By The Hill Staff - 05/09/06 12:00 AM EDT
One of the first political casualties from high gasoline prices may be a 10-year oil and gas research effort costing more than $1 billion that was once championed by Rep. Tom DeLay (R-Texas).
The earmark, controversial since it was included in the Energy Act of 2005, would pay for research into new types of oil rigs that could drill to “ultradeep” ocean depths as well as new methods for extracting natural gas in hard-to-get-at “unconventional” wells.
The bill allowed as much as $150 million to be spent each year for 10 years — $50 million of which is a dedicated funding stream that Congress would have to repeal to block. It is just one of a number of incentives attached to the energy bill that lawmakers from the left and right are targeting as oil and gas companies reap huge profits on high gasoline prices.
Some of the research and development money would likely have been managed by a consortium of companies and universities known as the Research Partnership to Secure Energy for America that is in DeLay’s district near Houston, although the money would apparently be spent in research facilities around the country.
Besides DeLay, Rep. Ralph Hall, another Texas Republican, also championed the measure.
Its main champions outside of Congress have been independent oil and gas companies that argue they need federal help in paying for research and development that could lead to great domestic fuel supplies.
Others described the subsidy as the energy bill’s “Bridge to Nowhere,” equating it with an Alaskan project attached to the transportation bill that became the subject of controversy.
The targeted tax breaks also subject to repeal include one that approaches $1 billion over 10 years that is directed at exploration expenses, such as the use of 3-D seismic technology to search for more oil reserves.
In total, the energy bill included $2.6 billion in oil and gas tax breaks.
“If there is any time this is going to happen, it would be now,” said Keith Ashdown of Taxpayers for Common Sense, a spending watchdog group.
“The administration is going to want to pick some high-profile fights,” he said.
The push to repeal tax breaks and other pro-production incentives has also split the oil and gas industry.
In general, industry giants such as ExxonMobil, BP and Chevron aren’t lobbying against efforts in Congress to trim the costs of the energy bill. The companies not only explore and drill for oil, they refine it and market it in their network of gas stations.
Independents for the most part just explore and drill for oil and gas. These companies are arguing on Capitol Hill that the funding for ultra-deep drilling and unconventional research will help find new reserves that could ease supply constraints.
“There is a tendency, when Congress is frustrated by what the biggest integrated oil companies have done, to spread that frustration across to the entire industry,” said Lee Fuller, the main lobbyist for the Independent Petroleum Association of America (IPAA), one of the main backers of the project.
Fuller and others said it is legitimate for the federal government to help pay for research and development.
“It would be short-sighted to get rid of R&D,” said John Northington, who was an Energy Department official in the Clinton administration before becoming an industry lobbyist.
“The goal is to increase domestic production. The government should play a role.”
According to IPAA, independents drill more than 90 percent of the domestic wells, including more than 70 percent in the oil and gas rich Gulf of Mexico.
Ashdown said the independents are also reaping financial windfalls from high fuel prices and can pay for the research themselves.
Some key Republicans apparently agree. President Bush zeroed the program out in his 2007 budget request. But $50 million of the program is a dedicated funding stream from oil and gas royalties.
Ed Markey, a Massachusetts Democrat, has introduced a bill to repeal the provision that created an independent research funding stream.
This year, the oil and gas industry won’t be able to call upon one of its most powerful defenders, former Tom DeLay, who is leaving office. But the industry still has supporters, including Hall and Energy and Commerce Committee Chairman Joe Barton (R-Texas).