Hearing of Senate Committee on Energy and Natural Resouces on Oil Shale and Oil Sands REsources....

HEARING BEFORE THE COMMITTEE ON ENERGY AND NATURAL RESOURCES TO DISCUSS OPPORTUNITIES TO ADVANCE TECHNOLOGY THAT WILL FACILITATE ENVIRONMENTALLY FRIENDLY DEVELOPMENT OF OIL SHALE AND OIL SANDS RESOURCES, AND TO ADDRESS LEGISLATIVE AND ADMINISTRATIVE ACTIONS NECESSARY TO PROVIDE INCENTIVES FOR INDUSTRY INVESTMENT, AS WELL AS EXPLORE CONCERNS AND EXPERIENCES OF OTHER GOVERNMENTS AND ORGANIZATIONS AND THE INTERESTS OF INDUSTRY

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM ALASKA

Senator Murkowski. Mr. Chairman, I just wanted to thank you for your ongoing series in the focus on different sources of
energy. We have had some great briefings to this point in time. I am looking forward to the opportunity this morning to
understanding a little bit more about the technology that is being utilized in the process as we derive significant quantities of oil from oil shale and oil sands. So just thank you to you, Mr. Chairman.

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Senator Murkowski. Thank you, Mr. Chairman.

Mr. Lonnie, this is a question directed to you. In reviewing your testimony, you were talking about trying to determine what is it that we have, and I have always been fascinated that we do a lousy job with our natural resources in
terms of inventorying them. As I understand, you have done regional assessments of the areas that have potential for oil
shale, but you have not done a national assessment. Is that correct?

Mr. Lonnie. Was that question directed at me?

Senator Murkowski. Yes.

Mr. Lonnie. No, we have not done a national assessment in the BLM.

Senator Murkowski. So how do we know what it is that we have?

Mr. Lonnie. Well, I think there are estimates the Department of Energy has put together in terms of total resources.

Senator Murkowski. Okay. Maybe my question is directed to the wrong person then. Mr. Maddox, can you help me out?

Mr. Maddox. Total resources?

Senator Murkowski. Do we have a national assessment of the oil shale and the potential here in this country?

Mr. Maddox. Yes. We are estimating about 1.8 trillion based on an early 1980's assessment and approximately 300 billion
available that has the right depth and formations to be relatively easily and economically available, which is significant by any standard.

Senator Murkowski. I guess I was getting this from your testimony, Mr. Lonnie, about the national oil shale data base
and the national oil shale assessment. So that was why I directed it to you. So I do not know whether it was an issue on
BLM lands or not.

Mr. Maddox, you are telling me that we, in fact, do have analysis that comes to us from the early 1980's on a national
level.

Mr. Maddox. That is correct.

Senator Murkowski. I guess I will go back to the chairman's initial questions about what we know and what Alberta has
demonstrated in terms of the incredible potential coming out of that province and how they have figured out a way to make this
process economic and to truly provide a benefit. If we have had this level of assessment for the past 25 years, I understand
the realities very, very well of the market, but we kind of do this boom and bust. We get going with a little bit of technology, somebody gets a good idea, and then it goes flat.

If we recognize the potential here in this country, we can look to other countries where they are making a difference,
whether it is in Canada or someplace else, I guess we have a project going in Australia, in Estonia, what can we do in this
country to eliminate or even out this boom and bust and actually get this technology moving forward?

Mr. Maddox. Clearly, there needs to be a full commitment by all the stakeholders, the Federal Government, State governments, local communities. We do have a problem that we do tend to live on today's level. From the Government's
standpoint, we all have budget pressures. We are feeling them this year. But I think the commitment needs to be made to
developing these nontraditional resources and bring them to market. Some grew up and came of age in the oil situation of
the 1970's. We have got to, I think, embrace as a Nation that energy is an ongoing issue, regardless of today's price, and
make a commitment to policies that understand that, that even if we dropped to $20 tomorrow, it could be again $50 the day
after. We have a very tenuous supply situation around the world and a highly competitive one, and I think we need to sit down
and say, okay, what do we need to do to make certain that we do not zig and zag.

Senator Murkowski. I guess maybe that is my frustration. We have recommendations coming out of DOE that call for us to
develop a Federal oil shale program plan, but there is no real hard specifics in terms of what it is that we do to advance
that policy. Do we need tax incentives? Do we need a Federal financial policy? What is it that we need in order to provide
some leveling?

Mr. Maddox. I would argue what we really need is a regulatory policy that allows people to explore for oil and extract oil. We have seen a large number of large producers leave the country, and if you talk to them--I am sure you have heard it too--they do not have any confidence that they are going to be able to bring their resource to market ultimately because of various regulatory issues, public concern issues. And I think that you have got to essentially tell people that we want to produce oil in this country.

The United States is the third largest oil producer in the world, 5.5 million barrels a year. 80 percent of that is from
independents. Some of these resources--you want to see money involved in oil shale, for example. That is not going to be
developed by an independent. It is going to be developed by a major producer just because of the sheer amount of money
involved, I mean, billions and billions of dollars. But right now, I think most oil companies' senior people would tell you,
at least privately, that they have concerns about whether the United States will support development of domestic resources.

Senator Murkowski. Let me ask just one very quick question, if I may, Mr. Chairman. This is in regard to the balance
between oil and natural gas. The process, as I understand, to release these hydrocarbons, we have got to use a considerable
amount of natural gas in order to allow this process to move forward. As we all know, the price of natural gas is sky high.
The demand in this country is very high and growing higher every day. At some point in time, does this process get stopped
because we do not have the natural gas that we need in order to allow this process to go forward if the price of natural gas is
just too high?

Mr. Maddox. A byproduct of this process, at least in the in-situ process, once it gets up and going, is natural gas, and
it will self-generate natural gas adequate to create the energy and the heat necessary. So there should not be any net loss of
natural gas in this process to the market. So there should not be any kind of price pressures as a result of the natural gas
being used.

Senator Murkowski. Thank you. Thank you, Mr. Chairman.

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