The American Gas Association (AGA) on Tuesday denounced the Bush administration’s fiscal year 2006 budget proposal that would “virtually” scrap federal research into new techniques for finding and producing natural gas at a time when tight supplies have sent prices soaring.

“Given the president’s call in his State of the Union address…for ‘reliable supplies of affordable, environmentally responsible energy,’ we are surprised that the administration has asked Congress to eliminate funding for research that leads to greater supplies of natural gas with less environmental impact,” said AGA President David Parker. He noted that AGA will seek to persuade Congress to restore funding for gas supply research programs.

The new budget, which was submitted to Congress on Monday, provides only $20 million for the close-out of all oil and natural gas research and development (R&D) programs at the Department of Energy (DOE) in fiscal year 2006. The DOE programs were awarded $78.7 million by Congress for the current fiscal year.

AGA’s Parker noted that the R&D program helped to pioneer horizontal drilling technology, “which allows developers to drill underground for up to six miles beyond a single drilling pad — thus extending natural gas supplies without an increase in environmental impact.” Also being “zeroed out” is a DOE program that promoted safer, more reliable gas distribution systems, he said.

The AGA, which represents gas distributors, expressed concern about the Interior Department’s proposal for expanded permit processing fees for onshore minerals as well. “Although pleased that BLM [the Bureau of Land Management] is requesting additional funds to speed up the paperwork process to generate more production more quickly, we are concerned that consumers will ultimately pay higher energy bills as a result of these increased user fees,” Parker noted.

Delays in the processing of permit applications have been a constant problem at the BLM. While it shouldn’t take more than 30 days for the BLM to process a producer’s application to drill in the InterMountain West, many independent producers there have said it actually takes more than 140 days, he said.

The AGA also singled out the Bush administration’s decision to budget less money for the Low-Income Home Energy Assistance Program (LIHEAP). The president has requested $1.8 billion in regular LIHEAP funding, plus $200 million in contingencies for fiscal year 2006. This compares to $1.88 billion in regular funding, plus $297.6 million in contingencies for the current fiscal year.

“While the president’s budget request for LIHEAP represents a 4.3% decline from the program’s current funding level, this proposed decrease is not surprising,” Parker said. “AGA will work with social service agencies, non-profit organizations and other energy groups to bring LIHEAP funding for FY2006 up to a level that recognizes the impact of higher energy costs on low-income families.”

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