Overview:
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Located within the Department of Energy, the Office of Fossil Energy (FE) is the federal government’s lead office for coal, natural gas and oil exploration and development. Altogether FE oversees approximately 600 research and development projects, ranging from development of zero-emissions power plants to energy facilities that efficiently transform coal, biomass and other fuels into commercial products to new technologies that can extract oil from existing fields that currently are unreachable. FE is also responsible for managing the country’s underground supply of oil in case of emergencies, known as the Strategic Petroleum Reserve, and running three research labs that conduct fossil energy exploration.
History:
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The federal government's involvement in fossil fuel resources began in the early 1900s. Long before Americans experienced the oil shortages of the 1970s, petroleum shortfalls became a major concern for the federal government at the start of the 20th century. Oil shortages were a serious concern of lawmakers thanks to growing demand for oil by the US Navy, which had converted from sails and coal to black oil for fuel as America began building its modern navy. To alleviate concerns of dwindling oil supplies, the government began withdrawing lands from the public domain, hoping to find crude oil. Between 1909 and 1924, tracts in California, Utah and Wyoming were set aside for the creation of what became the Naval Petroleum and Oil Shale Reserves, now the oldest component of the Office of Fossil Energy.
The federal government's petroleum research program began shortly after World War I. The U.S. Bureau of Mines, part of the Department of the Interior, set up a petroleum experiment station in Bartlesville, Oklahoma, in 1916. A year later, large oil deposits were discovered beneath the lands of the Osage Indian Nation just west of Bartlesville.
When German scientists and technical documents were captured in the latter stages of World War II, the US government first learned of new ways to extract oil from coal. Because the United States possessed massive quantities of coal, the federal government began investigating possible coal-based synthetic alternatives with the passage of the Synthetic Liquid Fuels Act of 1944.
In 1961 US Senator Robert Byrd (D-WV) sponsored legislation that established the Office of Coal Research in the Department of the Interior. With a modest first-year budget of $1 million, the office began to study a wide range of coal technologies, including the conversion of coal to gas and liquid fuels and new ways to combust coal more cleanly.
The oil embargo of 1973 by the Organization of Petroleum Exporting Countries (OPEC) brought energy and the security of oil to the forefront of the nation's attention. When several Persian Gulf nations temporarily ceased oil shipments to the United States and sent world oil prices skyrocketing, American policymakers decided it was time for a new federal agency to handle energy matters. The Energy Reorganization Act of 1974 created two new agencies: the Energy Research and Development Administration (ERDA), which not only carried out energy development programs but also oversaw the development of nuclear weapons and naval nuclear reactors, and the Nuclear Regulatory Commission to regulate the nuclear power industry.
The Office of Coal Research shifted from the Interior Department to the newly-created ERDA and became the core organization for the fossil energy program. Along with coal research, the new fossil energy office also became the home for the government's petroleum research program and a small synthetic fuels research program transferred from the Bureau of Mines.
The oil embargo of 1973 not only led to a reorganization of federal energy functions, it also called attention to the need for an emergency stockpile of crude oil. Although federal already existed in the west, the government decided the country needed a reserve that could pump emergency oil into the market much faster than any oil field. Such a stockpile of crude oil had been discussed in the Eisenhower Administration, but never implemented. On December 22, 1975, however, with the economy reeling from the first shock of oil shortages, President Ford signed the Energy Policy and Conservation Act, extending oil price controls, mandating automobile fuel economy standards and authorizing the creation of an emergency oil reserve. The final major piece of today's fossil energy organization, the U.S. Strategic Petroleum Reserve, began forming.
In 1977, with the nation facing its most severe winter in decades, natural gas shortages caused thousands of factory and school closings and threatened cutoffs to residential customers. More unrest was also taking place in the Middle East, specifically Iran, one of the world's biggest exporters of crude oil, where Islamic and secular revolutionaries would eventually overthrow the Shah, causing havoc in world oil markets. In response to these crises, President Carter signed the Department of Energy Organization Act, consolidating more than 30 separate energy functions carried out by various government agencies, including ERDA, into the brand new Department of Energy. In 1979 the fossil energy programs were organized into essentially the form that the Office of Fossil Energy (FE) is today.
FE research has historically focused on two programs—coal and power systems and natural gas and petroleum technology. Very large budgets from 1978 through 1981 were provided in response to the energy crises of the 1970s and early 1980s. During that period, more than 73% of the money was provided for technologies to produce liquid and gas fuel options from U.S. energy resources—coal and oil shale.
According to an analysis by the National Academies Press, from 1978 to 2000 58% of research and development funds were for coal utilization and conversion. Of this, approximately one-half was spent on direct liquefaction and gasification for building and operating large, commercial-scale demonstration plants between 1978 and 1981. In 1978, the coal conversion and utilization portion of the budget represented 68% of the total fossil energy expenditures, but since then, as funding for direct liquefaction and gasification declined, it has represented a considerably lower percentage. In 2000, it represented only 30% of the overall fossil energy budget for the technology programs analyzed.
With the election of George W. Bush in 2001, coal became the focus of a major new energy policy initiative. Coal is the United States’ most abundant fossil fuel. It is found in 38 states beneath 13% of the nation’s land area, and enough of it exists (268 billion tons) to provide a 240-year supply at today's usage rates. The problem is that coal contains sulfur, nitrogen, mercury, and other trace heavy metals that can damage the environment. So the Bush administration launched a $2 billion, 10-year Clean Coal Power Initiative to develop new technologies that will allow the country to fully utilize this resource without damaging America’s ecosystems or contributing to the worldwide problem of global warming.
The Bush administration also launched another ambitious project, FutureGen, which would invest almost $2 billion into research for building a prototype power plant that can burn coal without releasing virtually any air pollution and instead bury the carbon emissions deep inside the earth, while at the same time produce hydrogen that could be captured for use in fuel cells.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000 (Board on Energy and Environmental Systems)
(National Mining Association)
What it Does:
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Located within the Department of Energy, the Office of Fossil Energy is the federal government’s lead office for coal, natural gas and oil exploration and development.
Altogether FE oversees approximately 600 research and development projects ranging from development of zero-emissions power plants to energy facilities that efficiently transform coal, biomass and other fuels into commercial products to new technologies that can extract oil from existing fields that currently are unreachable.
Most of FE’s programs are grouped into five divisions:
- Clean Coal & Natural Gas Power Systems includes supporting elements of President Bush’s Clean Coal Power Initiative and FutureGen, along with research programs devoted to coal gasification research, fuel cell and turbine technology.
- The Carbon Sequestration division also includes efforts for FutureGen along with research into various ways of burying carbon emissions from new power plants.
- The Hydrogen & Other Clean Fuels section is exploring new methods of developing and using hydrogen as fuel or power source.
- Oil & Natural Gas Supply & Delivery examines new ways of drilling for oil, developing new forms of petroleum, technology transfer initiatives and transmission, distribution and storage of oil and natural gas.
- The Natural Gas Regulation section works on new global business opportunities for the American natural gas industry.
The remainder of FE’s programs support the office’s U.S. Petroleum Reserves
division. FE is responsible for managing the country’s underground supply of oil in case of emergencies, known as the Strategic Petroleum Reserve (SPR). The SPR is the largest government-owned inventory of emergency crude oil in the world, with a current capacity of 727 million barrels stored in deep, underground salt caverns along the Texas and Louisiana Gulf coasts. Should the President decide to tap the emergency stockpile, SPR crude oil can begin flowing to U.S. markets in as little as 13 days. As directed under the Energy Policy Act of 2005, FE has initiated proceedings to select sites needed to expand the SPR to one billion barrels of oil. FE also manages the two-million-barrel emergency Northeast Home Heating Oil Reserve and the Naval Petroleum and Oil Shale Reserves, which control oil-bearing lands owned by the U.S. government.
FE is also responsible for managing three research labs that conduct fossil energy exploration:
- National Energy Technology Laboratory - As the nation’s only national laboratory devoted to fossil fuel research, the National Energy Technology Laboratory is the lead field center for FE’s research and development program. Scientists at its Pittsburgh, PA, and Morgantown, WV, campuses conduct onsite research while contract administrators oversee nearly 700 federally-sponsored projects conducted by private sector research partners. The Tulsa, OK, office is part of the laboratory's Strategic Center for Natural Gas and Oil.
- Albany Research Center - Established in 1942, the Albany Research Center’s researchers address fundamental mechanisms and processes; melt, cast and fabricate up to one ton of materials; completely characterize the chemical and physical properties of materials; and deal with the waste and by-products of materials processes.
- Rocky Mountain Oilfield Testing Center - Located on the federal Naval Petroleum Reserve #3, this facility offers an operating oil field as a test site for both federal and private sector oil technology experiments.
Office of Fossil Energy Brochure
(PDF)
Where Does the Money Go:
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Some of the country’s wealthiest corporations are the primary stakeholders of the Office of Fossil Energy. Conglomerates such as ExxonMobil and Chevron benefit from FE’s research and development work, along with hundreds of other oil, gas and coal businesses. Most of these companies are represented by powerful trade associations, including:
American Petroleum Institute (API) is the only national trade association that represents all aspects of America’s oil and natural gas industry. 400 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. API represents producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry.
Western States Petroleum Association (WSPA) is a non-profit trade association that represents approximately 30 companies that account for the bulk of petroleum exploration, production, refining, transportation and marketing in the six western states of Arizona, California, Hawaii, Nevada, Oregon and Washington. Founded in 1907, WSPA is the oldest petroleum trade association in the United States.
The National Mining Association (NMA) is the voice of the American mining industry in Washington, D.C. NMA is the only national trade organization that represents the interests of mining before Congress, the White House, federal agencies, the judiciary and the media. Members includes more than 325 corporations involved in all aspects of the mining industry, including coal, metal and industrial mineral producers, mineral processors, equipment manufacturers, state associations, bulk transporters, engineering firms, consultants, financial institutions and other companies that supply goods and services to the mining industry.
Other trade organizations include the American Coal Ash Association, West Virginia Coal Association, Alabama Coal Association, Western Kentucky Coal Association and the National Rural Electric Cooperative Association.
In addition to these fossil fuel-oriented businesses, FE contracts with several companies that provide technical, administrative and security services for the National Energy Technology Laboratory. These contractors are Technology and Management Services, Inc., Research and Development Solutions, LLC, Performance Results Corporation, Prologic Incorporated, Pace-Tec, TJR Enterprises, Inc., Eagle Facilities Management Services and ISF Security Group, Inc., also known as Ameritex Guard Services.
Controversies:
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FutureGen: Texas vs. Illinois
Shortly after President Bush announced in his 2008 State of the Union speech that he planned a big hike in energy research funding, the administration appeared ready to scuttle one of its most important energy initiatives, FutureGen. Lawmakers from Illinois were told by DOE Secretary Samuel Bodman that he was ready to pull the plug on the billion-dollar program that would have been a boon for downstate Illinois. Only a month earlier, energy officials announced that Mattoon, Illinois, won a battle with Texas to host FutureGen.
A DOE spokeswoman said soaring cost projections and technological advances had led the department to rethink the project. The President first embraced the concept of FutureGen in 2003 as an inventive approach to energy generation that would use abundant U.S. coal reserves but trap most of the pollutants associated with the burning of coal. The idea was to marry two proven technologies to gasify coal and then bury greenhouse gases produced by the process deep within the earth.
During a meeting in Washington, DC, Bodman told the Illinois delegation that he planned to disband FutureGen and go "in another direction." At one point, Republican Congressman Timothy Johnson, whose district includes Mattoon, and Bodman snapped at each other.
The FutureGen project was to be one of the administration's biggest energy research plums, rich with promise, as well as jobs and investment for the winning community. Plans call for it to be built by a consortium involving DOE and coal and power companies, with 74 percent of the funding coming from taxpayers. Private sector partners in FutureGen announced the selection of Mattoon in December, even though Bodman's agency had urged a delay. Since then, the coal and power companies have promised to pick up a bigger share of the project's costs, but the administration would still be on the hook for the bulk of construction expenses.
Several communities bid to host the project, with the finalists coming down to Mattoon and nearby Tuscola, Illinois, and two cities in Texas. To some in Illinois, the battle evoked memories of the 1988 showdown over a $4 billion federally funded particle accelerator. One week after Bush's father was elected president, his home state of Texas was awarded the Superconducting Super Collider Project, triggering charges from the losing side that politics had trumped science. The project was beset by cost overruns and was never finished.
Following the decision by Bodman, US Sen. Richard Durbin (D-IL) said he feared the scenario was playing out again with another Bush in the White House. "In 25 years on Capitol Hill, I have never witnessed such a cruel deception," Durbin said. “When the city of Mattoon, Illinois, was chosen over possible locations in Texas, the secretary of energy set out to kill FutureGen."
Durbin is now considering ways to force the administration to reconsider its decision on FutureGen. Waiting in the Senate for confirmation are two high-level DOE appointments, and Durbin, the chamber's No. 2 Democrat, is exploring the idea of holding up the confirmations as a bargaining chip to revive the Mattoon plant.
Durbin’s plan may not work. According to the American Geological Institute (AGI), Bodman is committed to breaking apart FutureGen and scattering its research efforts across the country.
Energy Department backing out of Illinois-bound FutureGen project, officials say (by Bob Secter, Chicago Tribune) (PDF)
The President's FY2009 Department of Energy Budget Request (American Geological Institute)
Cuts in Energy Research
Although the administration has publicly committed itself to supporting coal and oil programs, budget plans throughout Bush’s two terms have provoked anger by some professional industry groups. From 2003 to 2008, AGI and the American Association of Petroleum Geologists (AAPG), an international geoscience organization representing more than 30,000 members, complained about budget appropriations to FE that have masked attempts to eliminate certain petroleum or coal programs.
In President Bush's FY 2003 budget request, several key energy research programs were slated for deep cuts. Support for fossil energy research was targeted to drop 12.6%, with oil research falling 37% and natural gas research taking a 50% hit, according to AAPG. For the FY 2006 budget, AAPG reported that the administration’s budget contained significant reductions for DOE, including the elimination of the oil and gas technology programs in the Office of Fossil Energy. The following year, AAPG remarked that the administration’s 2007 budget would repeal the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Research Fund. And for FY 2009 AGI representatives pointed out that although the Office of Fossil Energy would get a $223 million increase above the previous year, certain FE natural gas and petroleum technology programs were slated for termination, again. According to AGI, “These programs have been zeroed out for the past few years, but restored by Congress.
The President's FY 2003 Budget Request: Department of Energy (Government Affairs Program)
Appropriations for Oil and Gas Research and Development (American Association of Petroleum Geologists)
Department of Energy 2007 Budget request for Oil and Natural Gas Research and Development (American Association of Petroleum Geologists)
The President's FY2009 Department of Energy Budget Request (American Geological Institute)
Book Says White House Ordered Iraq-WMD Forgery (by Mike Allen, Politico)
- Table of Contents
- Overview
- History
- What it Does
- Where Does the Money Go
- Controversies
- Suggested Reforms
- Comments
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Founded: 1974
Annual Budget: $904 million
Employees: 1,000
Official Website: http://www.fossil.energy.gov/
Office of Fossil Energy
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