Statement of H. William Hochheiser
Manager, Oil and Gas Environmental Research
Office of Fossil Energy
U.S. Department of Energy
Before the
Senate Subcommittee on Forests and Public Land Management
Committee on Energy and Natural Resources
April 26, 2001

Mr. Chairman, thank you for the opportunity to speak today on the Department of Energy's (DOE's) work regarding the impacts of the Forest Service's Roadless Area Conservation rulemaking on the development of oil, natural gas, and coal resources.

On October 12, 2000, staff of DOE's Office of Fossil Energy met with DOE's Deputy Secretary T. J. Glauthier concerning the impacts of the Roadless Rule on the exploration and production of oil, gas, and coal resources. He requested that our office conduct an analysis of these potential impacts. We tasked Advanced Resources International (ARI), under an existing support contract, to perform the oil and gas analysis. Additionally, I gathered information on the coal impacts.

ARI completed its analysis of technically recoverable oil and gas resources under inventoried roadless areas in mid-November and presented it to a meeting convened by OMB on November 20, 2000. Attending that meeting were representatives from the Forest Service, the Council on Environmental Quality, OMB, and DOE.

Jeff Eppink from ARI is presenting the details of the analysis in separate testimony, but to summarize the results, ARI found:

• Between 3.5 and 23.1 trillion cubic feet (Tcf) of technically recoverable natural gas are estimated to underlie the roadless areas in the Rocky Mountain region. The mean estimate is 11.3 Tcf of gas.

• Between 120 million and 1200 million barrels of technically recoverable oil are estimated to underlie those same areas, with a mean estimate of 550 million barrels.

• Comparing estimates from the National Petroleum Council (NPC) 1999 natural gas study, the roadless rule could add 9.4 Tcf of gas to the resource estimated by the NPC to be off limits to development in the Rocky Mountain region, a 32 percent increase.

• Perhaps most importantly, it is estimated that 83 percent of the affected gas resource, 9.3 Tcf, is located under 2.7 million acres of roadless area, which is five percent of the 58.5 million acres covered by the roadless rule.

As a result of questions during and following the November 20 meeting, DOE further tasked ARI to estimate how much of the technically recoverable gas would be economically recoverable, and to estimate how technology advances might affect the amount of technically recoverable gas. Their results were delivered on November 30. Basing their methodology on the NPC study, ARI estimated that 7.7 to 8.5 Tcf of gas (68 to 75 percent of the mean technically recoverable estimate) would be economic at prices of three to four dollars per thousand cubic feet. Additionally, they calculated that advances in technology would increase the mean technically recoverable gas estimate from 11.3 to 13.5 Tcf.

With regard to impacts on coal, I gathered information from mining companies, the Forest Service minerals group, and electric utilities. My results were written in a white paper, dated November 30, which was forwarded to the Forest Service and OMB. In summary, I estimated that:

• In Colorado and Utah, the roadless rule could make at least 500 million tons of high quality, economic coal inaccessible. This coal has a value of $7 billion to $10 billion.

• In western Colorado, three active coals mines are hemmed in by roadless areas. These mines currently produce 16 million tons per year of bituminous, high Btu, low sulfur (0.5%) coal. In general, the impact on each of the three mines would be to preclude the operators from extending operations into currently unmined areas. As portions of the seam(s) are mined, normal practice would be to expand the mining operations to sustain production. If this cannot be done, production from the existing areas would eventually decline, and the mines would be forced to close prematurely.

• In central Utah, three tracts under roadless areas could contain 185 tons of economic coal worth $2.8 billion to $3.7 billion. One of the tracts is adjacent to an operating coal mine which needs these resources for future expansion. This mine produces six million tons per year and employs 252 people, with an annual payroll of over $19 million.

The Forest Service added the results of the analysis to the text of the minerals section in the Regulatory Impact Analysis and to the summary table of the rule's costs and benefits. The revised appendix described the DOE analysis and included additional information we provided on the growing oil and gas activity and interest in the Rocky Mountain region.

After review, the Forest Service concluded that the additional information provided by DOE did not change the magnitude of the effects as disclosed in the Final Environmental Impact Statement.

DOE believes that the amount of resources potentially impacted by the roadless rule could be significant. With U.S. demand for natural gas projected to grow significantly in the next 15 to 20 years, according to the Energy Information Administration, the National Petroleum Council, and others, interest for development of natural gas resources on Federal lands will increase.

This completes my statement.