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2012 DOE budget, a mixed bag for natural gas

Hydrocarbon Engineering,

On Monday February 14th, the US Department of Energy’s (DOE) 2012 budget was unveiled at a presentation to invited stakeholders, including the American Public Gas Association (APGA). President Obama’s budget for the DOE is a reflection of the importance of energy issues despite calls for deep cuts in government spending. For 2012, the overall DOE budget level is increased by US$ 453 million to US$ 29.5 billion.

Despite these increases, the budget does make significant cuts to fossil energy programs which are reflective of President Obama’s belief that clean energy technologies are the environmentally friendly, job creators of the future. Specific cuts of interest to natural gas include:

  • Ending US$ 3.6 billion worth of oil, coal and natural gas subsidies.
  • Ending the Natural Gas Technologies Program. This program researched environmentally responsible means of increasing production of natural gas.
  • Ending the Unconventional Fossil Energy Technologies Program. This program conducted R+D+D on production of unconventional coal, oil and natural gas.

Conversely, the President’s budget does maintain some key natural gas related research programs. In particular, the Methane Hydrates Research program is maintained in the 2012 budget. The program will be moved from the Fossil Energy Program to the Office of Basic Science which will continue to coordinate with Fossil Energy. A rationale for this change was not provided. This research into the significant potential of natural gas production from methane hydrates has been strongly supported by the APGA.

Moreover, the proposed budget also contains US$ 550 million for the Advanced Research Projects Agency-Energy (ARPA-E) an increase of US$ 161 million over FY10. This division of DOE, modeled after the Defense Advanced Research Projects Agency, will investigate ‘game changing’ technologies of many types. Of specific note, is ARPA-E will, ‘investigate methods to produce [natural gas] via approaches that would transform natural gas from a non-renewable to a renewable clean fuel.’

President Obama’s budget also maintains a variety of research programs into natural gas water heaters, natural gas as a transportation fuel, among many others. However, given the cuts to key natural gas related programs, the budget remains a mixed proposition at best.

It should also be noted that the President’s budget proposal rarely gets passed as is by the Congress (if ever). Moreover, the proposal itself merely indicative of the President’s priorities and the extent to which Congress will choose to adhere to his proposal is unknown. APGA will continue to press Congress and the Administration to fund natural gas programs as a part of any budget proposal.

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