Washington (Platts)--7May2009

The Obama administration said Thursday it intends to cancel $55 million
in oil drilling research and technology programs, saying the federal efforts
should instead be funded by the companies that benefit directly from the
projects.

In a budget document released by the administration, DOE laid out its
intent to eliminate the $50 million Ultra-Deepwater and Unconventional Natural
Gas research programs by 2012.

Although the programs are required by the Energy Policy Act of 2005, the
budget documents said the administration will propose canceling the program
"through a legislative proposal."

The administration will cut $20 million in funding for the program in
2010, $30 million in 2011, and eliminate it altogether by 2012.

All told, the program cuts would save $210 million between 2010 and 2014,
the documents showed.

The Obama administration will also cancel a discretionary $5 million oil
research and development program, saying "the oil industry has the incentive
and resources to undertake this work without this federal subsidy."

It will however keep a mandatory program that is run by a private
consortium and is funded by receipts from government oil and gas leases.

The Obama administration also noted that both programs, according to a
Government Accountability Office report, were duplicative of private industry
programs, which it said had spent more than $20 billion on research between
1997 and 2006.

--Daniel Goldstein, daniel_goldstein@platts.com