To establish a mechanism for funding research, development, and demonstration activities relating to ultra-deepwater and unconventional natural gas and other petroleum exploration and production technologies, and for other purposes.

Summary: Natural Gas and Other Petroleum Research, Development, and Demonstration Act of 2001 - Instructs the Secretary of Energy to establish, in areas currently available for Outer Continental Shelf leasing, a research, development, and demonstration program, implemented by the Research Organization (created by this Act), relating to ultra-deepwater natural gas and other petroleum exploration and production technologies.Directs the National Energy Technology Laboratory to: (1) implement long-term research programs into new natural gas and other petroleum exploration and production technologies and environmental mitigation technologies for production from unconventional and ultra-deepwater resources, including methane hydrates; and (2) conduct a research, development, and demonstration program of new technologies for the reduction of greenhouse gas emissions from unconventional and ultra-deepwater natural gas, or other petroleum exploration and production activities, including sub-sea floor carbon sequestration technologies.Directs the Secretary to establish an Advisory Committee to advise on selection of an organization to create the Research Organization. Prescribes a selection procedure.Requires the Research Organization to award research, development, and demonstration grants according to specified requirements.Establishes in the Treasury the Ultra-Deepwater and Unconventional Gas Research Fund funded with Federal appropriations which shall be considered loans from the Treasury.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Natural Gas and Other Petroleum 
Research, Development, and Demonstration Act of 2001''.

SEC. 2. DEFINITIONS.

    For purposes of this Act--
            (1) the term ``deepwater'' means water depths greater than 
        200 meters but less than 1,500 meters;
            (2) the term ``Fund'' means the Ultra-Deepwater and 
        Unconventional Gas Research Fund established under section 10;
            (3) the term ``institution of higher education'' has the 
        meaning given that term in section 101 of the Higher Education 
        Act of 1965 (20 U.S.C. 1001);
            (4) the term ``Research Organization'' means the Research 
        Organization created pursuant to section 6(a);
            (5) the term ``ultra-deepwater'' means water depths greater 
        than 1,500 meters; and
            (6) the term ``unconventional'' means located in heretofore 
        inaccessible or uneconomic formations on land.

SEC. 3. ULTRA-DEEPWATER PROGRAM.

    The Secretary shall establish a program of research, development, 
and demonstration of ultra-deepwater natural gas and other petroleum 
exploration and production technologies, in areas currently available 
for Outer Continental Shelf leasing. The program shall be carried out 
by the Research Organization as provided in this Act.

SEC. 4. NATIONAL ENERGY TECHNOLOGY LABORATORY.

    The National Energy Technology Laboratory and the United States 
Geological Survey, when appropriate, shall carry out programs of long-
term research into new natural gas and other petroleum exploration and 
production technologies and environmental mitigation technologies for 
production from unconventional and ultra-deepwater resources, including 
methane hydrates. Such Laboratory shall also conduct a program of 
research, development, and demonstration of new technologies for the 
reduction of greenhouse gas emissions from unconventional and ultra-
deepwater natural gas or other petroleum exploration and production 
activities, including sub-sea floor carbon sequestration technologies.

SEC. 5. ADVISORY COMMITTEE.

    (a) Establishment.--The Secretary shall, within 3 months after the 
date of the enactment of this Act, establish an Advisory Committee 
consisting of 7 members, each having extensive operational knowledge of 
and experience in the natural gas and other petroleum exploration and 
production industry who are not Federal Government employees or 
contractors. A minimum of 4 members shall have extensive knowledge of 
ultra-deepwater natural gas or other petroleum exploration and 
production technologies, a minimum of 2 members shall have extensive 
knowledge of unconventional natural gas or other petroleum exploration 
and production technologies, and at least 1 member shall have extensive 
knowledge of greenhouse gas emission reduction technologies, including 
carbon sequestration.
    (b) Function.--The Advisory Committee shall advise the Secretary on 
the selection of an organization to create the Research Organization 
and on the implementation of this Act.
    (c) Compensation.--Members of the Advisory Committee shall serve 
without compensation but shall receive travel expenses, including per 
diem in lieu of subsistence, in accordance with applicable provisions 
under subchapter I of chapter 57 of title 5, United States Code.
    (d) Administrative Costs.--The costs of activities carried out by 
the Secretary and the Advisory Committee under this Act shall be paid 
or reimbursed from the Fund.
    (e) Duration of Advisory Committee.--Section 14 of the Federal 
Advisory Committee Act shall not apply to the Advisory Committee.

SEC. 6. RESEARCH ORGANIZATION.

    (a) Selection of Research Organization.--The Secretary, within 6 
months after the date of the enactment of this Act, shall solicit 
proposals from eligible entities for the creation of the Research 
Organization, and within 3 months after such solicitation, shall select 
an entity to create the Research Organization.
    (b) Eligible Entities.--Entities eligible to create the Research 
Organization shall--
            (1) have been in existence as of the date of the enactment 
        of this Act;
            (2) be entities exempt from tax under section 501(c)(3) of 
        the Internal Revenue Code of 1986; and
            (3) be experienced in planning and managing programs in 
        natural gas or other petroleum exploration and production 
        research, development, and demonstration.
    (c) Proposals.--A proposal from an entity seeking to create the 
Research Organization shall include a detailed description of the 
proposed membership and structure of the Research Organization.
    (d) Functions.--The Research Organization shall--
            (1) award grants on a competitive basis to qualified--
                    (A) research institutions;
                    (B) institutions of higher education;
                    (C) companies; and
                    (D) consortia formed among institutions and 
                companies described in subparagraphs (A) through (C) 
                for the purpose of conducting research, development, 
                and demonstration of unconventional and ultra-deepwater 
                natural gas or other petroleum exploration and 
                production technologies; and
            (2) review activities under those grants to ensure that 
        they comply with the requirements of this Act and serve the 
        purposes for which the grant was made.

SEC. 7. GRANTS.

    (a) Types of Grants.--
            (1) Unconventional.--The Research Organization shall award 
        grants for research, development, and demonstration of 
        technologies to maximize the value of the Government's natural 
        gas and other petroleum resources in unconventional reservoirs, 
        and to develop technologies to increase the supply of natural 
        gas and other petroleum resources by lowering the cost and 
        improving the efficiency of exploration and production of 
        unconventional reservoirs, while improving safety and 
        minimizing environmental impacts.
            (2) Ultra-deepwater.--The Research Organization shall award 
        grants for research, development, and demonstration of natural 
        gas or other petroleum exploration and production technologies 
        to--
                    (A) maximize the value of the Federal Government's 
                natural gas and other petroleum resources in the ultra-
                deepwater areas;
                    (B) increase the supply of natural gas and other 
                petroleum resources by lowering the cost and improving 
                the efficiency of exploration and production of ultra-
                deepwater reservoirs; and
                    (C) improve safety and minimize the environmental 
                impacts of ultra-deepwater developments.
            (3) Ultra-deepwater architecture.--The Research 
        Organization shall award a grant to one or more consortia 
        described in section 6(d)(1)(D) for the purpose of developing 
        and demonstrating the next generation architecture for ultra-
        deepwater production of natural gas and other petroleum in 
        furtherance of the purposes stated in paragraph (2)(A) through 
        (C).
    (b) Conditions for Grants.--Grants provided under this section 
shall contain the following conditions:
            (1) If the grant recipient consists of more than one 
        entity, the recipient shall provide a signed contract agreed to 
        by all participating members clearly defining all rights to 
        intellectual property for existing technology and for future 
        inventions conceived and developed using funds provided under 
        the grant, in a manner that is consistent with applicable laws.
            (2) There shall be a repayment schedule for Federal dollars 
        provided for demonstration projects under the grant in the 
        event of a successful commercialization of the demonstrated 
        technology. Such repayment schedule shall provide that the 
        payments are made to the Secretary with the express intent that 
        these payments not impede the adoption of the demonstrated 
        technology in the marketplace. In the event that such impedance 
        occurs due to market forces or other factors, the Research 
        Organization shall renegotiate the grant agreement so that the 
        acceptance of the technology in the marketplace is enabled.
            (3) Applications for grants for demonstration projects 
        shall clearly state the intended commercial applications of the 
        technology demonstrated.
            (4) The total amount of funds made available under a grant 
        provided under subsection (a)(3) shall not exceed 50 percent of 
        the total cost of the activities for which the grant is 
        provided.
            (5) The total amount of funds made available under a grant 
        provided under subsection (a)(1) or (2) shall not exceed 50 
        percent of the total cost of the activities covered by the 
        grant, except that the Research Organization may elect to 
        provide grants covering a higher percentage, not to exceed 90 
        percent, of total project costs in the case of grants made 
        solely to independent producers.
            (6) An appropriate amount of funds provided under a grant 
        shall be used for the broad dissemination of technologies 
        developed under the grant to interested institutions of higher 
        education, industry, and appropriate Federal and State 
        technology entities to ensure the greatest possible benefits 
        for the public and use of government resources.
            (7) Demonstrations of ultra-deepwater technologies for 
        which funds are provided under a grant may be conducted in 
        ultra-deepwater or deepwater locations.
    (c) Allocation of Funds.--Funds available for grants under this Act 
shall be allocated as follows:
            (1) 15 percent shall be for grants under subsection (a)(1).
            (2) 15 percent shall be for grants under subsection (a)(2).
            (3) 60 percent shall be for grants under subsection (a)(3).
            (4) 10 percent shall be for carrying out section 4.

SEC. 8. PLAN AND FUNDING.

    (a) Transmittal to Secretary.--The Research Organization shall 
transmit to the Secretary an annual plan proposing projects and funding 
of activities under each paragraph of section 7(a).
    (b) Review.--The Secretary shall have 1 month to review the annual 
plan, and shall approve the plan, if it is consistent with this Act. If 
the Secretary approves the plan, the Secretary shall provide funding as 
proposed in the plan.
    (c) Disapproval.--If the Secretary does not approve the plan, the 
Secretary shall notify the Research Organization of the reasons for 
disapproval and shall withhold funding until a new plan is submitted 
which the Secretary approves. Within 1 month after notifying the 
Research Organization of a disapproval, the Secretary shall notify the 
appropriate congressional committees of the disapproval.

SEC. 9. AUDIT.

    The Secretary shall retain an independent, commercial auditor to 
determine the extent to which the funds authorized by this Act have 
been expended in a manner consistent with the purposes of this Act. The 
auditor shall transmit a report annually to the Secretary, who shall 
transmit the report to the appropriate congressional committees, along 
with a plan to remedy any deficiencies cited in the report.

SEC. 10. FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a fund to be known as the ``Ultra-Deepwater and 
Unconventional Gas Research Fund'' which shall be available for 
obligation to the extent provided in advance in appropriations Acts for 
allocation under section 7(c).
    (b) Funding Sources.--
            (1) Loans from treasury.--There are authorized to be 
        appropriated to the Secretary $900,000,000 for the period 
        encompassing fiscal years 2002 through 2009. Such amounts shall 
        be deposited by the Secretary in the Fund, and shall be 
        considered loans from the Treasury. Income received by the 
        United States in connection with any ultra-deepwater oil and 
        gas leases shall be deposited in the Treasury and considered as 
        repayment for the loans under this paragraph.
            (2) Additional appropriations.--There are authorized to be 
        appropriated to the Secretary such sums as may be necessary for 
        the fiscal years 2002 through 2009, to be deposited in the 
        Fund.
            (3) Oil and gas lease income.--To the extent provided in 
        advance in appropriations Acts, not more than 7.5 percent of 
        the income of the United States from Federal oil and gas leases 
        may be deposited in the Fund for fiscal years 2002 through 
        2009.

SEC. 11. SUNSET.

    No funds are authorized to be appropriated for carrying out this 
Act after fiscal year 2009. The Research Organization shall be 
terminated when it has expended all funds made available pursuant to 
this Act.