath
	the Federal waters of the outer continental shelf. However, it
	seems more and more potentially resource-rich land and
	submerged lands in the United States are closed, both to
	assessment and/or development. Land withdrawals, development
	moratoria and regulatory restrictions on land use prohibit
	development of significant gas resources in areas like the
	eastern front of the Rocky Mountains, the eastern front of the
	Gulf of Mexico and almost all of the Atlantic and Pacific
	submerged lands. Likewise, many promising OCS lands are off
	limits by an Executive Order and congressional moratoria or
	both.
	Our charge is to learn what, if anything, we might do to
	foster exploration for natural gas in prospectively valuable
	areas of the public lands. Can we do it while we are still
	protecting the environment? Are trade-offs worth it to boost
	the usage of favored energy sources? What will happen to our
	national economy if we don't change the culture that has
	hamstrung permitting of resource extraction activities over the
	next decade?
	These are the types of questions that we have to begin to
	address, and we will do that today at this hearing.
	[The prepared statement of Mrs. Cubin follows:]

	Statement of The Honorable Barbara Cubin, Chairman, Subcommittee on
	Energy and Mineral Resources

	The Subcommittee meets today, in our inaugural hearing of the 107th
	Congress, in our oversight function for issues concerning public lands
	energy and mineral resources. Last week the full resources Committee
	began this inquiry by looking at the role of our public lands and power
	marketing administrations to provide a broad spectrum of energy
	supplies. Our hearing today will focus upon natural gas availability
	issues, both from onshore Federal mineral estate and from the outer
	continental shelf.
	Fifteen months ago an advisory body to the Secretary of Energy
	completed a report entitled ``Meeting the Challenges of the Nation's
	Growing Natural Gas Demand.'' This study examined demand-side
	projections and supply-side forecasts and concluded that coordinated
	action by the Federal Government will be necessary to stave off an
	impending imbalance. That is, gas producers and pipelines may not be
	able to meet consumers expectations for this fuel if we don't get our
	act together soon.
	Perhaps the key recommendation of this panel was for the President
	to establish an Interagency Working Group within the White House to
	bring industry representatives and various Executive Branch agencies
	together to discuss the place for natural gas in an energy strategy for
	the nation. The panel believed that inter- agency squabbles were
	inhibiting supply, particularly from Federal mineral estate in the West
	and on the Outer Continental Shelves. A primary finding of the supply-
	side team was that while sufficient resources exist to meet growing
	demand well into the twenty-first century, many access restrictions are
	denying significant volumes of gas today, and will continue to do so
	unless administrative and/or legislative action to reduce permitting
	delays occurs.
	I don't need to tell everyone what happened this winter, but the
	NPC guys look like pretty good forecasters. Better than the local TV
	weathermen anyway who said the 50-year storm was headed our way ten
	days ago and Washington got a quarter-inch of snow. The NPC warned of a
	problem by the end of this decade, and it is here now.
	One of President Bush's first initiatives was to ask Vice President
	Cheney to lead an Energy Policy Development Group at the White House
	level. He will report on the current state of the nation's energy
	situation and to make recommendations for a national energy strategy.
	The Vice President's report is expected next month.
	But, today I'd like our Subcommittee to listen to the views of
	industry and economists, and the environmental community about the role
	for natural gas. This energy source, nicknamed ``the fuel of the
	future'' by some in the past Administration, is an increasingly
	important fraction of our domestic demand. But, unlike crude oil and
	refined petroleum products we import by the tanker load, natural gas is
	a commodity we must get from North American supplies transported by
	pipeline. Yes, there are a few moth-balled liquefied natural gas (LNG)
	port facilities in this country, but even if they were refurbished and
	operating it would represent a small fraction of demand. And the
	proposed reopening of just such a facility on the western shore of the
	Chesapeake Bay is causing concerns among Maryland officials because of
	proximity to a nuclear power plant.
	So, we are talking about getting our gas from U.S. and Canadian
	sources, as Mexico is currently a net importer of natural gas. So far
	our neighbors to the north have been willing to sell us their gas from
	western Canada and more recently from offshore of Nova Scotia. Still
	this is not enough. Perhaps stranded gas from the North Slope of Alaska
	is finally becoming economic to transport to lower-48 markets, but that
	gas won't make it here for several years to come, at best.
	But, significant amounts of the estimated natural gas resource base
	is on Federal land or the submerged lands beneath Federal waters of the
	outer continental shelf. However, it seems more and more potentially
	resource rich land and submerged lands in the United States, are closed
	to both assessment and/or development. Land withdrawals, development
	moratoria, and regulatory restrictions on land use prohibit development
	of significant gas resources in areas like the eastern front of the
	Rocky Mountains, the eastern Gulf of Mexico and almost all of the
	Atlantic and Pacific submerged lands. Likewise, many promising OCS
	areas are off-limits by Executive Order and Congressional moratoria
	both.
	Our charge is to learn what, if anything, we might do to foster
	exploration for natural gas in prospectively valuable areas of the
	public lands. Can we do it while still protecting the environment? Are
	trade-offs worth it to boost the usage of this favored energy resource?
	What will happen to our national economy if we don't ``change the
	culture'' that has hamstrung permitting of resource extraction
	activities over the past decade? These are the types of questions we
	must begin to address at this hearing.
	______

	Mrs. Cubin. The Chair would now like to recognize the
	Ranking Member, Mr. Kind.

	STATEMENT OF HON. RON KIND, A REPRESENTATIVE IN CONGRESS FROM
	THE STATE OF WISCONSIN

	Mr. Kind. Thank you, Madam Chair, and distinguished guests,
	and I am looking forward to what will hopefully prove to be a
	very productive Subcommittee in this session of Congress as we
	have a much needed and long overdue energy policy debate for
	our long-term energy needs in this country. And I think it is
	certainly timely, in light of the President's recent
	announcements regarding carbon dioxide emissions and allowing
	oil and gas exploration on all public lands, for the
	Subcommittee to take a closer look at the question of supply
	and demand of natural gas, and one of the cleaner and more
	abundant energy resources that we have available.
	It is also disappointing to find the President reversing
	himself so early in his tenure on a campaign promise that he
	made to the American people to have power plants reduce carbon
	dioxide emissions in order to meet clean air standards. The
	President has acknowledged that global warming is one of the
	most important environmental challenges that we face, but
	instead of addressing that issue, he has turned his back on it.
	It is equally disheartening to learn that he has stated
	that all public lands, even lands that have been set aside as
	national monuments, can be made available to oil and gas
	exploration.
	This is not a good beginning for a rational and productive
	debate on national energy policy, I believe. The solution to
	this problem is not simply more supply at any cost, as the
	President's recent actions seem to imply. Instead, we need a
	comprehensive and coordinated strategic plan that incorporates
	conservation measures and wise use of our resources. The best
	interests of the American people and the oil and gas industry
	will be better served by a balanced policy that consists of
	promoting exploration and development where it is appropriate,
	while also protecting our natural heritage and biodiversity,
	and fostering conservation and developing alternative and
	renewable energy sources.
	Certainly, natural gas will be a critical component of
	meeting those needs, and Federal lands have historically played
	a very large role in helping meet our needs, producing about 11
	percent of the natural gas produced onshore in the United
	States, while the outer continental shelf currently accounts
	for more than 26 percent of the domestic natural gas
	production, with the Gulf of Mexico OCS producing on average
	over 5.1 trillion cubic feet of natural gas per year.
	Further there has been, according to the Department, a
	nearly 60 percent increase in the production of natural gas on
	Federal onshore lands over the last 7 years, but I am concerned
	that some people believe that much of the Rocky Mountain area
	containing significant gas reserves are off limits or
	unreasonably restricted and therefore prevent oil and gas
	exploration and production. However, the vast majority of the
	restricted lands they cite are off limits only seasonally, to
	provide wildlife protection, for example. That is just not
	accurate to say there is no access to those lands or that
	somehow such restrictions prohibit production in the long run.
	Moreover, this line of reasoning appears to suggest that the
	oil and gas producers are in a better position than wildlife
	managers, for instance, many of whom are State fish and game
	professionals, to determine when exploration, drilling and
	production should occur in an environmentally sensitive manner.
	If we are to continue America's economic growth and
	continue creating jobs and wealth across the country, we need
	the affordable, reliable energy that fuels our economy and
	supports our way of life. If necessary, Congress can develop
	cost-effective, environmentally sound mechanisms for increasing
	domestic supply, but increasing supply, especially by opening
	up protected areas such as national monuments or ANWR, is
	neither the only nor primary answer, I feel. Environmental
	concerns have to be addressed. We will not solve our energy
	problems by opening up currently protected areas or ignoring
	wildlife needs.
	I thank the panelists for your testimony here today. I look
	forward to constructive engagement on these very important
	issues, and I thank the Chair for yielding me the time.
	Mrs. Cubin. Thank you, Mr. Kind.
	[The prepared statement of Mr. Kind follows:]

	Statement of The Honorable Ron Kind, Ranking Democrat, Subcommittee on
	Energy and Mineral Resources

	Madame Chair, distinguished guests, it is certainly timely, in
	light of the President's recent announcements regarding carbon dioxide
	emissions and allowing oil and gas exploration on all public lands, for
	the Subcommittee to take a closer look at the question of supply and
	demand of natural gas, one of the cleaner and more abundant energy
	sources.
	It is disappointing to find the President reversing himself so
	early in his tenure on a campaign promise he made to the American
	people to have power plants reduce carbon dioxide emissions in order to
	meet clean air standards. The President has acknowledged that global
	warming is one of the most important environmental challenges we face,
	but instead of addressing that issue; he has turned his back on it.
	It is equally disheartening to learn that he has stated that all
	public lands--- even lands that have been set aside as national
	monuments---can be made available to the oil and gas industry.
	This is not a good beginning for a rational and productive debate
	on national energy policy. The solution to this problem is not simply
	more supply at any cost as the President's recent actions seem to
	imply. Instead, we need a comprehensive and coordinated strategic plan
	that incorporates conservation, and wise use of our resources.
	The best interest of the American people and the oil and gas
	industry will be better served by a balanced policy that consists of
	promoting exploration and development where appropriate, while also
	protecting our natural heritage and bio- diversity, and fostering
	conservation and developing alternative energy sources.
	Certainly natural gas will be a critical component of meeting those
	needs. Presently natural gas provides nearly a quarter of the Nation's
	energy needs. The Energy Information Agency, National Petroleum
	Council, Gas Research Institute, and others forecast significant
	increases in future domestic gas demand to as much as 29 trillion cubic
	feet by 2010.
	According to the Department of the Interior, the U.S. is mostly
	self-sufficient in meeting an annual domestic demand for 22 trillion
	cubic feet of natural gas, of which the United States imports 3.4
	trillion cubic feet almost exclusively from Canada.
	Federal lands have historically played a large role in helping meet
	our needs, producing about 11 percent of the natural gas produced
	onshore in the United States while the Outer Continental Shelf
	currently accounts for more than 26 percent of domestic natural gas
	production, with the Gulf of Mexico OCS producing, on average, over 5.1
	trillion cubic feet of natural gas per year. Further, there has been,
	according to the Department, a nearly 60 percent increase in the
	production of natural gas on Federal onshore lands over the past 7
	years.
	Within the North Slope of Alaska, the Minerals Management Service
	estimates that there is more than 26 trillion cubic feet of stranded
	natural gas reserves. This equals nearly 21 percent of the total proven
	onshore and offshore reserves of the Lower 48 States. The entire gas
	endowment of Prudhoe Bay has been cycled through the oil field
	infrastructure since 1977 to enhance oil recovery. Gross gas production
	on the North Slope in 1999 averaged 8.7 billion cubic feet per day that
	is just 1 billion cubic feet less than total net imports to the US in
	1999. Until we can transport this gas to the Lower 48, it is premature
	to even discuss exploration in ANWR.
	But I am concerned that some of our witnesses today believe that
	much of the Rocky Mountain area containing significant gas reserves are
	off-limits or unreasonably restricted and therefore prevent oil and gas
	production. However, the vast majority of the ``restricted'' lands they
	cite are off-limits seasonally, for example, to provide wildlife
	protection.
	It is not accurate to say that there is no access to those lands,
	or that somehow such restrictions prohibit production in the long run.
	Moreover, this line of reasoning appears to suggest that oil and gas
	producers are in a better position than wildlife managers--many of who
	are state fish and game professionals--to determine when exploration,
	drilling and production should occur in an environmentally sensitive
	manner.
	If we are to continue America's economic growth and continue
	creating jobs and wealth across the country, we need the affordable,
	reliable energy that fuels our economy and supports our way of life. If
	necessary Congress can develop cost-effective, environmentally sound
	mechanisms for increasing domestic supply. But, increasing supply---
	especially by opening up protected areas, such as national monuments or
	ANWR---is neither the only nor the primary answer. Environmental
	concerns must be addressed; we will not solve our energy problems by
	opening up currently protected areas or ignoring wildlife needs.
	______

	Mrs. Cubin. As the Committee knows, the rules are that only
	the Chair and the Ranking Member give opening statements, but
	since there are so few of us here, if any other Members would
	like to give an opening statement, I would like to welcome them
	to do that.
	Mr. Markey.

	STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
	CONGRESS FROM THE STATE OF MASSACHUSETTS

	Mr. Markey. Thank you, Madam Chair, very much. I see from
	press reports just two days ago that President Bush called for
	allowing drilling for oil and gas on all public lands,
	including some areas presently designated as national
	monuments. So I suppose we soon may have to rename some of our
	national monuments to reflect their new status. The Statue of
	Liberty National Monument, for example, could become the Statue
	of Fossil Fuels Production National Monument, with an actual
	flame burning on the top of the torch. What an inspiring symbol
	that would be of the Bush Administration's public lands policy.
	Of course, we would have to change the inscription to read,
	give me your drill bits, your rigs, your huddled oil companies
	yearning to drill free, to dump their wretched refuse on our
	pristine shores. Send your well-heeled executives to me. I lift
	their lamps besides their golden doors.
	Mrs. Cubin. He means well.
	Mr. Markey. Now I am told in looking at this great threat
	that exists in the lower 48 that we have 1,466 trillion cubic
	feet of natural gas that unfortunately cannot be exploited,
	which is really a shame when you hear about it, you know.
	Sounds like a great tragedy and a loss, and we probably would
	become completely energy-dependent on OPEC. But the closer you
	look at the numbers, Madam Chair, you find out that 1,361 of
	the 1,466 are now accessible, but the obsession, of course, is
	with the 105 that are not accessible, and I guess the question
	is, why don't they go after the 1,361 trillion cubic feet first
	which have yet to be exploited before we have the debate over
	the 105? And I think that those are the issues, that is, the
	sequencing of the drilling, that have to be dealt with first.
	We know that this 30- to 40 trillion cubic feet of natural
	gas in Prudhoe Bay in Alaska that we all agree should be
	exploited. There is between 60- and 100 trillion cubic feet of
	natural gas off of Nova Scotia. There are scores of trillions
	of cubic feet down in Trinidad that we could create a policy
	for liquefying to bring into the East and gulf coast of the
	United States to deal with that issue.
	And I think these hearings are going to help us put
	together a comprehensive policy where we are looking at all of
	these sources in a way that I think is going to minimize this
	final 100- or 150 trillion cubic feet and realize that we can
	solve the problem if we use our heads in working together in a
	bipartisan fashion as we did in Alaska where the environmental
	impact statement was actually approved 18 years ago to bring
	down the natural gas from Alaska, but yet the industry hasn't
	built the pipeline yet. And I think the first set of questions
	have to go to them so they can tell us why they haven't built
	the pipelines where it is already approved before we open up
	the most sacred lands in our country.
	I thank you, Madam Chair.
	Mrs. Cubin. Certainly welcome your comments, Mr. Markey,
	anytime.
	Mrs. Cubin. The Chair now would like to introduce the first
	panel: Matthew Simmons, the President of Simmons and Company
	International; Mr. James Hackett, Chairman, President and Chief
	Executive Officer of Ocean Energy, Inc.; Mark Papa, Chairman
	and CEO of EOG Resources; and Lisa Speer, Staff Attorney for
	Natural Resources Defense Council. I will first call on Mr.
	Simmons.
	The Chair would like to remind you that your entire
	statement will be included in the record, and if you would
	please limit your oral presentation to five minutes.

	STATEMENT OF MATTHEW R. SIMMONS, PRESIDENT, SIMMONS & COMPANY
	INTERNATIONAL

	Mr. Simmons. I commend this Committee for having this
	hearing today. The current supply-demand balance for North
	American natural gas is precarious. Supply has now fallen
	behind demand, and to make up this shortfall the country has
	withdrawn record amounts of natural gas storage, leaving us
	already at record low levels of gas storage with still weeks of
	cold weather still probably to come before the industry begins
	an arduous task of trying to refill its storage system before
	the summer air conditioning gas needs kick in.
	Drilling for natural gas is at the highest level since the
	drilling collapse of 1982, yet thus far there has been no
	supply response. Canada is a year ahead of the U.S. in setting
	new records for gas drilling, but has also yet to see any
	significant supply response. There is a widespread hope that
	this supply response is just around the corner, but a growing
	number of industry experts, particularly those actually
	drilling these record number of wells, are beginning to
	question whether the current rig fleet and acreage available
	for drilling are adequate to create significant supply
	additions beyond the current base.
	There is a distinct possibility that five years hence North
	American natural gas supply base will be less than what we
	enjoy today.
	A week ago the Department of Energy held a 2-day workshop
	to review the natural gas industry today pursuant to the
	various assumptions that went into creating the NPC report on
	natural gas's long-term outlook. The findings were grim. Demand
	is outpacing the NPC estimates, while supply lags. A rig
	shortage has emerged some five to seven years earlier than the
	NPC report envisioned. People shortages are now becoming
	severe. Access to potential added gas reserves have been even
	more restricted. More troublesome is the fact that more new
	natural gas-fired power plants are now on order to be online by
	2002 than the NPC model assumed would be onstream by 2010. Few
	have any plants or facilities for any fuel-switching
	capability.
	This adds up to a possible need for up to 30 TCF of natural
	gas by as early as 2005. Adding so much supply is impossible.
	Reaching the 30 TCF market even in 2010 is a question. There is
	a risk that many parts of our country could be short of
	electricity capacity for up to a decade. Nothing highlights the
	urgency of finding fresh supplies of natural gas more than the
	prospect of long-term electricity rationing.
	The natural gas supply is particularly threatened by
	increasing evidence that the current supply base is now
	declining at a rate where half the current supply will be
	consumed by 2005. This means that 50 percent or 25 BCF of gas
	per day of new gas production needs to be added merely to keep
	the current supply base flat. In this context it is hard to
	exaggerate the importance of OCS energy resources.
	Natural gas from our continental shelf makes up 25 percent
	of domestic supply; 85 percent of this comes from the Gulf of
	Mexico shelf, the balance from deep water, but the shelf supply
	has one of the country's highest decline rates. What is now 11
	BCF a day will likely decline to only 3 BCF a day by 2005.
	Whether this can realistically be replaced by ever higher
	drilling activity in this mature area is questionable for two
	reasons.
	First, the number of offshore rigs is now near a 100
	percent utilization. Second, the finds each year are
	diminishing. Deepwater gas is growing from almost nothing at
	the start of the 1990s to over 2 BCF a day and projected to
	grow as high as 5 by 2005. If these aggressive targets were
	met, they would still only account for 10 percent of the U.S.
	Supply base.
	But complex technical issues to develop these deepwater
	resources still remain unsolved. Leading this list is an
	ability to strip associated gas from deepwater oil and how to
	transport this dry gas from water depths up to 10,000 feet.
	This highlights and underscores the importance of developing
	natural gas reserves in the highly gas-prone part, eastern part
	of the Gulf, an area that has been off limits to any
	hydrocarbon exploration for over a decade.
	The Clinton Administration placed a moratorium on any lease
	sales in the eastern portion of the Gulf through 2012 with the
	exception of a block of acreage planned for leasing this
	December. Lease Sale 181 is critical to help resolve America's
	pending natural gas crisis. It is extremely important to
	prevent Florida and Georgia from experiencing the awful energy
	problems now facing California.
	The Rocky Mountain States are another critically important
	area, but 40 percent of their reserves lie in Federal lands
	currently unavailable for any development. Much of these
	remaining reserves are burdened by cumbersome and lengthy
	permitting delays and other restrictions.
	Alaskan natural gas has suddenly become another critical
	portion of our fragile energy equation. For the past 30 years
	Alaskan energy just simply meant oil. Now Arctic gas could
	become invaluable.
	The Department of the Interior is about to begin a careful
	and detailed inventory of onshore natural gas potential. This
	inventory needs to be extended to the entire offshore waters of
	the U.S. Whether or not any of the potential reserves get
	developed is another issue, but unless an effort is made to
	test the potential, the country will never know how much
	natural gas we might have.
	Despite record levels of the drilling and remarkable
	technology advances and safer and more efficient drilling, the
	amount of exploration wells has fallen to less than 10 percent
	of wells drilled, and the exploration success is still less
	than 35 percent. The cost to drill new wells is rising even
	though drilling economics are not good enough to justify
	contractors building new rigs.
	Unless these problems are tackled quickly, America faces a
	genuine energy crisis that could last for over a decade. As
	natural gas becomes even more scarce, energy wars could erupt
	between various States reminiscent of the water wars between
	the Western States when the Colorado River dam system was
	created. These are unpleasant comments to make at such an
	important congressional hearing, but they are real issues, and
	they are serious issues. I appreciate the opportunity of
	sharing these concerns with this Committee.
	Mrs. Cubin. Thank you, Mr. Simmons.
	[The prepared statement of Mr. Simmons follows:]

	Statement of Matthew R. Simmons, President, Simmons & Company
	International

	I am Matthew Simmons, President of Simmons & Company International,
	a specialized energy investment bank. I have spent the past 28 years
	focusing exclusively on energy related investment banking and research.
	I am a member of the National Petroleum Council and was a member of the
	Bush-Cheney Energy Transition Advisory Committee. I also am a past
	Chairman of the National Ocean Industry Association. I served as the
	Demand Task Force Chairman on the National Petroleum Council's
	extremely important review of natural gas and the challenges we face in
	addressing a future market likely to exceed 30 TCF per year.
	I commend this Committee for holding these hearings today. The
	current supply demand balance for North American natural gas is
	precarious. Over the course of the past year, supply has fallen behind
	demand despite a significant number of natural gas users abandoning
	this precious fuel source because its price has soared. To make up this
	shortfall, the country has withdrawn record amounts from natural gas
	storage facilities. The country now has the lowest amount of gas
	storage in modern history with weeks of cold weather probably still to
	come before the industry begins the arduous task of trying to re-fill
	its storage system before the summer air-conditioning gas needs kick
	in.
	Drilling for natural gas is at the highest levels since drilling
	collapsed in 1982. Yet, thus far, there has been no supply response.
	Canada is a year ahead of the United States in setting new records for
	gas drilling, but has also yet to see any supply response.
	There is a widespread belief, or at least a hope, that such a
	supply response will arrive shortly. But a growing number of industry
	experts, particularly those actually drilling these record number of
	wells, are beginning to question whether the current rig fleet and
	acreage available for drilling are adequate to create significant
	supply additions beyond the current production base. There is a
	distinct possibility that five years hence, North America's natural gas
	supply base will be less than what we enjoy today.
	A week ago, the Department of Energy held a two-day workshop to
	review the natural gas industry today, pursuant to the various
	assumptions that went into creating the NPC report on natural gas long
	term outlook which was published just over a year ago. The findings
	were grim. Demand is outpacing the NPC estimates while supplies lag. A
	rig shortage is emerging some five to 7 years earlier than the NPC
	reported envisioned. People shortages are now becoming severe. Access
	to potential added gas reserves has been even more restricted,
	particularly with the new roadless policies and the potential challenge
	to the important upcoming lease sale in the Eastern portion of the Gulf
	of Mexico.
	More troublesome is the fact that more new natural gas-fired power
	plants are now on order to be on-line by 2002 than the NPC model
	assumed would be on-stream by 2010! Few have any plans or facilities
	for any fuel-switching capability. There is growing evidence, or at
	least strong suspicion, that many of these new gas-fired plants were
	originally built as merely peaking plants but now will be forced to
	become defacto quasi-base load plants in an electricity generation
	scarcity world.
	This adds up to a possible need for up to 30 TCF of natural gas by
	as early as 2005. Unless a supply miracle soon arrives, the Nation's
	ability to increase its use of electricity is severely threatened.
	There is a risk that many parts of our country could be short of
	electricity capacity for up to a decade. Nothing highlights the urgency
	of finding fresh supplies of natural gas more than the prospect of long
	term electricity rationing.
	The natural gas supply is particularly threatened by increasing
	evidence that the current supply base is now declining at a rate where
	half of the current supply will be consumed by 2005. This means that 50
	percent, or 25 BCF per day of new gas production needs to be added
	merely to keep the current base flat.
	THE IMPORTANCE OF OCS RESOURCES
	Natural gas from our Outer Continental Shelf remains the backbone
	of our domestic supply. Over 13 BCF per day come from these waters,
	making up about 25 percent of total domestic supply. 85 percent of this
	supply comes from the Gulf of Mexico's shelf. The balance comes from
	deep water gas. The supply from the shelf has one of the country's
	highest decline rates. What is now 11 BCF per day will likely decline
	to only three BCF per day by 2005. Whether this can realistically be
	replaced by ever higher drilling activity in this mature area is
	questionable for two reasons. First, the number of offshore rigs is now
	at near 100 percent utilization. Second, the finds each year are
	diminishing.
	Deepwater gas has grown from almost nothing at the start of the
	1990's to over two BCF per day today and is projected to grow to as
	high as five BCF per day by 2005. If these aggressive targets were met,
	they would still only account for 10 percent of the U.S. base in 2000.
	Furthermore, some complex technical issues still remain unsolved.
	Leading this list is an ability to strip associated gas from deepwater
	oil and how to transport this dry gas from water depths up to 10,000
	feet.
	This highlights and underscores the importance of developing the
	natural gas reserves in the eastern part of the Gulf, an area that has
	been off-limits to any hydrocarbon exploration for over a decade. The
	Clinton Administration placed a moratorium on any lease sales in the
	eastern portion of the Gulf through 2012 with the exception of a block
	of acreage planned for leasing this December. Lease Sale 181 is
	critical to help resolve America's pending natural gas crisis. It is
	extremely important to prevent Florida and Georgia from also
	experiencing the awful energy problems now facing California.
	FEDERAL LANDS ARE ALSO CRITICALLY IMPORTANT
	The Rocky Mountain states represent another critically important
	gas prone area. But, 40 percent of their potential gas reserves lie in
	Federal Lands currently unavailable for any development. Much of the
	remaining reserves are burdened by cumbersome and lengthy permitting
	delays and other restrictions.
	Alaskan natural gas has suddenly become another critical part of
	our fragile energy equation. For the past 30 years, Alaskan energy
	meant simply oil. Now, its potentially vast gas resources are an
	important resource. But to get this gas out of the ground, wells need
	to be drilled in areas beyond the Prudhoe Bay region because much of
	this area's gas may need to be re-injected to prop up a sagging, old
	oil production. This puts added emphasis on the importance of opening
	up ANWR and promptly resolving the pipeline route and considering the
	possibility of constructing two pipelines so both Alaskan and Beaufort
	Sea gas can be transported to a gas hungry USA.
	The Department of Interior is about to begin a careful and detailed
	inventory of onshore natural gas reserve potential. This exercise is
	extremely important but it also needs to be extended to the entire
	offshore waters of the U.S. Whether any of the potential reserves this
	inventory might uncover get developed is another issue, but unless an
	effort is made to test the potential, the country will never know how
	much natural gas we might have available to curtail a terrible risk to
	our economy's well being.
	Natural gas is the most precious energy source in North America. It
	is the most environmentally friendly real energy source we have. There
	is no geo-political risk to this energy supply. But getting it produced
	is a difficult task, even if all access problems are quickly resolved.
	Despite record levels of drilling and remarkable technology
	advances in safer and more efficient drilling, the amount of
	exploration wells has fallen to less than 10 percent of all wells
	drilled, and the exploration success rate is still less than 35
	percent. This means that 65 of every 100 exploratory wells drilled
	fail. The cost to drill new wells is rising even though drilling
	economics are not good enough to justify contractors building new rigs
	or paying wages high enough to attract a new generation of people to
	operate the rigs and develop the prospects.
	Unless these problems are tackled quickly, America faces a genuine
	energy crisis that could last for over a decade. Even if the problems
	of access are resolved, it might be too late to avoid a crisis for the
	next several years. But, any delay in resolving all the obstacles to
	growing fresh gas supplies merely extend and increase the crisis.
	As natural gas supply becomes ever more scarce, energy wars could
	erupt between various states reminiscent of the water wars between
	western states as the Colorado river dam system was created. Texas, for
	instance, has done a remarkably good job in building ample new gas-
	fired power plants to safely supply its growing electricity needs. But
	as these plants come on-line, more and more of Texas natural gas supply
	needs to stay within Texas. This will cutoff supplies which other
	states now take for granted.
	These are unpleasant comments to make at such an important
	congressional hearing but they are real issues and serious issues. I
	appreciate the opportunity to share my concerns with this Committee and
	urge all of you to help resolve this crisis.
	______

	Mrs. Cubin. The Chair now recognizes Mr. Hackett to
	testify.

	STATEMENT OF JAMES T. HACKETT, CHAIRMAN/PRESIDENT/CHIEF
	EXECUTIVE OFFICER, OCEAN ENERGY, INC.

	Mr. Hackett. Thank you, Madam Chairman. On behalf of the 22
	companies that are part of the Domestic Petroleum Council,
	independent oil and gas companies, I want to give some comments
	about the situation we are facing, and I am going to skip
	around a little bit, given Matt's summary at the beginning.
	On page 4, if you would, the Department of Energy-sponsored
	NPC study concluded that the North American natural gas
	resource base is sufficient to meet the projected growth and
	demand for natural gas, which Congressman Markey remarked as
	well. However, this ability is very dependent on industry and
	government positively addressing seven key challenges, which
	are in front of you on the slide on top. Access to resources
	tops this list.
	Page 5 shows that access to the resource base and to rights
	of way for infrastructure is critical for sustainable supply.
	Of the lower 48 resource base cited in the NPC study,
	approximately 47 percent is owned by the Federal Government.
	But the resource base under Federal Government lands is far
	more critical than that percentage might imply.
	The map illustrates the total lower 48 natural gas resource
	base and the percentages of it that are either completely off
	limits or importantly is access-restricted according to the NPC
	study. As can be seen on the map on page 6, a significant
	portion of the Rocky Mountain area, including some 76 percent
	of the natural gas resources, is owned by the Federal
	Government.
	Let me give you some examples of restrictions that we
	believe can and must be dealt with.
	Last year Bureau of Land Management officials in New Mexico
	announced new criteria for approval of applications for permits
	to drill in the San Juan Basin, while the BLM conducted a new
	environmental impact statement in preparation for updating its
	resource management plan. Had the criteria, including announced
	moratoria on some applications, been put into effect as
	announced, critical California gas supply from this mature
	producing area would have been lost in the recent crisis.
	Another prime example of this type of regulatory problem is
	illustrated by the time line chart you see on page 7 for BLM
	lands in southwest Wyoming. With the layering of wildlife
	protection and other environmental restrictions, you can see
	that there are only limited periods in which necessary gas
	exploration and production drilling by the industry can occur.
	Much of the land we are discussing is like that shown on
	page 8 at the top in Wyoming. With our current technology we
	can explore and produce gas on these lands with much smaller
	drilling locations. Also improved geoscience technology allows
	us to better target promising geologic formations below ground
	so we drill fewer wells to develop larger producing fields, but
	we still must drill to find and produce gas. Then we must and
	do reclaim the land back to its original condition.
	Now, an important word about the offshore appears on page
	9. As the NPC study pointed out and Matt referred to, as we in
	our industry know, with two of our three coasts completely off
	limits to exploration and production, the Gulf of Mexico,
	including its deep waters, will be crucial in meeting gas
	demand. Lease Sale 181 in the eastern Gulf of Mexico scheduled
	for December of this year provides a good example of what we
	need to be doing. It alone can make a significant contribution
	to providing natural gas to the Nation and the surrounding
	region to meet increasing electricity generation needs with a
	more clean-burning and environmentally safe fuel than any other
	alternative.
	The chart on page 10 illustrates the NPC's projection of
	the impact of access restrictions in the eastern Gulf of
	Mexico. Shown here on the bottom red line is the impact if Sale
	181 does not happen. Our Nation will suffer if the sale doesn't
	proceed as planned.
	Page 11 shows that over the past decade production from the
	wells we have drilled every year has declined more sharply.
	This means that the number of wells to be drilled will have to
	increase even beyond current high levels to meet projected
	demand. This can only be achieved through billions of dollars
	of investments by companies such as ours, but it will be a
	limited exercise without greater access to the U.S. resource
	base.
	As shown on page 13, producers are responding to market
	signals by spending billions of dollars putting additional gas
	rigs to work to meet consumer demand, but this pace will
	decelerate without more access to new inventory.
	On page 14 appear our recommendations to the administration
	about several steps to be taken to seek better coordination of
	energy permitting.
	In addition, on page 15 we support the ongoing
	congressionally mandated inventory of energy resources on
	Federal Government lands, but it needs to be expedited. Even
	more importantly, Congress and the administration should use
	the time during which the inventory is being undertaken to
	consider whether there should be a simplified process to allow
	States and their congressional delegations to seek removal of
	the access restrictions where there is little or no other
	benefit from the restriction, but the very real detriment of
	not producing critically needed energy supplies. The U.S.
	Government also needs to improve permitting processes and
	coordination.
	I appreciate the opportunity to be with you to discuss the
	Nation's energy challenges. All of us that are producers care
	as much about consumers as we do about producers. We are one of
	both. Thank you.
	Mrs. Cubin. Thank you, Mr. Hackett.
	[The prepared statement of Mr. Hackett follows:]

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	Mrs. Cubin. The Chair now recognizes Mr. Papa to testify.

	STATEMENT OF MARK PAPA, CHAIRMAN & CEO, EOG RESOURCES

	Mr. Papa. Madam Chairman, members of the Committee, I am
	Mark Papa, Chairman of the EOG Resources of Houston Texas.
	Today I am testifying on behalf of the Independent Petroleum
	Association of America, IPAA, National Stripper Well
	Association and 32 cooperating State and regional oil and gas
	associations. These organizations represent the thousands of
	independent petroleum and natural gas producers that drill 85
	percent of the wells, produce 40 percent of the oil and 65
	percent of the natural gas in the United States.
	This issue is particularly important to my company, EOG
	Resources, because we are at the forefront of the effort to
	develop new domestic gas reserves. During the past three years,
	EOG has ranked either number one or number two of all companies
	in terms of footage drilled in the U.S. looking for new gas
	reserves.
	Today's hearing addresses the impediments to developing
	domestic natural gas supply because access to the national
	resource base is prohibited or constrained. Much of the
	Nation's gas underlies Federal-controlled land both offshore
	and onshore. Policies in these areas have constrained or
	prohibited access largely based on fears of environmental harm.
	But these resources can be developed in an environmentally
	sound and sensitive manner. The Department of Energy recently
	released a comprehensive report, Environmental Benefits of
	Advanced Oil and Gas Exploration and Production Technology,
	demonstrating that the technology is available to preclude
	environmental damage. This technology is currently being
	employed when exploration is allowed. However, without policy
	changes the Nation may face a gas supply challenge.
	The National Petroleum Council's natural gas study projects
	demand increasing by over 30 percent during the next 15 years.
	This will require not only finding and developing resources to
	meet this higher demand, but also to replace the current
	depleting resource.
	While many analysts are focusing on how much natural gas
	demand will grow, it is equally important to recognize what is
	happening to supply. All natural gas wells begin to deplete as
	soon as they come on production. In fact, depletion rates for
	all U.S. production have increased from 16 percent in 1990 to
	23 percent today. In simple terms, this means that the domestic
	natural gas industry is on an ever-increasing depletion
	treadmill, and the reserves underlying Federal lands become
	that much more important.
	Let me address both offshore and onshore land use issues,
	and I will start with offshore. Currently over 75 trillion
	cubic feet, TCF, of natural gas in the offshore is off limits
	to development because of moratoria that are based on
	technologies that have been replaced decades ago. It is
	essential that those areas of the offshore that are scheduled
	for leasing remain accessible.
	Specifically, Lease Sale 181 lying off the Alabama coast
	must be undertaken. Unfortunately after years of negotiation to
	allow this lease sale, uncertainty remains as to regarding the
	political efforts that may be made to halt this sale. Lease
	Sale 181 is projected to be a significant natural gas area with
	estimated reserves of about 8 trillion cubic feet, enough
	natural gas to fuel Florida's 5.9 million households for 16
	years. To prevent the sale in view of the extraordinary
	environmental safety record of the Gulf of Mexico operations
	would be a tragic energy policy decision.
	Onshore the NPC natural gas study estimates the development
	of over 137 trillion cubic feet of natural gas under
	government-controlled land in the Rockies is restricted or
	prohibited. It is important to understand that access to these
	resources is limited by more than just one moratoria. The
	constraints differ. Monument and wilderness designations
	clearly prohibit access to some areas. Regulations like the
	Forest Service roadless policy and prohibitions in the Lewis
	and Clark National Forest are equally absolute.
	Let me discuss the Lewis and Clark National Forest for a
	moment as a specific example. The Rocky Mountain Division of
	the Lewis and Clark National Forest is estimated to contain
	large amounts of natural gas. The 1986 forest management plan
	anticipated development of this resource and made it an
	objective. In 1996, the Forest Service published a draft EIS
	with a preferred alternative that would allowed limited
	environmentally sensitive leasing. In 1997, the Forest Service
	published the final EIS, adding additional environmental
	protections to the preferred alternative.
	Notwithstanding these additional restrictions, the Lewis
	and Clark National Forest supervisor decided that no oil and
	gas leasing in this area would be permitted. The Forest Service
	amended the forest management plan without further public
	comment, deeming the decision to exempt the Rocky Mountain
	Division from leasing insignificant.
	These types of decisions obviously generate adverse energy
	supply consequences.
	Regarding onshore Federal lands, we offer both the short-
	and long-term recommendations. In the short term, additional
	BLM personnel are needed to process the increased number of
	permits that are being generated as the industry responds to
	supply challenges, and regarding our company, I can
	specifically mention the Rawlins and Pinedale offices in your
	home State, Madam Chairman, and also the Vernal, Utah, offices
	as areas where we have a potential backlog of getting permits
	done.
	Long term there are several policy decisions that need to
	be dealt with. We need a commitment to assure that government
	actions are developed with full recognition of the consequences
	to natural gas and other energy supplies. IPAA believes that
	all Federal decisions, regulatory guidance, environmental
	impact statements, Federal land management plans should
	identify at the outset the implications of the actions on
	energy supply. These implications should be clear to the
	decision-maker. Such an approach does not alter the mandates of
	the underlying law compelling the Federal action, but it would
	likely result in developing options that would minimize adverse
	energy consequences.
	In conclusion, it is time for this county to develop a
	sound future policy. Certainly there is room in such a policy
	for sound energy conservation measures and protection of the
	environment, but energy production, particularly petroleum and
	natural gas, is an essential component that must be included
	and addressed.
	Thank you for considering these comments.
	Mrs. Cubin. Thank you, Mr. Papa.
	[The prepared statement of Mr. Papa follows:]

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	Mrs. Cubin. The Chair now recognizes Ms. Speer for her
	testimony.

	STATEMENT OF LISA SPEER, STAFF ATTORNEY, NATURAL RESOURCES
	DEFENSE COUNCIL

	Ms. Speer. Thank you. My name is Lisa Speer. I am Senior
	Policy Analyst with the Natural Resources Defense Council. NRDC
	is a national nonprofit organization dedicated to protecting
	the environment and public health. My testimony today is on the
	environmental impacts and other environmental issues related to
	oil and gas or gas exploration and development on the outer
	continental shelf. My colleague, Dave Alberswerth, will deal
	with gas development onshore.
	Our Nation faces important challenges in the coming year.
	With California dealing with an energy crisis and natural gas
	prices shooting up for many, many people, it is time for this
	country to come together and develop a comprehensive national
	energy strategy.
	Two distinct visions of what that strategy should look like
	have emerged. One vision focuses on extracting as much energy
	as possible, principally in the form of fossil fuels, in the
	hope that we can somehow drill our way out of our energy woes.
	An alternative vision calls for encouraging innovative and new
	technologies to meet our energy needs in an environmentally
	responsible manner.
	NRDC believes that U.S. energy policy must rely on the
	application of readily available, currently available
	technology as a way to reduce consumption. Such an approach
	will decrease America's reliance on foreign sources of energy,
	protect the environment, provide for our energy needs and
	buffer the economy against short-term swings in the market.
	NRDC recently published a report called ``A Responsible
	Energy Policy for the 21st Century,'' which discusses these
	issues in detail. I would like to submit it for the record, if
	I might. (NOTE: This report is available for viewing in the
	Committee's official files.)
	Turning to natural gas development on the OCS, some people
	argue that we should move ahead to open protected areas of the
	OCS to natural gas development. They argue that natural gas--
	the risk of oil spills when developing natural gas is
	negligible, and, therefore, natural gas development can proceed
	in an environmentally benign fashion. This argument ignores the
	fact that oil spills are not the only concern with respect to
	natural gas development on the outer continental shelf.
	OCS gas development, like oil development, can have
	substantial environmental impacts. For example, offshore
	activity, be it for oil or for gas, frequently entails
	extensive onshore infrastructure in the form of roads,
	pipelines, processing facilities, waste-handling facilities and
	other industrial infrastructure. This infrastructure can cause
	significant harm to the coastal zone. For example, OCS
	pipelines crossing wetlands in the Gulf of Mexico are estimated
	to have destroyed more coastal salt marsh than exists from New
	Jersey to Maine.
	Moreover, the industrial character of offshore oil and gas
	development is often at odds with the existing economic base of
	affected coastal communities, many of which rely on coastal
	tourism, fishing and recreation.
	Air and water pollution is a second issue. Offshore
	operations for oil or gas generates tremendous amount of waste,
	some of which contains a variety of pollutants, including toxic
	pollutants. Air pollution is also generated in significant
	amounts by offshore oil and gas drilling rigs as well as
	production platforms.
	And then there is the possibility of an oil spill. There is
	always the possibility of finding oil when searching for gas.
	We know of no instance where a lease has prohibited the
	development of oil in a gas-prone region, and we are not aware
	of any company ever agreeing to such a restriction in the
	history of the OCS program. If oil is found, the possibility of
	spills exists. According to the Department of the Interior,
	some 3 million gallons of oil have spilled from OCS oil and gas
	operations between 1980 and 1999.
	Concerns over these impacts have led many States and their
	congressional delegations to oppose OCS development off their
	coasts. Since 1981, Congress and two Presidents have imposed
	restrictions on OCS leasing in sensitive areas off of our
	coasts. These moratoria now protect the eastern and western
	coast of United States, much of the eastern Gulf of Mexico and
	Bristol Bay, Alaska. They represent a clearly established
	consensus on where OCS development should take place in this
	country. They have been endorsed by a broad array of elected
	officials from former President George Bush to Governor Jeb
	Bush, from Governor Knowles of Alaska to Governor King of Maine
	and from Governor Davis in California and Governor Bush in
	Florida.
	We strongly oppose any attempt to lift the moratoria to
	promote gas development or to promote gas development in other
	sensitive areas off of Florida and Alaska. Fortunately, we
	don't need to drill these areas for natural gas. That is
	because some 80 percent of the Nation's untapped economically
	recoverable OCS gas is located in areas already open to
	leasing.
	The idea that most of America's OCS gas is locked up is
	simply not supported by the facts. It is also not supported by
	this report. If you add up, as Mr. Markey indicated, the amount
	of gas that is in OCS areas that are under restriction, it
	amounts to less than 5 percent of the total amount of gas the
	Nation has outside of Alaska as identified in this report.
	Large untapped efficiency resources exist that can provide
	more gas more cheaply and faster than drilling public lands.
	For example, providing tax incentives for the construction of
	energy-efficient buildings and manufacturing of energy-
	efficient heating and water-heating equipment could save some
	300 trillion cubic feet of gas over 50 years. That is more than
	twice the amount of gas the Interior Department estimates is
	economically recoverable from the entire OCS.
	These strategies will do far more to increase our Nation's
	energy security than a ``drain America first'' approach of
	exploiting onshore and offshore Federal lands.
	Thank you, Madam Chairman.
	Mrs. Cubin. Thank you very much for your testimony.
	[The prepared statement of Ms. Speer follows:]

	Statement of Lisa Speer, Senior Policy Analyst, Natural Resources
	Defense Council

	My name is Lisa Speer. I am Senior Policy Analyst with the Natural
	Resources Defense Council (NRDC) in New York. NRDC is a national
	nonprofit organization of scientists, lawyers, and environmental
	specialists, dedicated to protecting public health and the environment.
	Founded in 1970, NRDC serves more than 400,000 members from offices in
	New York, Washington, Los Angeles, and San Francisco. My testimony
	today addresses environmental issues surrounding natural gas
	exploration, development and production from submerged Federal lands on
	the Outer Continental Shelf (OCS).

	1. Background: Energy Policy in the 21st Century
	At the dawn of a new century, America finds itself once again
	wrestling with a problem that has, off and on, been at the forefront of
	U.S. politics for several decades: energy. The United States has 5
	percent of the world's population, but consumes nearly a quarter of the
	world's energy supply. We use energy to heat our homes and our
	businesses, power our computers and telephone systems, run our
	automobiles and aircraft, and drive our manufacturing plants and
	hospitals. In short, we have constructed an economy and a way of life
	that depends on the ready availability of energy.
	Two distinct visions of an energy policy for the United States have
	emerged to meet these demands. One vision focuses chiefly on extracting
	as much energy as possible, mostly in fossil fuel form (oil, coal and
	natural gas), in hopes that supply can catch up with demand. The
	alternative vision, however, calls for encouraging innovation and new
	technology to meet our energy needs in an environmentally responsible
	manner. This vision emphasizes efficient use of energy, and places
	priority on using energy resources that are least damaging to our
	environment. It promotes economic growth and American industrial
	competitiveness. This energy path would not force consumers to make
	sacrifices. Instead it relies on improved technologies that will
	eliminate waste while increasing productivity and comfort.
	Therefore, NRDC believes that U.S. energy policy must rely on the
	application of technological advances already in place and readily
	available as a way to reduce consumption. Such an approach will
	decrease America's reliance on foreign sources of energy in the near-
	and long-term, protect the environment, provide for America's energy
	needs, and buffer the economy against short-term swings in the market.
	NRDC's recently published report, A Responsible Energy Policy for the
	21st Century examines these issues in detail. I ask that the report be
	included in the record.

	2. Natural Gas Resources of the Outer Continental Shelf
	As the cleanest burning fuel, natural gas makes an important
	contribution to the Nation's energy supply. Some argue that natural gas
	development on the Outer Continental Shelf should be promoted. They
	argue that the risk of oil spills is negligible, and that
	environmentally sound development can take place. This argument ignores
	the reality that oil spills are not the only environmental concern
	related to OCS development. Offshore gas development, like oil
	development, causes substantial environmental impacts, including the
	following.
	Onshore damage: The onshore infrastructure associated with offshore
	oil or gas cause significant harm to the coastal zone. For example, OCS
	pipelines crossing coastal wetlands in the Gulf of Mexico are estimated
	to have destroyed more coastal salt marsh than can be found in the
	stretch of land running from New Jersey through Maine. <SUP>1</SUP>
	Moreover, the industrial character of offshore oil and gas development
	is often at odds with the existing economic base of the affected
	coastal communities, many of which rely on tourism, coastal recreation
	and fishing.
	---------------------------------------------------------------------------
	\1\ Boesch and Rabalais, eds., The Long-term Effects of Offshore
	Oil and Gas Development: An Assessment and a Research Strategy. A
	Report to NOAA, National Marine Pollution Program Office at 13-11.
	---------------------------------------------------------------------------
	Water pollution: Drilling muds are used to lubricate drill bits,
	maintain downhole pressure, and serve other functions. Drill cuttings
	are pieces of rock ground by the bit and brought up from the well along
	with used mud. Massive amounts of waste muds and cuttings are generated
	by drilling operations an average of 180,000 gallons per well.
	<SUP>2</SUP> Most of this waste is dumped untreated into surrounding
	waters. Drilling muds contain toxic metals, including mercury, lead and
	cadmium. Significant concentrations of these metals have been observed
	around drilling sites. <SUP>3</SUP>
	---------------------------------------------------------------------------
	\2\ MMS, 2000. Gulf of Mexico OCS Oil and Gas Lease Sale 181,
	Draft Environmental Impact Statement (DEIS), p. IV-50.
	\3\ Id.
	---------------------------------------------------------------------------
	A second major polluting discharge is produced water, the water
	brought up from a well along with oil and gas. Offshore operations
	generate large amounts of produced water. The Minerals Management
	Service estimates that each platform discharges hundreds of thousands
	of gallons of produced water every day. <SUP>4</SUP> Produced water
	typically contains a variety of toxic pollutants, including benzene,
	arsenic, lead, naphthalene, zinc and toluene, and can contain varying
	amounts of radioactive pollutants. All major field research programs
	investigating the fate and effects of produced water discharges have
	detected petroleum hydrocarbons, toxic metals and radium in the water
	column down-current from the discharge. <SUP>5</SUP>
	---------------------------------------------------------------------------
	\4\ Id., p. IV-32.
	\5\ Id., p. IV-32-33.
	---------------------------------------------------------------------------
	Air pollution: Drilling an average exploration well generates some
	50 tons of nitrogen oxides (NOx), 13 tons of carbon monoxide, 6 tons of
	sulfur dioxide, and 5 tons of volatile organic hydrocarbons. Each OCS
	platform generates more than 50 tons per year of NOx, 11 tons of carbon
	monoxide, 8 tons of sulfur dioxide and 38 tons of volatile organic
	hydrocarbons every year. <SUP>6</SUP>
	---------------------------------------------------------------------------
	\6\ Id., p. IV-40.
	---------------------------------------------------------------------------
	Oil spills: If offshore areas are leased for gas exploration there
	is always the possibility that oil also will be found. We no of no
	instance where a lease prohibits an oil company from developing oil if
	oil is found in a gas prone region. We are not aware of any company
	ever agreeing to such a condition in the history of the OCS program.
	Without such a restriction included in a lease there would be no
	assurances that oil in fact would not be developed, raising the
	possibility of an oil spill. According to statistics compiled by the
	Department of the Interior, some 3 million gallons of oil spilled from
	OCS oil and gas operations in 73 incidents between 1980 and 1999.
	<SUP>7</SUP> Oil is extremely toxic to a wide variety of marine
	species, including marine birds, mammals and commercially important
	species of fish.
	---------------------------------------------------------------------------
	\7\ MMS, 2000. Gulf of Mexico OCS Oil and Gas Lease Sale 181,
	Draft Environmental Impact Statement (DEIS), pp. IV-50.
	---------------------------------------------------------------------------

	3. The OCS Moratoria
	Beginning in 1981 and every year since then, Congress has imposed
	restrictions on OCS leasing in sensitive areas off the Nation's coasts.
	These moratoria now protect the east and west coasts of the U.S. and
	most of the Eastern Gulf of Mexico. The moratoria reflect a clearly
	established consensus on the appropriateness of OCS activities in most
	areas of the country, and have been endorsed by an array of elected
	officials from all levels of government and diverse political
	persuasions, from former President George H.W. Bush to Governor Jeb
	Bush of Florida, and from Governor Tony Knowles of Alaska to Governor
	Gray Davis of California.
	We strongly oppose any attempt to lift the moratorium, or to
	promote gas development in other sensitive OCS areas, including the
	Sale 181 area off the west coast of Florida and areas off Alaska. We
	have called on the Interior Department to remove these areas from the
	new Five Year OCS Program currently under development.

	4. Drilling in the Moratoria Areas, the Sale 181 Area and the Alaskan
	OCS is Not Necessary
	Despite assertions from industry and their supporters on Capitol
	Hill, it is not necessary to drill in sensitive areas to meet America's
	energy needs. For example, industry is pressing to drill in the
	moratorium areas, the Eastern Gulf of Mexico, and off Alaska. But such
	drilling is unnecessary because seventy per cent of the nation's
	undiscovered, economically recoverable OCS oil and gas, and 80 percent
	of the Nation's undiscovered, economically recoverable OCS gas, is
	located in the Central and Western Gulf of Mexico. <SUP>8</SUP> Thus,
	removing the moratorium areas, the OCS off Alaska, and the Eastern Gulf
	of Mexico from the five-year program will leave the vast majority of
	the nation's OCS oil and gas available to the industry.
	---------------------------------------------------------------------------
	\8\ U.S. Department of the Interior, Minerals Management Service
	(MMS), 2000. Outer Continental Shelf Petroleum Assessment, 2000, page 5
	and Gulf of Mexico Assessment Update.
	---------------------------------------------------------------------------
	Large untapped energy efficiency resources provide a much better
	choice. Congress can help by providing tax incentives for the
	construction of energy efficient buildings, manufacturing energy-
	efficient heating and water heating equipment. These measures could
	save 300 Tcf of natural gas over 50 years. <SUP>9</SUP> This is more
	than twelve times the Interior Department's mean estimates of
	economically recoverable gas located outside the Central and Western
	Gulf of Mexico. <SUP>10</SUP> These strategies will do far more to
	increase our nation's energy security than a drain America first policy
	of exploiting sensitive offshore and onshore Federal lands.
	---------------------------------------------------------------------------
	\9\ NRDC, 2001. A Responsible Energy Policy for the 21st Century,
	p. 32.
	\10\ U.S. Department of the Interior, Minerals Management Service
	(MMS), 2000. OCS Petroleum Assessment, 2000, p. 5 and Gulf of Mexico
	Assessment Update.
	---------------------------------------------------------------------------
	Thank you for the opportunity to testify.
	______

	Mrs. Cubin. I thank all of the Members of the panel.
	Before I forget it, I would like to ask the Committee's
	unanimous consent to submit for the record statements that are
	being made by a couple of constituents of mine, who live in the
	Powder River Basin, where there is a huge coal bed methane
	play. They have some concerns about the water and the
	environment and what is going on up there. So with unanimous
	consent, I will offer this for the record.

	[Letters from the Powder River Basin Resource Council
	submitted for the record follow:]

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	[GRAPHIC] [TIFF OMITTED] T1208.003

	[GRAPHIC] [TIFF OMITTED] T1208.004

	[GRAPHIC] [TIFF OMITTED] T1208.005

	[GRAPHIC] [TIFF OMITTED] T1208.006

	[GRAPHIC] [TIFF OMITTED] T1208.007

	[GRAPHIC] [TIFF OMITTED] T1208.008

	[GRAPHIC] [TIFF OMITTED] T1208.009

	Mrs. Napolitano. Madam Chairman, can we also introduce into
	the record the report she handed to be introduced? I don't
	think you accepted it.
	Mrs. Cubin. Certainly, we accept that to be put on the
	record.
	[The aforementioned report has been retained in the
	Committee's official files.]
	Mrs. Napolitano. Thank you, ma'am.
	Mrs. Cubin. You bet. I will start off with my five minutes
	really with a statement. No one argues that we are having an
	energy shortage or that there is some sort of a crisis. There
	certainly is. Many of us have known that for a long time. What
	has been disturbing to me is--I am glad that Vice President
	Cheney is the head of the task force that the President has
	appointed to come up with a national energy policy. I would
	like to give you my view of what a national energy policy
	should include.
	First of all, I think we have to estimate--not estimate, we
	have to figure out what our national consumption is and how
	much we actually need to be safe as a Nation, and how much we
	need to consume or how much we do consume. Then, we need to
	predict or estimate future growth in consumption or reduction
	in consumption, whichever that might be. At that point, we need
	to apply the forces of conservation, better technology,
	efficiencies in the technology that we have and try to reduce
	our consumption of energy as much as we possibly can. At that
	point, we need to--when we know what our energy consumption
	needs are, then we have to decide what percentage of that
	should be produced domestically.
	After we decide that, we need to decide what sources--what
	percentage of that domestic production should come from coal,
	oil, gas, wind, solar, geothermal, hydro, whatever, and that
	way we would have an idea.
	This document or this policy could certainly change, and
	there would be times when one fuel would be contributing more
	to the energy supply than others, but at least we wouldn't find
	ourselves in a situation where we don't--a boom-and-bust
	situation which the minerals industries usually find themselves
	in.
	I think if we all work together as Congressmen, and we work
	with industry, and we work with agencies so that we can have
	access to produce the energy that we need, we will be far
	better off than politicizing this issue. To say or to think
	that President Bush would want to put every acre of public land
	open for drilling is simply nonsense.
	I wish Mr. Markey were still here. The statement he made
	about the 1,466 trillion cubic feet available for production
	are total and 1,361 are available, well, they may be available
	to be permitted, but they aren't ever going to get the permit
	because we have the Endangered Species Act that affects access.
	We have wilderness areas, wilderness study areas, national
	parks, national forests, on and on and on and on.
	So the information is truly slanted, and that isn't going
	to help us get to a national energy policy, and it is not going
	to help us solve the problems that we have.
	So I hope that this Subcommittee will work together to put
	forward honest pictures of what the situation is like out
	there. What I see so far has been very distorted, and I
	certainly hope the Committee can do a better job of being
	realistic with the facts.
	Having said that, I will now recognize Mr. Kind for any
	questions he might have of the panel.
	Mr. Kind. Well, I want to thank the witnesses for your
	testimony here today. I think as we embark upon this, what will
	hopefully be a national discussion in regards to our long-term
	energy needs, that we will be able to approach it in a
	bipartisan and balanced fashion.
	One of the disturbing things that I have witnessed thus far
	in the early stages of this next session of Congress is there
	has been a lot of focus, a lot of attention on the supply
	equation, and that is the business that you gentlemen are in,
	and we recognize that, and it is going to have to play an
	important role in regards to our energy needs. But I think we
	need to be careful that it doesn't become too one-sided,
	because obviously we need to focus on the demand aspect. And I
	appreciate Ms. Speer's testimony today in regards to various
	ideas and proposals to deal with the demand, and I would hope
	that all of us here would be in agreement that there is a lot
	of work that we can do, a lot of progress we can make in
	regards to sound conservation practices and trying to reduce
	the demand side of the equation, things we may be able to
	pursue in the Tax Code to encourage greater energy-saving
	devices and development of higher efficient buildings, for
	instance. And I think we also need to take a serious look at
	the CAFE standards when it comes to oil production and the
	needs of oil in this country.
	And I agree with the Madam Chair's assessment in regards to
	what data and what information we are going to need, and that
	is where I think you all can be of invaluable assistance in
	trying to project out what the energy consumption needs are
	going to be in light of the economic fluctuations that we are
	in right now. But hopefully we are going to be able to bring
	some balance to this and take a serious look at developing a
	long-term energy conservation policy, which I believe this
	country sorely lacks, an honest assessment of the type of
	alternative and renewable sources that we can honestly and
	cost-effectively pursue today.
	But one of the questions that I have for you gentlemen here
	today is it appears as if you do have a political problem. I
	mean, Ms. Speer testified in regards to the congressional
	moratorium on OCS exploration and drilling off the east and
	west coast and the eastern part of the Gulf, for instance. Even
	Governor Bush in Florida, for instance, has come out on record
	opposed to drilling in 181, for instance; Governor Knowles up
	in Alaska. In light of that, how do you make the case to the
	American people when you have community leaders and Governors
	of the very States who are on record as saying--some of them
	actually saying that we believe in drilling, just not in our
	backyard. I mean, how do you overcome that type of political
	resistance that you may be facing? And I would open it up to
	anyone.
	Mr. Hackett. I might just try to clarify what my view of
	that situation is, is that while Governor Bush may be against
	the OCS sale that has been announced for December, it has been
	some five years in the making. The other four Governors of the
	States that it touches are in support of it. So four out of
	five are actually in support of it, and the onshore facilities
	that were referred to earlier are not anticipated to be in
	Florida. So States who will be most impacted by this who
	actually welcome offshore rigs for fishing purposes in the
	States that I work in, Louisiana and Texas, because they
	attract fish, they may have a very different view than Governor
	Bush about that particular sale.
	And more importantly, I think there are a lot of answers,
	and I think you are absolutely right, Congressman Kind, in the
	long term in terms of demand reduction, more efficiency, LNG,
	frankly nuclear energy, a number of different alternatives for
	supplies of energy that we need to look very hard at. The
	problem is they don't get here for five years, and neither does
	the pipeline from Alaska. So we all sit here as citizens of
	this country worried about our global competitiveness and how
	we are going to make it over the next five years, and we need
	to take very seriously getting the facts out in front of us
	about what we are facing and the question about whether there
	really is a lot of free property out there that we are somehow
	not taking advantage of.
	I promise you in a competitive market-based economy people
	tend to take advantage of what is given to them. If that was
	truly there, I promise you we wouldn't be spending our energy
	up here talking to you. We would be out there trying to drill
	it up. Thank you.
	Mr. Kind. Ms. Speer, let me throw it at you for a second.
	In light of what Mr. Hackett just testified to, given our
	short-term energy needs, do you believe it is possible through
	conservation and development of alternatives and renewables to
	pivot in a short period of time, given the demand that already
	exists in the marketplace and what will inevitably be there in
	the very near future?
	Ms. Speer. That is a very good question, and the short-term
	needs are very pressing right now. There are some ramping-up
	activities that we can take. But the reality is my
	understanding is that for most offshore gas fields, as well as
	onshore gas fields, that it takes a good five or six years,
	according to Chevron, to bring those on, too. So this is going
	to take time to solve, and there are a lot of issues that have
	to be addressed, including things like pipeline availability in
	some areas.
	But I just want to emphasize with respect to the eastern
	Gulf that you know this is not just a few people here and
	there. Every single member of the Florida delegation with one
	exception has supported the moratorium and supported the
	position that we have articulated and Governor Bush has
	articulated. These are very deeply held views on the part of
	very many people, and fortunately, there is not that much gas
	there by the Interior Department's estimates. The Interior
	Department again says there is about 6.9 trillion cubic feet in
	the entire eastern Gulf of Mexico, and again, that is only
	about 5 percent of Interior Department's estimates of the total
	OCS undiscovered resources.
	Mrs. Cubin. The gentleman's time has expired.
	The Chair now recognizes Mr. Flake from--oh, he is gone. So
	Mr. Otter.
	Mr. Otter. Thank you very much, Madam Chairman. I wasn't
	quite ready. Being the bottom of the political food chain here,
	I expected some of the more senior Members to get their
	opportunity in the box first, but thank you very much.
	Mrs. Cubin. If you would like, I could recognize somebody
	else. Generally on the Committee we can recognize people in the
	order that they show up.
	Mr. Otter. I shall show up very early from now on.
	Mrs. Cubin. If you would like to take a few minutes.
	Mr. Otter. No, no, I am ready. Having got this position, I
	am not giving that up for anything, and now that I have used 2-
	1/2 minutes of my time getting the floor--you know, much is
	said about who is and who isn't supporting this thing, and I
	think it is important--in fact, I think it ought to be the
	direction that we always look to first rather than looking to
	an organization from New York or an organization from San
	Francisco or Dallas, Texas, or someplace else about where we
	ought to be drilling and where we ought to be exploring or
	where we ought to be looking for energy needs, I think we ought
	to look to the States first, and if Governor Jeb Bush doesn't
	want his State to develop, that ought to be so.
	But would you then agree--would you all then agree that if
	Governor Kempthorne of Idaho or all the other Governors said,
	yes, we want to build dams, yes--because I don't, Madam
	Chairman and members of the Committee, I don't think that we
	can talk about this subject in a vacuum. I think it is going to
	have to be part of the entire piece for energy, and so I think
	we have got to talk about dams and coal-fired plants. I think
	we have talk to about FERC. I think we have got to talk about
	additional potential; heaven forbid, even nuclear plants. I
	think we need to talk about all these things as part of our
	national energy policy.
	And so I want to know, I want to hear from each of the
	Members that--would you be equally enthusiastic about extolling
	the statements if a Governor said, yes, come and drill in my
	State; yes, come and build a dam; yes, we want a coal-fired
	plant from clean coal?
	I will start with you, Mr. Simmons.
	Mr. Simmons. I spent this morning at the Department of
	Energy workshop on the power situation of the United States and
	heartily endorsed clean coal, nuclear. Natural gas will not get
	to 30 TCF, in my opinion, and it is going to basically cause
	severe risk of electricity problems for a decade. So I think
	the time has come that we need to embrace every form of energy,
	including conservation, but the conservation numbers, unless
	the conservation people can do some very quick education, do
	not add up to enough reduced demand to basically conserve us
	out of a problem.
	Let me give you one example. If we could create tomorrow
	morning 100,000 80-mile-per-gallon cars, we would save 4960
	barrels a day. That is a single well in the Gulf of Mexico.
	Those are real economic reality numbers. So I think it is going
	to be very important as we go into these very serious energy
	debates that we have some real genuine intellectual honesty
	about how we deal with some numbers very precisely, because
	this could be the greatest risk to our economy since World War
	II.
	Mr. Hackett. Thank you, Congressman. I agree with Matt that
	we are a very spoiled Nation, this Nation doesn't like to
	conserve, generally speaking. You look at the demand for oil
	products, even with the crunch that you had in the late 1970's,
	early 1980's, and you see it has gone up over that whole
	period. I was not pointing to governors' support of individual
	States as a reason to necessarily approve or disapprove of
	anything. It was just to straighten the record out, so we are
	not biased in one direction. This is a national issue, it is a
	national issue on environment and energy. The biggest risk to
	us is the economy against a global competition that will have
	much lower natural gas costs.
	There is plenty of natural gas in the world we just, can't
	get it in here because we don't want to allow degasification
	facilities to be sited in our country. We have four of them. We
	are refurbishing two of them. They do not make a big enough
	dent. They costs hundreds of millions of dollars just like the
	ships that are required to get them here, and the facilities
	overseas that you have to make it from, but there is plenty of
	it at the right price over time. It doesn't happen for five
	years. So what do we do in the meantime? That is where you look
	at all the alternatives, you mention and I applaud you for your
	thought process.
	Mr. Papa. Congressman, we agree that we need a national
	energy policy that embraces not only natural gas, but also
	clean coal, consideration of nuclear, certainly renewables,
	wind, solar, some of those items, and I think none of us
	disagree with that. To me, I think you can frame the debate on
	access for natural gas is very simply, I believe, that if, the
	Nation is willing to tolerate a higher average natural gas
	price over the next 10 or 20 years, then we can continue to
	withhold lands from drilling. If however we open up these lands
	for drilling, the consequence will be you have more supply, you
	will have an average lower natural gas price over the next 10
	years or so. And I guess the Nation has to weigh what are the
	economic consequences of those two items?
	Ms. Speer. Thank you. I want to agree with Mr. Hackett that
	we are a spoiled Nation, and we really do have to get our house
	in order on this question if we are going to continue to
	prosper in the way we have. In our view, the way to proceed,
	though, is a different way. And I think that the record of
	energy efficiency improvement really speaks for itself. For
	example, from 1975 to 2000, new generations of energy efficient
	refrigerators has reduced their electricity consumption by 75
	percent saving some 60,000 megawatts of electricity. And
	standards that have been adopted by the Energy Department since
	1997 for clothes dryers and air conditioners and other
	appliances will eliminate the need to build 120 new power
	plants. These are real figures, and we think this is the
	direction people should go. With respect to the discussion of
	governors--.
	Mrs. Cubin. The gentleman's time has expired. If you could
	make it quick.
	Mr. Otter. I think she answered the question. Madam
	Chairman, I reserved my opening statement and I would like it
	submitted for the record.
	Mrs. Cubin. Yes.
	Mr. Otter. Thank you.
	[The prepared statement of Mr. Otter follows:]

	Statement of The Honorable C.L. ``Butch'' Otter, A Representative in
	Congress from the State of Idaho

	Madam Chairwoman, thank you for holding this hearing today on the
	important role that public lands play in the development of a
	comprehensive domestic energy policy. I am pleased to join you and my
	colleagues in support of proposals to increase our natural gas supply.
	At first look, you might ask, why would Idaho be interested in
	this? There are no natural gas plants in Idaho. Almost 87 percent of
	Idaho's electricity-generating capability comes from hydroelectric
	power. However, while Idaho does not produce natural gas, it now
	imports nearly 64 trillion cubic feet of gas that is used to provide
	energy for homes, businesses, and industrial operations in Idaho--
	almost all of it in my District.
	Additionally, over 914 trillion cubic feet of gas is transported
	across Northern Idaho from Canada into the United States to serve the
	demand for natural gas in California, Washington, Oregon, and other
	western states. This trend is growing dramatically. The U.S. Energy
	Information Agency forecasts that within 20 years, demand for natural
	gas will increase 62 percent--much faster than it is being produced.
	Madam Chairwoman, we need to develop an energy policy now--one that
	will utilize resources we know are already available right here in the
	United States--on public lands and submerged offshore in methane
	deposits.
	Under the previous Administration, U.S. imports of foreign oil
	increased to 56 percent--7 percent of it from Saddam Hussein. Last
	summer, gas prices skyrocketed, and the only answer from the previous
	Administration was to beg foreigners for more oil, tap into our
	Strategic Petroleum Reserve, and actually cut off efforts to create new
	sources of energy in the United States. Because of stringent
	regulations, relicensing existing hydro, nuclear, or natural gas
	facilities has become costly and time consuming. We should be seeking
	ways to bolster our national security by developing domestic energy
	sources and decreasing our dependence on foreign oil
	The crisis is at near-critical mass in Idaho and the West. Record-
	low water levels will severely harm hydroelectric dams' ability to
	produce sufficient power to meet Idaho's needs--let alone increasing
	demands of Californians and other western power users. The previous
	Administration's forest roadless restrictions on Forest Service and
	Bureau of Land Management lands is blocking access to 9 million acres
	of Idaho public lands--land that most certainly would yield to the
	development of new sources of natural gas supply and rich mineral
	resources. These rules were imposed contrary to BLM's statutory duty to
	manage public lands for multiple use and sustained yield.
	Recent estimates reveal that 1,300 trillion cubic feet of natural
	gas and some 204 billion barrels of oil could be made available on
	American soil. That energy that could fuel American industries,
	businesses, homes--and help offset the millions of dollars that
	taxpayers are now paying for years of poor maintenance by the Federal
	agencies in our national forests.
	Madam Chairwoman, we also need to block efforts that would tear out
	existing clean, renewable sources of hydroelectric power.
	Environmentalists have proposed tearing out hydroelectric dams that
	produce up to 3,000 megawatts of power at their peak--enough to power
	the City of Seattle three times over. Replacing the clean electricity
	generated by the dams with the next cheapest source--natural gas--would
	take years to implement, cost millions of dollars per year, and would
	further exacerbate the growing demand for natural gas that is already
	there. Instead, we should support efforts to swiftly relicense these
	dams, and authorize access to public lands to increase transmission
	capability.
	I look forward to working with you, Madam Chairwoman, and the rest
	of the members of this Committee, to explore common sense proposals to
	unlock the abundant natural gas supply on the millions of acres of
	public lands and to review unwise directives such as the roadless
	regulations, that prevent access to those who could untap resources,
	reduce the risk of forest fires, and to ease our nation's energy
	crisis.
	______

	Mrs. Cubin. The Chair recognizes Mr. Markey.
	Mr. Markey. Thank you, Madam Chair. Let me go to you, Mr.
	Papa, the 1999 report of the National Petroleum Council (NPC).
	The report estimates that the total of natural gas resource
	base in the lower 48 States, including offshore, equals 1,466
	trillion cubic feet. Much of this resource base resides on
	Federal lands or Federal waters. The NPC study asserts that a
	large portion of this resource base is not open to either
	assessment or development.
	So I would like to ask you some questions, if I may, about
	this assertion, which I believe to be a total exaggeration.
	First of all, I see that the NPC asserts that approximately 40
	percent, or 137 TCF of the Rocky Mountain States resources is
	either closed to exploration or is under restrictive
	provisions. Isn't it true that the fine print in this report
	states that only 29 TCF of the Rocky's gas resources are
	actually closed to development, that is, in a natural park or
	wilderness area, while the remaining 108 TCF are available for
	oil, gas or leasing under certain stipulations, such as
	seasonal limitations during calving periods.
	So wouldn't you agree that this 108 TCF is, in fact,
	accessible in the same way the industry is arguing that in the
	Arctic Refuge, that they can drill in a way that doesn't
	disturb the caribou? Isn't it true that you are also permitted
	to right now drill in these areas under the same conditions
	that you are requesting to be able to drill in Arctic Refuge?
	Mr. Papa. Congressman Markey, I believe that a study is
	underway, as has been initiated by Madam Chairman, to take a
	look at these numbers and see if we can get to some numbers
	that everyone can agree on. The issue that you bring up here is
	a very viable one. The problem with the reasoning, in my
	opinion, that you just generated, is that a lot of these areas
	that are accessible to drilling and leasing have very severe
	restrictions on them. For example, there may be a very narrow
	window such as a two month window that you can access it.
	Mr. Markey. I am looking at the chart here that Mr.
	Hackett, the Chairman and President/CEO of Ocean Energy has
	provided, and I am looking at Wyoming, and a lot of these look
	like they are State restrictions for the NRA and fishermen that
	have been put on the books by the State government, big game
	winter range, sage grouse nesting, raptor nesting, prairie dog
	avoidance. I don't know how hard it is to avoid a prairie dog.
	I can move over here a little bit, but just don't disturb that
	nest. They do not seem like they are the most restrictive. Most
	of them are State restrictions. Are we supposed to preempt the
	governors in all these western States from putting on these
	relatively modest seasonal restrictions?
	Mr. Papa. It is good we are having the debate on this
	because it has opened up--in my opinion, the numbers are really
	misleading. As someone who tries to access these lands to
	drill, I can tell you a lot of this land is not accessible.
	Mr. Markey. When we are talking about seasonal here, aren't
	we really talking about what the NRA wants? They just want a
	season, but the rest of the year would be fine. Do you have a
	problem with that? Does the NRA support your position on
	drilling?
	Mr. Papa. I am not aware of the NRA's position on this .
	Mr. Markey. I look at your own chart here and it looks to
	me like only 3.5 percent of all public lands are off base, and
	it goes up to 10 percent, but then you have to include the
	Department of Defense and Department of Energy lands as well,
	which are public lands, obviously.
	But I don't know that we really want to move on to the
	Department of Defense reservations for drilling. But it is only
	3.5 percent if you eliminate the Department of Defense and
	Energy. And these are under the--this is the Independent
	Petroleum Association of America study that I am reading that
	was provided to me here today, which seems like a pretty low
	percentage. Let me move on quickly. The NPC report also asserts
	that 76 trillion cubic feet are closed to development in
	offshore areas, that is, California, Florida and Atlantic
	coastal moratoria imposed by Congress with the full support of
	the affected States.
	Are you calling for a repeal of the moratoria on offshore
	drilling along the Atlantic and Pacific coasts?
	Mr. Papa. At this time, no. We are designating it as
	resources.
	Mr. Markey. So you are not calling for repeal? Okay. So as
	I look at the numbers, it seems there is only 105 TCF--29 in
	the Rocky mountain States and 76 on the OCS--of the natural gas
	resource base that are not accessible. That means there are
	1361 TCF, of the 1466 TCF natural gas resource base which are
	available for development, and I am told at a 31 TCF per year
	consumption rate, that is enough to meet America's anticipated
	needs for over 40 years. Does that number square with you? Do
	you disagree with this number that 1361 TCF would be available,
	at least for part of the area for drilling?
	Mr. Papa. That is the potential that is out there. That is
	not proven reserve. In a competitive marketplace, I can assure
	you that if that were readily available--.
	Mr. Markey. So even that number is speculative, is that
	what you are saying? Even that you don't know. It could be
	lower.
	Mr. Papa. It could be lower. That is exactly right.
	Mrs. Cubin. The gentleman's time has expired. I would like
	to answer one of the requests that you brought up, Mr. Markey,
	if you do not mind. You were talking about the chart where the
	seasonal use restrictions. I wanted to point out that they are
	not really State laws or State regulations. The State manages
	the wildlife, but the habitat is managed under the Federal
	Government, so that is the answer to that.
	Mr. Markey. If you would yield. I am told that many of
	these restrictions are put in place by the BLM at the request
	of the State gaming officials, and that it is only the Federal
	Government responding to the State requests in almost all of
	these restrictions. Although they don't have the legal
	authority to impose them requested by Wyoming or Arizona or
	other States.
	Mrs. Cubin. Based on managing the animals, that would be
	correct.
	Mr. Markey. So that is a State action.
	Mrs. Cubin. But I can't say that all or most of them are. I
	don't know the answers to that but fortunately we do not need
	to know the answer to that because we were smart enough as a
	Congress last year, Mr. Skeen, and I, as you recall, offered
	the amendment to have the USGS do an inventory of all of the
	mineral wealth underground in the United States, and then do an
	overlay of any rules, regulations, laws designations that
	restrict the possibility for exploration or introduction. And
	this is a priority of Secretary Norton. I have talked to her
	yesterday. So, soon we will have the facts that we need, so
	that we can do something. The Chair now--.
	Mr. Markey. Can I just? I await that report. But pending
	that we have the Independent Petroleum Association's report,
	which makes it clear in their own study that 95 percent of it
	is available.
	Mrs. Cubin. One last thing, he and I need to do this off
	the record. Believe it or not, it is okay to mine coal in the
	Black Hills National Forest, but it is only okay to mine it
	where it isn't. So the point is, it is not okay to mine coal in
	the Black Hills Forest where it is, but it is okay to mine it
	where it doesn't occur. So that is my point.
	Mr. Markey. So, I don't care honestly, as you can
	appreciate, whether your constituents can kill animals or not,
	but your constituents might care. So I think these are
	primarily restrictions imposed by the States for your
	constituents.
	Mrs. Cubin. We appreciate your concern. The Chair
	recognizes Mr. Gibbons.
	Mr. Gibbons. Thank you, Mr. Chairman. To follow up on what
	you were just mentioning. The State of Nevada is nearly 90
	percent owned by the Federal Government. Yet in the State of
	Nevada, probably 1000 of 1 percent has either oil or gas
	deposits located on it. Oil and gas is not located under every
	square inch of available land to determine whether or not it is
	there for production. And it is found where you find it, which
	makes many of these large leases that you have out there
	literally valueless when it shows that you have entered a dry
	well and not found what you thought you had found in the
	beginning.
	So speculation, of course, as to what might be under there
	at this point in time is, as a geologist would say, only as
	good as as far as you can stick your finger in the ground to
	see what is there. You have to spend that money. You have to
	invest in those drilling operations to make that determination.
	Nonetheless, let me say that I do support the effort to
	increase our resources, energy resources in this country.
	There is, no doubt, in my mind, even though we are spoiled,
	we are a Nation that has 5 percent of the world's population
	using 25 percent of the world's energy, but I guarantee you
	that not one person in this room is ready to reduce the quality
	of life. They will not reduce the quality of their health care
	and the benefits that have come from the development of
	resources in this Nation. And I dare say that once the rest of
	the world begins to catch up with us in the quality of life and
	things that we have enjoyed because of our resources, that the
	consumption rate will pretty much level out in those countries
	at about our per capita rate of consumption of energy.
	My point being in all of this is that in this support for
	your effort to supply this Nation, which has seen in recent
	months some great challenges to its energy consumption, what
	single issue, what is the biggest impediment that if we were to
	go at it legislatively, taking a bite of the apple, not being
	able to take the whole thing at one time, but one bite of the
	apple, what impediment would you like to see us address first?
	And I will begin, and let you go right down the aisle just as
	Mr. Otter did.
	Mr. Simmons.
	Mr. Simmons. Unfortunately, I think the magnitude of the
	problem is such that we don't have the luxury of prioritizing
	and doing one thing at a time. If, for instance, we decided to
	waive every access issue, which I know will not happen, we open
	the door to the next problem, which is an unbelievable
	limitation in people and rigs. So it goes on one problem after
	another. So I think one of the critical needs in getting the
	proper national energy strategy together is to recognize how
	fragile our energy supplies are right across the face of
	energy. We can't make the mistake of saying there is one area
	we can solve, and then we are out of our energy problems.
	Unfortunately we have a thousand things to simultaneously
	solve.
	Mr. Hackett. It is hard to disagree with that assessment,
	and I think that, as with many things in a free market economy,
	we tend to realize too late when we find ourselves in the
	situation, and oftentimes we tend to ignore that we are heading
	into it as well politically, in particular, and I think
	California is a great example of that. I think Matt is
	absolutely right. I think we need to be absolutely committed to
	the notion that we have to develop the resources we can
	environmentally safely develop as quickly as we possibly can to
	bridge us into the period when we can have the very serious
	debate about things like nuclear energy and improving our
	ability to import LNG and bringing a pipeline down from Alaska.
	Whatever it takes from government and industry hand in hand
	to make that happen, we need to get serious about it. We needed
	to get serious about it probably five years ago. The industry
	itself probably started to get serious about it two or three
	years ago in terms of making pronouncements up here, but it is
	upon us.
	Mr. Papa. Congressman Gibbons, in response to your
	question, I give you two answers. One, I think we need a
	pragmatic review of surface access in the lower 48 States and
	the outer continental shelf in terms of availability to drill
	and balancing all considerations including environmental. At
	the same time I would recommend that you look very hard at fast
	tracking the permitting for an Alaskan gas pipeline. I think
	that is a longer-term solution to the problem.
	Ms. Speer. Thank you. I think that is an excellent
	question. And I would say corporate average fuel economy
	standards are the number one priority. They have been frozen by
	a congressional rider since 1994 at 27.5 miles per gallon for
	cars and 20.7 for SUVs and trucks. By increasing that to an
	average for both of about 30.9 miles per gallon we could save
	over 1.6 billion barrels of oil annually by 2020. That is more
	oil than the government estimates would be produced from under
	Arctic Refuge, the entire outer continental shelf, plus the
	amount we import from Saudi Arabia, Kuwait, Qatar, Bahrain and
	the United Arab Emirates. That is the kind of step we ought to
	be taking to help our Nation reduce its dependence on oil.
	Mrs. Cubin. The gentleman's time has expired. The Chair
	recognize Mrs. Napolitano.
	Mrs. Napolitano. Thank you, Madam Chair. May I defer to Mr.
	Inslee? He has to leave.
	Mr. Inslee. Thank you very much. I do have a flight. I
	appreciate that, so do my children. My name is Jay Inslee. I
	represent the First District. It is located in the suburbs
	north of Seattle. I am sure you are aware of it. The folks in
	the State of Washington are seeing their electrical prices go
	up five-, tenfold or at least the wholesale prices to date,
	which are already resulting in astronomical retail price
	increases. We have an emergency situation up in the Pacific
	northwest right now. I say that because a lot of people think
	it is just California. It is felt in the Pacific north as well.
	And a lot of the things we have been talking about potentially
	have some resolution five to 10 years from now.
	But I want to focus on today and tomorrow with my
	constituents, because the fact of the matter is, this year, to
	prevent us from tripping into a recession, we need some relief
	led by this administration today on two things: Really, the
	only two things we can do right now, today, this week, which
	are conservation and a realistic wholesale price cap on
	electricity. And frankly, neither one are we seeing leadership
	too much on getting those immediate help for the Pacific
	northwest and whole west of the United States.
	I want to ask you gentlemen your thoughts in that regard.
	First, Mr. Simmons, I noted you were in the Bush-Cheney
	transition team. I think I read that in your testimony. What
	did you advise the administration and what is their position on
	immediate conservation efforts to try to reduce the demand in
	the next five to six months in the western United States on how
	to help us give incentives for conservation? Can you tell us
	what you advised the administration and what their position is
	as far as you understand it?
	Mr. Simmons. My advice has been that conservation is a very
	important thing to take seriously. But I do not honestly
	believe in any stretch of the way that we can do anything in
	the next 6 to 12 months to even make a dent on these terrible
	problems. I am originally from Utah. I am afraid Utah will get
	sucked into the California problems, too. I would love to think
	we can conserve our way out, but I think we are actually
	talking about Draconian life-style changes, as was said
	earlier, none of us in this room are probably emotionally
	prepared to do.
	I think one of the dangerous things we could do is hold
	conservation out as a silver bullet. That has nothing to do
	with not being a really strong believer that we have to find
	ways to start conserving energy, but I just do not believe we
	will all turn in our Suburbans. I think we need to hunker down
	for a possible decade-long solution to a really massive energy
	problem. I have described this in a Senate hearing a month ago
	as a Marshall plan of energy that will literally take us a
	decade to do, and I think the bad news is there is no solution
	in the next 6 months.
	Mr. Inslee. Well, thanks for the optimistic note. I frankly
	think you are dead wrong, just flat dead wrong. It is that kind
	of thinking that got us behind the eight ball. I tell you, if
	we achieve 10 percent conservation of electrical usage in a
	retail and commercial basis in the State of Washington, we will
	relieve enormous pressure on our utilities during peak demands.
	As you well know, it is the peak pricing in the electrical
	market that kills utility. If we look at this and if we hit 10
	percent conservation, we will dramatically reduce the pricing
	benefits that the generators have in a moment.
	And so, I guess I will reiterate the question, Mr. Simmons,
	for instance, did you encourage the administration to get
	behind an effort to increase our CAFE standards and if so, what
	was their response?
	Mr. Simmons. No, I didn't. I actually do not believe that
	CAFE--that we mandate people to do things they are not prepared
	to do. I think the evidence is you can enact CAFE standards and
	Americans will buy sport utility vehicles and suburbans, so
	that wasn't any of my recommendations.
	Mr. Inslee. You understand the goal is to close the
	loophole in the CAFE standards so that if you close the
	loophole, you do away with that loophole. You understand that
	can be done, I am sure. So what you are telling me is you are
	here to advocate drilling in national monuments before the
	United States of America closes a major loophole in their CAFE
	standards, and simply gains gasoline by conserving it. Is that
	what you are telling us?
	Mr. Simmons. No, I am saying we need a very carefully
	designed and very balanced energy policy that does a little bit
	of everything, because not one thing will get the job done.
	Mr. Inslee. I agree with you. Are you telling this panel
	that we should allow drilling in national monuments, crown
	jewels of the west before we increase CAFE standards? Is that
	your testimony?
	Mr. Simmons. No, not at all.
	Mrs. Cubin. Mr. Inslee, he answered your question.
	Mr. Simmons. I don't know that anybody here is proposing
	drilling in national monuments.
	Mr. Inslee. Just so you know, President Bush yesterday said
	we should drill on national monuments.
	Mrs. Cubin. The gentlemen's time has expired. The Chair
	recognizes Mr. Rehberg.
	Mr. Rehberg. No questions.
	Mrs. Cubin. You have no questions. Mr. Inslee, I believe it
	is your turn now.
	Mr. Inslee. Thank you, Madam Chair, for your courtesy.
	Mrs. Napolitano. I am sitting here shaking my head in
	disbelief because we in California are going through the energy
	crisis, and now we are faced with the increase in gas prices
	because of its ability to create energy, and we are now facing,
	supposedly, a crisis in supply of gas.
	I am not quite sure that I totally agree with some of what
	I have been presented with in that for years, we have been
	saying we have more than ample supply of gas. We have heard it
	for years when I was in a State assembly. I have heard it in
	dialogue, I have heard it in testimony, and now we are saying
	that we need to go and drill in areas because we must find--to
	make sure that we have enough, and if I heard you, Mr. Papa,
	you stated that you did not know how much there was.
	Our chair has indicated they have done an assessment and
	evaluation, and they have an idea why most of these precious
	resources are. Just recently there was a statement made by me
	that I am very concerned about continuing to not necessarily
	explore but dig out our resources, because in the end, we may
	not leave that much for our successors, the children,
	grandchildren and future generations.
	While we need to know what we have and be able to tell our
	constituents, our friends and our neighbors that conservation
	is going to have to be a fiber and not just a side line. It is
	a major portion for me in the State of California that they, to
	be able to tell my constituents that they need to understand
	that the future rests on every one of us, not just the
	industry, not just government, but everyone.
	That said, I am concerned because of the implications of
	not necessarily wrongdoing, but the gouging by the providers of
	energy that are driving up the prices because they control the
	abilities for us to be able to get it. We no longer produce it,
	so we have to pay the price. And my understanding that that is
	a problem, that we are now looking at in the CPUC, looking at
	the three contracts of marketers that have brought capacity
	through the El Paso natural gas and others, that they may have
	controlled, that they were able--my entities in California
	bought, were unable to use, sold back and this particular
	entity held on to it driving the price up.
	To me that is unconscionable, because people that are
	mostly hurt when they can't pay the price of this energy are
	people on fixed income. The poor people. And I just can't see
	why we can not come to other meeting of the ways to provide
	energy and be able, especially now that we are beginning to
	feel a downturn in the economy. We are just keeping fueling
	while somebody is making an inordinate amount of money for
	their investors. And I am going to look at some of this
	material.
	I have just found most of it as I came in. I would like to
	see a lot more dialogue going on. I would like to see more
	people who can give the other sides of it, so we can better
	understand and have some clarity to where we are and what we
	can do about it. I thank the Chairwoman for bringing this
	session, at least, to light so we can make some of our
	frustrations known and maybe have you talk to us about what is
	it that you can help us clarify in our minds when we talk to
	our constituents to say look, this is what needs to happen. But
	so far I haven't seen that I haven't heard that, and I would
	like to see how you gentlemen can somehow clarify a little bit
	of that mystery behind what is happening, and now can we work
	together so that we may be able to do our job and help you do
	yours.
	Mr. Papa. Congresswoman, thank you. I think that is a very
	germane comment that comes up when you have got an upset
	condition in California, and most everywhere else, and your
	constituents are saying why is this upset? It hasn't happened
	in the past. Speaking for natural gas producers in the U.S.,
	and, as part of IPAA, I will say that one thing we will welcome
	the opportunity to discuss with you, one on one or as a group,
	more details on this, but the one thing that hopefully will
	bring some light to it is if you think about it, that every
	single gas well in the United States for the last several years
	has been producing at maximum rates 365 days a year, and yet we
	still don't have enough gas to really meet the demand
	requirements there.
	I can tell you that there has been no curtailment by any
	producers or anything along those lines. We as an industry are
	racing as hard as we can. We have increased the level of
	drilling activity, and we are trying to grow supply as fast as
	we can. We are facing a higher depletion rate, a treadmill
	every year. If we stop drilling as a Nation for one year, we
	would lose 23 percent of our productive capacity in one year,
	and we have to make up that 23 percent to just stay even. So I
	do think that more dialogue is absolutely necessary on this
	subject, and we would certainly welcome it.
	Mrs. Napolitano. I appreciate your comments and thank you,
	Madam Chair. There will be a hearing at next week at the State
	legislature in California to deal with the specific comment I
	made on the overpricing or the holding back of the supply.
	Thank you.
	Mrs. Cubin. One comment I would like to make is with retail
	prices capped as the California electric dereg did, it gives
	the consumer no incentive whatsoever to conserve, so that could
	be something that ought to be brought up too, maybe.
	Mrs. Napolitano. Madam Chair, I couldn't agree with you
	more, but I think it is inherent upon the leadership to begin
	espousing down to the local conservation, the methodology and
	do concerted efforts through the media, it is the highest
	authority. They have every right and every ability to get it
	across. It happened when we did water conservation some 10
	years ago and we met it and were able to survive, and I think
	we will survive this one. But you are right. I think we need to
	do a concerted effort for teaching people when, where and how
	to do it, because we take it for granted we know, people may
	not.
	Mrs. Cubin. Right. The Chair now recognize Mr.Rehberg. He
	has a question.
	Mr. Rehberg. Thank you, Madam Chair. It is often said that
	life kind of repeats itself, and I found myself remembering
	exactly 20 years ago when I first came to Washington D.C., it
	was May of 1979 in the middle of a gas crisis. Sitting in back
	of me where my staff is sitting today, I sat behind Congressman
	Marlenee staffing this Committee. And at that time we were
	talking about energy shortages and how we were going to
	conserve our way out of this problem. We funded, over the
	course of the next three years, a lot of solar energy policy, a
	lot of wind energy policy a lot of alternative energy policy
	and that seems to have fallen by the wayside.
	Mr. Simmons I totally agree with you, with all due respect
	to my colleague from the State of Washington. I fear that we
	are creating a debt even more serious than the financial debt
	that we were creating for the next generations, the energy debt
	we are creating because a day will come where we will not be
	able to dig one more shovel full of coal or one more gas well
	can be punched, whether it be in Alaska or Montana. So I would
	not feel good about my representation for my State if we didn't
	seriously address the issue of production aside from
	conservation.
	We will do the best we can with conservation. One of the
	things I remember from 20 years ago was a stupid policy called
	the windfall profits tax, and here we are again talking about
	the same thing in the State of Montana. I see in the
	legislature they just introduced the windfall profits tax on
	the electric companies out there because of the wholesale price
	of energy.
	My question to you, and I apologize I looked through the
	materials and I didn't see if you touched on it. If you had, I
	apologize. I was looking for your resume and I don't have that
	as well. I see you are from the investment arena. Do you feel
	that the Federal taxation policy and the policies such as
	another quick example, CARA, where are we going to take off
	shore drilling revenues and put it into something called
	purchases of additional properties as opposed to taking that
	revenue and turning it into a solution for the energy crisis,
	keeping it in the same arena. Do you think our taxation
	policies in many of the things we talk about, capping of
	electrical costs and such, give a true picture? Has it made it
	more difficult for your clientele or your group to be able to
	fund people in the production of energy that this country
	needs?
	Mr. Simmons. I think the thing that has been the real
	inhibitor more than anything else is energy prices that were
	just simply too low. Unfortunately, America got to thinking
	they were real, but they virtually devastated the petroleum
	industry. They almost wiped out the country's spare energy fuel
	reserves. The industry spent 30, 20 years trying to cope with
	low energy price by downsizing, and we became a shadow of
	ourselves. It was not the tax policy. I think there are some
	creative things we can do on tax policy, particularly in some
	areas that won't work unless there is some extra stimulus.
	This is a personal view, but I don't believe the current
	energy prices are probably yet high enough to actually pay for
	an energy Marshall plan. And someone has got to foot that bill.
	I think that we have an enormous education ahead of us to
	educate Americans on the proper relationship of energy costs.
	The natural gas consumers last year, commercial and residential
	spent about $31 billion on natural gas. They spent $7.7 billion
	on movie receipts. Now I don't think that necessarily means
	they should not have done that. We spent $135 billion on
	residential energy last year and we spent $205 billion last
	year on advertising, most of which doesn't ever get seen and
	all of which is embedded in costs.
	So I think in this complicated energy relook we have to
	basically come back and know an awful lot more about energy
	costs, and if we are crazy enough, reckless enough to go back
	and try to windfall profit, we will never get the energy
	Marshall plan built because it will not be built by the
	government. It has got to be the private sector and they have
	to have money or they will not be able to afford it. It will be
	costly. We are talking trillions of dollars.
	Mr. Rehberg. Would you say also because of the cost of
	regulations it has inhibited the companies' ability to get out
	and find the additional resource that is available to us.
	Mr. Simmons. Absolutely. It has not helped anything, but it
	has been one of a whole long laundry list of problems.
	Mr. Rehberg. Certainly it is not one issue this is, it is
	the cumulative effect.
	Mr. Simmons. Yes, the buildup over 30 years.
	Mr. Rehberg. Thank you, Madam Chair.
	Mrs. Cubin. Thank you.
	The Chair recognizes Mr. Carson.
	Mr. Carson. Just a couple questions for you. I thank you
	for being here today. Ms. Speer brought up the point that was
	not addressed in the testimony I heard, the testimony is quite
	eloquent and the evidence quite well that the actual footprint
	of new exploration platforms is actually quite low . She talked
	about the coastal development, the infrastructure needs to back
	that up. I want the three panelists from the energy industry to
	talk about their experience with that.
	And Ms. Speer, if you might respond to what their concerns
	are that it is not so much of the exploration equipment itself,
	but in fact, the roads in infrastructure to back that
	exploration up.
	Mr. Simmons. There was a terrific article in The New York
	Times in the last couple of months on the wildlife refuges of
	Louisiana, and I wasn't aware that Louisiana had wildlife
	refuges, and the data was remarkable because they have been
	doing the spoiling of the coastal plains in Louisiana for over
	50 years now, and the numbers in The New York Times, I have
	never known The New York Times to be proenergy, were really
	stunning.
	And so I would encourage you to have one of your staff dig
	out that article and look at it and just see that--you know,
	some stuff built 50 years ago was really built sloppily. But
	anything in the last 20 years has really been done in an
	unbelievable--I am not in the energy business. I am in the
	investment banking business. But I have worked with these
	energy companies for 30 years. They are very responsible
	corporate citizens. Most executives are passionate outdoorsmen.
	I have never known an outdoorsman that doesn't love the
	environment. So I think the reality turns out to be quite
	different than the rhetoric.
	Mr. Hackett. I might add the last five years are
	dramatically different than the first 15-, 20-year period that
	was referred to earlier in the testimony. As with most
	statistics they can tell you what you want them to tell you,
	depending on what period you choose. I do not know the actual
	details behind the comments that either of the witnesses have
	given you on the shoreline, but I will tell you that when you
	look at alternate fuels, which we thought might be the holy
	grail back in the late 1970's, early 1980's, we need to be very
	careful to know what we are getting into in terms of cost, in
	terms of damage to the environment.
	You talk about substituting for an offshore platform that
	has a one block imprint, granted, with affiliated structures on
	shore, and you look at an equivalent power generating capacity
	of a wind farm, some of which are out in California, and you
	are talking about sizes that are 320 times the size, 45 square
	miles to have a wind farm with comparable capacity. Ten square
	miles for a photovotaic farm to be able to produce solar
	energy. We were not talking about always environmentally
	friendly alternate technologies. We have got to use whatever we
	can the best way we can, but we have to keep in mind that no
	solution is perfect. There is always a balancing act that has
	to occur.
	Mr. Papa. Congressman Carson, I would echo those comments.
	I would recommend that you might want to take a look at this
	DOE report entitled ``Environmental Benefits of Advanced Oil
	and Gas Exploration and Production.'' I can tell you that
	technologies today are much different than they were 20 or 30
	years ago. Horizontal drilling, ability to drill multiple wells
	from a single location. Lots of activities. And I think the oil
	industry is unfortunately stereotyped by things that may have
	occurred 30 or 40 years ago, certain specific upset cases that
	may have occurred. But I think a look at the last five years
	particularly shows that we can be very responsible
	environmental citizens.
	Mr. Carson. Ms. Speer do you have a comment about those?
	Ms. Speer. Yes. First of all, I think that we all agree
	that the industry has done a tremendous job in improving its
	record of environmentally sound development. Things have
	improved dramatically in the last 20 years. That said, there
	are still very significant impacts that accompany offshore oil
	and gas development. Spills happen routinely. They happen in
	great magnitude.
	You need roads, you need processing facilities, you need
	storage tanks, you need an infrastructure that can have very
	significant impacts in the coastal areas. I was reading the
	comments of the State of Louisiana yesterday on the 5-year
	program, and they talk about continuing impacts that they are
	experiencing, particularly with respect to their coastal
	wetlands.
	Also, you know, you have air pollution that generates over
	100 tons per platform per year. Nearly 70 tons per exploratory
	well per year. You have water pollution, enormous amounts of
	waste are generated by those operations, and a lot of it is not
	handled by a closed loop system. Most of it is not on the OCS.
	Right now most of it is discharged over the side after minimal
	treatment.
	Mr. Carson. Great. Let me ask you a different question
	about that. The testimony of the IPAA was helpful about some of
	the tax policies that might be beneficial. Being from Oklahoma,
	I have a lot of friends in the oil and gas industry, and they
	talk often about tax policies that would encourage stripper
	wells and things like that from being kept up. I would like the
	comments of Mr. Simmons, Hackett and Papa about now that the
	emphasis seems to be access, if we have different tax treatment
	in the oil and gas industry, whether the deductibility of
	certain costs or changing the AMT, the very things you proposed
	in your testimony, to what extent will that get us to the holy
	grail of increased sustainable natural gas production?
	Mr. Simmons. I would repeat a comment that probably sounds
	like a broken record, but there are no silver bullets. Every
	one of them are important, and unfortunately, they all have to
	be done at the same time. And to the extent we don't do ten of
	the thousand, we are basically whatever the percentage that is
	behind. And again, it is the best thing you can do in
	conservation to the best thing you can do on access. And if we
	don't do them all at the same time, then the awful problems of
	California are going to be all over the United States for the
	next decade.
	Mrs. Cubin. The gentleman's time has expired. I would like
	to thank the witnesses for their valuable testimony and thank
	the members for their questions. This Subcommittee may have
	additional questions. And we will ask that you respond to them
	in writing if you would not mind doing that.
	I would like to thank the panel, and you are free to go. I
	would like to recognize now the second panel of witnesses,
	Marlan W. Downey, President of the American Association of
	Petroleum Geologists; Robert Fisher, President of the Montana
	Petroleum Association and Vice President of Ballard Petroleum;
	and Mr. David Alberswerth, Director of the BLM Program for The
	Wilderness Society. If you would please take your places at the
	table.
	Mrs. Cubin. Thank you. First I would like to recognize
	Marlan W. Downey.

	STATEMENT OF MARLAN W. DOWNEY, PRESIDENT, AMERICAN ASSOCIATION
	OF PETROLEUM GEOLOGISTS

	Mr. Downey. Thank you, Madam Chairman. I am President of
	the American Association of Petroleum Geologists, which is an
	international association that represents the energy
	professionals in geology, geophysics, and engineering
	worldwide. I was greatly impressed by the testimony and the
	questions coming before us, and I am going to skip over the
	testimony that I have provided in written form. And I am going
	to attempt to talk very briefly about some elements of the
	questions that have been brought up previously.
	I would like to start with just the simple description of
	what the scale of the problem is. I think from all estimates,
	we are going to need about 10 trillion cubic feet of new gas
	every year for the new demand. That is a tough thing to do. The
	good thing is that we do have enormous resources undiscovered,
	unproduced, but estimated in the United States. That is the
	good news. The bad news is that we do not get to go to Saudi
	Arabia or Qatar or Mexico or Venezuela for any of those
	supplies, as we can do for oil. America has to solve its gas
	problems all by itself, within its own boundaries, with
	possibly a little help from Canada.
	Gas is very difficult, very expensive, to transport, so
	forget about any significant help on our 10 trillion cubic feet
	of gas increase in demand every year from any other place than
	internal. It is our problem. Fortunately we do have a very
	large resource and I would say that, especially for that part
	that is located, appears to be located in the Rocky Mountains;
	I think it is vastly underestimated in the Rocky Mountains. We
	are going to need all of that, and we are going to need all the
	help we can get from conservation while we are at it.
	Now, the good news is that once upon a time not too long
	ago, in fact, for 25 years running, we found an extra 10
	trillion cubic feet of gas every year. Well, folks, we had 2000
	rigs running. Right now we have got a thousand. And we are
	barely able to stay ahead of the game and to find each year
	what we burn up last year. Natural gas is important in the
	United States for two reasons: One is that it emits a lot less
	carbon dioxide than any other fossil fuel when converted to
	electricity; that is good; the second one is that it provides
	much more nearly a quick fix for local energy problems, because
	given the equipment, you can start up a large gas turbine
	electric generating plant, in probably under a year, as opposed
	to four or five years for a coal-fired plant and an infinity
	currently for a nuclear plant.
	So that is a powerful reason why we were interested in
	being able to handle that natural gas. When we put those
	additional one thousand rigs to work for us to add that ten
	trillion cubic feet of gas, we have another subtlety in the
	problem. Shell won't help us, Exxon won't help us, ARCO and
	Amoco won't help us. All the majors have left the domestic
	onshore. The problem, and the solution, is going to be almost
	entirely with the small mom-and-pop operators, the independent
	producers that are drilling with most of those thousand rigs--
	using those thousand rigs currently.
	And I heard a mention of the taxation problems. Is there
	anything that can be done to help? Well, I will say that since
	the solution for this problem, if it is going to be attacked
	from a supply standpoint, is going to be the mom-and-pop
	independent operators, that there is a world of difference in
	how they need to operate in a tax system than the large
	companies. The small companies are capital short. They need to
	get their money back from each well they drill before they can
	drill another one. Currently you have to wait 7 years to fully
	recover your expenses, your general expenses from drilling a
	well.
	That doesn't bother Shell or Exxon, but it does bother
	small companies. Something that allows small companies to
	recover their cost, the same year they start recovering
	revenue, would make a world of difference for little companies.
	No less tax to the government, no greater benefit to the small
	company, but cash flow, little companies live on cash flow.
	At the end I have to agree, I would love to have the
	problem solved with conservation, but there isn't a chance in
	hell in the short term that can be anything but a partial help.
	I would love to have gas brought in from Alaska, but you are
	talking a decade from now. Short term, to keep our head above
	water, we better be encouraging domestic drilling by small
	companies in the United States. And if we do not, well, then,
	our national planners better be looking at a new energy future
	for the United States, one that doesn't count on natural gas.
	Thank you, Madam Chairman.
	[The prepared statement of Mr. Downey follows:]

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	Mrs. Cubin. Thank you, Mr. Downey. The Chair now recognizes
	Mr. Rehberg for an introduction.
	Mr. Rehberg. Madam Chair, it gives me a great deal of
	pleasure to introduce the next gentlemen to you, Bob Fisher
	from my home State, the State of Montana is president of the
	Montana Petroleum Organization, an organization I have had a
	real close association with since my dad was the executive
	director of the Montana Petroleum Association for many years.
	He is the senior vice president and managing partner of Ballard
	Petroleum holdings, a big name for a little company, and to
	tell you how much I have appreciated and honor the Ballard
	family, when I became lieutenant governor in 1991, I
	immediately appointed Dave Ballard to the Oil and Gas
	Commission in Montana, a position he still holds at the age of
	44 and is chairman of that commission.
	The most recent governor has reappointed him. And we just
	look to this family and to this company for their leadership
	within this arena that we are talking about today. Ballard
	Petroleum employs 28 people and produces 1100 barrels of oil
	per day. Bob is a professional geologist who, despite his
	youthful appearance, has spent 25 years in Montana's oil and
	gas business.
	Bob, welcome to the Energy and Minerals Resources
	Subcommittee. I really appreciate your taking the time. I know
	how many barrels of oil it took to fly you out here.

	STATEMENT OF ROBERT FISHER, PRESIDENT, MONTANA PETROLEUM
	ASSOCIATION, VICE PRESIDENT, BALLARD PETROLEUM

	Mr. Fisher. Thank you very much, Congressman Rehberg, thank
	you for your introduction. Madam Chair, members of the
	Committee, thank you for the introduction. I am here on behalf
	of Montana Petroleum Association and some of the mom-and-pop
	operations that Mr. Downey has just referred to. Independent
	producers supply over half of the Nation's natural gas needs.
	The company I helped establish, Ballard Petroleum is one of the
	few independent producers remaining in Montana. Since there has
	been so much addressed of the National Petroleum Council
	findings, I think I will address a few other concerns and some
	of the National Petroleum Council findings. Secretary Pena
	noted in 1998 that for a secure energy future, government and
	private sector decision makers need to be confident that
	industry has the capability to meet potential significant
	increases in future natural gas demand. That is a fairly
	prophetic outlook by Mr. Pena.
	It is important to note that at the same time, the Clinton
	Administration was restricting air emissions from coal-fired
	generation facilities, and we are restricting access to
	government lands and access to the basic resources. These are
	various forces that are put in motion, along with hundreds of
	other small things we have done over 30 years that have
	combined to create a very bad recipe for the long-term supply
	problems.
	In Montana, to give you an idea where we have been for the
	last decade or so, we have had three major forest service
	decisions, and I want to focus in on the forest service and
	BLM. Those three major decisions started with the Beaverhead
	National Forest in southwestern Montana. We started with about
	a million six, 2.1 million acres of land, a million six of it
	legally available. The games of explaining what is available
	for lease. No surface occupancy was almost a half a million
	acres. When they came out with their final EIS, a half a
	million acres is put into NSO; 741,000 acres is put into
	controlled surface use with timing limitations; and we had
	415,000 acres, bless their heart, that were standard lease
	terms, and it goes downhill from there.
	The next forest service decision has 997,000 acres
	available. Of that, 185,000 is put off discretionary
	unavailable, legally unavailable is 144,000 for wilderness
	areas. No surface occupancy takes up 384,000 or 45 percent of
	the forest remaining. Controlled surface use and timing
	limitations takes up another 25 percent, and bless their heart,
	they gave us 24,000 acres out of a million acres as standard
	lease terms. It gets worse. Lewis and Clark came along. The
	decision there in 1997, we had 1.8 million acres of land
	available to start with. 614,000 were the Bob Marshall
	wilderness areas and I love them. They are a great wilderness,
	but then the remaining 1.2 million acres, 356,000 no lease, the
	entire Rocky Mountain area of the Lewis and Clark Forest.
	363,000 acres, no surface occupancy. Controlled surface use and
	timing limitations takes up another 400,000, and bless their
	heart, standard lease terms, zero acres.
	I am here to tell you that access in Montana has been
	severely restricted and that the lands that were allowed to
	explore on and to help this country meet its energy needs have
	been severely restricted in Montana. As far as moving forward I
	think there have been a lot of good comments today,
	conservation being a very important issue, but I also think
	attitudes need to change, across the country, we need to work
	with the conservation groups, with environmentalists, with
	preservationists, industry and State, local and Federal
	governments. NIMBY has to leave. NOPE has to leave. And NOPE
	means ``not on planet earth,'' ``not in my backyard.'' .
	This whole attitude that this country needs energy, it is
	important to our economy, it is important to our way of life
	and our quality of life. And we all need to come to the table
	and work together. And there are some very successful
	cooperative efforts out there that we could look at and model
	going forward. Some of these are known as the petroleum
	showcase models that are out there in the Forest Service
	presently.
	I am a small operator and I can tell you this: these are
	personal experiences, when you go to do business on Federal
	lands, it takes 30 to 45 days to permit a well in Wyoming. I
	can drill it in 8 days. Okay. That is a 9,000 foot materials
	test. If I drill the same well which I did on Forest Service
	administered grasslands in Wyoming, it took me 6-1/2 months to
	get a permit. This country drills 24,000 wells a year. We have
	need to go to a pace of approximately 40,000 wells a year. We
	are short drilling rigs, but we also have to increase the pace.
	Streamlining the permitting process, bringing all the factions
	to the table when we are developing areas, is really critical
	for our country to meet, just to arrest the decline of
	production, let alone find new reserves.
	So I know my time is short, but there are a lot of acres
	that the Federal lands cover, 200-- over 252 million acres in
	the west. Not all those acres are in productive areas. The
	geologic basins that hold oil and gas are unique.
	So are some of the environmental concerns cover very unique
	areas, and sometimes we clash, but because we clash does not
	mean that the oil and gas sector has to be locked out of those
	areas. There are enough technologies out there now that we can
	mitigate environmental concerns, and I would just as soon have
	the Wilderness Society at the table with me, or the Nature
	Conservancy at the table with me so I know what to protect when
	I go into an area so I can develop those resources, because it
	does nobody any good to be issued an APD, an approved permit
	for drill, and then be served with a lawsuit and we begin the
	litigation.
	And there are enough examples throughout the Rockies where
	litigation can last up to a decade for a well to be drilled.
	And that serves nobody any good. I thank you for your time.
	Mrs. Cubin. Thank you.
	[The prepared statement of Mr. Fisher follows:]

	Statement of Robert W. Fisher, President, Montana Petroleum
	Association, and Senior Vice President/Managing Partner, Ballard
	Petroleum Holdings, LLC

	Madam Chairman, Members of the Committee, for the record my name is
	Robert Fisher and I am the President of the Montana Petroleum
	Association (MPA) and Managing Partner in a small independent
	exploration and production company headquartered in Billings, Montana.
	It is a distinct honor to be here today at the invitation of
	Congressman Rehberg to represent the MPA and independent oil and gas
	business at work in the Rocky Mountain States.
	Independent producers supply over half of the Nation's natural gas
	needs. The company I helped establish, Ballard Petroleum, is one of the
	few independent producers remaining in the state of Montana. I am here
	today to attempt to convey to this Committee the challenges facing all
	exploration companies in their quest to help this Nation meet its
	energy needs. Specifically, I would like to address some of the
	findings of the 1999 National Petroleum Council report on natural gas,
	entitled Meeting the Challenges of the Nation's Growing Natural Gas
	Demand .
	The 1999 NPC report was prepared at the request of then Secretary
	of Energy, Federico Pena. Secretary Pena noted that, For a secure
	energy future, government and private sector decisions makers need to
	be confident that industry has the capability to meet potential
	significant increases in future natural gas demand. A very prophetic
	outlook indeed.
	It is important to note that in 1998 the Clinton Administration was
	restricting air emissions from coal-fired generation facilities forcing
	this sector toward increased natural gas usage to meet new air quality
	standards and at the same time fostering an environment in our Federal
	land management agencies that continued to restrict access to
	government lands and access to the basic resource. To put these various
	forces in motion without consideration of the impact on the commodity
	of natural gas was poor policy decisionmaking at best, and a recipe for
	long term supply problems.
	The 1999 NPC report identified several key factors influencing
	natural gas supply and deliverability to this nation. These factors
	include:
	<bullet> LAcess to resources and rights-of-way
	<bullet> LContinued technological advancements
	<bullet> LFinancial requirements for developing new supply and
	infrastructure
	<bullet> LAvailability of skilled workers
	<bullet> LExpansion of the U.S. drilling fleet
	<bullet> LLead times for development
	<bullet> LChanging customer needs
	In regards to the National Petroleum Council's report, I would like
	to relate my company's specific interactions with various government
	agencies and other examples of Montana's attempts to help meet this
	Nation's energy needs.
	First, a history of various Federal agency actions was prepared to
	give this Committee a reference point from which to evaluate the
	ability of the industry in Montana to help assist this Nation in the
	development of energy resources and power generation.
	In January 1994 the Beaverhead National Forest began scoping for a
	new Environmental Impact Statement (EIS) for oil and gas leasing. In
	February 1996 a Record of Decision (ROD) was issued concerning the
	original 2,149,300 acres.
	<bullet> LLegally Unavailable 503,400 acres (23 percent)
	<bullet> LAdministratively Unavailable 9000 acres (<1 percent)
	<bullet> LAdministratively Available 1,636,900 acres (76 percent)
	Of the Administratively Available acreage the following
	designations were enacted:
	<bullet> LNo Surface Occupancy (NSO) 479,300 acres (22 percent)
	<bullet> LControlled Surface Use (CSU)/Timing Limitations (TL)
	741,700 acres (35 percent)
	<bullet> LStandard Terms (STD)* 415,900 acres (19 percent)
	*Bureau of Land Management (BLM) standard lease terms are
	applicable.
	In February 1996 a Record of Decision was issued by the Helena
	National Forest covering approximately 997,700 acres. In July 1996 the
	Forest Service promptly withdrew their 2/96 ROD because of other
	reasonably foreseeable projects that had arisen since the EIS was
	prepared. Subsequently, a new ROD was issued in May 1998 with the
	following leasing availability designations:
	<bullet> LLegally Unavailable 144,500 acres (14.48 percent)
	<bullet> LAdministratively Available 853,200 acres (85.52 percent)
	Of the Administratively Available acreage the following
	designations were enacted:
	<bullet> LDiscretionary Unavailable 185,100 acres (18.55 percent)
	<bullet> LNo Surface Occupancy 384,700 acres (38.56 percent)
	<bullet> LControlled Surface Use and or Timing Limitations 258,700
	acres (25.93 percent)
	<bullet> LStandard Terms Only 24,700 acres (2.48 percent)
	Finally, in September 1997 a Record of Decision was issued for
	1,862,453 acres in the Rocky Mountain Division and the Jefferson
	Division of the Lewis and Clark National Forest with the following
	leasing availability designations:
	<bullet> LLegally Unavailable 614,458 acres (33 percent)
	<bullet> LAdministratively Available 1,247,995 acres (67 percent)
	Of the Administratively Available lands the following designations
	were enacted:
	<bullet> LNo Lease 356,111 acres (19.12 percent)
	<bullet> LNo Surface Occupancy 363,033 acres (19.49 percent)
	<bullet> LControlled Surface use 393,793 acres (21.14 percent)
	<bullet> LControlled Surface Use and or Timing Limitations 135,058
	acres (7.25 percent)
	<bullet> LStandard Lease Terms 0 acres (0 percent)
	It is important to note that for the Rocky Mountain Division no
	lands were offered for lease. Only certain lands will be offered for
	lease in Central Montana in the Jefferson Division of the Lewis and
	Clark National Forest.
	The summary of these three combined Forest Service decisions is as
	follows:
	<bullet> LTotal Forest Service Acres 5,009,453 acres
	<bullet> Legally Unavailable 1,262,358 acres (25.2 percent)
	<bullet> LLegally Available 3,747,095 acres (74.8 percent)
	<bullet> LAdministratively/Discretionary Unavailable 194,100
	acres (3.87 percent)
	<bullet> LNo Lease 356,111 acres (7.10 percent)
	<bullet> LNo Surface Occupancy 1,227,033 acres (24.15 percent)
	<bullet> LControlled Surface Use and or Timing Limitations
	1,529,251 acres (30.53 percent)
	<bullet> LStandard Lease Terms 440,600 acres* (8.80 percent)
	*94 percent of these available acres are in the Beaverhead
	National Forest These combined decisions have potentially cost the
	State of Montana 10 to 30 TCF in natural gas reserves. This equates to
	tens of billions in revenues for local and state government.
	In October 1997 Mike Dombeck, Head of the U.S. Forest Service,
	issued a memo to all employees of the USFS stating the following:
	Recently, Forest Supervisor Gloria Flora and the staff of the Lewis
	and Clark National Forest made a decision to not allow any further
	exploration for oil and gas on the Rocky Mountain Front. The decision
	was widely and positively covered by the media, including several
	national outlets. This decision was based primarily on the will of the
	people who responded to the draft EIS and preferred alternative. If
	collaborative stewardship is to be a cornerstone of our working
	relationship with the American people, we must, as the Lewis and Clark
	National Forest has done, demonstrate that the will of all people will
	be one of our key bases for decisions, along with sound science and
	resource objectives. This is true conservation leadership.
	When you have people in the highest positions of government
	praising their employees for eliminating access and locking up the
	resource base then you create an environment that fosters opposition to
	Congressionally mandated Multiple-Use land policies. The greatest
	concern of our industry following these decisions was the copycat
	phenomenon that would ensue following, in particular, the No-Lease
	Decision of the Lewis and Clark Forest. This perceived threat to
	responsible resource development and to basic access is now coming to
	fruition in the State of Wyoming in the recently released Preferred
	Alternative for the Bridger-Teton Forest. The Forest Service decision
	to adopt a No Lease policy even after a 10-year process to prepare the
	Bridger-Teton Land and Resource Management Plan is in total disregard
	for the science and detailed planning that went into the document. This
	latest decision by the Forest Service bypasses Congressional directives
	for multiple-use and places another 370,000 acres in a de-facto
	wilderness classification and more resources off limits.
	Following these decisions, of course, was the designation of
	Monument status for almost one-half million acres along the Upper
	Missouri River and the Clinton Administration's Roadless Initiative
	that locked up over 6 million acres of Forest Service land in Montana.
	Attitudes must change!
	<bullet> LNIMBY: Not in my back yard
	<bullet> LBANANA: Build Absolutely Nothing Anywhere Near Anyone
	<bullet> LNOPE: Not On Planet Earth
	Our country cannot afford the radical swings of policy that can
	adversely effect our environment or our national security. Responsible
	development with utmost care for the environment is not mutually
	exclusive!
	The problem facing this industry and this Nation is reasonable
	access to resources! The National Petroleum Council went further in its
	recommendations by stating that The Council believes that unprecedented
	and cooperative effort among industry, government, and other
	stakeholders will be required to develop production from new and
	existing fields and build infrastructure at sufficient rates to meet
	the high level of demand indicated in this study.
	Specific examples of the regulatory burden and inefficiencies are
	everywhere. As an independent exploration company Ballard Petroleum
	(BPL) has dealt with many of the Regional BLM and Forest Service
	offices throughout the western U.S.
	In the Manti-LaSal Forest of Utah it took BPL 10 months to receive
	a permit to drill a single well. The well was drilled in two weeks time
	on Forest Service lands and subsequently plugged. We then left the area
	for the winter months and came back to reclaim the well pad per USFS
	regulations. The USFS intervened and requested changes to the
	previously approved USFS reclamation plan. These changes then had to be
	re-submitted and re-approved. This process took the entire summer and
	early fall period. The USFS instructed reclamation to begin just prior
	to the fall snow period. BPL began reclamation knowing that there was a
	significant chance of snow and that operations would be forced to stop
	due to heavy snows. The snow came, we were forced to leave and then
	subsequently served with a non-compliance letter for not reclaiming the
	well pad in a timely manner. If BPL had been left alone, BPL would have
	properly reclaimed the location in June and July of 2000. Instead, the
	USFS bureaucracy cost BPL the entire summer period of decent working
	weather due to the USFS mandated changes to a previously approved USFS
	reclamation plan!
	Another example of stifling regulatory oversight experienced by BPL
	was in the Powder River Basin of Wyoming in 1999/2000. In order to
	permit a single well on the USFS administered Thunder Basin Grasslands
	it took BPL 6 months to receive an approved permit to drill. It took 8
	days to drill the well.
	Generally speaking, when operating in the Powder River Basin of
	Wyoming, it takes one week to two weeks to drill 5000 to 12000 feet in
	depth. It takes the Forest Service a minimum of 6 months to permit a
	single well as opposed to 30-45 days for the BLM to permit the same.
	The industry in the United States needs to drill thousands of new wells
	every year to arrest the natural decline of known resources and to
	develop new reserves to meet this Nation's energy needs. If you examine
	production volumes in this country you will find that all producing
	areas are declining in production except for one area in Wyoming, the
	Powder River Basin.
	In the Rocky Mountain States of Montana, Wyoming, Colorado and Utah
	there are 44,655,799 acres of Forest Service lands and 45,771,563
	available acres of BLM lands. (1995 statistics) The National Petroleum
	Council report identifies additional resources by region in excess of
	300 TCF in the Rocky Mountain Foreland Basins and Overthrust Province.
	Continued restriction of access to these resource areas will only drive
	investment away. Our Federal, state and local economies will continue
	to lose revenues. Our nation will continue to lose good paying natural
	resource jobs and will become even more dependent on imports of all
	resources, not just natural gas and oil.
	Montana and the Western States have a wealth of natural resources
	that can be responsibly developed. Eastern Montana can supply the
	Nation with super-compliant low sulphur coal. Coalbed Natural Gas is
	just beginning to be developed in Montana and could supply several TCF
	for future energy needs. Montana's Overthrust province may hold in
	excess of 20 TCF but is currently out of reach because of recent USFS
	decisions. The representatives for the western States need to take a
	much more aggressive role in Federal lands decisions or their state
	economies will suffer!
	The Oil and Gas Industry can address the concerns voiced by the
	National Petroleum Council pertaining to investment, drilling fleet
	expansion, technological advancement, training skilled workers and
	contracting lead times for development.
	Our industry cannot solve government lands access issues without
	unprecedented cooperation from our government! Federal surface
	ownership in the western U.S. totals more than 252 million acres. The
	Forest Service needs to have a specific mandate from Congress that
	directs that prudent, environmentally sound resource development needs
	to be considered on an equal footing with current environmental and
	sense of place issues that are dominating the decision processes.
	Public land managers of the Forest Service are ignoring Congressional
	mandate that directs the Forest Service to support, facilitate, and
	administer the orderly exploration, development, and production of
	mineral and energy resources on National Forest System lands to help
	meet the present and future needs of the nation.
	There are those in the government and the press that are very quick
	to point the accusatory finger of blame at industry, but please examine
	the facts and your sacrosanct positions. The government, in aggregate,
	is the largest natural gas producer in our country and therefore
	benefits enormously from this resource base. At the same time the
	government is further restricting access to the resource base at an
	alarming pace, both onshore and offshore through moratorium, No Surface
	Occupancy, No Lease declarations and regulatory overlap of Timing
	Limitations and Controlled Surface Use stipulations.
	The greatest impediment to securing our Nation's natural gas
	resources for energy generation is our own Federal Government! Since
	the early 1980's there has been an enormous amount of discussion/
	reporting on the ever-increasing volumes of imports and potential
	energy shortages. Well, the energy shortages are here (California and
	the Northwest United States), imports are at all time highs and
	government continues to reduce access to oil and gas minerals on public
	lands. Our country has just experienced something that many of us only
	thought happened in Third World nations and portions of the Former
	Soviet Union rolling black outs and power shortages. With snow pack and
	moisture levels at record lows in the Northwest and low levels of
	natural gas in storage the individual consumer and all of business has
	not seen the end of the energy shortages and high power bills!
	As a Nation it is easy to sit back and enjoy low inflation and a
	vibrant economy while putting off the nagging question of energy policy
	when the raw commodity is cheap. Now that energy has everyone's
	attention our Nation rushes to govern, as more often than naught, by
	crisis. My brother served in Desert Storm, for cheap oil. He came
	home--others did not! Leadership demands that this Nation describe a
	course that best meets the demand for energy, in high or low commodity
	price environments, that protects our citizenry and arguably the
	strongest economy on earth.
	If you can't access the basic resources don't be surprised when you
	reach for the light switch and there is no light!
	______

	[Attachments to Mr. Fisher's statement follow:]

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	Mrs. Cubin. The Chair now recognizes Mr. David Alberswerth.

	STATEMENT OF DAVID ALBERSWERTH, DIRECTOR, BUREAU OF LAND
	MANAGEMENT PROGRAM, THE WILDERNESS SOCIETY

	Mr. Alberswerth. Thank you, Madam Chairman. Before I start,
	I couldn't help but notice that the staff has identified me
	that I am with the BLM. And I can assure you that the current
	management at the BLM would be dismayed to hear this. Thank you
	very much for the opportunity to testify on behalf of the
	Wilderness Society today on this important topic of the public
	lands' contribution to domestic natural gas supplies.
	My name is David Alberswerth and I am the director of the
	Wilderness Society's Bureau of Land Management Program. Prior
	to joining the Wilderness Society staff last year, I served the
	Clinton Administration within the Department of Interior as
	special assistant and senior advisor to the Assistant Secretary
	for Land and Minerals Management. It is the Wilderness
	Society's hope that in exercising its oversight role regarding
	this important matter, the Subcommittee will seek to be as
	objective as possible in reviewing the extent of natural
	resources on our public lands and the environmental values that
	also reside on those lands that can be placed at risk by
	natural gas exploration and development activities.
	For although natural gas extracted from our public lands is
	an important component of our Nation's well being, the
	environmental, wildlife, watershed, and wilderness values of
	those lands are also vitally important to Americans. Some
	suggest that these two interests are incompatible, or that we
	cannot meet our energy needs without sacrificing some of our
	most precious lands. The Wilderness Society believes that we
	can meet our energy needs without sacrificing our most
	treasured natural landscapes. In fact, America has a proud
	tradition of combining a strong economy with strong
	environmental values, and we urge the Subcommittee to be guided
	by both goals. A review of some pertinent facts, which I will
	set forth below, demonstrates clearly that this is possible.
	One fact of central importance that I wish to draw to the
	Subcommittee's attention is that the vast majority of public
	lands managed by the BLM in the overthrust belt States are
	presently open to leasing exploration and development by the
	oil and gas industry. In fact, information presented to the
	Assistant Secretary for Land and Minerals Management by the BLM
	in 1995 indicated that over 95 percent of BLM lands in those
	states, including split estate State lands, were available for
	oil and gas leasing.
	Although there have been some changes in the land status of
	some of the lands indicated on the attachment to my testimony,
	the data here is still essentially valid, and I would suggest
	it would be in the Subcommittee's interest to request an update
	of that data from the BLM for the Subcommittee's consideration
	of next week's hearing on the same topic. In addition, the
	Subcommittee should ask the Interior Department for its report
	to Vice President Cheney's energy policy task force, which I
	understand is being finalized this week and will be submitted
	to the task force.
	I think, given the Subcommittee's charter here for
	oversight of Federal land policies and their relationship to
	energy development, that the direction that the Vice
	President's task force is headed is of vital importance to this
	Committee. It is also relevant to any discussion of our public
	land energy policies to understand that the BLM has been
	carrying out a robust onshore oil and gas leasing program for
	the past decade. For example, the Clinton Administration issued
	oil and gas leases on more than 26 million acres of public
	lands during the last 8 years.
	Mr. Alberswerth. There are nearly 50,000 producing oil and
	gas wells on the public lands. Thousands of new drilling
	permits have been issued during the past 8 years, 3,400 by the
	BLM in fiscal year 2000 alone. Production of natural gas from
	onshore and offshore Federal lands has steadily increased from
	1991 to the present.
	Now, criticism by some that in recent years too much public
	land has been made unavailable for oil and gas activities is
	simply not supported by the facts. Upon close examination,
	industry criticism of lack of access to onshore public lands
	really falls into two categories: Lands that are off limits
	entirely to oil and gas development and lands available for
	development if the industry takes special care of the
	environment. The former areas include wilderness areas,
	wilderness study areas and areas such as steep slopes or areas
	where other mineral activities are taking place; in other
	words, places where oil and gas activities could pose extreme
	environmental or safety hazards or be incompatible with other
	values. Currently such areas comprise roughly 5 percent of BLM
	managed lands in the five States.
	The latter category often encompasses areas where evidence
	indicates the presence of sensitive wildlife habitat such as
	elk calving areas or sage grouse leks where operations at
	certain times of the year could pose severe threats to
	wildlife. The basic types of stipulations imposed by the BLM
	are described in more detail in my written statement.
	Although industry public relations campaigns frequently
	emphasize the benign nature of contemporary exploration and
	development practices and technologies, when required by the
	BLM to utilize these technologies to minimize environmental
	impacts the industry is reluctant to do so, as we have been
	hearing here today. In fact, in testimony delivered before the
	Full Committee last week, the Independent Petroleum Association
	of the Mountain States specifically singled out protection of
	elk habitat as an example of an unnecessary environmental
	precaution. The witness' candor was refreshing. Clearly the oil
	and gas industry cares little for the concerns shared by most
	Americans that environmental values on our public lands be
	protected. However, the purpose of these stipulations which the
	industry disdains is simply to ensure that these advanced
	technologies touted elsewhere are used to minimize the impact
	of energy production on environmentally sensitive public lands.
	In conclusion, I had planned to talk about everybody's
	favorite natural gas report here today. I hope everybody would
	agree on the basic data in there. Our conclusion from reviewing
	that report is that there is about a 40-year supply of natural
	gas without having to go into the sensitive areas that the
	industry is complaining about that they would like to go into.
	In any event, in conclusion, if we are careful we can
	pursue energy policies that allow and even encourage increased
	natural gas use while protecting sensitive public lands and the
	environmental values that all Americans have a right to have
	protected, but our policies must also recognize that there are
	adverse impacts to natural gas development and valid safety
	concerns with natural gas distribution issues that should not
	be swept under the carpet in a headlong drilling and
	development frenzy.
	Thank you very much.
	[The prepared statement of Mr. Alberswerth
	follows:]<plus-minus><plus-minus>

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	Mrs. Cubin. Thank you, Mr. Alberswerth, and thank all of
	you for your testimony.
	My first question will be of Mr. Downey. I understand that
	you have some geologic experience on the North Slope of Alaska.
	Can you describe for me, please, how much gas Prudhoe Bay and
	satellite fields could provide to the lower 48 States and how
	long it would take to get that down?
	Mr. Downey. Sure, I think the key thing is that in Prudhoe
	Bay, the 30 or 40 trillion cubic feet that are there are not
	available at all for going to a pipeline, not for many years,
	and the reason is simple physics. It is the gas at Prudhoe Bay
	that moves the oil out so that it flows to the pipeline. As
	soon as you take the gas out, the oil stops flowing. So the
	only time that any reasonable person would start tapping into
	the gas at Prudhoe Bay is long down the road when we run out of
	oil in Prudhoe Bay. All the rest is wishful thinking.
	Mrs. Cubin. Can you identify for me some of the high gas
	potential areas in the United States, the lower 48, that have
	serious access problems?
	Mr. Downey. I would defer to some of the other people who
	have had firsthand experience as to access, as I have never
	myself permitted a well in those areas. I would say that I
	think the Rocky Mountains is going to be one of the great gas
	provinces of the United States. We had a wonderful technical
	conference a few months ago in which people were pointing out
	an entirely new development of gas, and of a gas accumulation
	that is largely restricted to the Rocky Mountains, and I think
	you all are going to be a major exporter of gas to save
	California in the years to come.
	Mrs. Cubin. Could you explain to me why Mexico isn't a
	potential source of natural gas?
	Mr. Downey. They are a user. We supply gas to them, about,
	I think, 140 million cubic feet of gas per day. They need all
	they can get, and they are buying from us. Not much of a chance
	they will turn around and stop buying and start exporting.
	Mrs. Cubin. One last question, Mr. Downey, if you don't
	mind. Is there any gas potential in the OCS off our
	northeastern United States that are akin to the Sable Island
	discovery and project off of Nova Scotia that Mr. Markey
	referred to?
	Mr. Downey. Sure, there is potential, because we haven't
	been allowed to explore there, but all you have to do is go
	across the State line into Canada. They are finding all sorts
	of gas in that same setting and, thanks to Canada, they are
	keeping northeast United States warm with offshore Canadian gas
	while northeastern states refuse to allow it to be drilled and
	produced from their own offshore. I hope Canada stays friendly.
	Mrs. Cubin. Isn't that the truth? It really makes you
	wonder, doesn't it?
	My next question, I guess, will be for Mr. Alberswerth. You
	talk about the 95 percent of BLM land that is available for oil
	and gas leasing. Does that include land that has no prospects
	at all for oil and gas production?
	Mr. Alberswerth. That 95 percent, Madam Chairman, is within
	the overthrust belt States of Montana, New Mexico, Colorado,
	Utah and Wyoming, and the information that I presented was
	based on information developed by the BLM in response to a
	question as to what the potential availability of oil and gas
	resources were in those States. It is probably not as precise
	as one might want. I am sure that there are lands, you know,
	incorporated in that analysis by the BLM that may not have oil
	and gas potential, but I couldn't tell you where they are. It
	would be a good question to perhaps ask the BLM, you know, if
	they could do a better job of disaggregating that information.
	Mrs. Cubin. Well, hopefully in the study that is being done
	by the USGS, or will be soon done by the USGS, they can get
	that information. I think all of the information that we need
	is really out there. It is just a matter of someone bringing it
	all together, focusing on it and applying it to reality.
	Mr. Alberswerth. That is right, and I want to make clear,
	though, it doesn't include States like Idaho and Nevada, for
	example.
	Mrs. Cubin. It did not?
	Mr. Alberswerth. No, ma'am, it does not include those
	States which are generally considered to not have a great deal
	of oil and gas potential. So we had asked information from
	States where there was an ongoing oil and gas program.
	Mrs. Cubin. As you know, the subsurface of the U.S. Forest
	Service land is managed by the BLM, but BLM will not lease any
	Forest Service land for oil and gas without Forest Service
	approval, is that correct?
	Mr. Alberswerth. That is correct, and that 95 percent
	figure, I just want to be very clear about this, does not
	include Federal oil and gas on national forest lands. It is
	only BLM-managed surface and subsurface State or Federal
	minerals under privately owned lands. As you know, in your
	State of Wyoming there is a lot of split estate land, so it
	does not include minerals on national forests.
	Mrs. Cubin. Is the 95 percent adjusted for areas like the
	BLM lands in southwest Wyoming where layering of multiple
	overlapping restrictions of wildlife protection leaves such a
	small window of availability of time and so for all practical
	purposes they can't drill because the time is too short?
	Mr. Alberswerth. Well, see that is a dispute here. I
	mean--.
	Mrs. Cubin. Pardon me.
	Mr. Alberswerth. That is a dispute.
	Mrs. Cubin. Okay.
	Mr. Alberswerth. The 95 percent are lands that are
	available for oil and gas leasing and development, much of
	which is in fact subject to the sorts of environmental
	protections that members of the previous panel and others have
	objected to. For example, the seasonal elk habitat, no surface
	occupancy stipulation there is correct. In our view, those are
	appropriate protections that have been proposed.
	Mrs. Cubin. Sure.
	Mr. Alberswerth. In an attempt by the BLM to try to reach
	this balance, you know, where you allow oil and gas activities
	but they are trying to protect seasonal elk habitat or other
	types of wildlife habitat.
	Mrs. Cubin. I want to look at that language again just a
	second. 95 percent of BLM land is available for oil and gas
	leasing, and you are saying that doesn't count any of the BLM
	land in Idaho. Is that what you said?
	Mr. Alberswerth. Yes, the 95 percent figure, if you look
	carefully at the attachments, is in the States of Montana,
	Wyoming, New Mexico, Utah and--.
	Mrs. Cubin. And another one.
	Mr. Alberswerth. Colorado, excuse me. That is right. It
	does not include any other Western State and I should add, too,
	you know, there is an oil and gas program that is fairly
	significant in the State of California, but this whole debate
	about restrictions seems to be centered in overthrust belt
	States. So that is where that information is concentrated.
	Mrs. Cubin. But all of those nine, that 95 percent that you
	are talking about has restrictions, I don't mean every single
	square foot has restrictions but across the 95 percent there
	are other restrictions in place due to regulations, rules,
	things other than land designations, right?
	Mr. Alberswerth. I would assume so.
	Mrs. Cubin. And land designations, wilderness study areas,
	for example, would be included in that or not?
	Mr. Alberswerth. No, ma'am. My understanding is, and it may
	be worth asking the BLM about this, that the 95 percent
	excludes wilderness study areas. In other words, wilderness
	study areas are in the 5 percent where oil and gas leasing is
	not allowed.
	Mrs. Cubin. And you know, I think that the 95 percent
	figure can be very misleading because it is like I said with
	the coal in Black Hills National Forest, if you do drill on 95
	percent of it or you can mine in 95 percent of it but you can't
	mine where the coal is, it doesn't do you much good, and I
	think that is the claim a lot of people have made in a lot of
	the objections I have personally heard.
	Now a question for Mr. Fisher. Can you tell me your
	comparative experiences in permitting wells between the Forest
	Service, BLM and various State Oil and Gas Conservation
	Commissions? And the reason I ask this is because I am curious
	about a bill--not curious about, obviously I think it is a good
	idea or I wouldn't be writing a bill about it, but allowing the
	State Conservation Commissions to administer programs
	permitting wells. So just give me an idea of your experiences
	in dealing with those regulatory agencies.
	Mr. Fisher. From a standpoint of the Forest Service,
	generally the rules that are in place right now prohibit
	obtaining a drilling permit in less than 6 months. They can
	take upwards, I believe, to 10 months and my personal
	experience is, drilling a 9,000 foot well in the Powder River
	Basin on grasslands administered by the Forest Service, 6-1/2
	months to get a permit.
	Drilling a 3,500-foot overthrust test in the Manti-La Sal
	Forest in Utah, 10 months for a two-acre disturbance.
	Mrs. Cubin. Forest Service.
	Mr. Fisher. Forest Service, Manti-La Sal. I spent $700,000
	on a rig and the well cost me $400,000 to drill. I drilled the
	well in two weeks. There are some very disproportionate costs
	associated with conducting business on the Forest Service. When
	we get to the BLM, the BLM usually takes 30 to 45 days to
	process an APD. They are quite efficient, I think. They do a
	good job at it. When they have concerns, you have longer
	periods of time to get an APD, specific wildlife concerns or
	something that is special to or unique to an area, and those
	are understandable and you have to mitigate them.
	Mrs. Cubin. Is that in the Powder River Basin that you are
	speaking of?
	Mr. Fisher. I have permitted BLM in the Powder and down in
	Colorado, Utah, Montana. All four States I have done business
	in.
	Mrs. Cubin. Okay.
	Mr. Fisher. The BLM is fairly efficient at it and you have
	more personnel within that agency that have, or are ex-oil
	field if you will. They have some knowledge of the oil and gas
	industry. What I find, there is a very large gap between the
	knowledge base in the Forest Service in oil and gas operations
	and in the BLM, and that large gap I think has served the
	industry very poorly in the last decade on a lot of decisions
	that have been made concerning Forest Service lands. We have
	done a lot of effort to try to educate the Forest Service and,
	to put it bluntly, I think we are wholly ignored in the State
	of Montana when it comes to current technologies and smaller
	footprint technologies.
	Mrs. Cubin. What do you mean by wholly ignored?
	Mr. Fisher. We bring the data to them from service
	companies, from drilling contractors, from our known
	experience, explaining closed mud systems, explaining
	directional drilling multiple wells from a single pad, what our
	limitations are. In overthrust provinces you are not going to
	reach out much more than a mile. There are technologies now
	that could reach up to five miles, but you are in soft
	sediment, you are in offshore type situations. Alaska is
	different, but they can reach upwards of five miles in Alaska.
	Not in the lower 48. We do not have the tools, we do not have
	the technology, and it is much more complex geology.
	To the extent that I gave a lot of testimony on the Lewis
	and Clark, that I participated in the Helena National Forest
	debate and the results of those, I think when we talk about
	pendulums swinging one way or the other, whether or not the
	environment is the driving force in the decision process or the
	resource is the driving force, if the pendulum swings in either
	direction it is bad because something is ignored, and I am here
	to tell you in the State of Montana the resource development on
	Forest Service lands was wholly ignored in favor of environment
	exclusively, and those are the results of the decisions. So--.
	Mrs. Cubin. Do you think there is a significant difference
	in the environmental protection outcomes between those
	different agencies, including the State ConservationCommission?
	Mr. Fisher. I don't think the State does as good a job, if
	you will. If I permit on fee minerals, if I permit on State,
	the State of Montana has some fairly strict application of
	environmental laws through NEPA standards which are much like
	NEPA and so that permitting on State lands can be quite
	difficult if there are environmental concerns, but generally
	State lands are not in uniquely sensitive environments. Now
	there some along the Rocky Mountain front and other areas
	without a doubt.
	Mrs. Cubin. So between Forest Service and BLM, is there a
	significant difference between them in the resulting
	environmental protection that comes from those, you know, that
	they put out?
	Mr. Fisher. I don't believe so. The standards are
	relatively the same. I think the Forest Service a lot of times
	has different environments to deal with than the BLM. But then
	the BLM comes in after the Forest Service makes the decision
	and then administers the APD and you go through an entire other
	round of environmental analysis through the APD process.
	Mrs. Cubin. Does one or the other have a higher standard, I
	guess is what I am trying to say.
	Mr. Fisher. I would say that the Forest Service without a
	doubt has a higher standard to meet for environmental
	protection.
	Mrs. Cubin. Yes, that was the question, the way I should
	have put it in the first place. Well, I would like to thank you
	gentlemen for being here, taking your time today and would ask
	that you would respond to any questions that the Subcommittee
	members would like to ask but weren't able to do that. So thank
	you very much.
	The Subcommittee on Minerals and Energy is now adjourned.
	[Whereupon, at 4:17 p.m., the Subcommittee was adjourned.]

	[Additional material supplied for the record follows:]

	[A statement submitted for the record by Red Cavaney,
	President and CEO, The American Petroleum Institute, follows:]

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