[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
OIL AND GAS TECHNOLOGY INNOVATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MAY 3, 2017
__________
Serial No. 115-12
__________
Printed for the use of the Committee on Science, Space, and Technology
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California ZOE LOFGREN, California
MO BROOKS, Alabama DANIEL LIPINSKI, Illinois
RANDY HULTGREN, Illinois SUZANNE BONAMICI, Oregon
BILL POSEY, Florida ALAN GRAYSON, Florida
THOMAS MASSIE, Kentucky AMI BERA, California
JIM BRIDENSTINE, Oklahoma ELIZABETH H. ESTY, Connecticut
RANDY K. WEBER, Texas MARC A. VEASEY, Texas
STEPHEN KNIGHT, California DONALD S. BEYER, JR., Virginia
BRIAN BABIN, Texas JACKY ROSEN, Nevada
BARBARA COMSTOCK, Virginia JERRY MCNERNEY, California
GARY PALMER, Alabama ED PERLMUTTER, Colorado
BARRY LOUDERMILK, Georgia PAUL TONKO, New York
RALPH LEE ABRAHAM, Louisiana BILL FOSTER, Illinois
DRAIN LaHOOD, Illinois MARK TAKANO, California
DANIEL WEBSTER, Florida COLLEEN HANABUSA, Hawaii
JIM BANKS, Indiana CHARLIE CRIST, Florida
ANDY BIGGS, Arizona
ROGER W. MARSHALL, Kansas
NEAL P. DUNN, Florida
CLAY HIGGINS, Louisiana
------
Subcommittee on Energy
HON. RANDY K. WEBER, Texas, Chair
DANA ROHRABACHER, California MARC A. VEASEY, Texas, Ranking
FRANK D. LUCAS, Oklahoma Member
MO BROOKS, Alabama ZOE LOFGREN, California
RANDY HULTGREN, Illinois DANIEL LIPINSKI, Illinois
THOMAS MASSIE, Kentucky JACKY ROSEN, Nevada
JIM BRIDENSTINE, Oklahoma JERRY MCNERNEY, California
STEPHEN KNIGHT, California, Vice PAUL TONKO, New York
Chair JACKY ROSEN, Nevada
DRAIN LaHOOD, Illinois BILL FOSTER, Illinois
DANIEL WEBSTER, Florida AMI BERA, California
NEAL P. DUNN, Florida MARK TAKANO, California
LAMAR S. SMITH, Texas EDDIE BERNICE JOHNSON, Texas
C O N T E N T S
May 3, 2017
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Randy K. Weber, Chairman,
Subcommittee on Energy, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 4
Written Statement............................................ 6
Statement by Representative Marc A. Veasey, Ranking Member,
Subcommittee on Energy, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 8
Written Statement............................................ 10
Statement by Representative Lamar S. Smith, Chairman, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 12
Written Statement............................................ 14
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 16
Written Statement............................................ 18
Witnesses:
Mr. Edward Johnston, Senior Vice President for Research and
Development, GasTechnology Institute
Oral Statement............................................... 20
Written Statement............................................ 23
Dr. Dave Brower, Founder and President, Astro Technology
Oral Statement............................................... 29
Written Statement............................................ 31
Mr. Walker Dimmig, Principal, 8 Rivers Capital, LLC
Oral Statement............................................... 34
Written Statement............................................ 36
Dr. Ramanan Krishnamoorti, Interim VP/VC for Research and
Technology Transfer, Univ.of Houston & Univ. of Houston System;
and Chief Energy Officer University of Houston
Oral Statement............................................... 44
Written Statement............................................ 46
Discussion....................................................... 58
OIL AND GAS TECHNOLOGY INNOVATION
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WEDNESDAY, MAY 3, 2017
House of Representatives,
Subcommittee on Energy
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:06 a.m., in
Room 2318, Rayburn House Office Building, Hon. Randy Weber
[Chairman of the Subcommittee] presiding.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Weber. The Subcommittee on Energy will come to
order. Without objection, the Chair is authorized to declare
recesses of the Subcommittee at any time.
Welcome to today's hearing entitled ``Oil and Gas
Technology Innovation.'' I recognize myself for five minutes
for an opening statement.
Today, we will have the opportunity to hear about exciting
new research and developments in oil and gas. Fossil fuels
continue to be America's dominant energy source and provide
over 80 percent of the energy around the world. It's no
surprise that we have a robust industry here at home investing
in developing the next generation of technologies to help
produce American fossil fuels more efficiently, more safely,
and at a lower cost for American consumers.
Our hearing today will highlight individuals and private
sector organizations taking a leading role in oil and gas
technology innovation. Much like our Committee roster, we see a
lot of our Texas innovators on our panel today.
As we worked to put together today's hearing, I quickly
learned we could fill this room with innovators from across
Texas and the country who are exploring new ways to improve a
broad range of technologies that can help revolutionize this
industry. My staff and I have had the opportunity to talk to
researchers from the University of Texas, Texas A&M, University
of Houston, Rice University, and the DOE national labs, all of
whom are conducting research that is driven by industry needs.
We heard about research in materials science, to develop
materials resistant to the high temperature and pressure
environments that occur particularly in offshore drilling. We
even learned about the unique applications of nanotechnology to
monitor the subsurface, and basic research in geology and
computing that allows industry to make better decisions about
when and where they drill.
I want to thank Dr. Ramanan Krishnamoorti--am I saying that
right? Close enough, huh? Okay. You're very kind--from the
University of Houston for testifying today and representing the
incredible research going on in my home State. I'm a graduate
of U of H myself, Doctor, by the way, so thank you for being
here. I look forward to hearing--the Cougars, yes. I look
forward to hearing your insight on the nexus between this basic
and fundamental research and how it applies in the oil and gas
industry.
This brings us to the appropriate role for the Department
of Energy. The Department has contributed valuable research in
this field for decades. Congress first funded DOE's
unconventional oil and gas research programs beginning in 1976,
and collaboration with industry has indeed been a core part of
DOE's research efforts. Historically, the Department has
conducted basic and early-stage research, collecting long-term
data and maintaining expertise to provide industry with the
tools necessary to achieve technology breakthroughs.
Industry then led the next step, building on DOE research,
to commercialize oil and gas technology. Using this
collaborative approach, DOE research conducted by the national
labs contributed to the development of key technology for
hydraulic fracturing and revolutionized the American economy in
the process.
Today, DOE continues to make targeted investments in early-
stage unconventional oil and gas research, while efforts to
deploy new technology are consistently led by the private
sector. The Department also contributes funding to larger,
industry-led projects measuring seismic data and analyzing
geological formations like the Gas Technology Institute's
research to maximize the efficiency of hydraulic fracturing in
the Permian basin, which we're going to hear more about in
testimony today.
As we approach the budget season, it is our job as an
authorizing committee to make sure that we have a clear picture
of what federal research investments provide the most bang for
our buck.
We know that industry has the skills and resources to fund
technology commercialization, but they often don't have the
tools to conduct early-stage research and maintain that
historical data like the DOE national labs can. With that in
mind, DOE should prioritize the basic and early-stage research
that provides data and analytical tools to researchers and
allows the private sector to commercialize groundbreaking
technology.
I want to thank our witnesses for testifying today, and I
look forward to hearing more about your innovative research.
[The prepared statement of Chairman Weber follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Weber. And with that, I will recognize my good
friend from Texas, Mr. Veasey.
Mr. Veasey. Thank you, Mr. Chairman. I would like to thank
you for holding this hearing and thank you for having the
witnesses here today. It looks like we have a really--a good
distinguished panel, glad that there are two Texans leading
this discussion on energy and oil production technology, and it
really is amazing how that technology has played such a major
part in the world changing just in the last two years. It
really is very, very miraculous.
And as you know, the State of Texas represents the largest
share of the U.S. oil and gas industry. And everyone here knows
that we produce more crude oil and we also produce a lot of
natural gas. And this industry has been a major economic driver
for our State for a long time, employing hundreds and thousands
of Texans. In order to continue this economic success, it is
necessary for our State to lead the way in making oil and gas
cleaner and safer for the environment and public health.
I'm happy to see that everyone on the panel today can speak
to the crucial importance of the environmental mitigation in
the extraction production and consumption of oil and gas. I
look forward to hearing everyone's insights and ideas.
Because--even though there has been some disagreement, we all
know for certain that human activity has contributed to the
warming of the climate, and the scientific community has made
clear that we all need to take some sort of action on climate
change.
And so what does this mean for the oil and gas industry?
The shale gas boom can take credit for much of the U.S.
emissions reductions over the last five years. Much of the
power generation sector has switched to natural gas, and we've
enjoyed the benefits of this cleaner-burning resource.
However, this is not a sufficient long-term solution to
lowering our emissions. Methane, the largest component of
natural gas, has 84 times the heat-trapping capacity of carbon
dioxide over a 20-year span. Aging infrastructure, greater
storage demand, and a growing pipeline network present a number
of challenges in monitoring and preventing these leaks.
The most notable leak since the shale gas boom occurred in
2015 at the Aliso Canyon storage facility in California. The
leak resulted in the release of 109,000 metric tons of methane
into the atmosphere. While methane is colorless and odorless,
we know the impact it can have on the environment and the
health of our own communities, as evidenced by this incident
that we saw in California.
Methane leaks are unique in that the environmental
incentives align with the profit incentives of the industry,
but it also can mean a loss of profit for industry. But working
together, we can provide the incentives and research necessary
to drastically reduce methane leaks by closely aligning the
industry's bottom line with our urgent need to protect the
environment.
The increased reliance on natural gas also highlights
another long-term challenge, and that is the deployment of
carbon capture technologies. The use of this resource still
pumps out greenhouse gases at an unsustainable rate, and that
is why we must accelerate the deployment of carbon capture
technologies not only for coal-fired plants but also for
natural gas power generation.
According to the International Energy Agency, carbon
capture and storage technologies are vital to enabling a robust
global response in addressing the threat of climate change. The
necessity is reflected in the Paris climate negotiations, and
we are not short on innovative concepts.
I particularly look forward to hearing from Mr. Dimmig on
NET Power's unique zero-emissions design that they are trying
to commercialize in Texas in the next few years.
And before I finish, I would also like to note that during
today's dialogue, we may hear a few inaccurate or misleading
statements comparing incentives for fossil fuel versus those
for various forms of renewable energy and energy efficiency.
The most obvious inaccuracy in this criticism is the
presumption that all renewable energy is the same. It's not, as
if solar, wind, geothermal, and hydropower are not all unique
forms of energy generation.
Claiming a lack of parity in research and development
funding by comparing fossil energy research budget lines to
budgets for efficiency and all of these renewable sources
lumped together is not only misleading, it ignores the basic
fact of how our energy markets work. Fossil energy has enjoyed
strong government support for the past century, including tax
incentives, subsidies, research, development funding. In fact
the current boom in natural gas production can be traced back
to research on horizontal drilling and hydraulic fracturing
pioneered by the Department of Energy in the 1970s.
Moreover, fossil energy commands strong control over the
electric generation and transportation markets, and yet some of
my Republican colleagues cry foul when the biggest energy
companies in the world do not receive the same dollar-for-
dollar government support as all other energy industries
combined.
I strongly support government research and development to
advance energy efficiency, the wide range of renewable energy
technologies, and nuclear power. However, this does not mean
that the Department of Energy can't or shouldn't support a
robust portfolio of fossil energy research and development as
well. This area of research requires a strong partnership
between government and industry focused on mitigating the
environmental impacts of fossil energy generation.
The Department of Energy's work in this space is vital to
our environmental priorities. I hope we have the opportunity
this Congress to collaborate with our colleagues on the
majority in examining how we can prioritize and expand the
Department's R&D in this critical area.
Mr. Chairman, thank you for your patience. I know I went
over my time there, and I yield back the balance of my time,
and again want to thank the panel for being here.
[The prepared statement of Mr. Veasey follows:]
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Chairman Weber. Thank you, Mr. Veasey.
I now recognize the Chairman of the Full Committee, Mr.
Smith.
Chairman Smith. Thank you, Mr. Chairman.
I want to say this is an important subject today, and I
appreciate you having a hearing on it.
Today, we will discuss recent breakthroughs in oil and gas
technology. Innovators continue to build on decades of
groundbreaking successes in oil and gas production, maintaining
America's technology leadership. This area of research is
particularly successful due to continued collaboration between
industry, universities, and national labs. We also will discuss
the appropriate balance between the private sector leadership
and the Department of Energy in applied research and technology
development.
The oil and gas industry has a long and successful history
of maximizing the research conducted by DOE to further
technological breakthroughs. Before hydraulic fracturing and
horizontal drilling revolutionized oil and gas production,
basic and early-stage research funded by the Department
provided valuable tools and knowledge to industry. In the
1980s, Sandia National Lab collaborated with industry to
develop the primary drill bit used in horizontal drilling. And
Sandia National Lab's basic research in geology led to the
development of microseismic fracture mapping techniques for
hydraulic fracturing. Industry partners adapted these
techniques for commercial use and deployed technology to
maximize energy production across the country.
The partnership between DOE and the private sector must
have the right structure for success. DOE is best suited to
provide the early-stage research that allows industry the
opportunity to commercialize and use new technology in the
field. This approach allows for the most cost-effective and
efficient technology to be deployed by oil and gas companies.
We don't need mandates to motivate producers to use the most
efficient production technology.
Technology that improves development often reduces the
footprint and environmental impact of energy development. It
also lowers costs for consumers. R&D is a great way to improve
our environment and power our economy. Federally funded
research in one area also can provide economic benefits and new
technology where we least expect it.
One of our witnesses today--David Brower, the founder of
Astro Technology--spent his career as an engineer working with
NASA and the Department of Defense. After years of working on
rocket propulsion and safety, he discovered that he could
effectively apply many of the sensor technologies used in the
aerospace industry to improve safety in oil and gas
development. This is the kind of groundbreaking technology that
we cannot predict when we fund basic and early-stage research.
Like many of my colleagues, I share a commitment to the
long-term use of our nation's most abundant and affordable fuel
source. DOE's fossil energy research programs can pave the way
for industry to develop the next generation of technologies.
But for this partnership to be a success, industry must
continue to take a leading role.
I look forward to a discussion about what policies Congress
and DOE should pursue to encourage more industry-led research
and development efforts. In Congress, we have the
responsibility to ensure the efficient and effective use of
American tax dollars. By investing in early-stage research and
encouraging strategic partnerships between DOE and industry, we
will ensure that our vast natural resources will continue to
provide affordable and efficient fuel for the American economy.
[The prepared statement of Chairman Smith follows:]
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Chairman Smith. Mr. Chairman, before I close, I want to
recognize James Danford, who is sitting right behind me, and he
is our Science Committee Legal Assistant and Speechwriter who
has helped me at numerous committee hearings and markups over
the past five years. James' last day on the Committee will be
next Friday.
He has been attending Georgetown Law School at night while
working at the Science Committee full-time and will graduate
May 21.
James and his wife Christa, my Executive Assistant, will be
moving back to Texas for James to take a job at a Houston law
firm. James and Christa have each been on my staff for almost
six years. They are expecting their first child in July. So we
wish them health, happiness, and success.
And James will you stand up and let us give you some
applause here?
Chairman Weber. So, James and did you meet your wife here
on the Science Committee?
Mr. Danford. No, we've been dating since high school.
Chairman Weber. Okay. So it took you a long time. I see
how you are.
So thank you, Mr. Chairman. And I now recognize the Ranking
Member of the Full Committee for a statement. Ms. Johnson?
Ms. Johnson. Thank you very much. Let me congratulate
James and say good wishes for the future. And thank all of our
witnesses, Mr. Chairman, for being here.
This is an interesting topic. I think it's interesting to
note that both the Chairman and Ranking Member of the Full
Committee and the Subcommittee Chairman and Ranking Member are
all Texans, and the Secretary of Energy now is also a Texan. So
you can tell that there is interest in this topic in Texas.
Certainly, the oil and gas sector is in is one area in
which we see how advances in science and engineering can
produce large-scale economic value, and our federal R&D
agencies have played a historic role in this process. Just over
a decade ago, we had little idea of the fossil resources that
would be available to us today.
However, due to some critical research investments made by
the Department of Energy over 40 years ago, coupled with rising
oil prices and in previous decades, the American economy
underwent the shale gas revolution, bringing natural gas
resources online and with it a sharp increase in domestic oil
production.
The DOE--that program in DOE wrapped up in the early '90s
when a private company took the research performed by DOE and
used it to ignite the oil and gas boom we see today. I think my
colleagues would agree that that is the model of DOE's energy
technology programs that we all hope to see: federal
investments shepherding transformative technologies to the
marketplace even when the endpoint is not clear at the
beginning of the process.
That brings us to what should be fundamental questions
today. Where should the Department of Energy be investing
limited dollars in this area? If the standard of identifying of
a government role rests in whether the private industry has the
capacity to invest in R&D, then I think the answer to the
question of DOE investments in oil and gas is that the federal
role should be very limited. After all, it is hard to think of
a sector that is much more commercial and on average more
profitable than the oil and gas industry. For this reason, I
believe the Department should focus its investments on
environmental mitigation. At present there is little incentive
for industry to spend major R&D dollars to protect the
environment.
If this hearing is intended to highlight the importance of
oil and gas to the economy, hopefully, I can save us some time.
I am from Dallas. Oil and gas will play an important role in
our nation's economy for decades to come. My hope is that our
outcome of these hearings will be to push the present
Administration to reconsider its position to drastically reduce
R&D funding for fossil energy. I would support that endeavor as
long as it comes along with strong support of DOE's other
energy technology programs. When it comes to R&D funding,
Republicans and Democrats should be speaking with one voice.
Investments in R&D benefit our nation.
In closing, I would like to challenge the current
Administration and our colleagues on this Committee to be
forward-looking in our push to develop the next-generation
energy economy. Drilling our way to economic growth while
ignoring the long-term impacts cannot be the answer as we face
a warming climate and the significant consequences that come
along with that. Our environment and the health of the public
is on the line.
And so I thank you, Mr. Chairman, and I yield back the
balance of my time.
[The prepared statement of Ms. Johnson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Weber. I thank the Ranking Member, and I will
introduce the panel.
Our first witness today is Mr. Edward Johnston, Senior Vice
President for Research and Development at the Gas Technology
Institute. Mr. Johnston received his bachelor's degree in
mechanical engineering from Mississippi State University and
his MBA from University of Chicago's Booth School of Business.
And our next witness today is Mr. David Brower, founder and
President of Astro Technology. Mr. Brower received both his
bachelor's degree in material science and mechanical
engineering and a master's of science degree from the
University of Utah.
And then our next witness is Mr. Walker Dimmig, Principal
at 8 Rivers Capital, LLC. Mr. Dimmig received his bachelor's
degree in political science from Middlebury College.
And our last witness is Dr. Ramanan Krishnamoorti, Interim
Vice President and Interim Vice Chancellor for Research and
Technology Transfer at the University of Houston and University
of Houston System--go Cougs--as well as Chief Energy Officer at
the University of Houston. Dr. Krishnamoorti obtained his
bachelor's degree in chemical engineering from the Indian
Institute of Technology Madras and doctoral degree in chemical
engineering from Princeton University.
I now recognize you, Mr. Johnston, for five minutes to
present your testimony.
TESTIMONY OF MR. EDWARD JOHNSTON,
SENIOR VICE PRESIDENT FOR RESEARCH AND DEVELOPMENT,
GAS TECHNOLOGY INSTITUTE
Mr. Johnston. Thank you very much, Chairman Weber, Ranking
Member Veasey, Chairman Smith, and Ranking Member Johnson, and
the rest of the Members of the Subcommittee.
On behalf of GTI, I'd like to thank you for the opportunity
to testify before you today regarding innovation in the
upstream oil and gas sector. My name is Eddie Johnston. I'm the
Senior Vice President of Research and Technology Development at
GTI, and we're an independent, not-for-profit R&D organization.
Our vision is to turn raw technology into practical energy
solutions that have meaningful impact for both the economy and
the environment.
I'm here to talk about shale research, and while shale
development seems like an overnight occurrence to most, decades
of research and cooperative field experiments by GTI and DOE
underpin the technical complexities of producing this resource.
Shale rock has very low permeability, so stimulation can be
very challenging and require significant energy. In shale
formations, the recovery rate is typically below 20 percent for
gas and ten percent for oil and sometimes even much lower. This
is the grand challenge. Field experiments we've conducted
indicate that as many as 80 percent of fracture treatments did
not significantly contribute to overall production. Effective,
yes; efficient, no. This inefficiency has direct environmental
implications, and by optimizing fracture efficiencies, fewer
wells will need to be drilled, which leads to fewer trucks,
less water, reduced emissions, and less community impact.
To address these issues, GTI launched the Permian project,
our hydraulic fracturing test site in West Texas. Our goal is
simple in concept: substantially advance the hydraulic
fracturing process to optimize well spacing so fewer wells are
needed. The problem, though, is multifaceted. Subsurface
completion science continues to be a complex process with many
variables that affect the locations where fractures propagate,
their dimensions, and their ability to enhance production.
Direct and reliable data is still needed about the size, shape,
and distance that hydraulic fractures actually propagate.
Optimizing resource recovery techniques requires input from
the best and brightest from industry, universities, national
labs, research institutes, and the only way to realistically do
this is via public-private partnership. So with the assistance
of a $7.4 million cooperative agreement from the Fossil Energy
Office, GTI was able to pull together a partner in Laredo
Petroleum that provided a test site and personnel in the
Permian, along with $100 million of microseismic and other
background data.
A joint industry partnership of Chevron, Conoco Phillips,
Core Labs, Devon, Discovery Natural Resources, Encana, Energen,
Halliburton, Shell, and TOTAL that sponsored the additional $16
million of research work and also provided subject matter
experts to contribute to the scope and a team of leading
researchers from the University of Texas, The Bureau of
Economic Geology, and NETL. And over this 11-well experiment,
more than 400 fracture stages were monitored, and we continue
to study the production from these fractures today.
But the key differentiator of this work is the $6 million
core well as we captured 600 feet of unique core through
fracture zones by drilling a one-of-a-kind slant core well.
More people have actually examined rocks from the moon than
they have through fractured core. Extracting core of this
magnitude is an expensive and risky undertaking, but this
ground truth evidence is critical to understanding fractures
and improving models and to consider how predictive analytics
can improve the process. Important data about propagation and
proppant transport dynamics will lead to the design of optimal
fracture treatments and ultimately ideal well spacing. Many of
the findings will likely be transferable to other basins, but
shale is a heterogeneous resource, so much work is still needed
to be done.
We have planned future work in the Permian and signed a
letter of intent with BHP Billiton for a test site in the
Delaware basin, part of the Permian that is deeper, at higher
pressures and temperatures, and different permeability than the
Laredo site. Interested partners are looking for a commitment
from DOE that signals continued support for this type of
important research. This investment will be the catalyst for
the next phase of learning.
In conclusion, shale has recalibrated world energy markets,
helped resurrect our economy, provided U.S. consumers clean,
affordable energy. Much has been accomplished by the mechanical
innovations by industry, but the subsurface science work is
clearly incomplete. Continued field experiments are critical to
achieve desired recovery rates for more responsible
development. The involvement of the public funding ensures the
results are ultimately shared broadly rather than being held by
a select few. This will allow us to maximize our national
energy resource and accelerate our path to energy security and
independence.
Thank you again for this opportunity to speak today, and
I'd be happy to answer any questions when it's the correct
time.
[The prepared statement of Mr. Johnston follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Weber. Thank you, Mr. Johnston. Dr. Brower,
you're recognized for five minutes.
TESTIMONY OF DR. DAVE BROWER,
FOUNDER AND PRESIDENT,
ASTRO TECHNOLOGY
Dr. Brower. Mr. Chairman, Members of the Committee, thank
you for having me here this morning. As mentioned, my name is
David Brower. I have much experience in science and technology,
and I've spent my 37-year career working on rocket technology
for defense and space applications. I've also worked in the
energy industry for over the past 20 years.
The combination of aerospace, energy, and government
experience has allowed me to develop and implement entirely new
high-technology methods into the energy industry. The primary
objective of my work has been to identify and prevent potential
problems before they occur. In doing so, we should be able to
mitigate environmental contamination from hydrocarbon spillage
and offshore and land-based operations, for example, to head
off catastrophic events such as the major oil spill in the Gulf
of Mexico during summer of 2010 and many less publicized
smaller spills our candidates also. The innovative methods also
improve safety and help increase production and operation
capabilities.
Since I formed Astro Technology in 1994, I have been a
committed advocate of strong working relationships between
government and industry. Currently, we work under a Space Act
agreement with NASA. The resulting work activity has been
instrumental in transfer of high-technology methods into the
energy industry. Twice--in 2004 and 2015--our efforts have been
highlighted in NASA's annual spinoff report to Congress. This
highly effective government-to-industry approach has led to
several deep-water sensor implementations in the Gulf of Mexico
with several others in progress. I should mention that our
collaboration has included university support as well.
Consequently, we've been able to identify and potentially
prevent structural failure, ensure environmental protection,
and at the same time improve operations.
Our venture began with the START treaty as part of the
counterproliferation of weapons of mass destruction in the
republics of the former Soviet Union. As a result of that work,
I was successful in development and application of new advanced
sensors. In mid- to late 1990s, several oil and gas companies
approached me about solving problems on a deep-water pipeline
in the Gulf of Mexico. They needed a sensor that could measure
pressure on the interior of a subsea pipeline that did not
require penetrations leading to possible leak paths. After the
successful task, several more oil and gas projects resulted.
Twenty years later, significant progress has been made with
NASA's assistance to advanced technology in oil and gas. Much
more effort is needed. Astra Technology started a research and
development project called Clear Gulf approximately a decade
ago. This effort includes 10 research areas such as
identification and mitigation of structural integrity that
could cause significant hydrocarbon spillage.
Flow assurance monitoring is another research area we're
addressing to prevent blockage of flowlines from hydrocarbon
and hydrate formation. Also advanced robotic development will
fill a significant gap in current large-scale remotely operated
vehicles. The new robots would work and live subsea. They will
have dexterous capability and perform finesse work operations
mimicking human capability. Another exciting research area is
the repair of older or soon-to-fail structures that are in
deep-water fields.
By definition, I believe the role of small business in new
advanced methods is clearly that of innovation. Large companies
are highly suited for implementation, and government support,
encouragement, technology direction, and possible incentives.
It can be very difficult to achieve implementation of new
technology methods. A stronger alliance between government and
industry could solve that problem. I've been very fortunate to
have a string of successful projects. My journey would've been
much more difficult without government support.
My thoughts going forward involve a stronger working
relationship between small business mainstream oil and gas
companies, universities, and U.S. Government. My experience
with oil and gas companies has been very positive. They
sometimes have fear of trying anything new. However, as we move
into future endeavors, it becomes increasingly important to
develop and apply advanced technologies to ensure
environmentally clean operations, trouble-free work effort, and
better control of operational processes.
In conclusion, I recommend the formation of a short-term
task team that addresses the issues discussed. The team should
consist of small business entities, DOE, several subject matter
experts from large oil and gas companies, and universities.
Thank you again for the invitation and your attention.
[The prepared statement of Mr. Brower follows:]
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Chairman Weber. Thank you, Mr. Brower.
Mr. Dimmig, you're up.
TESTIMONY OF MR. WALKER DIMMIG,
PRINCIPAL, 8 RIVERS CAPITAL, LLC
Mr. Dimmig. Thank you, Chairman Weber, Ranking Member
Veasey, and Members of the Committee. I appreciate the
opportunity to discuss energy technology innovation with you
today.
Eight Rivers is a technology commercialization firm focused
on developing breakthrough industrial innovations. Today, I
will be sharing perspective gained from developing one such
innovation on the natural gas utilization side known as the
Allam cycle, which is a new direct-fired supercritical CO2
power cycle for use with natural gas or coal. It projects to
compete on the cost of electricity basis with existing best-in-
class power plants today. Importantly, the technology does this
while producing virtually no air emissions. Water and high-
pressure, high-purity CO2 are the only byproducts of
the cycle.
Because the cycle can inherently produce pipeline-ready
CO2, it presents an opportunity to transform the
enhanced oil recovery industry by providing a supply of
affordable CO2, which would enable over 100 billion
barrels of domestic oil to be accessed even in low-oil-price
environments. In order to produce this oil, billions of tons of
power sector CO2 would be sequestered. In short, the
Allam cycle has the potential to be a major win for the
electricity sector, the oil and gas industry, the environment,
and consumers.
Today, NET Power, a company owned by 8 Rivers, the power
company Exelon, and the engineering firm CB&I is building a 50-
megawatt thermal pilot-scale natural gas demonstration plant
down in La Porte, Texas, with over $140 million in private
investment into it. The plant is within months of entering into
operation, and it is designed to provide the information
required to then build the first 300-megawatt commercial-scale
natural gas plant.
Eight Rivers' experience in commercializing this technology
and others supports the view that federal government support
has an important role in energy technology development from R&D
through to deployment. The R&D process is long, expensive, and
highly uncertain. Without government participation at this
stage, it would be difficult for 8 Rivers to execute on its
model for commercializing important energy innovations.
Examples of federally funded R&D are present all throughout
the Allam cycle. Most commonly, 8 Rivers has been able to take
proven R&D that was originally pursued for other purposes such
as materials for supercritical coal boilers or heat exchanger
learnings from a solar program and apply that technology in the
Allam cycle.
In addition, the DOE has a new supercritical CO2
crosscutting initiative, and we're hopeful this program will
lead to opportunities to further advance the Allam cycle in
important ways. But our experience is also that public-partner
private partnerships remain critical all the way through to
deployment of first-of-a-kind commercial plants. The Allam
cycle is currently entering this challenging period.
A first-of-a-kind commercial facility needs to operate
successfully in the market against fully mature technologies,
and yet it has to do so with costs that are significantly
higher than even the second facility of its kind. Reasons for
this can include inefficient supply chains, designs that have
not yet been fully optimized, large first-time engineering
costs, increased contingency fees, and even less competitive
warranties.
Programs that partner with the private sector through
grants to assist in building first-of-a-kind projects can be
essential. One such program is the Clean Coal Power Initiative.
Importantly, a similar program for natural gas projects such as
the one IN that Power is now pursuing, does not exist. Cost
challenges do not completely dissipate by the second plant.
They reduce over time. Ongoing assistance for these projects
through mechanisms such as a reformed 45Q tax credit for CCS
can be critical to ensuring these technologies are able to
reach their full potential and are not just developed into
niche applications.
Finally, we believe federal R&D programs should be very
goal-oriented across the technology portfolio, and, rather than
being too technology-prescriptive, programs should have the
flexibility to pivot with industry to achieve those goals. For
example, 8 Rivers began by developing the Allam cycle for coal,
but it became quickly apparent that the coal development
pathway must first proceed through natural gas. This was the
lowest-cost, least-risky, and most impactful approach.
Similarly, federal programs could benefit from being
structured to work with both coal and natural gas utilization
technologies as this flexibility could help technologies move
forward for one fuel in a way that also represents a major
advance for the other fuel and achieves broader program goals.
Thank you for the opportunity to testify today, and I
welcome any questions you have.
[The prepared statement of Mr. Dimmig follows:]
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Chairman Weber. Thank you, Mr. Dimmig.
Dr. Krishnamoorti, you're up.
TESTIMONY OF DR. RAMANAN KRISHNAMOORTI,
INTERIM VP/VC FOR RESEARCH
AND TECHNOLOGY TRANSFER,
UNIV.OF HOUSTON & UNIV. OF HOUSTON SYSTEM;
AND CHIEF ENERGY OFFICER UNIVERSITY OF HOUSTON
Dr. Krishnamoorti. Thank you so much, Chairman. Thank you
for asking me today to talk about the critical partnership
between academia, industry, and national labs that are helping
move the oil and gas industry forward.
My name is Ramanan Krishnamoorti. I'm the Interim Vice
President, Vice Chancellor for research and technology transfer
at the University of Houston, but I'm also the Chief Energy
Officer.
Guided by a distinguished panel of the--of our Energy
Advisory Board comprising top executives from the energy
industry, we at the--at UH are committed to becoming the energy
university.
At the University of Houston, located in the energy capital
of the world, we strongly believe that fundamental advances in
science and engineering, when appropriately coupled with
industry-based pull, can help transform the capital-intensive
oil and gas industry. Just as hydraulic fracturing and
horizontal drilling have transformed the availability of shale
oil and gas, UH is working with industry and national
laboratories and other academic institutions to create the next
transformative technologies to advance conventional and
unconventional, as well as terrestrial and offshore oil and
gas.
We are focused on dramatically increasing the amount of
hydrocarbon resources that can be recovered, while minimizing
the impact on the environment and therefore ensuring the
continued supply of affordable energy solutions. Such a focus
requires commitment to all aspects of the oil and gas industry,
including regulation, business policy and management, public
policy, human factors, and naturally, fundamental and applied
science, engineering, and technology.
In my written testimony I've provided a detailed report on
the impact of the University of Houston in providing innovative
strategies to lower costs and develop safer methods to find and
produce oil and gas. These innovative solutions include
responses to immediate challenges and strategic long-term
disruptive technologies. The key issues are summarized as--I'm
going to have four points here.
First, technology innovations require a strong connection
between industry pull for targeted applications and the
academic push for fundamental and applied advances in science,
engineering, and technology. Some notable examples of industry
collaboration-driven advances are the significant speeding up
of seismic interpretation through advanced computing, the
development of smart cements, developing enhanced oil recovery
formulations for high-temperature and high-salinity reservoirs,
and sensing and preventing microbial corrosion of pipelines.
For these innovations to continue, the business of oil and gas
will require the embrace of human factor-centric design,
standardization, and system integration.
The second point is disruptive technologies advances in oil
and gas are likely to come from fundamental advances in various
fields, including nanotechnology, life sciences, data
analytics, and cognitive computing. But given the capital
expenses and long runways between fundamental research, applied
development, deployment, and commercialization, those advances
would require continued engagement by federal and state
agencies for fundamental breakthroughs and possibly by
incubation through engaged national laboratories as
technologies are developed. Specifically, engaging NASA Johnson
Space Center with the University of Houston and the Subsea
Systems Institute for the adoption and deployment of automated
underwater vehicles and risk modeling for deep-water missions
are examples of best-in-class engagement.
My third point, the oil and gas industry is challenged with
so-called crew change as experienced geophysicists,
geoscientists, engineers, and others retire, taking with them
an enormous amount of expertise over the next ten years.
Academia plays a critical role in partnering with industry in
the continued enhancement of the workforce for this industry
and the continued engagement of subject matter experts to
advance technological solution.
Finally, it is important to emphasize the cyclical nature
of the industry with boom and bust cycles all too common.
Combined with the long runways for the development of resources
such as those in the ultradeep water and those found in high-
temperature, high-pressure reservoirs, the continued
development of technology innovations remains critical and
requires sustained public investment.
Mr. Chairman, at the University of Houston we are proud of
the interactions we've forged with the industry and the
demonstrated value of these partnerships. I thank you for the
opportunity to provide testimony today and look forward to
answering your questions. Thank you.
[The prepared statement of Mr. Krishnamoorti follows:]
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Chairman Weber. Thank you, Doctor.
I now recognize myself for five minutes. This will be a
question for all of you, which I would like to keep short if we
can, your answer. We're going to try to get back to some more
questions. In your opinion, what is the appropriate role of
government in oil and gas research and development? Let me
explain. Are we better off focusing limited federal funds on
applied energy research or the demonstration and
commercialization of energy technologies? Mr. Johnston?
Mr. Johnston. So I would start by saying the leverage of
the funds of the project that we have I think are a very
appropriate way to utilize that fund. So we're actually taking
first principles and marrying them with industry, so trying to
get to the fundamental issue that's causing the inefficiencies
in hydraulic fracturing but also bringing partners along with
that. I think that is a very appropriate role for these types
of funds in these private-public partnerships.
Chairman Weber. Okay. Thank you. Mr. Brower?
Dr. Brower. I think one of the fundamental issues about
research in general in the oil and gas industry starts really
with the definition of what research and development really is
because when I made the transition from aerospace into the oil
world, research is defined much differently in both those
environments. Research in aerospace oftentimes can start with a
blank piece of paper and just thoughts as they start to
generate. In oil and gas, research typically begins with
something that's already somewhat downstream.
I think if I were looking at where some of the funding
could be utilized very effectively, it would be to have a
hybrid of both those two methods, whereas you're thinking of
new innovative methods that could solve some of the problems in
oil and gas and combine that with things that are a little bit
more mature.
Chairman Weber. All right. Thank you. I appreciate it. Mr.
Dimmig?
Mr. Dimmig. I think it's in our experience not an either/
or scenario. I think--we wouldn't have technologies to deploy
if we don't have a robust R&D base. And we've benefited from
R&D all throughout the Department of Energy, even R&D that
wasn't intended for fossil fuels. So we have to start there.
At the same time I think we have to recognize that certain
technologies that we think are very promising and the market
thinks are very promising are very capital-intensive, very
difficult to get into the market in--with that first
deployment. And so if we don't follow through with the most
promising of those technologies, we might leave them behind.
Chairman Weber. Okay. Got you.
Doctor?
Dr. Krishnamoorti. I agree with my panelists. It's not an
either/or. I think we learn some of our best lessons when we go
to deploy them. When we go to deploy technologies we come back
and say do we have to do research or fundamental basic research
that gets applied? And I think we've got to have a complete
stream of this, but to the boom and bust cycles that are so
common in the industry are today. Industry funding alone cannot
move this industry forward.
Chairman Weber. Got you. And you're--actually my next
question, in your testimony you discussed how oil and gas
production is testing the limits of current understanding of
engineering principles and presenting new problems along the
way. For example, you wrote to that, ``As we access more high-
temperature, high-pressure reservoirs with ultradeep water
exploration production, the material challenges have become
more significant''. You go on to write that your colleague is
conducting materials research to develop new polymers to solve
this challenge. Engineering is a practical field. Do you think
these practical problems are actually leading to basic science
research? And before you answer that, you said in your
prepared--in your remarks earlier you wanted U of H to be the
energy universe, so we want to make sure that happens. Do you
think that these practical problems are leading to basic
research?
Dr. Krishnamoorti. Absolutely in that basic research in
materials design and materials development, processing, and
deployment is where these practical problems are leading to a
significant change. And these are not going to just impact the
oil and gas industry. It's going to have a much broader
application, for instance, in the aerospace industry. You know,
the--we've had challenges in the deep water with the hydrogen
embrittlement of bolts. This has got parallels to the aerospace
industry, and what we've learned from either of those fields
has led to really understanding and improving the technology in
the field.
Chairman Weber. Thank you.
Mr. Johnston, I'm going to jump back to you. Can you give
us an update on the research at GTI's hydraulic fracturing test
site? What are some open problems that the scientists and
engineers are trying to understand?
Mr. Johnston. What they're really trying to figure out now
is actually where the proppant goes through the--so we--in this
project we actually physically, chemically, and radioactively
trace the proppant so that we have a better understanding of
what happens within the transport mechanism. So today, it's
really more of analyzing the production, inferring information
about the physical evidence that we have, and validating and
building new models that really help understand, you know, the
process.
Sometimes you induce as many questions as you answer with
projects like this, and I think that's why, you know, continued
research in this field is very important.
Chairman Weber. Well, that's true about a lot of research
in----
Mr. Johnston. It is.
Chairman Weber. Yes.
Mr. Johnston. It is.
Chairman Weber. All right. My time has expired. I'll now
recognize Mr. Veasey.
Mr. Veasey. Thank you, Mr. Chairman. And this question is
for Mr. Dimmig.
Mr. Dimmig, the IEA, among many other widely respected
analysts and institutions, has concluded that developing and
deploying carbon capture technologies in the power generation
sector, notably including such technologies for natural gas-
fired power plants, will be critical to achieving the goals of
the Paris agreement. I wanted to ask you, because NET Power is
developing a unique design for a natural gas power plan, which
would completely eliminate the smokestack, how do you see
designs like yours fitting into the long-term emissions
reduction strategy of the United States and other countries
that are participating in the Paris agreement?
Mr. Dimmig. We think it's critical. We've looked at all of
the sort of major studies out there, and I would agree they all
tend to conclude that without CCS, we're not going to get to
the various climate goals we've set. So at 8 Rivers we view
finding a fossil fuel solution to carbon emissions as a
critical requirement mostly because we also see that fossil
fuels aren't going anywhere. We have abundant oil and gas here
in the United States. We'll be using that for some time to
come.
There's abundant oil and gas around the world. Coal is
being utilized in the developing world quite abundantly, so we
know these fuels are going to be used and we know in order to
meet these goals, we're--then we're going to have to deal with
carbon emissions from that. Our main goal is to try to make
that sort of an economically relevant choice to make--give
people the option to build a plant using low-cost abundant
fossil fuels and do so in a way that limits or eliminates
carbon emissions and not make it an environmental or an
economic choice and make both options palatable in the same
facility.
Mr. Veasey. As developing countries try to improve their
way of life, how do you see these technologies playing into all
of this for those places around the world?
Mr. Dimmig. You know, I think the developed world sort of
built its economies on the back of abundant low-cost fossil
fuel. Those fields are also abundant in the developing world,
and if we want--you know, those folks are going to want to
bring the same quality of life and type of lifestyle we have in
the developed world to their world. And so fossil fuels are
going to be utilized to do that. We have an opportunity to do
that differently. We have an opportunity to do that by building
from the start even cleaner infrastructure to utilize those
fossil--those low-cost abundant fossil fuels.
Mr. Veasey. One of the key challenges that have plagued
carbon capture projects is scalability. I know your pilot scale
project is 1/10 the size of the eventual powerplant that NET
Power would like to commercialize. What are some of the
challenges that NET Power faces in scaling the technology?
Mr. Dimmig. Sure. So we started by designing a commercial-
scale plant rather than focusing on sort of taking R&D and
scaling it just to whatever we felt like the next most cost-
effective size was. We said what does the best commercial
product look like and then we scaled that as small as we could
to build a demonstration plant without trying to fundamentally
alter that design, fundamentally alter the equipment in the
plant. So every piece of equipment in that plant is being
supplied by a supplier that can also supply the same piece at a
larger size. So we're very confident about the all the
equipment in that facility.
The key piece then to scale would be the turbine. That
turbine does not exist yet at a larger scale, but we're
benefiting from the fact that that turbine could only be made
so small due to the pressures of the system so it's actually
operating at less than its full capacity and that will--that
turbine will actually--in the demonstration plant, it'll
actually then scale up to a commercial plant more of a 4X
scale-up than a 10X. So we really reduce the scaling as much as
possible and eliminated sort of technology changes from small
scale to commercial scale.
Mr. Veasey. Interesting. And in your opinion--because we
always have this debate on this Committee is what role do you
see government playing in helping with the scaling up of the
technologies like the one you're testing?
Mr. Dimmig. Yes, as I mentioned in my written testimony at
length and then a little bit of my oral testimony that there--
as you scale up, there are new risks even if you have the same
piece of equipment and you're just making it larger. There's a
new turbine in the middle of a plant like this. It's got to
operate against very, very mature technologies such as, say,
natural gas combined cycle plant that's been in the market
operating and becoming efficient for 40 years. So it's a very
challenging hurdle to overcome. And so when we take that step,
you have to figure out how to make that plant--that first plant
more cost-effective against what's in the market today.
Mr. Veasey. Mr. Chairman, I yield back. Thank you. Thank
you, Mr. Dimmig.
Chairman Weber. I now recognize Mr. Dunn for five minutes.
Mr. Dunn. Thank you, Mr. Chairman.
This is a fascinating subject. I could quiz you guys all
afternoon, but let me jump right in here and start with Mr.
Johnston. So the shale revolution, talk about the first, I
would like to get a sense of how that actually impacts the
average American family and if you could also tell us--sort of
give us a time horizon how long can we count on our shale
revolution to take care of us?
Mr. Johnston. Well, we refer to it as the shale evolution
because there was decades of investment and field experiments
that went into this where, you know, most people do see it as
an overnight occurrence. The average American family today is
getting approximately $1,400 back into their pockets through
lower utility bills on the electric and gas side together
because there's been such a shift in power generation from coal
to natural gas and lower gas bills as well.
If you look at--just take the Permian basin, for example,
you know, it's just one basin but it is now the world's--
considered by many the world's largest super basin of
hydrocarbons. And with estimates of 160 billion barrels of oil
and looking to double and beyond and you'll see kind of similar
growth----
Mr. Dunn. Well, what technology barriers do you see to
continuing to efficiently extract all that potential?
Mr. Johnston. Yes, it's really more fundamental learning
than I think it is the technology itself. It's really about
being able to understand and predict where you actually make
the fractures because, as I pointed out, so many of these are
not actually producing toward the overall production of the
well. So it's about having a better understanding of how the
fractures propagate. There could be some fundamental things and
materials in the proppant itself and having more intelligence
with the proppants. But it's really about predictive analytics
at this point.
Mr. Dunn. Thank you. So I want to turn my attention to Mr.
Brower. I loved your bio. Sometime I want to get you to come
back and tell us how you make a spaceship on the moon--out of
the moon. That's a great, great background there. But I'm going
to ask you a different question, though, today. What--you have
a relatively small company and a very exciting company. What
impact are you going to be making on the shale revolution?
Dr. Brower. Well, hopefully bigger than most of us think.
You know, the--it's the ideas I think that are generated that
have the impact and not the size of the company. You know, I
think back to some of the early pioneers in technology such as
Thomas Edison, you know, just a very small group of people that
were able to come up with some great innovations. And, you
know, he met with a lot of opposition, too, when he was
developing the lightbulb. Most people were really opposed to it
because they thought, you know, we already have kerosene lamps;
why do we need an electric light bulb?
You know, and so I think that we come up with those kind of
barriers whenever you--whenever we innovate something new.
There's resistance to anything new in a certain level, some of
it a lot of resistance and some of it much more gentle. But I
think that the concepts are what really make the difference
rather than the size of the company.
Mr. Dunn. And I was actually very fascinated by all the
areas you're--you've fringed into professionally in your life.
Mr. Dimmig, I'm going to ask you because you have such a
great testimony, more written than oral here. If you can direct
us may be offline to more information on the Allman cycle
that's more than we can dive into in the remaining minute we
have here, but I'm just going to ask you if you could have
somebody send us on the Committee more information on how that
energy cycle actually works, just a simple request.
Mr. Dimmig. I'd be happy to do that. Thank you.
Mr. Dunn. Thank you very much. And then, Dr.
Krishnamoorti, so we're talking about an insufficient supply of
engineers and scientists. What's the University of Houston
doing about that?
Dr. Krishnamoorti. Well, we started a petroleum
engineering program seven years ago. We now have 1,000 students
in that program. We've created the nation's only subsea
engineering program, and today, we are graduating about 50
graduate students annually in that program. We've created a
program that is focused on upstream data analytics that is
looking at how do you bring all the advances we've done in
high-performance computing and data analytics to the upstream
world.
Mr. Dunn. So I'm not going to trip you up with that
question. That's--good job. Thank you very much, Mr. Chairman.
I yield back.
Chairman Weber. Thank you, sir.
The Chair now recognizes the gentleman from California, Mr.
Takano, for five minutes.
Mr. Takano. I thank the Chairman.
My question--my first question is for Mr. Johnston. Mr.
Johnston, data released by the Occupational Safety and Health
Administration, OSHA, shows that the rate of severe injuries
across various--well, it shows the rate of severe injuries
across various U.S. industries. The upstream oil and gas
industry was once again one of the more dangerous places to
work according to these--this report. It tends to have a low
injury rate but a very high fatality rate. What is the industry
doing to improve safety for oil and gas industry workers? Is
there anything on the technology and research front that
industry is funding or could fund to bring the fatality rate
down?
Mr. Johnston. Thanks for your question. I grew up as a
roughneck on an offshore drilling rig, so this is something
kind of personal to me.
Mr. Takano. Yes.
Mr. Johnston. So, you know, it is a hazardous occupation.
I would have to say that safety, it starts with culture and
engineering controls, administrative controls, and things of
that nature. From the time that I worked offshore in the '80s
to what I saw on the--our hydraulic fracturing test site is a
huge transformation and attention to safety and culture and so
on. I was very impressed with what our host site Laredo was
doing. I'm also our executive sponsor of our corporate EH&S
team. So I think it really starts with having that commitment
to a safety management system.
As far as specific technology, GTI is not developing any
technology in the upstream oil and gas sector that's safety-
related. We do more in the downstream segment of that business
with the distribution companies and public safety in that
regard. I'm sure, though, that the industry is--has a keen
awareness on that.
Mr. Takano. I'm not--you know, I'm not from Texas. I
don't--I'm not around it.
Mr. Johnston. Yes.
Mr. Takano. I'm just wondering is--are refineries
considered upstream or downstream?
Mr. Johnston. Downstream, yes.
Mr. Takano. Yes. I mean, I--we do have refineries in
California----
Mr. Johnston. Yes.
Mr. Takano. --and I know that we've had some serious
incidents and accidents in those types of environments. And I'm
just wondering if there's any way in which there can be an
improvement in technology there or more intensive research.
Mr. Johnston. Certainly. There's a great book called
Failure to Learn that is a historical recount of the Texas City
Refinery explosion and the deaths that occurred. Every one of
my directors has read it. I bought them all copies of it
because I think that's one of the key pieces of that. But
there's certainly monitoring technology and advanced controls
and things that are continuing to accelerate down the
technology path.
Mr. Takano. Well, thank you.
Mr. Dimmig, I'm going to try and get this question in. Some
of my colleagues across the aisle often complain that the
Department of Energy is, quote, ``picking winners and losers,''
end quote, and interfering with the free market by, quote,
``crowding out private investment,'' end quote. I would be
interested in your perspective given NET Power's experience in
utilizing technologies developed by government, as well as in
securing private sector investment. Should the Department
support all research proposals in areas equally or should it
prioritize investments based on where we can get the most value
for taxpayer dollars?
Mr. Dimmig. I think it should--there should be a priority
on value. And I think at the end of the day if we believe that
these technologies--there's a great public interest in having
them available to us and that the R&D was worth it and we want
to sort of get them into the market. Ultimately, there will be
winners and losers selected and I think it--the key is to have
market pull because the market is very good at picking winners
and losers. And so getting market--the market to really drive
those decisions but have the DOE and the federal government as
a partner I think is a smart way to sort of blend the benefits
of both.
Mr. Takano. Dr. Krishnamoorti, I see you nodding your
head. Do you agree with that?
Dr. Krishnamoorti. Absolutely. The idea of having an
industry pull is critical in determining what types of
solutions we put together. It cannot be done in isolation of
industry pull.
Mr. Takano. Well, has the Department picked a lot of
important winners in the past few decades such as--well, hasn't
it really picked some important winners and losers in the past
few decades such as breakthrough hydraulic fracturing
techniques? Is this a bad thing?
Mr. Dimmig. No, I don't think that is a bad thing. And
again, it's--there's industry involvement, industry pull that
really helped drive that technology into the market, but
clearly, the Department of Energy and the federal government
had an important role in getting that technology to market and
then out the door.
Mr. Takano. Before I yield back, I'll just note for the
record that Dr. Krishnamoorti was also nodding his head.
Chairman Weber. Did the gentleman yield back?
Mr. Takano. I did.
Chairman Weber. Okay. And did you say that the other side
was complaining? You know, we're husbands. It's in our job
description. I'm just saying.
The gentleman from New York is recognized for five minutes.
Mr. Tonko. Thank you, Mr. Chair. The energy challenges
facing the United States today are real and growing. The only
way to meet these challenges is by investing in research and
development. Having an R&D portfolio that covers the spectrum
from advances in basic sciences to cutting-edge technology
development, testing and deployment greatly augments the
critical work being done by our private sector in our nation's
colleges and universities. Sustained support of these advances
produces significant economic dividends for the United States,
lowering costs and improving performance of widely used energy
technologies.
President Trump's fiscal year 2018 budget proposal would
deal a critical blow to the United States cutting-edge
innovation and research in the energy field. It would carve
away at critical programs, including the Department of Energy's
Office of Energy Efficiency and Renewable Energy, DOE's Office
of Science, and even the visionary energy advancements being
achieved through ARPA-E, the Advanced Research Projects Agency
for Energy, with a proven record of moving the horizon of
energy research forward.
At a time when we should be adding to our investments in
our nation's future, these cuts would put American research and
innovation far behind that of other nations. Many members claim
to support an all-of-the-above strategy for energy production.
I believe we also need an all-of-the-above energy research
strategy to complement it.
I recognize the value of federal fossil fuel research when
it helps us to achieve greenhouse gas emission reductions,
improve efficiency, and protect Americans' public health and
safety. That is why I have authorized bipartisan legislation--
I've introduced bipartisan legislation to authorize a gas
turbine efficiency R&D program. Without DOE's support, we will
lose our nation's advanced manufacturing edge to countries that
are investing in advanced turbine research.
Instead, with appropriate investments in turbine efficiency
research, we can be saving and creating American jobs while
we're working to reduce emissions. Simply put, an all-of-the-
above approach cannot be limited to oil and gas technology. We
must support research targeting renewables, storage, grid
modernization, and all other viable options to secure our
nation's energy independence and our global leadership in
energy innovation.
Advanced Research Projects Agency for Energy, or ARPA-E,
modeled on the Defense Department's DARPA program, invests in
high-potential, high-impact technologies that are too risky for
the private sector at this time. ARPA-E is advancing America's
competitiveness around the world. It has fostered cooperative
projects with academic, federal, and private sector
researchers, pushing forward cutting-edge ideas with an eye
toward the marketplace.
So, Mr. Johnston, as far--as it has been widely reported,
we understand that ARPA-E is now subject to a no-contract
action order which prevents the program from taking any action
to distribute and manage fiscal year 2016 or prior year funds,
as directed by law. It has also been reported to Committee
staff that, as part of this order, requests for routine no-cost
extensions of contracts, which are critical tools for effective
program management, are not even being considered by the
agency.
GTI is currently leading or participating in several active
and announced ARPA-E projects. So to the best of your
knowledge, how has this no-contract action impacted the work
you do or what you need to move forward in terms of research?
Mr. Johnston. Thank you for the question. We had received
notification of an award through the refuel program back in the
fall, and that particular project has not been contracted yet,
so it's been delayed. We go through a period of negotiation
with Contracting Officer and the Program Director, and it's--
you know, it's clearly in DOE's court now before that contract
is initiated.
Mr. Tonko. Is such an order unusual in your experience?
Mr. Johnston. It's not unusual to have delays when there
is an administration change. This one seems to have gone on,
you know, a little bit longer than typical.
Mr. Tonko. And in regard to the new contract action----
Mr. Johnston. I'm not sure of the no-contract action. I
just kind of look at our internal process and see that, you
know, an award was made and it's--you know, it's 8 months into,
you know, the notification and we still don't have a contract.
Mr. Tonko. Beyond ARPA-E, have you encountered similar
issues in working with or receiving funding from other DOE
programs within the last few months?
Mr. Johnston. Have we received others?
Mr. Tonko. Yes.
Mr. Johnston. Yes.
Mr. Tonko. And such as?
Mr. Johnston. In the Fossil Energy Office we have a
supercritical CO2 Brayton cycle project that's a
large project with other partners through the Fossil Energy and
NETL.
Mr. Tonko. So what impact will that have?
Mr. Johnston. Of getting that project? Well, we just
kicked the project off and so, you know, our teams are now
fully engaged in delivering that project, and it's a team of
different research institutes and other researchers.
Mr. Tonko. Thank you. I'll yield back, Mr. Chair.
Chairman Weber. Thank you, sir.
The gentleman from California is recognized.
Mr. McNerney. Well, I thank the Chair. I thank the
witnesses. I'm going to be confining my questions to shale oil.
In California we're very concerned about groundwater. We have a
limited amount of it. We have a limited amount of rain. What
are the best ways to minimize contamination of groundwater in
the shale process, Mr. Johnston?
Mr. Johnston. So as far as groundwater, I think it's all
about surface retention. There's, you know--the actual
hydraulic fracturing happens so far between--you know, below
the groundwater table----
Mr. McNerney. Right. Yes.
Mr. Johnston. --that there's really, you know,
infinitesimally small risk that could ever happen unless you
had a surface casing issue. But really, you're probably much
more limited to surface type of contamination to groundwater.
Mr. McNerney. Surface----
Mr. Johnston. Spills or something of that----
Mr. McNerney. Okay. I'm not quite sure I'm convinced, but
I've heard that before so I will go with that for now. What
about--what's the best way to minimize leakage of methane into
the atmosphere from the fracking process? Or are you the right
person to ask that question?
Mr. Johnston. I'm certainly--I've been around--I was on my
first frack job in 1985, so I've been around it for a little
bit. So fracturing from the--or methane emissions from the
hydraulic fracturing process are typically lower than they are
from actually conventional gas production. As with anything,
you know, I think operators want to keep as much of the product
as they can.
Mr. McNerney. Right.
Mr. Johnston. The real significant points of the process
that have more--are more apt to leak methane would be through
the flow back process. And you can have green completions where
you actually capture the methane through that process, in the
gas processing process as well. So--and sometimes in storage--
--
Mr. McNerney. So would regulations be the way to encourage
companies to use that technology?
Mr. Johnston. What I see that's been very effective today
is when policymakers, environmental NGOs, and industry can come
together and have a discussion and develop, you know, policy
around that. I look at Colorado, for example. They have what I
would consider to be a great case study of how you address
methane reductions and a methane target within a state. And
then, you know, there's technology--Senator Tanaka--or
Congressman Tanaka mentioned ARPA-E.
Mr. McNerney. Right.
Mr. Johnston. There's a lot of new technology actually
coming out of the ARPA-E monitoring--monitor program that will
be there for the commercial sector to bring into account so a
lot more monitoring of more remote sites on the horizon.
Mr. McNerney. Mr. Dimmig, do you agree that
environmentalists, industry, and policymakers come together to
find solutions?
Mr. Dimmig. I do. I do. We work quite extensively with
NGOs to try to educate them about what we're doing and learn
from them about where their concerns are and figure out how we
can address those. Methane emissions is one of those areas. And
from our conversations and where we see things with monitoring,
many of these emissions issues are very easily addressed. But
we have that conversation on the--very regularly with NGOs and
policymakers.
Mr. McNerney. Okay. Good to hear. Mr. Johnston, again,
concerning wastewater, there's a significant and growing
concern about the wastewater injection back underground causing
earthquakes and other sorts of problems. Would it be feasible
to require fracking operations to clean up the wastewater so
that it can be usable if not potable?
Mr. Johnston. I think it's--in some instances it's more of
a market question because they can dispose of this water so
inexpensively, and specifically in the--and what you've seen in
Oklahoma and some of the other areas. It's actually not from
shale where a lot of this water is being produced. It's from
the Mississippi lime formation and that's what--and that--a lot
of that deep-water injection has caused some of the induced
seismicity in the Arbuckle formation there. They seem to be
able to manage that pretty well as a reduce the amount.
You know, we're constantly looking for technology and
innovations that make that decision very easy for operators to
recycle as much of the water and to clean it up as--and reuse.
So that's a big priority for GTI.
Mr. McNerney. Okay. All right. Mr. Chairman, I'll go ahead
and yield back and let you terminate the hearing if you wish.
Chairman Weber. Actually, we're--I think we're going to do
a second round of questions if you have more, Jerry, so hang in
there.
Gosh, where do I start? Well, let me do it this way. Mr.
Johnston, I'll start with you. What policies could Congress and
DOE implement to encourage more industry-led development--
research and development efforts? Are there existing--in other
words, what policies could we implement, more industry-led
research. You talked about being a roughneck basically back in
'85. Is that what you said? Okay. So you've watched this
industry develop. So how do we get industry more involved?
Mr. Johnston. Well, one of the reasons I wanted to
highlight the project that we have today is just that. I mean,
how--I mean, that's tremendous leverage. It's working on a big
problem, and it takes lots of different stakeholders to come
together and solve the problem. So I think if you set out more
grand challenges that can really have an impact for consumers,
for industry, for the government to be able to point to that
impact that they're making, I think that's the way to do it.
That's one thing I really like about, you know, even the
ARPA-E model is they put big stakes in the ground and you have
to innovate to those, so not be prescriptive but put big
opportunities out there and let innovators and in the industry
come together to try to solve those.
Chairman Weber. Okay. Mr. Dimmig, I want to come to you
offline afterwards. I'm very interested--you know, I own an air
conditioning company, furnaces. We're about 80 percent
efficient, so natural gas, about 20 percent of the heat and
energy goes out the roof through the vent, and I'm curious
about how exactly you all intend to get them to zero emissions.
But I want to come to the doctor here. When you talk about
those kinds of measuring--or maybe it's Mr. Brower, I'm not
sure or both of you--measuring--being able to measure abilities
of pipelines subsea. You talked about ROVs, unmanned ROVs,
subsea, acting like human capabilities--I think it was you--
where you can measure that pressure differential or pressure
change. My question is would--could that be applied downhole
when that drilling is happening onsite? When you've got a
wildcat or a rig going, are you able to measure pressure on
those kinds of downhole or is that just out of the question?
Dr. Krishnamoorti. Measuring anything downhole while
drilling is extremely difficult. The head of the bit is a real
challenge. But there are technology solutions that are coming
through right now that are likely to transform that. One is
through smart fluids, putting fluids that can actually measure
ahead of the bit has become a way to control fluid loss. The
other is looking at acoustic signals that are able to look
beyond the drill noise and be able to actually tell what's
going on in the head of the bit. And those are coming along. In
perhaps 3 to five years those technologies will be mature.
Chairman Weber. Okay. Well, if you can shorten that, we
can get you more money. I'm just saying.
Mr. Brower, would you agree with that?
Dr. Brower. Yes, I agree with shortening it, too.
Chairman Weber. I figured you'd like that.
Dr. Brower. Yes, the faster the better. Downhole
measurements like differential pressure in downhole is like the
Holy Grail of measurements in that arena. It's very difficult
to get. Right after the Macondo incident, I was asked by BP to
participate on one of their steering group, and that was one of
the items that we addressed.
There--that there is ways and there are ways to do downhole
monitoring. As the doctor said, it's extremely difficult. We
have certain monitoring methods that we use and are continuing
to further develop that are used in the deep-water area that we
are now starting to put into downhole operations. And so I
think in the next little--you know, in the next few years that
it will be very doable to get those differential pressure
measurements----
Chairman Weber. Recently, I heard GE's plant--they would
build blowout preventers that are megatons and they use
redundancy in putting those on the floor of the ocean, for
example. So it's a very interesting thing that we can monitor
that.
But, Doctor, I want to come back to you. Mr. McNerney from
California had some questions about the water issue. Would you
like to further expand on that? Do you want some more time?
Dr. Krishnamoorti. Sure. So there are some very
interesting technologies that are in place that are allowing
for the use of geothermal energy to clean up the water. These
are being done through nanotechnology. There is a startup
company from the University of Houston----
Chairman Weber. Geothermal onsite?
Dr. Krishnamoorti. Onsite. So they're able to bring--not
use fossil energy but use geothermal energy to clean up water.
This is a nanotechnology company called Wave. They have got--
they've developed these materials that can pull out most of the
contaminants that are there and make the water as good as
potable water. And that's the kind of thing--even though you
can clean it up, the idea is to reuse and recycle that water so
that it can be used for re-fracking or for other fracturing
operations.
Those--I think that's an opportunity where the challenge
has been there. These are technologies that have been developed
for other applications such as in the developing world where
clean potable water has been a challenge, and those are being
brought to bear on the oil and gas industry.
Chairman Weber. Thank you, Doctor. I'm going to yield my
time and go to Mr. Veasey.
Mr. Veasey. Yes, thank you, Mr. Chairman. My question is,
again, for Mr. Dimmig. I know that NET Power intends to use the
captured carbon dioxide for EOR. If carbon capture technologies
are expanded widely across the market, will the capacity for
additional CO2 EOR meet the influx of carbon dioxide
that will be available or would the there be a market
saturation?
Mr. Dimmig. In most of the analyses we've seen are that
there's a huge opportunity for CO2-based enhanced
oil recovery, and that opportunity can absorb the carbon
emissions from really gigawatts of power plants. So there's a
study by Advanced Resources International that argues there are
100--about 100 billion barrels of next-generation CO2
EOR barrels recoverable, economically recoverable, and I think
those--to recover that oil would require 33 billion tons of
carbon dioxide, which is approximately I think--it was 260 or
280 gigawatts of natural gas plants over a 35-year life.
Mr. Veasey. Well, thank you very much.
Mr. Johnston, to many, the idea of using carbon captured
dioxide to extract additional greenhouse gas emitting
resources--in this case oil--seems to run counter to the
purpose of capturing carbon dioxide in the first place. Can you
explain why CO2 EOR--how that benefits the climate?
Mr. Johnston. Well, currently, you know, most--a lot of
the EOR operations come from natural--naturally occurring so
it's mined basically. It's drilled for to produce the
CO2. And if you take anthropogenic CO2
from power plants or other industry and you reuse that in an
EOR application, you're actually sinking that and it becomes a
miscible fluid. It helps, you know, bring up that tertiary
produced oil that you can't extract today.
So I think IEA did a study where they're looking at if all
the potential EOR applications that are technically recovery
were done, there would be like a 63 percent carbon reduction
from using manmade CO2 for enhanced oil recovery.
Mr. Veasey. Amazing. So in that same context can you
explain what a carbon advantage barrel of oil actually means?
Mr. Johnston. I would have to infer that it's something on
that, you know, guideline. I'm not really dialed into that. But
it--I think it has to do with using the manmade CO2
to bring that oil to bear to the market.
Mr. Veasey. Okay. Do you have an estimate of how much
private industry invests in R&D into new technologies annually
compared with the Department of Energy's Office of Fossil
Energy?
Mr. Johnston. Are you talking about across the value
chain----
Mr. Veasey. Yes.
Mr. Johnston. --of oil and gas? I mean it's orders of
magnitude more than what DOE would put in. I mean, because the
Fossil Energy Office has put 600--roughly $600 million a year.
I think, you know, there--it'd be orders of magnitude more by
industry, you know, across--are you just talking about the
United States? Even it's at least an order of magnitude,
probably higher.
Mr. Veasey. Okay. That would be interesting to have--to
see those numbers. Would the government best fulfill its
obligation to the public by pursuing more efficient extraction
methods and technologies or by pursuing more effective
environmental protections?
Mr. Johnston. Could you repeat that? I'm sorry.
Mr. Veasey. Yes, absolutely. Would the government best
fulfill its obligations to the public by pursuing more
efficient extraction methods and technologies or by pursuing a
more effective environmental protection policy?
Mr. Johnston. Yes, you know, those things are so closely
coupled, and I don't think people realize that or a lot of
people, so--and as I pointed out in my testimony, the more
you're driving that efficiency, the more you're reducing the
environmental impacts and the community impacts on top of that,
which is very important to people. So I think they are much
more tightly linked and it's not an either/or, and I think
that's the conversation we should be having more.
Mr. Veasey. Mr. Dimmig, do you--it looked like you
wanted--did you want to comment on that? Okay. All right. No,
thank you, Mr. Chairman. I yield back my time. Thank you.
Chairman Weber. He wasn't going to touch that with a 10-
foot drill stem.
Mr. McNerney?
Mr. McNerney. Well, I thank the Chairman again.
You know, shale revolution really has changed our country's
energy outlook. In 2007 we were talking about running out of
oil and prices and all, and now we have oil. We're talking
about exporting natural gas. But shale has a bad rap. I mean,
it does. If you look at the State of Maryland, didn't they just
pass a law that would forbid fracking? I mean, states, even
Oklahoma, there's a lot of concern out there about shale.
So what can we do? Is it more government regulation? Is it
just improving technology? I mean, I'm at a little bit of a
loss here. How do we change that image of fracking as a nasty,
polluting, earthquake-causing business?
Mr. Dimmig. Sure, Professor.
Dr. Krishnamoorti. So I direct you to my testimony. There
is a report that the Academy of Medicine, Engineering, Science,
and Technology at the State of Texas is creating is led by one
of our UH faculty members Christine Economides. She's a
National Academy of Engineers member. They have looked at all
of the different aspects of shale gas, and this is the
technology, the water, the infrastructure, and there are best
practices in place that can be put in play that will ensure
that this can be done safely, can be done economically, and can
be done in a way that actually minimizes environmental and
infrastructure damage. And I think those are the best practices
that have been established. It's been about 10, 12 years of the
industry working really hard to do it rights.
And I think even though there has been a lot of publicity
about the ills of shale gas and the unconventional resources, I
think that this is a resource that, if managed right and if
done right, can be an incredible resource for all of us.
Mr. McNerney. Well, I mean, you talk about best practices,
okay, but it just takes one or two bad players to give the
whole industry a bad rap. And, I mean, is it going to take
additional government regulation or enforcement? I mean, how
are we going to make sure that the industry follows those best
practices?
Dr. Krishnamoorti. So the challenge is how distributed the
resources and how many operations that are continuously being
developed or drilled and production. And so to try and do this
by just simply regulatory oversight is a mistake. This has to
be a partnership with the industry and with best practices
being put in place and where the effectiveness is monitored by
the industry. It cannot be monitored by regulatory agencies.
Mr. McNerney. I don't quite buy that. I mean, that's like
saying you're going to have the financial industry regulate
itself. No, that doesn't work.
Mr. Johnston, did you want to chime in here?
Mr. Johnston. I do think that having un-polarized
conversations would be a good start. And I don't know who is
the facilitator----
Chairman Weber. Yes, we'll get right on that here in
Congress.
Mr. Johnston. Yes, exactly. I wasn't going to bring that
up. But anyway--but, I mean, that would be a huge start, just
to bring the NGOs, industry, and policymakers together to
really--because we have an unprecedented opportunity. You know,
you talk about in our country going to--being an exporter of
hydrocarbons and, you know, ten years ago we were talking about
building LNG import terminals and, you know----
Mr. McNerney. Now we want to know how to make them export
terminals.
Mr. Johnston. Yes.
Mr. McNerney. But, I mean, the thing is even if the United
States--all the players in the United States are good, you
know, angels and they don't ever--they follow best practices,
then we're--there's other countries in other parts of the world
that are going to take up this technology and they're going to
be bad players. So, I mean, we still have a huge challenge in
terms of our leadership and in terms of our example on how we
do this.
Mr. Johnston. Yes. Fracking is not a good, you know, name,
right, anywhere you look, and it's painted with a broad brush--
--
Mr. McNerney. Yes.
Mr. Johnston. --whether it's actually the culprit or not.
And I don't know how you redirect that conversation, but, you
know, it's been around since 1947. It's not--it's--and, you
know, I don't know how you change the conversation, but that's
really what needs to happen.
Mr. McNerney. I mean, as a tree hugger, I want to see more
renewables and maybe more nuclear, but we can't just turn off.
And so we're going to have to rely on fracking, and we want it
to be as clean and as safe as possible.
Mr. Johnston. Well, there's ways to--you know, there are
best practices and I think there are commonsensical ways to
address the issues that are out there. Like I said, I pointed
to Colorado in the case of methane emissions. That's a great
case study and then how you take that from there.
Mr. McNerney. All right. Thank you, Mr. Chair. I'm going
to yield back to you.
Chairman Weber. Okay. Well, now that we have fixed all
those problems, I want to thank the witnesses for their
valuable testimony and the Members for their questions. Jerry,
thank you for your difficult questions, too. I mean, that's a
lot of frank discussion. I appreciate that.
The record will remain open for two weeks for additional
comments and written questions from the members. This hearing
is adjourned.
[Whereupon, at 11:37 a.m., the Subcommittee was adjourned.]
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