Energy the basis of industrial societies such as the United States, is critical to our standard of living and our security. Deregulation in petroleum production and transportation has enabled energy markets to respond to economic signals and become more efficient. However, the U. S. is dependent on foreign sources for more than 50% of the oil we consume, creating a national security problem. The U.S. obtained 85 percent of its energy from fossil fuels in 1997, nearly 40 percent from oil alone (more than half was imported), and 24 percent from natural gas (1). U.S. fossil-fuel dependence, like that of the rest of the world, will not significantly decline in the foreseeable future. It has been estimated that fossil fuels will provide two-thirds of all world energy needs in 2030 and half or more in 2100 (2). In the U.S., fossil energy is forecasted to increase to over 89% of the energy consumed in the year 2020 (1). U.S. oil imports, according to the "reference" forecast of the Department of Energy, would grow from 9 million barrels per day in 1995 to 14 million barrels per day in 2015, and continue to increase for some time thereafter. In the U.S., natural gas has become an increasingly important energy resource, and is the fuel of choice for new electrical generation. This trend to natural gas is likely to continue for several decades into the 21st century and contributes positively to U.S. environmental objectives by reducing CO2 emissions to the extent that gas replaces coal (3).
Technological advances are critical to ensuring that America’s resources are adequately developed. Technological innovation drives down costs and brings new efficiencies to the entire spectrum of energy supply. As a result of past innovation, the U.S. is the most efficient conservator of oil and gas production in the world. The U.S. is the only country that captures significant quantities of oil and gas from marginally economic wells and continues to explore for new resources in mature basins. Through efficient exploration, operating practices, and application of advanced technologies, marginal wells account for nearly one out of ten barrels of domestic oil production (330 million barrels of oil) and 9.38 billion cubic feet of gas (IOGCC Marginal Oil and Gas: Fuel for Economic Growth). Large investments in new technologies have helped the energy industries to meet the environmental challenge. Today, as a result of technologic innovation the pollution risks associated with our producing fields have been dramatically reduced, the gasoline we burn in our cars is strikingly cleaner, and all environmental impacts of U. S. energy use have been reduced.
Energy research and development, both public and private, have contributed greatly to our past energy successes. Technologies such as three-dimensional seismic, drilling advances (e.g., horizontal drilling and polycrystalline drill bits), and information technologies have unleashed productivity in the oil and gas industry. However, as we have turned to imported oil and overseas exploration, there has been a growing loss of domestic energy infrastructure. The last decade has witnessed the elimination of 500,000 high-quality jobs in the U.S. petroleum industry (according to data complied by the U.S. Bureau of Labor Statistics). Lack of consistent attention to longer-term investment in energy R&D has resulted in a shrinking population of U.S. scientists and engineers available to perform high-quality R&D, and a loss of a new generation of technologists. The tremendous loss of experienced and entry-level technical personnel is a constraint on domestic exploration and production activity and on energy R & D.
Over the last two decades, major oil and gas companies have refocused their efforts away from the United States. Today, the exploration, development, and R&D programs of the major oil and gas companies are largely directed overseas. Maintaining and enhancing domestic petroleum reserves and production has been left to a large extent in the hands of independent operators. Out of necessity these smaller companies do not maintain private R &D efforts and operate on foreshortened time horizons (in Kansas, 89% of the 2,534 currently active oil and gas companies have fewer than 20 employees). The result, research and development directed at, and appropriate for maintaining U.S. energy resources is threatened. This reduction in private-sector R&D occurs at a time when science and technology are of growing importance to the continued development of needed energy resources. We must increase and focus our investment in energy research and development.
The Kansas Geological Survey, acting through the University of Kansas Energy Research Center and in cooperation with other research units, has a number of federally funded research projects that are focused on providing technology appropriate to the U.S. oil and gas operator. These ongoing cooperative projects involving the U.S. Department of Energy, the University, and industry include
In addition the KU Energy Research Center and the Kansas Geological Survey have a number of programs underway that involve a combination of State and private funds. These include:
The Midcontinent Energy Research Center (MERC) would bring together the numerous ongoing and future projects into a single organization focused on working with the domestic oil and gas industry. The MERC could combine State and Federal resources to provide basic and essential technology and data to the domestic oil and gas industry. Many tasks, such as preserving and providing access to core material or visiting with an operator, are critical but very difficult to fund through traditional research grants and contracts. MERC would operate in a manner similar to Federal and State agricultural extension agencies to develop, demonstrate, and transfer new technologies in order to maintain the infrastructure for the 21st century. Central to the MERC effort would be field agents who would assist companies to adopt new technologies in their operations and to communicate the companies' present and anticipated needs for technology and training back to researchers associated with MERC.
A comprehensive technical approach to establishment of the center can be made available in a detailed proposal. We are confident that the project can be achieved with annual funding of $1,300,000. The requested MERC funding would provide a foundation to significantly enhance ongoing and future funding obtained through competitive grants and contracts from Federal, State and private sectors. Total direct State and University cost sharing in the project will be greater than 20 percent. However, the additional Federal dollars would enhance and leverage several million dollars of existing State and University funding. Base funding, including University indirect costs, would be directed at the following major budget areas:
An institution such as MERC will preserve and enhance Kansas and the U.S. as significant oil and gas producing regions. The MERC will improve the long-term viability of the domestic oil and gas industry, and provide the U.S. with the energy from oil and gas that we will need well into the next century.
The Kansas Geological Survey acting through the University of Kansas Energy Research Center and the University of Kansas Center for Research Inc. is the lead organization for the proposed creation of a Midcontinent Energy Research Center. The University of Kansas and the Kansas Geological Survey have been leaders in developing, adapting, and transferring cost-effective technology to the U.S. oil and gas producer. Additional participation will be provided from other University research organizations throughout the Midcontinent. Total State and University cost sharing in the project will be greater than 20 percent.
For further information contact:
Dr. Timothy R. Carr, Chief of the Petroleum Research Section, Kansas Geological Survey and Director of the University of Kansas Energy Research Center, Phone 785-864-2135, FAX 785-864-5317, Email: tcarr@kgs.ukans.edu
References Cited
1 1998 Annual Energy Outlook 1999 with Projections to 2020, Energy Information Agency, U. S. Department of Energy DOE/EIA-0383(99).
2 1997, Energy Information Agency, U. S. Department of Energy, Annual Energy Outlook 1997.
3 1997, Report of the Energy Research and Development Panel, Federal Energy Research and Development for the Challenges of the Twenty-first Century: President’s Committee of Advisors on Science and Technology, November.