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F I S C A L I M P A C T R E P O R T

SPONSOR Altamirano

ORIGINAL DATE

LAST UPDATED

2/16/2007

HB

SHORT TITLE NM Tech Petroleum Recovery Research Center

SB 1084

ANALYST Moser

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$410.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

SUMMARY

Synopsis of Bill

Senate Bill 1084 appropriates $410,000 from the General Fund to the Board of Regents of New

Mexico Institute of Mining and Technology for expenditure in FY08 and subsequent fiscal years

for the Petroleum Recovery Research Center to use as a mandatory match for a $67,000,000

grant from the United States Department of Energy over the next 10 years for carbon

sequestration.

FISCAL IMPLICATIONS

The appropriation of $410,000 contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of a fiscal year shall revert to

the general fund.

HED indicates that the provisions of SB1084 require a recurring funding increase of $410,000

for 10 years beginning in FY08. This would make the recurring funding for the PRRC

$2,321,800 from the General Fund. The FY07 base currently includes an increase of $39,800

from the previous fiscal year.

SIGNIFICANT ISSUES

This request was submitted by New Mexico Tech in the amount of $409,300 to the New Mexico

Senate Bill 1084 – Page

2

Higher Education Department as an increase in the base of $1,912,500 for the PRRC, but is not

included in the Department’s funding recommendation for FY08. However, the Department

recommended PRRC be funded at its base recurring level in FY08.

Per HED the Petroleum Recovery Research Center (PRRC) of New Mexico Tech is regarded

both nationally and internationally as one of the nation's leading petroleum research

centers. PRRC was established by the New Mexico State Legislature in 1977 to conduct both

basic and applied research designed to improve recovery of petroleum and natural gas.

The PRRC website (

http://baervan.nmt.edu/

) describes carbon sequestration as an approach in

the world’s climate change mitigation effort that involves the capture and permanent storage of

greenhouse gases. At PRRC, regional possibilities for storing carbon dioxide are being explored

and tested through the Southwest Partnership on Carbon Management. The project is an

alternative energy process taking carbon from a power plant and out of the atmosphere. Dr.

Robert Lee is the Program Manager for this seven-state effort sponsored by the U.S. DOE.

According to PRRC management staff, the carbon sequestration project is in its third phase,

which includes the preparation for market to the oil industry. The third phase is approximately a

three-year process. The $67,000,000 DOE grant award to New Mexico Tech was announced this

year and includes a 20% total match requirement, and about $800,000 matching funds annually

over 10 years. There are currently a large number of stakeholders and occasionally in-kind

contributions are acceptable. The PRRC has a $390,000 commitment from the private sector and

is seeking the remaining $410,000 from the state.

Primary funding for the PRRC comes through the U.S. Department of Energy's (DOE) Office of

Fossil Energy through the National Energy Technology Lab (NETL) and the State of New

Mexico for their funding and support of the research program. Various major and independent

oil companies have also worked with the PRRC on cooperative projects to seek solutions to real-

world problems in the oil field.

GM/csd