STATEMENT OF

DR. SUZANNE D. WEEDMAN

ENERGY RESOURCES PROGRAM COORDINATOR

U.S. GEOLOGICAL SURVEY

U. S. DEPARTMENT OF THE INTERIOR

BEFORE THE

ENERGY SUBCOMMITTEE

OF THE

SCIENCE COMMITTEE

U.S. HOUSE OF REPRESENTATIVES

May 3, 2001

Mr. Chairman and Members of the Subcommittee, thank you for this opportunity to present this statement regarding U.S. Geological Survey assessments of national and global energy resources.

Background

Within the Federal Government, the U.S. Geological Survey (USGS) is responsible for assessing undiscovered oil and gas resources of all onshore and State offshore areas of the Nation as well as coal and coal bed methane resources. The Geothermal Energy Research, Development and Demonstration Act of 1974 assigned responsibility for the evaluation and assessment of geothermal resources to the USGS through the U.S. Department of the Interior (DOI). The Minerals Management Service (MMS) is responsible for estimating the undiscovered oil and natural gas resources of the Outer Continental Shelf (OCS).

Because the Subcommittee requested a comprehensive overview of the U.S. Energy picture, we will also include a brief overview of U.S. uranium resources

Oil and Natural Gas Resources

The USGS 1995 National Oil and Gas Assessment. In February 1995, the USGS released the National Assessment of United States Oil and Gas Resources. Currently, we are updating that assessment in selected regions thought to have high potential for undiscovered natural gas, including coal-bed methane. This update will be completed in 2004, with interim products available in early 2002. The updated assessment will include allocations of undiscovered oil and gas resources to Federal lands.

The 1995 USGS assessment of the Nation's onshore undiscovered oil and gas was published in digital format on a CD-ROM (USGS Digital Data Series-30) and in a non-technical summary, as USGS Circular 1118. The Assessment was conducted in collaboration with State Geological Surveys, MMS, and industry geologists working under the auspices of the American Association of Petroleum Geologists. Additional cooperation with the Bureau of Land Management, National Park Service, U.S. Forest Service, and Bureau of Indian Affairs was essential for USGS to generate information regarding oil and gas resources on Federal lands. The current update of the 1995 assessment involves many of the same partners.

Assuming existing technology, there are approximately 112 billion barrels of technically recoverable oil onshore and in State waters, according to USGS's most recent assessment. This volume includes both conventional and unconventional resources. Technically recoverable resources are those that may be recoverable using current technology without regard to economic feasibility. This includes measured (proved) reserves, future additions to reserves in existing fields (reserve growth), and undiscovered conventional resources.

The technically recoverable conventional resources of natural gas in measured (proved) reserves, future additions to reserves in existing fields (reserve growth), and undiscovered conventional accumulations equal approximately 716 trillion cubic feet of gas. In addition to conventional gas resources, USGS has assessed technically recoverable resources in continuous-type (largely unconventional) accumulations. We estimate about 308 TCFG (trillion cubic feet of gas) of technically recoverable natural gas in continuous-type deposits in sandstones, shales, and chalks, and almost 50 TCFG of technically recoverable gas in coal beds. The total technically recoverable oil and gas resource base onshore and in State waters of the United States is displayed in Table 1.

Table 1. Results of the USGS 1995 National Oil and Gas Assessment

The estimates presented in this statement reflect USGS understanding as of January 1, 1994. They are intended to capture the range of uncertainty, to provide indicators of the relative potential of various petroleum provinces, and to provide a useful guide in considering possible effects of future oil- and gas-related activities within the United States.

The geographic information system (GIS) coverages contained in this assessment and related databases provide the capability to estimate oil and gas resource potential on specific tracts of land, including those managed by the Federal Government. This process is called allocation, based on expert opinion, and is accomplished using a methodology that takes into consideration all geologic information available about a particular basin.

1995 National Oil and Gas Assessment and Onshore Federal Lands (1998). In January 1998, USGS published an Open-File Report (OFR 95-0075-N) that reported estimates of volumes of undiscovered oil and gas on Federal lands. Estimates of oil in undiscovered conventional fields range from 4.4 to 12.8 billion barrels (BBO), with a mean value of 7.5 BBO. Estimates of technically recoverable gas in undiscovered conventional fields range from 34.0 to 96.8 trillion cubic feet (TCF), with a mean value of 57.9 TCF. Almost 85 percent of the assessed natural gas in undiscovered conventional accumulations was non-associated gas, that is, gas in gas fields rather than gas in oil fields. Estimates of technically recoverable resources in unconventional (continuous type) accumulations for oil are from 0.2 to 0.6 BBO, with a mean value of 0.3 BBO, and for gas, from 72.3 to 202.4 TCF, with a mean value of 127.1 TCF. These ranges of estimates correspond to 95-percent probability (19 in 20 chance) and 5-percent probability (1 in 20 chance) respectively, of a least those amounts occurring.

An economic evaluation was applied to these technically recoverable estimates. Our study concluded that at $30 per barrel for oil and $3.34 per thousand cubic feet of gas, 3.3 BBO oil and 13.6 TCF in undiscovered conventional fields could be found, developed, and produced. In addition, at these estimated prices, 0.2 BBO oil and 11.4 TCF in continuous-type accumulations and 11.8 TCF of coalbed gas can be developed.

Estimated volumes of undiscovered oil, gas, and natural gas liquids in onshore Federal lands, as of January 1994 are displayed in Table 2.

Table 2. Results of the USGS 1998 National Oil and Gas Assessment and Onshore Federal Lands

The results of the USGS National Oil and Gas Resource Assessment have been used by the Energy Information Administration (EIA) for its Annual Energy Outlook, by the California Energy Commission and Canadian Energy Board to model inter-regional natural gas supply and demand and the resulting economic impacts, and by numerous petroleum companies as a basis for evaluating risk associated with exploration and development of domestic oil and gas resources.

Many Federal agencies use the information in the USGS National Oil and Gas Assessment for land-use planning, energy policy formulation, and economic forecasting. Customers include the Department of the Interior, Bureau of Land Management, National Park Service, U.S. Forest Service, Bureau of Indian Affairs, Energy Information Administration, and the Department of Energy (DOE), among others. In addition, most State Geological Surveys and/or State Divisions of Oil and Gas use the USGS assessment for regional and local resource evaluation and lease planning purposes. Many private sector organizations also use the digital oil and gas assessment results, including environmental protection advocacy groups, petroleum exploration companies, and utility companies (including natural gas and electricity utilities).

Sec. 604 Energy Act of 2000. The Secretary of the Interior is charged with conducting an inventory of energy resources and the restrictions and impediments to their development on Federal Lands in Section 604 of the Energy Act of 2000, signed into law on November 9, 2000.

It is our understanding that the role of USGS will be to assess the oil and gas resources of oil- and gas-bearing basins that have federally managed lands, consistent with the USGS assessment and allocation methodology. Then, USGS geologists will allocate resource estimates to those specific land parcels managed by the Federal government. The USGS resource estimates will be combined with reserve volumes from the Energy Information Administration (EIA) of the Department of Energy (DOE), and will be incorporated into a geographic information system (GIS) to show the spatial distribution of those potential resources and known reserves. The resource and reserve information will be integrated with information on restrictions and impediments provided by the Bureau of Land Management (BLM) and the Forest Service.

The USGS will use resource estimates from the 1995 National Oil and Gas Assessment for areas where there are no significant new data and will update resource estimates for the gas-prone areas of the country where new data are available.

The Minerals Management Service's 2000 OCS Resource Assessment. As background, MMS's mission consists of two major programs: Offshore Minerals Management and Minerals Revenue Management. The leasing and oversight of mineral operations on the Outer Continental Shelf (OCS) and all mineral revenue management functions for Federal (onshore and offshore) and American Indian lands are centralized within the bureau. In 2000, OCS oil and natural gas production accounted for roughly 25 and 26 percent, respectively, of our nation's domestic energy production - oil production was over 500 million barrels and natural gas production was over 5 trillion cubic feet. The amount of oil and natural gas production in 2000 was the most ever produced on the OCS. In addition, in fiscal year 2000, MMS collected and distributed about $7.8 billion in mineral leasing revenues from Federal and American Indian lands.

In its role as manager of the Nation's OCS energy and non-energy mineral resources, MMS is responsible for assessing those resources; determining if they can be developed in an environmentally sound manner; and if leased, regulating activities to ensure safety and environmental protection. An integral element in that mission is to identify the most promising areas of the OCS for the occurrence of crude oil and natural gas accumulations and to quantify the amounts of oil and natural gas that may exist in these areas.

Since its creation in 1982, MMS has completed four systematic assessments of Federal OCS undiscovered oil and natural gas resources, including its most recent assessment. The 2000 resource assessment was done to support staff work and analysis needed in formulating the next 5-Year Oil and Gas Leasing Program covering the timeframe 2002-2007. It should be noted that the methodology for the 2000 assessment has not changed significantly from that used in the previous 1995 assessment.

The 2000 assessment presents the updated assessment results since the 1995 assessment for the Alaska, Atlantic, and Gulf of Mexico OCS Regions. In the Alaska Region only the Beaufort and Chukchi Seas, Hope Basin, and Cook Inlet areas were updated, as there were no new data or other changes since the last assessment. The Pacific OCS Region was not updated for the same reasons. The Atlantic OCS Region was re-evaluated to reflect recent exploration results offshore Nova Scotia, current exploration and production technologies, and to make the water depth divisions compatible with the ones now being used in the Gulf of Mexico.

The MMS has recently made public the 2000 assessment, and I have included a copy of the assessment with my written statement for the hearing record. MMS estimates that the total mean undiscovered, conventionally recoverable resources for the United States OCS are 75.0 billion barrels of oil and 362.2 trillion cubic feet of natural gas. Within that total, MMS determined that the undiscovered conventionally recoverable resources foregone by the 1998 moratoria (i.e., the President's June 1998 OCS decision) would be approximately 16 billion barrels of oil and 62 trillion cubic feet of gas.

The total mean undiscovered economically recoverable resources for the United States OCS are 26.6 billion barrels of oil and 116.8 trillion cubic feet of gas at prices of $18 per barrel and $2.11 per thousand cubic feet, respectively, and 46.7 billion barrels of oil and 168.1 trillion cubic feet of gas at prices of $30 barrel and $3.52 per thousand cubic feet, respectively.

USGS 2000 World Petroleum Assessment. In March 2000,USGS released the World Petroleum Assessment 2000. This assessment is a five-year project that was extensively reviewed by members of the World Energy Consortium. The project assessed recoverable undiscovered conventional oil and gas resources of the world, exclusive of the United States, for a 30-year time frame (1995--2025). This is a geologically based assessment and resources were allocated to individual countries, allocated to onshore and offshore, and allocated to OPEC, OECD, and other countries not part of OPEC or OECD. For the first time, our world assessment contains an estimate of the amount of reserve growth expected in the next 30 years. All the products are digital and available on CD-ROM and via the Web.

The assessment provides estimates of the quantities of conventional oil, gas, and natural gas liquids that have the potential to be added to global reserves in the next 30 years. The mean (expected) volumes of undiscovered resources are 649 billion barrels of oil (BBO), 4,669 trillion cubic feet of gas (TCFG), and 207 billion barrels of natural gas liquids (BBNGL). The estimated mean additions to reserves from discovered fields (potential reserve growth) are 612 BBO, 3,305 TCFG, and 42 BBNGL.

The potential additions to reserves from reserve growth are nearly as large as the estimated undiscovered resource volumes. These estimates imply that 75 percent of the world's grown conventional oil endowment (see Table 3 for explanation of grown endowment) and 66 percent of the world's grown conventional gas endowment have already been discovered in the areas assessed (exclusive of the U.S.). Additionally, for these areas, 20 percent of the world's grown conventional oil endowment and 7 percent of the world's grown conventional gas endowment had been produced as of the end of 1995

This assessment is based on extensive geologic studies rather than a statistical projection. The petroleum assessed occurs in fields exceeding a stated minimum size, which varies between 1 and 20 million barrels of oil equivalent in different areas, and in accumulation categories judged to be viable in a 30-year forecast span.

Compared to the last USGS world petroleum assessment (Masters and others, 1994, 1997), undiscovered volumes from this world assessment are 20 percent greater for oil, 14 percent smaller for gas, and 130 percent greater for natural gas liquids. The large estimated volumes of oil, gas, and natural gas liquids from reserve growth in this assessment represent a resource category not quantitatively assessed previously for the world by the USGS.

The volume of undiscovered oil estimated in this assessment is larger than that of the 1994 assessment, due in part to larger estimates for the Middle East and Atlantic offshore portions of South America and Africa. However, in some areas the estimated volumes of undiscovered oil were smaller, particularly for Mexico and China.

The volume of undiscovered gas estimated in this assessment is smaller than that of the previous world assessment mainly because of smaller estimates for arctic areas of the Former Soviet Union, some basins in China, and the Alberta Basin of Canada. The volume of undiscovered NGL estimated in this assessment is much larger than that of the previous assessment because of more detailed analysis, coupled with the incorporation of co product ratios into the assessment calculations.

Areas assessed in the World Petroleum Assessment 2000 that contain the greatest volumes of undiscovered conventional oil include the Middle East, northeast Greenland Shelf, the West Siberian and Caspian areas of the Former Soviet Union, and the Niger and Congo delta areas of Africa. Significant new undiscovered oil resource potential was identified in a number of areas with no significant production history, such as northeast Greenland and offshore Suriname.

Areas that contain the greatest volumes of undiscovered conventional gas include the West Siberia Basin, Barents and Kara Seas shelves of the Former Soviet Union, the Middle East, and offshore Norwegian Sea. A number of areas were identified that may contain significant additional undiscovered gas resources where large discoveries have been made but remain undeveloped. Examples include East Siberia and the Northwest Shelf of Australia.

Table 3. Results from the USGS World Energy Assessment 2000 compared with U.S. domestic resources.

Coal Resources

The USGS is completing a National Coal Resource Assessment (NCRA) during 2001. To date, two coal resource assessments have been released, the Colorado Plateau and the Northern Rocky Mountains and Great Plains. Coal resource assessments of the Appalachian and Illinois Basins, and Gulf Coast Region will be available later in 2001. The USGS coal assessments also identify volumes of coal under federally owned lands, and of federally owned coal under privately owned lands, where present.

The NCRA is a multi-year effort by the USGS to identify, characterize, and assess the coal resources that are expected to supply a major part of the Nation's energy needs during the 21^st century. Products from NCRA include publicly available stratigraphic, geochemical, and GIS databases to answer a variety of questions of importance to government, industry and public decision makers and interpretive geologic and geochemical information for the primary coal resources of the Nation. Five priority regions were assessed: the Appalachian Basin, Illinois Basin, Gulf Coast, Colorado Plateau, and Northern Rocky Mountains and Great Plains. The NCRA is a cooperative effort between the USGS and a number of State geological surveys in these coal-bearing regions. Volumes of coal resources on Federal lands were also identified.

The results of the USGS National Coal Resource Assessment are important because they provide an impartial assessment of the Nation's coal resources. The USGS NCRA provides information that can be used to; (1) evaluate and minimize environmental impacts related to extraction, production, and use of energy resources; (2) manage resources on Federal lands; (3) address issues of energy and environmental policy and strategy; (4) determine the potential for coalbed gas resources and development of the United States; (5) determine the availability and recoverability of coal resources throughout the U.S; (6) determine potential areas of future coal development; and (7) assess the potential of coal to act as a storage site to sequester carbon dioxide.

The reported coal resource estimates for the five regions refer to coal resources in the ground and are quite large and should not be confused with available or minable and recoverable coal (often referred to as 'reserves') in these regions. There are trillions of tons of coal in the United States. However, total resources are also important because they are still potential resources, should technologic, societal, political, or economic needs change resulting in presently unminable coal becoming usable. For example, results from the two finalized assessment regions estimate resources of approximately 550 billion short tons of remaining coal in the Colorado Plateau and 660 billion short tons of coal in the Northern Rocky Mountains and Great Plains region. Not all of this coal is available for mining or economically recoverable. Studies in the Appalachian and Illinois Basins indicate that only 50 to 60 percent of the coal is usually available for mining after land use and technological restrictions are applied to the data, and only 11 to 38 percent is economically recoverable. Furthermore, coal quality affects coal usage greatly. Current Clean Air Act regulations limit the amount of sulfur dioxide that power plants may emit. These regulations limit the amount of sulfur in the coal that may be burned, unless the power plants install certain smoke stack equipment.

In addition to the resources assessed in the five priority regions, a resource assessment of coal on Federal land was also conducted. The Federal Government manages vast amounts of coal resources. The U.S. Government held 91.7 billion short tons of coal in reserve in 1998-1999. Approximately one-third of the Nation's coal production comes from coal on Federal lands; in 1997, approximately 1.1 billion short tons of coal were produced in the United States and approximately 330 million tons of that coal originated from Federal lands. More than a quarter of a billion dollars in royalties are generated annually from production of coal on Federal lands, of which about half is disbursed to the States from which the coal was mined.

Federal coal and land ownership is a much more important issue in the western United States where many coal fields occur on Federally managed lands. The majority of relatively high quality coal reserves in Wyoming, Utah, Montana, Colorado and New Mexico occur on federally managed lands. Approximately 50 percent of the coal in the Colorado Plateau assessment region underlies land that is administered by Federal agencies including the Bureau of Land Management, the National Park Service, and the U.S. Forest Service; the Colorado Plateau also contains coal underlying Tribal, State, and private lands. Approximately 32 percent of the coal in the Northern Rocky Mountains and Great Plains assessment region occurs beneath land surface managed by Federal agencies, however, Federal coal resources underlie approximately 80 percent of this area.

An important issue in Federal land management is the interrelationship between surface ownership and coal ownership. Often ownership of the coal and ownership of the surface land is not the same. This is strikingly illustrated when comparing land ownership versus federal coal ownership in the assessed units of the Colorado Plateau and the Northern Rocky Mountains and Great Plains. In the Powder River Basin, Wyoming and Montana, where more than a third of the country's coal is produced, almost all of the coal is Federally managed, yet most of the surface rights are privately held. In the Colorado Plateau, the majority of the coal is also federally managed, yet the majority of surface ownership is nonfederal (either State, Tribal, or private).

Because federally managed coal plays a major role in the energy supply of the United States, National Coal Resource Assessment developed digital databases of information on Federal coal resources. These databases identify areas where surface ownership is different from mineral ownership and can help policy makers, land-use planners, land managers, and mineral developers make informed decisions regarding Federal land use while maintaining a healthy domestic energy industry. At this time, these databases only contain information for the conterminous United States, because digital information on coal ownership in Alaska is not presently available.

This work represents the first time that resource estimates have been calculated for Federal coal. More than 360 billion short tons of Federal coal exists in Utah, Colorado, and New Mexico and more than 520 billion short tons of Federal coal exists in Wyoming, Montana, and North Dakota.

Geothermal Resources

Assessment efforts initiated under the Geothermal Energy Research, Development, and Demonstration Act of 1974 led to the publication of USGS Circular 726, Assessment of Geothermal Resources of the United States--1975 and USGS Circular 790, Assessment of Geothermal Resources of the United States--1978. These reports established the methodology for geothermal resource assessments and provided estimates of potential electric power generation that have guided geothermal energy research and development for the past 22 years.

Today, the United States has an installed capacity of approximately 2,860 Megawatts (MW) of electrical power production from geothermal plants located in California, Hawaii, Nevada, and Utah. This constitutes 0.4% of our total electricity generation capacity. Geothermal energy is derived from the earth's internal heat and can be manifested as volcanoes, hot springs, and other thermal features. Large portions of the western U.S. are characterized by abnormally high heat flow as a result of active faulting and volcanism and all of the existing geothermal power plants fall within these regions.

Geothermal reservoirs are classified according to their temperature and whether the reservoir fluid occurs as liquid water or as steam. Geothermal power is obtained from steam produced directly from the ground, from steam flashed and separated from hot water, or from binary systems involving closed-loop heat exchange between hot water and organic fluids with low boiling temperatures.

High temperature geothermal systems have temperatures greater than 150 ^oC (302 ^oF) with the reservoir fluid comprising hot water and/or steam. These systems are typically the best candidates for electricity generation and power plants exploiting these systems typically flash the hot water to drive steam turbines.

Intermediate temperature systems have temperatures between 90 and 150 ^oC (194 and 302 ^oF) and generally require the use of binary power plants with closed-loop heat exchange technology that allows transfer of the heat in the geothermal fluid to a second fluid that vaporizes at lower temperature.

Low temperature systems are those with temperatures less than 90 ^oC (194 ^oF) and are generally considered appropriate for direct use applications (space heating, agricultural process heat, spas). In this statement I will concentrate on the nature and abundance of intermediate and high temperature geothermal systems in the United States. A general overview of all aspects of geothermal energy can be found in USGS Circular 1125, Tapping the Earth's Natural Heat.

The last nationwide geothermal resource assessment (USGS Circular 790) was published in 1978, and a comparison of its findings with the current state of knowledge and development highlights some important points.

1. Nine western states (Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Utah) have potential for at least 100 MW of electrical power generation per state from identified geothermal systems.

1. The total identified high temperature geothermal resource in these nine states was estimated at approximately 22,000 MW. On a state-by-state basis, only California has realized a significant fraction (22%) of this potential (2,600 out of 12,000 MW). Estimates of undiscovered resources ranged from 72,000 to 127,000 MW.

1. The Great Basin region, which lies mostly in Nevada and Utah but also encompasses parts of California, Oregon, and Idaho, has the lowest percentage of developed power with respect to the Circular 790 estimates. Only about 500 MW are produced in the Great Basin compared with an estimated high-temperature resource of about 7,500 MW.

• Economics - Until recently, the 5- to 8-cent per kilowatt-hour (kwh) cost of geothermal energy was not competitive with fossil fuel-generated power costing as little as 3 cents/kwh.

• Water - Reservoirs exploited with flash-steam power plants lose a significant fraction of the produced water from their cooling towers. In many western states water for reinjection into geothermal reservoirs is either unavailable or in short supply.

• Remote Locations - Many geothermal systems, particularly those in the Great Basin, are dispersed in relatively remote locations with limited access to electric power transmission lines and other facilities.

• Validation of the Resource - Because geothermal reservoir development requires drilling, it has often proven difficult for power companies to obtain financing in the absence of up to date resource assessments.

• Uncertainties in the Circular 790 Assessment - The state of knowledge about geothermal resources has advanced dramatically in the past 20 years, and there is evidence that Circular 790 may have overstated the abundance of high temperature resources in the western U.S.

• Binary Power Plants - The maturation of binary power plant technology has provided a means of exploiting geothermal reservoirs with little or no loss of water. In addition, binary power plants have enabled the development of intermediate temperature systems not included in the Circular 790 estimate.

• Reclaimed Water - Effluent pipelines carrying reclaimed water from urban areas have become a cost-effective and environmentally sound means of providing water for reinjection into declining or depleted geothermal reservoirs. For example, reclaimed water is now being used to replenish The Geysers geothermal field in California, which produces approximately 1,200 MW of electricity.

• Enhanced Geothermal Systems - With DOE support, scientists and engineers have been developing a geothermal reservoir stimulation technique known as Enhanced Geothermal Systems (EGS). Through the hydraulic fracturing of the hot but impermeable rock surrounding geothermal reservoirs, power companies will be able to increase the amount of hot rock available to heat geothermal fluid, increasing the capacity and extending the lifetime of existing geothermal systems.

• Exploration Technology - Improved geochemical and geophysical tools for geothermal exploration, together with targeted test drilling, have allowed power companies to more accurately predict the productivity of a specific geothermal resource before embarking on an expensive program of production drilling.