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Congress Asked to Promote 'All Kinds of Energy'

As both the House and Senate prepare to debate energy legislation this week, energy experts and industry officials Friday called on lawmakers to take an "ecumenical" approach to domestic energy policy that encourages the production of all forms of resources.

"It is an undeniable truth that we will need more of all kinds of energy," said Shell Oil Co. President Marvin Odum, at a day-long energy summit on Capitol Hill. A comprehensive energy policy should provide more access to domestic oil and natural gas resources, encourage more investment in alternative and renewable fuels, promote conservation and efficiency, and reduce carbon dioxide emissions using market mechanisms, such as a cap-and-trade system, he said.

The solution to U.S. energy problems "is not [an] either-or" one, but rather will require a broad-based approach, said Daniel Yergin, CEO of Cambridge Energy Research Associates in Cambridge, MA. Renewable fuels "[are] crossing the divide. They're becoming part of the energy mix. They're going to grow. They're going to become more extensive." But oil and natural gas still account for more than 60% of total energy consumption, and that's "not going to go away soon."

To promote production of renewable fuels, the production tax credit needs a "longer-term horizon," Yergin said. "An on-again, off-again production tax credit is not a way to promote stable development of renewable energy," he told both Sens. Jeff Bingaman (D-NM) and Pete Domenici (R-NM), who oversaw the energy summit.

Although renewables are increasing in importance, "oil and gas will remain critical fuels for our economy for decades to come," Odum agreed, adding that "we have potentially abundant resources" in the United States.

"If more areas are open to oil and gas exploration, I think it is crucial that adequate funding be provided to federal agencies that manage those activities," he said. "When adequate funding is not in place, the system breaks down, permits are not issued on time, environmental studies are questioned and [the] system is vulnerable to litigation."

Odum noted that a lease is no guarantee that drilling will take place, citing Alaska as a case in point. "Alaska's Chukchi and Beaufort seas are some of the most promising, undeveloped hydrocarbon basins in the U.S. In the last couple of years, Shell has invested more than $2 billion in leases and hundreds of millions more in equipment, studies, permits, training and other preparations, trying to bring more production to the U.S. market...With permit slippage and litigation delay, we [are] nearly three years on and have yet to drill a single exploration well, let alone produce much-needed oil and gas."

And to encourage drilling outside of the Gulf region, Odom urged Congress to "routinely extend revenue sharing to other areas, starting with Alaska."

Domenici questioned Yergin about why natural gas, which was once believed to be in short supply, has become more abundant. The game-changer has been the development of increased unconventional gas supplies, he said. "What seemed to be very much of a fringe activity has now puts us in a more abundant position. Last year our gas [production] went up 9% after many years of thinking we were going to be tied into a global LNG [liquefied natural gas] market."

But he said a critical question now is whether this is a "short-term rush" or does it "really open up a whole new horizon for natural gas."

Given the public's demand for more offshore drilling, Domenici said that there has been a change in the attitude of Congress toward drilling. In the past, "we were frightened by the word drilling. [Instead we] used the fancy word exploration."

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