Congressional Hearings
THE SHIFTING GEOPOLITICS OF OIL AND GAS
Congressional Hearings
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| AUTHORITYID | CHAMBER | TYPE | COMMITTEENAME |
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| hsif00 | H | S | Committee on Energy and Commerce |
[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
THE SHIFTING GEOPOLITICS OF OIL AND GAS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
JUNE 26, 2018
__________
Serial No. 115-145
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
34-855 PDF WASHINGTON : 2019
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
Subcommittee on Energy
FRED UPTON, Michigan
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOE BARTON, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois SCOTT H. PETERS, California
ROBERT E. LATTA, Ohio GENE GREEN, Texas
GREGG HARPER, Mississippi MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia KATHY CASTOR, Florida
ADAM KINZINGER, Illinois JOHN P. SARBANES, Maryland
H. MORGAN GRIFFITH, Virginia PETER WELCH, Vermont
BILL JOHNSON, Ohio PAUL TONKO, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina G.K. BUTTERFIELD, North Carolina
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
TIM WALBERG, Michigan officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
(ii)
C O N T E N T S
----------
Page
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 1
Prepared statement........................................... 3
Hon. Jerry McNerney, a Representative in Congress from the State
of California, opening statement............................... 4
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 5
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Prepared statement........................................... 9
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, prepared statement................................ 95
Witnesses
Daniel Yergin, Ph.D., Vice Chairman, IHS Markit.................. 10
Prepared statement........................................... 12
Answers to submitted questions............................... 97
Dennis V. Arriola, Chief Strategy Officer, Executive Vice
President of External Affairs and South America, Sempra Energy. 20
Prepared statement........................................... 22
Kevin Kennedy, Ph.D., Deputy Director, U.S. Climate Initiative,
World Resources Institute...................................... 30
Prepared statement........................................... 32
Answers to submitted questions............................... 99
Harold Hamm, Chairman and Chief Executive Officer, Continental
Resoures....................................................... 49
Prepared statement........................................... 51
THE SHIFTING GEOPOLITICS OF OIL AND GAS
----------
TUESDAY, JUNE 26, 2018
House of Representatives,
Subcommittee on Energy,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 1:39 p.m., in
room 2123, Rayburn House Office Building, Hon. Fred Upton
(chairman of the subcommittee) presiding.
Members present: Representatives Upton, Olson, Barton,
Shimkus, Latta, Harper, McKinley, Kinzinger, Griffith, Johnson,
Bucshon, Flores, Mullin, Hudson, Walberg, Duncan, Walden (ex
officio), McNerney, Peters, Green, Welch, Tonko, Kennedy,
Butterfield, and Pallone (ex officio).
Staff present: Mike Bloomquist, Staff Director; Samantha
Bopp, Staff Assistant; Karen Christian, General Counsel; Kelly
Collins, Legislative Clerk, Energy/Environment; Wyatt
Ellertson, Professional Staff Member, Energy/Environment;
Margaret Tucker Fogarty, Staff Assistant; Adam Fromm, Director
of Outreach and Coalitions; Theresa Gambo, Human Resources and
Office Administrator; Jordan Haverly, Policy Coordinator,
Environment; Bijan Koohmaraie, Counsel, Digital Commerce and
Consumer Protection; Mary Martin, Chief Counsel, Energy/
Environment; Sarah Matthews, Press Secretary; Drew McDowell,
Executive Assistant; Brandon Mooney, Deputy Chief Counsel,
Energy; Mark Ratner, Policy Coordinator; Annelise Rickert,
Counsel, Energy; Peter Spencer, Senior Professional Staff
Member, Energy; Austin Stonebraker, Press Assistant; Madeline
Vey, Policy Coordinator, Digital Commerce and Consumer
Protection; Hamlin Wade, Special Advisor, External Affairs;
Caitlin Haberman, Minority Professional Staff Member; Rick
Kessler, Minority Senior Advisor and Staff Director, Energy and
Environment; John Marshall, Minority Policy Coordinator;
Alexander Ratner, Minority Policy Analyst; Tuley Wright,
Minority Energy and Environment Policy Advisor; and Catherine
Zander, Minority Environment Fellow.
Mr. Upton. Good afternoon. Sorry we are a little delayed in
starting, but we had three votes on the House floor, and they
are just finishing up. And so we will get started.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
So, good afternoon, and, certainly, welcome to this Energy
Subcommittee hearing on ``The Shifting Geopolitics of Oil and
Gas.``
So this hearing is especially timely because here in DC,
right now, energy ministers and CEOs from around the world are
gathering for the 27th World Gas Conference to examine
important opportunities in energy trends happening across the
globe. And while it's an international conference for sure, the
U.S.'s role as a world leader in energy is sure to be the
focus.
So, before we arrived at this current era of energy
abundance, some of you may remember that as little as a decade
ago America's energy landscape was in a lot different state
than it is today.
In 2005, American domestic oil and gas production was
declining and the country reached a point of peak reliance on
foreign sources of energy, and at that time we were importing
eight times more energy than we were exporting and we were
becoming increasingly dependent on OPEC nations for our energy
needs.
It was right around that time that this important
technological breakthrough pioneered by American companies--
namely, horizontal drilling and hydraulic fracturing--
dramatically altered our energy outlook.
These technological breakthroughs led to a surge in
domestic oil and gas production, decreasing U.S. reliance on
energy imports.
As for today, and we will see that this trend has not
slowed down--in fact, energy--EIA projects that by 2022, the
U.S. will become a net energy exporter for the first time in
over half a century.
It should be noted that America's emergence as a major
energy supplier to the world is thanks, in part, to Congress'
lifting the 40-year-old crude oil export ban in 2015, and I
would note, that was bipartisan. President Obama signed it into
law.
Removing the ban has enabled our companies to take
advantage of global energy markets and has resulted in more
American jobs for sure, a stronger economy for sure, lower
emissions, indeed, and it's helping to reduce our trade
deficit.
The national security and energy security benefits provided
by the shale energy revolution cannot be overstated. Every day,
we are less dependent on foreign nations and cartels, such as
OPEC, to meet our domestic energy needs.
Instead, we are now employing American workers and American
technologies to harness our own standard and abundant domestic
resources in a way that is growing the economy, protecting the
environment, and improving our energy security.
So today we are holding this hearing to take a closer look
at how the U.S.'s growing role as a global energy leader is
benefitting consumers and enhancing the Nation's standing on
the geopolitical world stage.
To provide insight on these topics, we have a great panel
of four witnesses with extensive experience working in and
around the U.S. oil and gas industry.
As part of today's panel we have Dr. Daniel Yergin, a
Pulitzer Prize-winning author and a world-renowned energy
expert who many of us say literally wrote the book.
Dr. Yergin is joined by Harold Hamm, the CEO of Continental
Resources, which is a highly successful oil exploration and
production company that he himself founded, and he had an
instrumental role in making sure that we lifted that crude oil
ban.
We also have Dennis Arriola, the chief strategy officer for
Sempra, a Fortune 500 energy services company that serves 40
million customers--consumers around the world.
And rounding up the lineup, we have got Dr. Kevin Kennedy,
a deputy director at the World Resources Institute, a global
research organization that spans more than 50 countries and
focuses on the nexus of environment economic opportunity and
human wellbeing.
So I want to thank all of you for joining us, for twiddling
your thumbs for 30 minutes while we cast some mighty important
votes on the House floor, and I now yield to the acting ranking
member of the subcommittee, Mr. McNerney, our friend from
California, taking Bobby Rush's place this afternoon, who's
getting married.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Good afternoon, and welcome to this Energy Subcommittee
hearing on the shifting geopolitics of oil and gas. This
hearing is especially timely, because here in Washington DC,
energy ministers and CEOs are gathering for the 27th World Gas
Conference to examine important opportunities and energy trends
happening across the world. While it's an international
conference, the United States' growing role as a world leader
in energy is sure to be in focus.
Before we arrived to this current era of energy abundance,
some of you may remember that as little as a decade ago,
America's energy landscape was in a much different state than
it is today. In 2005, American domestic oil and gas production
was declining and the country reached a point of peak reliance
on foreign sources of energy. At that time, we were importing
eight times more energy than we were exporting and we were
becoming increasingly dependent on OPEC nations for our energy
needs.
It was right around this time that important technological
breakthroughs pioneered by American companies, namely
horizontal drilling and hydraulic fracturing, dramatically
altered our energy outlook. These technological breakthroughs
led to a surge in domestic oil and gas production, decreasing
U.S. reliance on energy imports.
Fast forward to today, and we see that this trend has not
slowed down. In fact, the Energy Information Administration
projects that by 2022 the United States will become a net
energy exporter for the first time in over half a century.
It should be noted that America's emergence as a major
energy supplier to the world is thanks, in part, to Congress
lifting the 40-year-old crude oil export ban in 2015. Removing
this ban has enabled our companies to take advantage of global
energy markets and has resulted in more American jobs, a
stronger economy, lower emissions, and is helping to reduce our
trade deficit.
The national security and energy security benefits provided
by the shale energy revolution cannot be overstated. Every day
we are less dependent on foreign nations and cartels, such as
OPEC, to meet our domestic energy needs. Instead, we are now
employing American workers and American technologies to harness
our own abundant domestic resources in a way that is growing
the economy, protecting the environment, and improving our
energy security.
Today, we are holding this hearing to take a closer look at
how the United States growing role as a global energy leader is
benefiting consumers and enhancing the Nation's standing on the
geopolitical world stage. To provide insight on these topics,
we have a panel of four witnesses with extensive experience
working in and around the U.S. oil and gas industry. As part of
today's panel we have Dr. Daniel Yergin, a Pulitzer Prize-
winning author and a world-renowned energy expert. Dr. Yergin,
is joined by Mr. Harold Hamm, the CEO of Continental Resources,
which is a highly successful oil exploration and production
company that he himself founded. We also have Mr. Dennis
Arriola, the chief strategy officer for Sempra Energy, a
Fortune 500 energy services company that serves 40 million
consumers around the world. And rounding out the lineup, we
have Dr. Kevin Kennedy, a deputy director at the World
Resources Institute, a global research organization that spans
more than 50 countries and focuses on the nexus of environment,
economic opportunity, and human wellbeing.I'd like to thank
each of these witnesses for joining us and I look forward to
their thoughts on what the future holds for the U.S. energy
sector.
OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. McNerney. Getting married Saturday.
Well, thank you, Mr. Chairman, for yielding to me. I want
to thank the panelists, and I think you're all interesting and
I am looking forward to hearing what you have to say, and I
hope we get a very diverse set of opinions about the issues
here.
It's important to have this conversation with industry
leaders and with policy leaders and with people that understand
the business.
We have world gas conference nearby and this is topical,
but the topic that's listed here--the shifting geopolitics of
oil and gas--is a little too narrow.
We should be including other topics like renewables,
storage, and other resources that are impacting our energy
markets. LNG and crude oil exports have changed in the last
decade.
When I first got elected in 2007, we were worried about our
dependence on foreign oil. That's changed. That's possibly a
good thing. But we continue to need a very diverse--we continue
to need a very diverse energy mix. It won't help us, I don't
think, to depend--become overly dependent on oil and/or gas.
We need political compromise to get there. If one side or
the other dominates, I think we are going to go down a path
that's unsustainable. So we need political compromise on this
and all the other issues including tax reform.
Renewables--you know, the interesting things is that the
energy market is really shifting to electricity now. We have
electric vehicles growing, especially in California but in
other States as well.
So we are going to see more and more and dependence on
electricity as a product. It's not necessarily a resource a but
as a product. So we need to be--we need to have policies that's
going to support that shift.
We have energy storage, another thing that's going to be
very important in terms of shifting where we get our energy
from.
Concerning the Paris agreement, the United States was a
leader in this agreement. We are still in the--we are still in
terms of cities and States declaring that they are going to
continue to abide by the terms of the Paris Climate Accord. I
think that's very inspiring to me.
And I want to say to the witnesses, Dr. Yergin, your
scholarship has advanced the field of energy. I really
appreciate what you've been able to accomplish in terms of
providing the history.
And one of the things that strikes me about your
scholarship is that we see a cyclical market. The oil market
goes in very big cycles about every 10 or 15 years, and right
now we are on a low energy cost part of that cycle.
But I think that's probably going to change in a another 5
years, based on history--nothing more.
Mr. Kennedy, World Resources Institute climate initiative
is a the gold standard for providing advice. So thank you for
coming today.
Mr. Arriola, Sempra holds utilities in my home State and
has a diverse generation of energy assets here and abroad. I
hope it stays that way.
And Mr. Hamm, you have been a leader, and I appreciate what
horizontal drilling has done to the energy markets in this
country. We need to keep an eye on that to make sure that it
doesn't cause problems in our States.
We know that there is problems with earthquakes. We know
that there is potential problems with groundwater contamination
and so on. So it's important to keep an eye on that.
At any rate, I am going to yield if any Democrats want to
take a minute or two, and with that I yield back to the Chair.
Mr. Upton. The gentleman yields back. The Chair recognizes
the chair of the full committee, Mr. Walden, for an opening
statement.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Thank you very much, Mr. Chairman. To our
panelists, welcome. Thank you for being here today and sharing
with us on these issues that are so important. We have an
excellent lineup of witnesses, Mr. Chairman, and we are going
to learn a lot.
This is, of course, a big week in Washington, DC. It is
when America hosts the World Gas Conference. They call it the
Olympics of natural gas, and indeed, it is.
It brings together hundreds--actually, thousands of
participants in energy ministers and CEOs from global energy
companies to discuss strategic, commercial, and technical
issues facing this really important American industry.
It's been 30 years. Ronald Reagan was president the last
time America hosted this and the energy picture was quite
different then than it is today.
So it's kind of interesting to reflect back on those times.
But today, the United States is the world's number-one producer
of petroleum and natural gas. Our markets are more open,
transparent, and competitive than they've ever been.
Prices for consumers are low and stable. There are always
ups and downs. But we have cut our imports by about 75 percent
since they peaked in 2005, and if this trend continues we will
be net energy exporters in just a few short years.
We got there by repealing the Jimmy Carter era supply and
price controls to encourage a free market for energy
commodities.
We have taken steps to improve our regulatory policies--we
know we have a lot more to do there--and reform our outdated
tax code to encourage domestic production.
Piece by piece, we have removed restrictions on energy
trade to allow American energy to compete in the global
marketplace, and Mr. Hamm's done a lot in that effort globally.
Most recently, as Members on this committee will remember,
we repealed the 40-year-old ban on crude oil. Now, just 2 years
later, we are exporting more than 1\1/2\ million barrels per
day of crude oil to countries around the world.
This is big. The shale revolution, now 10 years in the
making, has had an enormously positive impact on the economy.
It's created hundreds of thousands of jobs, billions of dollars
in investment that wouldn't have happened were it not for our
energy abundance in the United States.
The jobs and investments are widespread. They are across
all sectors of the economy in all 50 States. It's also had a
big impact on our power sector and with the shift to abundant
and cheap natural gas we have seen a huge reduction in our
carbon emissions--enormous.
In fact, the U.S. is leading the world in reducing carbon
emissions, and by a large margin. Since peaking in 2005, our
carbon emissions have declined steadily and this trend looks
likely to continue.
This just goes to how you don't always a need a Government
mandate to get it done if you believe in the free market system
and innovation that comes from it.
We can do a lot of cleanup of the environment and create
great American jobs and develop American energy. So we are
seeing these benefits today, and as we emerge as the world-
leading LNG exporter, our trading partners will share in this
good fortune.
The outlook for American energy is bright, with plentiful
reserves, a highly skilled workforce, pro-growth regulations.
Our energy production will continue to grow and, with this
growth, America will see even greater economic, geopolitical,
and environmental benefits along with additional opportunities
to help our American allies abroad who are in need of reliable
and affordable supplies of energy, not held hostage for their
energy by less than friendly countries.
I'd like to thank the witnesses again for participating
today and we appreciate you sharing your experiences, your
knowledge, and your ideas with us about how we can continue to
grow American jobs, develop American energy, and enjoy the
economic and environmental benefits that come from that.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Good afternoon, and welcome to today's hearing on the
shifting geopolitics of oil and gas. We have an excellent
lineup of witnesses and a lot to discuss.
This is a big week in Washington, DC, as we host the World
Gas Conference, which convenes every 3 years in a different
city across the globe. The conference brings together hundreds
of participants--energy ministers and CEOs from global energy
companies--to discuss strategic, commercial, and technical
issues facing the industry. It's been 30 years since the
conference was held in the United States, and we're honored to
host it again this year.
It's interesting to reflect on the last 30 years, and
especially the last decade, to truly appreciate how our energy
security situation has improved. By almost every measure, we're
more energy secure today than ever before.
Today, the United States is the world's number one producer
of petroleum and natural gas. Our markets are more open,
transparent, and competitive than ever before. Prices for
consumers are low and stable. We've cut our imports by about 75
percent since they peaked in 2005, and if this trend continues,
we'll be net energy exporters in just a few short years.
We got here by repealing the Carter-era supply and price
controls to encourage a free market for energy commodities.
We've taken steps to improve our regulatory policies and reform
our outdated tax code to encourage domestic production. And
piece-by-piece, we've removed restrictions on energy trade to
allow American energy to compete in the global marketplace.
Most recently, as Members on this committee will remember, we
repealed the 40-year ban on crude oil exports. Now, just 2
years later, we're exporting more than one-and-a-half million
barrels per day of crude oil to countries around the world.
The shale revolution, now 10 years in the making, has had
an enormously positive impact on our economy. It's created
hundreds of thousands of jobs and billions of dollars in
investments that wouldn't have happened were it not for our
energy abundance. The jobs and investments are widespread
throughout all sectors of the economy and across all 50 States.
It's also had a big impact on our power sector, and with
the shift to abundant and cheap natural gas, we've seen a huge
reduction in our carbon emissions.
In fact, the U.S. is leading the world in reducing carbon
emissions by a large margin. Since peaking in 2005, our carbon
emissions have declined steadily and this trend looks likely to
continue. This just goes to show that we don't need Government
mandates to reduce emissions. We can get much better results
when we allow the private sector to innovate, develop new
technologies, and improve efficiency.
We're seeing these benefits today--and as we emerge as a
world leading LNG exporter, our trading partners will share in
this good fortune.
The outlook for American energy is bright. With plentiful
reserves, a highly skilled workforce, and pro-growth
regulations, our energy production will continue to grow. And
with this growth, America will see even greater economic,
geopolitical, and environmental benefits, along with additional
opportunities to help our American allies abroad who are in
need of reliable and affordable supplies of energy.
I'd like to thank the witnesses for appearing before us
today to share their experiences and provide suggestions on
ways to lock-in future production growth, jobs, and economic
benefits for years to come.
Thank you, I yield back.
Mr. Walden. With that, I've got a minute and a half left.
If anybody on our side wants to use that, I'd be happy to
yield.
Mr. Barton, former chairman of the committee, the vice
chair of the full committee, I would yield such time as you may
use.
Mr. Barton. Thank you, Mr. Chairman. I, basically, just
want to welcome the panel. I know three of you personally and
the fourth one I am sure I'd love to know personally if I did.
So our committee, in the time I've been on it, starting
back when John Dingell was chairman, has led the Congress in
energy legislation, and we have gone from where in the '70s and
early '80s we were trying to restrict the use of things like
natural gas and put price controls on various things and our
natural resources because we thought that we were entering an
era of scarcity to the point where we are now in an--I won't
say an era of surplus, but in an era where we are on the verge
of being the dominant energy producer in the world and, you
know, I think that's a good thing, and you gentlemen have
helped lead that effort.
Of course, Mr. Yergin, he's probably the premier--I won't
say statistician or historian, but he's certainly one of the
leading experts in the world. So we are glad to have you
especially, sir.
And with that, Mr. Chairman, I yield back my 2 seconds.
Mr. Walden. I yield back.
Mr. Upton. Time is expired. The Chair would recognize the
ranking member of the full committee, Mr. Pallone from New
Jersey, for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman. After nearly 2 years
of Republican control of all branches of Government, my
Republican colleagues have little to show for their efforts,
and the little they have accomplished is benefitting the
wealthy to the detriment of the middle class and the
vulnerable.
Just think about it--skyrocketing health care premiums and
growing numbers of the uninsured, a widely unpopular Trump tax
scam, trillions of dollars in new and mounting debt, and now a
devastating Trump-inflicted policy that stripped thousands of
children from their parents.
So faced with the failure of their policies, Republicans
have started to retreat to their safe spaces, including
proposing draconian cuts to Medicare, Medicaid, and Social
Security as part of their new budget and now, of course,
today's old favorite--cheerleading for fossil fuels.
The latest version of this tired old story has Republicans
going so far as to trying to legislatively blackmail States
like New Jersey that have stood up to the administration's oil-
above-all agenda, by imposing sizeable fees on any State that
refuses to rubber stamp President Trump's offshore drilling
expansion policy.
Early this year, New Jersey Governor Phil Murphy listened
to our coastal communities and blocked offshore oil and gas
drilling in State waters.
The Jersey shore where I live is a priceless national
treasure that is an engine for our tourism industry that
generates $38 billion a year and one of the largest
recreational fishing industries in the Nation.
That's all threatened by offshore drilling, which will
destroy our coastal economy. We simply don't need to risk the
health and vitality of our coastal communities for the sake of
putting more fossil fuels into our energy mix.
We have seen this show before. First, rising gasoline costs
or something else moves us toward reducing our dependence on
fossil fuels. Then, in response, fossil fuel industry
executives come to Congress to tell us that the only solution
to our problems is to ramp up drilling and decrease
restrictions on their industry in order to increase supply.
That's happening today, as reckless Republican policies
have led to a significant jump in the price of gasoline since
March. In fact, the price of gas has gone up nearly 25 percent
since President Trump took office.
You'd think that would lead to an effort to support cleaner
less gas-guzzling vehicles. But that logic is lost on President
Trump and his ethically challenged EPA administrator, Scott
Pruitt, who have gone completely in the opposite direction.
They have moved aggressively against clean cars and a
diverse 21st century energy policy. Instead, President Trump
has worked tirelessly to put in place a 1950s approach to
energy that only an oil company could love and can best be
summed up by the words dig, drill anytime, anywhere, even if
it's in our coastal recreational waters.
Now, President Trump also made a foolish decision by
announcing his intention to withdraw from the Paris Climate
agreement. That was an agreement we spent years negotiating
with the global community and was signed by, roughly, 200
countries.
By abandoning our friend and allies, we have ceded our
leadership on climate action and clean technology development
and deployment to China, and others.
We were the global leader, but now we don't even have a
seat at the table. What does that mean? That puts America last
and is, tragically, shortsighted.
Republican ``oil-above-all'' policies have always centered
on one thing--putting the profits of oil tycoons and fossil
industry donors first, and the current rerun of this cliched
show should have been canceled long ago. But, obviously, it
isn't.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
After nearly 2 years of Republican control of all branches
of Government, my Republican colleagues have little to show for
their efforts. And the little they have accomplished is
benefiting the wealthy to the detriment of the middle class and
the vulnerable. Just think about it: skyrocketing health care
premiums and growing numbers of the uninsured, a wildly
unpopular Trump Tax Scam, trillions of dollars in new and
mounting debt, and now a devastating Trump inflicted policy
that stripped thousands of children from their parents.
So, faced with the failure of their policies, Republicans
have started to retreat to their ``safe spaces,'' including
proposing draconian cuts to Medicare, Medicaid and Social
Security as part of their new budget and, of course, today's
old favorite: cheerleading for fossil fuels.
The latest version of this tired old story has Republicans
going so far as trying to legislatively blackmail States that
have stood up to the administration's oil-above-all agenda by
imposing sizable fees on any State that refuses to rubber stamp
President Trump's offshore drilling expansion plan. Earlier
this year New Jersey Governor Phil Murphy listened to our
coastal communities and blocked offshore oil and gas drilling
in State waters. The Jersey Shore is a priceless national
treasure that is an engine for a tourism industry that
generates $38 billion a year, and one of the largest
recreational fishing industries in the Nation.
That's all threatened by offshore drilling. We simply don't
need to risk the health and vitality of our coastal communities
for the sake of putting more fossil fuels into our energy mix.
We have seen this show before. First, rising gasoline costs
or something else moves us toward reducing our dependence on
fossil fuels. Then, in response, fossil fuel industry
executives come to Congress to tell us that the only solution
to our problems is to ramp up drilling and decrease
restrictions on their industry in order to increase supply.
That's happening today as reckless Republican policies have
led to a significant jump in the price of gasoline since March.
In fact, the price of gasoline has gone up nearly 25 percent
since President Trump took office. You would think that would
lead to an effort to support cleaner, less gas guzzling
vehicles. But, that logic is lost on President Trump and his
ethically challenged EPA Administrator, Scott Pruitt, who have
gone completely in the opposite direction. They have moved
aggressively against clean cars and a diverse 21st century
energy policy. Instead, President Trump has worked tirelessly
to put in place a 1950s approach to energy that only an oil
company could love, and can best be summed up by the words
``dig, drill, anytime, anywhere'' even if it's in our coastal
recreational waters. President Trump also made a foolish
decision by announcing his intention to withdraw the United
States from the Paris Climate Agreement. This was an agreement
we spent years negotiating with the global community, and was
signed by roughly 200 countries. By abandoning our friends and
allies, we have ceded our leadership on climate action and
clean technology development and deployment to China and
others. We were the global leader, but now we don't even have a
seat at the table. That puts America Last, and is tragically
shortsighted.
Republican Oil-Above-All policies have always centered on
one thing: putting the profits of oil tycoons and fossil
industry donors first. The current re-run of this cliched show
should have been canceled long ago.
I yield back.
Mr. Pallone. I don't know if anyone else would like my
time. If not, I will yield back, Mr. Chairman.
Mr. Upton. I'd like to say the gentleman's time has
expired, but I'll be polite.
[Laughter.]
The gentleman yields back.
So we are ready for the testimony. I appreciate all of you
sending up your testimony in advance. I was able to read it
last night.
It will be made part of the record in its entirety, and
you'll each have 5 minutes to summarize that testimony and
expound how you might, and we will do questions.
And Dr. Yergin, you're first up.
Thank you. You got to hit that button to make sure that
you're on.
STATEMENTS OF DANIEL YERGIN, PH.D., VICE CHAIRMAN, IHS MARKIT;
DENNIS V. ARRIOLA, CHIEF STRATEGY OFFICER, EXECUTIVE VICE
PRESIDENT OF EXTERNAL AFFAIRS AND SOUTH AMERICA, SEMPRA ENERGY;
KEVIN KENNEDY, PH.D., DEPUTY DIRECTOR, U.S. CLIMATE INITIATIVE,
WORLD RESOURCES INSTITUTE; AND HAROLD HAMM, CHAIRMAN AND CHIEF
EXECUTIVE OFFICER, CONTINENTAL RESOURCES
STATEMENT OF DANIEL YERGIN
Dr. Yergin. Mr. Chairman, Acting Ranking Member, members of
the subcommittee, it's really an honor to be here and to have
the chance to talk about this just dramatic change that's
happened in the United States and what it means for our
economy, for geopolitics, and the position of the United States
in the world.
As the chairman pointed out and Mr. Walden pointed out, the
World Gas Conference is here. It's 12,000 people from around
the world who have come to Washington.
I have just come over from it. The theme of this
conferences is fueling the future and now it's a very different
future because of the shale revolution in the United States,
and that has been one of the major themes.
This is, as was noted, the 10th anniversary, at least as we
see it at IHS Markit, of what we have called the shale gale,
which was--really changed the United States and the energy
picture to have profound consequences, although I think the
scale of the consequences would have been foreseen.
What's changed since 2008? Well, back in 2008, we were
going to be the largest importer of LNG in the world. Now we
are on the road to be one of the largest exporters and, indeed,
as noted, the largest producer of natural gas in the world.
As many of you know, for four decades energy independence
was the cry but we always were going in the other direction.
The question only seemed to be how high would our imports go.
But now in a decade, we have gone from importing on a net
basis 60 percent of our oil to 16 percent. Huge change.
Everyone knows that trade is a very big issue, so it's
noteworthy to observe that over this decade the change in the
U.S. oil position, along with changes in prices, has reduced
the Nation's annual trade deficit by $300 billion.
U.S. oil production has more than doubled in the decade,
and here's something striking. Next year, or maybe later this
year, the United States will become the world's largest oil
producer, ahead of Saudi Arabia and Russia.
It's been a major stimulus to the U.S. economy, not just in
the oil and gas sector, but because across the entire economy
because of long supply chains, and I would say in many States
that--where shale is not permitted there are jobs that have
been created, we calculated 50,000 jobs in the State of New
York because of the shale revolution.
Industries that were supposed to flee the United States
because of high energy costs are now here in the United States,
spending tens of billions of dollars.
Also, this is having major geopolitical impacts that are
constructive for the United States. I can see it as I travel
around the world how there is a whole new degree of influence
that the United States has because of this revolution.
The turnaround in gas is just striking. The 8-year period
of 2000-2007, total U.S. gas production grew by 1 percent. Over
the subsequent 10-year period it's grown by 40 percent, and we
believe that it will grow by another 60 percent over the next
20 years.
So where would we be without this? Without the shale
revolution, the United States would be importing large volumes
of oil and gas. Our trade balance would be dramatically
different.
Millions of jobs would not exist and the United States
would be less competitive. The domestic U.S. power markets and
the overall economy would look significantly different without
the shale revolution.
Similarly, the outlook would be different in terms of the
global economy and international relations both for countries
that produce oil and gas and for countries that import them.
I just came from a meeting of APEC countries and the role
of the U.S. in terms of LNG is something that is now very
important to those Asian countries.
Certainly, without the shale gale we would be in a
different position internationally. This has brought a new
element of influence and independence for the United States. It
was so evident this morning, and U.S. LNG exports are becoming
a significant and positive factor in relations with many
countries and a key issue in discussions about trade.
So this new outlook for oil and natural gas has created new
possibilities for making progress towards national goals of
energy efficiency, cost efficiency, environmental protection,
global competitiveness, and energy security.
It is also contributing jobs and revenues to the economy at
the national, State, and local levels. In short, the shale gale
has put a powerful new wind at America's back.
Thank you.
[The prepared statement of Dr. Yergin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you. Mr. Arriola.
STATEMENT OF DENNIS ARRIOLA
Mr. Arriola. Mr. Chairman--Chairman Upton, Acting Ranking
Member McNerney, and members of the subcommittee, thank you for
this opportunity to testify regarding U.S. natural gas policy
and how it affects our business.
My name is Dennis Arriola and I am the chief strategy
officer for Sempra Energy and I also have responsibility for
our external affairs in our South American operations.
Sempra, as you mentioned, is a Fortune 500 services company
based in San Diego, California, and we have approximately
20,000 employees that serve more than 40,000 consumers around
the world and we are the largest utility holding company with
the largest U.S. customer base.
And our utilities include Southern California Gas Company,
which is the largest natural gas distribution company in the
United States, San Diego Gas and Electric, and Encore Electric
Delivery Company in Texas.
And our energy infrastructure companies include our
investments in Mexico that help import U.S. natural gas and
petroleum products to that country and we have also have our
Sempra LNG and Midstream business.
And as Dr. Yergin mentioned, the timing of this hearing
couldn't be better as the World Gas Conference is here in our
Nation's Capital, and with the global triennial next stopping
in the Republic of Korea and China, the conference this week in
DC is the last time that the U.S. is going to have the
opportunity to really help shape the discussion as the host
country for years to come.
And I can tell you that the world truly is watching what's
going on in Washington this week. The outlook for domestic and
international natural gas markets has never been better because
of two key developments, and one which Dr. Yergin mentioned--
the shale energy boom--but also the opportunity to export U.S.
liquefied natural gas, or LNG.
And if we invest wisely and follow smart pro-market
policies, there's little doubt that the U.S. will derive
increased economic benefits, job growth, and even greater
energy independence, and natural gas now serves as the leading
fuel source for the industrial, commercial, and residential
sectors of the U.S. economy.
And this increased consumption is providing for significant
job growth, boosting the economy, and lowering air emissions,
and natural gas is also ensuring greater energy security and
prosperity globally as well.
Now, we own two and operate two LNG facilities and we are
in the process of permitting a third. Our Cameron LNG is in
Louisiana--is under construction. We currently have 10,000
workers on site and when it's completed and starts operating in
2019, the facility is going to create approximately 130 well-
paying jobs in an area that really will benefit from them.
We are also pursuing our FERC permit for an LNG export
facility located near Port Arthur, Texas, and again, this is
going to be employing over 3,100 construction and engineering
jobs and, on average over the 4- to 5-year period of build out
it's going to create more than 200 permanent well-paying jobs.
Both of these projects together could help reduce our
overall trade deficit by, roughly, $16 billion annually, and
these and other export facilities are going to promote new
pipelines and maintain natural gas production for many States
that are represented here on the subcommittee, including Ohio,
Pennsylvania, New Mexico, Texas, and Louisiana, and it's also
going to help continue the current cost advantage that benefits
U.S. consumers.
Now, we have the potential to strengthen alliances with
developed and developing countries by providing a safe and
reliable resource to those countries.
But we've got to be able to build the infrastructure in
this country to do that, and the U.S. gas exports can also help
our European and Asian allies reduce their energy dependence on
Russia.
And if we are to benefit from this opportunity, we've got
to take advantage of it and the time is now, and one of the
things that we were looking for from this subcommittee is to,
along with the administration, figure out how we can expedite
in a smart manner the permitting processes that are required
here in this country to have that infrastructure, to help
export good clean natural gas from the United States.
These delays jeopardize commercial agreements with our
international trading partners and you can be sure that the
other major LNG-exporting countries are doing everything
possible to enhance their competitive position, and
bureaucratic delays are not one of the challenges they have.
So I think we need to work together as a country to take
advantage of this window of opportunity to make sure that when
you enter into these contracts these are 20- to 30-year
contracts.
If we, as an American business community, can't get in on
time with these countries, we are going to get shut out and we
are not just shut out for a year--we are shut out for decades,
and that means that the jobs that can be helping certain parts
of our country, the economic progress won't come about.
And so what we need is to ensure that FERC maintains its
typical permit review schedule of no more than 18 to 24 months
so that we can get this going.
Thank you.
[The prepared statement of Mr. Arriola follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you. Dr. Kennedy.
STATEMENT OF KEVIN KENNEDY
Dr. Kennedy. Thank you, Chairman Upton, Mr. McNerney, other
members of the committee. I am very pleased to be joining you
here today for this hearing.
My name is Kevin Kennedy and I am deputy director for the
U.S. Climate Initiative at the World Resources Institute. WRI
is a global research organization that turns big ideas into
action at the intersection of the environment, economic
opportunity, and human wellbeing.
As Mr. McNerney noted, as we look at the energy landscape
in the United States today, it's important not just to focus on
the oil and gas industry but to consider the broader context of
changes that are happening across the country.
America has seen significant progress on the development
and deployment of clean energy such as renewables, resulting in
large part from the leadership of States, cities, and
businesses, often acting with the support and cooperation of
the Federal Government.
When President Trump announced last year his intent to
withdraw from the international climate agreement, some feared
that this progress might slow.
On the contrary, that announcement catalysed continued and
expanded commitment from States, cities, and businesses across
the country.
Within days, over 1,200 leaders joined together to say we
are still in and committed to support climate action, and as of
this weekend, that declaration has been supported by over 2,800
leaders.
I have been a core member of the research team behind the
America's Pledge Initiative, which was launched last July by
former Mayor Michael Bloomberg and Governor Jerry Brown, to
document the full range of climate and clean energy actions
being taken across America.
Our report last November showed that leaders representing
almost half the population and more than half of the U.S.
economy have committed to bringing down their greenhouse gas
emissions.
These leaders recognized that acting to support clean
energy and address climate change can go hand in hand with
economic growth and job creation.
While many of those signing declarations like we are still
in are doing so for environmental reasons. Others are acting
based primarily on the economic opportunities offered by being
leaders in clean energy.
They recognize that major countries around the world are
investing in renewables and other clean energy sources and the
global markets are shifting fast, and they want to see their
communities and the country lead rather than to follow.
This committee and Congress can be their partners in moving
ahead on renewables, energy efficiency, and other clean energy
sources. I want to share just a few of the stories today.
In 2017, large corporate buyers in the U.S. like Google,
Kimberly-Clark, and General Motors, announced contracts for
nearly 2.9 gigawatts of renewable energy--an 80 percent
increase from the previous year, and this year they've already
announced deals for almost 2.5 gigawatts--almost matching last
year's total just 6 months in.
The Republican mayor of Georgetown, Texas, said one of the
most important benefits of being 100 percent renewable is the
potential for economic development. Many companies are looking
to increase their green sources of power for both office and
manufacturing facilities.
Mayor Ross added that the city's move to 100 percent
renewables was chiefly a business decision based on cost and
price stability.
Looking to energy efficiency, the private sector has,
again, been a leader. Almost 200 U.S. manufacturers have
committed to decreasing their energy intensity by 25 percent
over 10 years as part of the Department of Energy's Better
Plants program.
These companies have already saved--already reported $3.1
billion in reduced energy costs. We also see meaningful moves
in the auto industry. Ford plans to nearly double its
investment in electric vehicles in the next 5 years and GM is
working towards an all-electric zero tailpipe emissions future
with 20 new electric vehicle models to be available globally in
the early 2020s.
The NEF projects that by 2040, 55 percent of new global car
sales will be electric. Those States that have put a price on
carbon have also seen both environmental and economic benefits.
The Regional Greenhouse Gas Initiative, known as RGGI,
prices carbon dioxide emissions from the electric sector,
serving nine States from Maryland to Maine. RGGI States have
outperformed the rest of the country both environmentally and
economically.
During its first 5 years, emissions decreased 35 percent in
RGGI States but only 12 percent elsewhere. At the same time,
RGGI State economies grew faster than the rest of the country.
These are just a few of the good news stories about State,
local, and private-sector movement towards renewables and other
forms of clean energy.
The degree of momentum behind this transformation and the
resulting economic benefits to local communities across the
country would be enhanced by Federal support for development
and deployment of clean energy resources like renewables and
energy efficiency.
As other countries invest in clean energy, it's time for
this Congress and the administration to step up support for
States, cities, and businesses that are looking to seize the
economic opportunities presented by clean energy
transformation.
Thank you for your time.
[The prepared statement of Dr. Kennedy follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Mr. Hamm, welcome.
STATEMENT OF HAROLD HAMM
Mr. Hamm. Thank you, Chairman Upton, Acting Ranking Member
McNerney, and other members of the committee.
My name is Harold Hamm. It's my honor to address you today
on the miracle of American oil and gas and its global impact.
As chairman of the Domestic Energy Producers Alliance and
CEO of the company that co-developed the first oil field ever
drilled exclusively with horizontal drilling and a company that
is the largest leaseholder and most active driller and largest
producer both in the Bakken play in North Dakota and the SCOOP/
STACK and Springer plays of Oklahoma, I've been able to pioneer
and participate in the American energy renaissance firsthand.
I testified to the House Agricultural Committee on July 8,
2015, about the American energy renaissance and in particular
was asking for lifting of the ban on exportation of crude oil,
and it was granted. We got it signed into law. President Obama
signed it into law and I appreciated that.
Of course, we have to remember back. It was on the omnibus
bill--it's a little bit hard not to sign--and a 2-year
extension was given to wind and solar at that time and, of
course, 2 years times 10. It was a very costly addition--the
cost renewals.
I said it then and I will say it again--the American energy
renaissance is the single-most defining aspect on this planet
today that will shape the next 50 years ahead of us.
In the past 10 years, the United States has undergone
unprecedented transformation, as Daniel said, and thanks to the
ingenuity of America's independent oil and gas natural
producers--oil and natural gas producers we are transitioning
from a consuming short supply nation to an energy long supplier
dominating the world oil market today.
Our country has rapidly gone from fears of energy scarcity
to understand that U.S. energy independence is well within our
reach. I think that will happen late 2020. We are a little
ahead of the IEA on that, and during this Trump administration
we've become not only energy dominant but we'll become energy
sufficient and independent in the future.
And so we have had to rely on other countries to fuel our
energy needs drastically in the past, primarily from the Middle
East.
The instability of shifting alliances wreaked havoc on
American foreign policy for decades, and that's been
complicated by Russia and their involvement as well in the
country's global affairs.
But the American energy renaissance is rapidly shaping
those complicated dynamics to align with the U.S. to produce
all the energy that it needs.
Our energy imports have dropped from over 30 percent of
energy consumed in 2007 to less than 8 percent currently, and
because of these production gains, the U.S. no longer has to
put American lives in the Middle East particularly.
The ban on exports of crude oil was lifted in 2015--we
talked about that--and we are now on pace to become a net
energy exporter and provide our allies with a reliable
affordable supply of vital commodities like oil, LNG, and other
petroleum products, and we can also impact the world with these
clean fuels.
Rising U.S. oil production has proven to be vital in
meeting global demand as production capacity -- while
eliminating dramatic price hikes have long been a hallmark of
global markets.
Total petroleum exports are now averaging close to 7
million barrels a day, roughly, 2 million of which is crude
oil.
The commitment of the Trump administration to repealing
unnecessary and in many cases archaic and onerous regulations
is the right move for America.
There are still a couple around the CAFE standards that was
approved back when everybody thought we was running out of oil.
Certainly, it is wreaking havoc with the--on the highways today
and claim an additional 10,000 lives per year due to the small
size imposed by CAFE standards on vehicles.
Also, the archaic SCC rules need to be changed that limit
our production and booking just to 5 years. If we are to be
energy dominant, we certainly need to recognize that.
And we've done it environmentally sound, no governmental
assistance or subsidies. It's all come from the independent
sector.
Thank you.
[The prepared statement of Mr. Hamm follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you all. You know, I remember coming to
Washington as a young staffer--I am still young--and I remember
the gas lines.
I remember having a 1 at the end of my license plate which
allowed me to fill up, after an hour and a half, at a Shell
station around the corner here on Capitol Hill.
And, Mr. Arriola, I don't know how you did it but you got
one of the sharpest people in your organization in the woman
behind you, Maryam Brown.
She was one that worked hard with our Energy and Commerce
staff to actually develop the strategy that, I got to tell you,
was bipartisan--the North American Energy Independent Plan--and
laid it out.
We had testimony from Dr. Yergin back then, who predicted
that we could do this if you unshackle the industry, and I got
to tell you, 9 years ago, the day that President Obama was
sworn in, the gas price--average gas price, and that was before
Memorial Day and before July 4th, was $3.84 a gallon, and it
hurt a lot of people, particularly the most vulnerable.
And as I recall, that summer gas prices got pretty close to
$5.00 and even over--in some areas like California even maybe
$6.00 a gallon.
This last weekend, I was home in Michigan. I watched gas
prices at $2.65. So forget inflation. I mean, we are so much
better off, and the strategy that we laid out, which, again,
was bipartisan.
Mr. Hamm talked about it. President Obama signed it into
law to lift the crude oil, and there were still some, even from
Texas, who voted against the omnibus, even though that was part
of it, despite Mr. Barton's pleading, and he did a great job in
lining up the support to get that done.
But where would we be today without this? And I guess the
other quick question that I have for Mr. Yergin, you said in
your testimony that we anticipate that U.S. production could
grow by another 60 percent over the next 20 years.
You know, I talk to my farmers who use natural gas to dry
their corn. You know, most of my constituents--many of them,
anyway--have natural gas for heating and cooling and so those
rates have gone down. They're not even a third of what they
were 10, 15 years ago.
Where are we headed with this continued new production that
in fact not only can we export and so help our balance of
trade, but what is that going to do for the average family
across the country?
Dr. Yergin. What it's meant is lower cost for electricity,
lower cost for heating, and it's also, because of the impact on
this economy, I mentioned in my written testimony we've added
about $120 billion of new investment directly in manufacturing,
about maybe a same amount as ancillary.
So it's created a lot of jobs. It's really been beneficial
across the board.
Mr. Upton. And it's done a lot for the climate as well. I
mean, we know that emissions--CO2 emissions--have
dropped by 30 percent. I think half of that is just by the
transformation to coal--from coal, I should say.
Dr. Yergin. Well, I mean--yes, if you look at it, our
emissions today are back to the level of the early 1990s
although our economy has almost doubled since that time and gas
has been an important part of that.
Mr. Upton. Mr. Hamm, you indicated in your testimony that
U.S. has the lowest gas and diesel prices in the developed
world. What are the biggest drivers of reducing those prices
and what can we do to continue to keep those prices low?
Mr. Hamm. A lot of it has to do with the product that's
produced. Just like the Bakken--you know, that's--that oil has
no bottoms to speak of, no asphalt.
Basically, a lot of middle distillates, which is gasoline,
diesel, kerosene, and when that--you know, prior to it coming
into existence back in 2007, you saw diesel prices at $4.00,
$4.50 a gallon, and that was because there wasn't much you
could wring out of a barrel of bitumen coming in from Canada.
But with the addition of all this oil coming in in the
Bakken, that price went to $2.25 and it did it very quickly.
And so as a result, we see both diesel and gasoline prices the
cheapest that you have seen.
And so we have the lowest gasoline prices in the world that
we are enjoying and this is with some State taxes on it, and
some of them, like, California, get pretty high.
Mr. Upton. So in my remaining 15 seconds, if the oil price
stays about the same--where it is today--is that going to
continue to see the exploration and the drilling and the
production of domestic resources versus going too low and maybe
shutting those off?
Mr. Hamm. You know, we have a great supply. You know, I
think we are all--I am a geologist--looking forward with
natural gas.
I think we've got a 100-year supply or more. You know, I
think we can produce 10 million barrels a day of crude oil for
the next 85 years. You know, again this is an entirely new
reservoir to explore.
Basically, what we've done in the past is explored what
leaked off of these giant shale fields where the oil was
generated. And so all we could do is maybe that 15 percent that
leaked off into upper reservoir traps we could go after that.
Today, we can go into those resource beds like the Woodford
and the Bakken and produce the oil left in them. So there's
about 85 percent available. What can we get of that--20, 25, 30
percent? Sure.
Mr. Upton. My time has expired. Mr. McNerney.
Mr. McNerney. Thank you, Mr. Chairman. Your time has more
than expired.
Excellent presentations. I really appreciate all of your
words. Dr. Yergin, the financial disclosure of climate effects
for oil companies--is that possible to make that happen? What
would it--how would it affect the economy?
How would it affect the companies and how can we get that
information to shareholders if they're not going to be able to
produce that information?
Dr. Yergin. I think a lot of that is being produced now.
Companies are preparing their financial disclosure reports,
their sustainability reports.
The question is does it go in the financial reports, does
it go in others, and I think there's a process going on with
the climate-related financial disclosures to get the right
framework for meaningful information that's meaningful for
investors. So I think we have pointed to something that's in
process and being developed.
Mr. McNerney. Thank you. Do you--in my opening statement, I
mentioned the cyclical nature of the oil business economically.
Do you see that happening now or do you think because of the
shale revolution that it's going to flatten out a little bit?
Dr. Yergin. No, I think--I think you hit it on the nail.
It's a cyclical business. It's always been a cyclical business
and if you look at the oil market today you see that we've gone
from that really big surplus that led to the collapse with a
tightening market and you have some very important geopolitical
things that are happening.
One is the rapid decline and collapse in Venezuela in oil
production, which is something that we can feel the impact of
in the next several months.
Just to give you the numbers, Venezuela was 2\1/2\ million
barrels 3 years ago. Today, it's 1.4. We think next year it'll
be at 800,000 and could be lower than that.
And the other thing that's, obviously, with the sanctions
coming on Iran, with a very different pacing by this
administration and the Obama administration, right now there's
uncertainty about that.
So I think, you know, whenever they say cycles have been
abolished, I tend to think no.
Mr. McNerney. Thank you. You know, I believe one of the big
drivers to the shale revolution was the way that ownership of
the minerals below the surface as handled in this country as
compared to other countries.
Are other countries going to be able to carry on this--pick
up the shale revolution or is that going to be continuing to be
driven in this country?
Dr. Yergin. Well, it's in Canada, but the kind of early
thoughts that it was going to spread rapidly around the world
has not borne out, partly for geological reasons, partly for
political reasons, and partly for the reason you point to--that
the resources under the grounds are owned by governments, not
by the farmers who work on them.
I would say the area now that there's the greatest optimism
about is what's called the Vaca Muerta, which means dead cow,
which is an area of Argentina and that's where the focus is.
But so far, this is really a North American deal.
Mr. McNerney. How about geopolitical leverage of our oil
export and natural gas export versus what's happening as a
result of us pulling out of Paris and sort of repercussions of
us pulling back with regard to being a leader on climate
change?
Dr. Yergin. I think there are kind of two separate things.
Obviously, Dr. Kennedy has described the latter.
But I am very struck when I go to a country like India to
see that, to them, it's very significant that there's this
whole new dimension to their relationship with the United
States that we are exporting gas to them.
We are actually exporting oil to them and it gives a whole
new strand to that relationship and a kind of dialogue that
wasn't there before, and I see that in many countries around
the world.
And I think that the--you know, I don't know where we are
on trade right now but, certainly, LNG exports to China were
seen as one factor that changed the trade balance between our
two countries.
Mr. McNerney. Thank you. Dr. Kennedy, could you give me
some indication of the job creation per kilowatt hour
equivalent of renewables versus oil and natural gas?
Dr. Kennedy. I don't have those numbers off the top of my
head. But I would be happy to sort of go back to the office and
gather some of that information and provide it to you, yes.
Mr. McNerney. OK.
Mr. Arriola, I am concerned about Sempra's design of
selling off its renewables. Can you give me some clue where
Sempra is with regard to that process?
Mr. Arriola. I think what you're probably referring to,
Congressman, is a shareholder proposal that we received in the
last couple weeks from an investor group, and what I can tell
is Sempra is totally dedicated and committed to continuing our
focus with renewables.
In fact, if you look at--and you know our company, San
Diego Gas and Electric, it's actually one of the leading
companies that procures renewable power on behalf of our
customers.
In fact, last year over 45 percent of the power that we
procured was renewables and we are continuing to focus on what
we can do from the battery storage technology standpoint in
looking at electric vehicles.
So Sempra, at its core, is focused on sustainability and
part of that is renewable energy as well.
Mr. McNerney. OK. Thank you. Yield back.
Mr. Olson [presiding]. The Chair now calls upon the
gentleman from Texas, the vice chairman of the full committee,
Mr. Barton, for 5 minutes.
Mr. Barton. I thank the gentleman from Fort Bend County,
Texas, and I can't tell you how excited I am to have this
hearing. It's really exciting for me.
I've got all kinds of questions but I am going to--since I
only have 5 minutes I am going to try to be as quick as
possible.
Mr. Yergin--and this would be also for Mr. Hamm--what's--
with current technology and current resource base, what's the
upper limit for oil production per day in the United States as
compared to Saudi Arabia and Russia?
Dr. Yergin. Well, as a famous wildcatter in Texas said
about around 1900, on Dr. Drill knows for sure. But I think now
an informed view, and I think we see it from even the Energy
Information Administration and others, the U.S. today is a
little short of 11 million barrels a day.
It could be 14 or 15 million barrels a day. Russia is
around 11 million. Saudi is, like, 10.3. So we are moving into
this position very significant and, you know, you take the
Permian in Texas, which Mr. Hamm referred to.
Eight years ago, it was 900,000 barrels a day. It's 2.5. We
think another 5 years the Permian alone will be 5.4 million
barrels a day, which will make it larger than any country in
OPEC except for Saudi Arabia.
Mr. Barton. Mr. Hamm.
Mr. Hamm. I don't have any change to that. Daniel is right
on. You know, this year, best guess that we are going to grow
about 900,000 barrels per day in the U.S.
So, you know, there's some infrastructure things out there
that, you know, will cap some of that--that growth. But, you
know, I don't see that number changing for a while.
Mr. Barton. Is there any other country in the world that
has a higher delta potential production increase than the
United States?
Dr. Yergin. Well, I will say that----
Mr. Barton. I hope the answer is no.
Dr. Yergin. The answer is no. I don't think anywhere in the
world has actually seen the kind of growth that we've seen in
the United States in the last 5 or 6 years. It just doesn't
happen anywhere else in the world. It's breathtaking.
Mr. Barton. What is China's potential oil and gas
production as a percent of its demand? Do they have the ability
to produce what they consume in oil and gas or will they--will
they be a net importer of----
Dr. Yergin. No, they're going in just the opposite
direction we are. They are now importing 75 percent of their
oil and I think IEA has just said next year they're going to be
the largest importer of natural gas, which has become a real
imperative for them.
So they're becoming more deponent and, you know, it's
striking to see that part of their portfolio now is from the
United States.
Mr. Barton. This next question is for Mr. Arriola, since
you're with Sempra. What's the 10-year outlook for LNG prices
on the world market? I would assume they're going to come down
as we ramp up our exports?
Mr. Arriola. No, I think--Congressman, I think you're
correct. I think what we are finding is that as demand
externally continues to increase, there's more production going
on here domestically and it's helping to actually keep prices
relatively flat or actually continuing to push them down, and
as we see additional advances in technology I think it's really
good for consumers long term.
So what we are seeing in why countries on the outside are
looking to buy U.S. natural gas is because of the stability of
those prices.
Mr. Barton. My assumption--of course, I am not in the
market like you are, but my assumption is that as we ramp up
our expert terminal capability and capacity that those prices
are going to come down, but they're going to level out, I hope,
about halfway from where they were a couple years ago and where
our domestic price is.
So if we can get it $7, $8 in MCF equivalent, I think--I
hope it's somewhere in that range. Can U.S. exports be
profitable in that price range?
Mr. Arriola. What we are seeing from the market is that the
demand is there, and Mr. Hamm knows probably better than anyone
that the U.S. production market is continuing to look for more
natural gas and oil, which they wouldn't be doing it if it
weren't profitable.
Mr. Barton. This is my last question and I am going to sort
of pat myself on the back here. You know, I helped lead the
fight, and a lot of Members on the committee did, to repeal the
ban on crude oil exports 3 or 4 years ago, and this committee
also led the effort to make it possible to permit LNG terminals
in a more timely fashion.
What's the geopolitical significance of those two
congressional actions?
Dr. Yergin. I think the geopolitical position is
strengthening the United States and strengthening our position
in the world.
I mean, it really gives us a whole new vocabulary to talk
to countries about and the degree and a whole new category of
kind of respect and a deeper relationship. So it's been proved
to be, I think, very positive.
Mr. Arriola. Congressman, what I would say to that is we
talk to customers outside of the United States. They're looking
for options. They're looking for options away from Russia and
other countries and they want the United States to be one of
those options.
Dr. Yergin. If I could say one other thing--it also--
there's a lot of contention in the relationship with China
right now.
But this has taken one issue of contention off the table,
because if you go back 8, 10 years, there would still have to
be this zero sum game between China and the United States for
energy. That's completely gone, and I think that's something
that improves our position.
Mr. Barton. Thank you, Mr. Chairman.
Mr. Olson. Pat on the back complete. The Chair now calls
upon Mr. Peters from California for 5 minutes.
Mr. Peters. Thank you, Mr. Chairman. I thank the witnesses
for being here. I will say hello to Mr. Arriola from San Diego,
and congratulations on the SDG&E being at 45 percent.
I say it's the highest, the most renewable. If you know of
a utility that's doing better you should--unless you know that,
you should say it's the highest, not one of the highest.
Mr. Arriola. We'll do that in the future. Thank you.
Mr. Peters. OK. Thanks. Not that you're running for office.
You referred to clean natural gas in your testimony. I
think that implicit in that is the statement that natural gas
burns cleaner than coal, and I think most people would concede
that.
The thing that a lot of folks say, though, is that a lot of
the benefit of natural gas is lost because of fugitive methane
emissions--that methane being a much more damaging agent to
climate even than carbon dioxide in the short run.
The flip side of that is if you could contain it--if you
could--if you could keep methane from escaping you could have a
good impact on the rate of climate change.
Let me ask you kind of how do you think the United States
is doing in terms of methane capture? And I would like you to
address that--I am going to ask the same questions of Mr.
Kennedy.
Mr. Arriola. You know, it's a great question, Congressman,
because I think with all of the advancements in technology and
all of the capital expenditures that we've had within our
industries over the--I would say over the last 10 years, we
have been able to identify and remediate substantially a lot of
the methane emissions that come from the natural gas supply
chain.
And so when you compare the United States--and this is
based upon numbers that were coming out of the EPA, the United
States is probably one of the lowest when you look at the
overall supply chain--probably close to 1\1/2\ percent is the
number that I've seen.
What I would tell you is that there are additional
opportunities for us to be able to capture methane emissions
that don't necessarily come from the natural gas supply chain
but, rather, from the agricultural industry, the water supply
industry, landfills, and within our company we are actually
looking at new technologies to try to gather this and really
create renewable natural gas by using it for either
transportation fuels and/or reinjecting it into our pipelines.
So I think there's more opportunities there and we are
focused on those.
Mr. Peters. Just in terms of natural gas collection and
distribution, it's my concern that the market may not provide
sufficient incentives to look after that.
Mr. Kennedy, what do you--what would you tell me about
methane capture?
Dr. Kennedy. Thank you, Congressman. I would agree that
both--that there are many of the technologies that are
available and can be used to help contain and capture the
methane leakage from the oil and gas industry but they are
often not being used to the degree that they should be.
In a recent report just last week, some academic studies
looking at the degree of methane leakage across the oil and gas
industry are suggesting that it is much greater than EPA had
been estimating.
I have not had a chance to look in any depth at that study
but am greatly concerned that that is an indication that while
CO2 emissions are down because of the advantages on
the combustion side between natural gas and coal that the
methane leakage may in fact be using up much of that advantage
or even all of that advantage.
I would also agree that there's opportunities for renewable
natural gas from other sources. We have done some recent work
on that. So there's other opportunities to capture other
methane.
But the oil and gas industry has the ability, but needs a
lot of attention to make sure that they really capture methane
as they could.
Mr. Peters. I would just say I would like to follow up with
both of you or all of you about what we could do on that. I was
invited to attend a conference held by Harvard Business School
on America's unconventional energy opportunity, they called it.
It was in--it was in Mach of 2015--where they assessed that
the cost of actually controlling this was very small in
relation to the revenues and the profits.
But I don't--it just strikes me that we should come up with
some regulatory regime because this is classic market failure,
I believe, when the cost of capturing that few--that little bit
of methane gas may not be sufficient to induce someone to keep
it from escaping and I think--I think, frankly, Sempra's been
pretty open to that and I look forward to working with you.
Mr. Chairman, I yield back.
Mr. Olson. Thank you. The Chair now calls upon Mr. Shimkus
from Illinois for 5 minutes, sir.
Mr. Shimkus. Thank you, Mr. Chairman, and my colleague's
line of questioning--from California.
I do want to make a point on the renewable natural gas that
in the RFS in the advanced bucket there are credits for
renewable natural gas.
That's actually a growing part of the advanced bucket of
the RFS. So we should visit on that as we go down this route.
A question I have--I am going to focus on the refined
products and exports for a minute and I would like to ask Dr.
Yergin and Mr. Hamm what countries outside of North America do
we ship refined products to?
Dr. Yergin. Well, I don't have all of them in my head by
any means. I know Latin America is a big source, sometimes
Europe, perhaps even Asia.
I think in terms of LNG exports, I think so far we've
exported LNG to about 26 different countries.
Mr. Shimkus. Mr. Hamm.
Mr. Hamm. Yes. You know, the refineries in this country, 30
percent of it is owned by foreign governments and entities and
they can ship wherever they want.
They, basically, own those refineries. Much of it was built
for their own oil, like the Canadians, Venezuelans, PEMEX. And
so that oil, basically, is coming through, refined here and
where it goes is any customer that they have around the world.
And so about 5 million barrels a day is refined products
that go to those customers wherever.
Mr. Shimkus. Can anyone talk to me the difference between
the, in essence, the refined product on the gasoline side for
octane ratings the difference between the United States and the
European market, and is there one? Does anyone know that?
We've been working on it. Bill Flores and I are--we are
focusing on trying to revise the renewable fuel standard. As
many of you people know, there is a push on looking at octane,
and then the basic argument is this--why not get our smartest
petroleum engineers and our smartest engine engineers to work
together to figure out what's the best product. It addresses
maybe a CAFE issue. It might address a little carbon issue.
So in our research we found out that in the United States
our regular is 91 to 92 real octane number. The European
gasoline is at a 95 real octane number.
So the question would be do you see any benefits of a kind
of a unified octane standard in just markets as far as
exporting refined product to the European market if we had the
same octane standard as they would have?
My guess is that would be beneficial, just through
simplicity of markets and commodity product. Is that
farfetched?
Dr. Yergin.
Dr. Yergin. This is new to me. I feel I need to go back and
ask my refinery--my colleagues who work in refining that
question and focus on it. I would be happy to----
Mr. Shimkus. Yes, I think--well, we are putting a lot of
time to it and I would appreciate any smart people looking at
this.
We are trying to address this--obviously, the White House
is and the secretary of ag and the secretary of energy and the
EPA administrator.
The industry is being whipsawed back and forth with
different proposals and I think that's what happened when you
don't have a legislative fix and a legislative schedule and
agenda. So we have a lot of different stakeholders.
The last thing for--part of this is, and I direct this to
you, Mr. Hamm, because we do talk about CAFE standards, and
without a change in the fuel mix, as we are predicting, the way
to reach CAFE standards is to have smaller lighter vehicles,
which might address, one, safety issues for some, and then in
rural America, a total rejection of--because we like big
trucks, big engines, big power aspects.
Do you--if--in this issue of--do you see a--do you see a
benefit in the aspect of CAFE if you have high-compression
engines that can go further on the same amount of gas, as far
as meeting CAFE standards?
Mr. Hamm. You can only go so far with that technology and
manufacturers have done what they could with high-compression
engines and fuel injection and everything that goes along with
that, and what it came down to was the shadow of a car gets
smaller and smaller and smaller, and it's rejected by the
buyers in America.
So pretty soon everybody's buying SUVs. Everybody is buying
pickup trucks or they're buying these little cars if that's all
they can afford and putting their families in it.
But what we've seen is that we've reduced--we've reduced
with seatbelts and airbags and everything else safety
fatalities from 45,000 down to about 30,000, and that was the
bottom, and now it's crept up due to the small size of these
cars back up to 40,000.
So it's killing 10,000 Americans per year, and we have--
that's the number of them because you have got a huge mix of
bigger vehicles out there with these little cars. And they're
made out of aluminum--they crush up like a beer can, kill
everybody inside.
Mr. Shimkus. Yield back. Thank you, Mr. Chairman.
Mr. Upton [presiding]. Mr. Tonko.
Mr. Tonko. Thank you, Mr. Chair. Earlier this month, Pope
Francis met with some of the world's largest oil and gas
companies to urge them to take the threat of climate change
more seriously.
But the consequences of climate change are not just moral
or environmental-based. Any of the world's largest investors
say it is an economic concern as well.
Mark Carney, the Governor of the Bank of England and chair
of the G-20's Financial Stability Board, has made it clear that
businesses should be assessing and disclosing climate related
risks.
A 2016 Black Rock Investment Institute report concluded
that all investors should incorporate climate change awareness
into their investment process and that advice is being heeded.
Investors representing trillions in assets have urge this
sector to be more transparent and take responsibility for its
emissions.
Dr. Kennedy, I listened as there was some discussion about
shareholders in this whole arena, and shareholders have helped
drive greater disclosures of companies' climate-related risks.
How important is it for shareholders to be given this
information when making decisions on how to invest their money?
Dr. Kennedy. This is a topic that I've not gone into in
depth. But what I would say is that our economic system, our
investment system, which is often driven by short-term returns,
has a great difficulty in dealing with longer-term challenges
and longer-term economic risks like climate change.
And so the more information that can be made available to
investors about the implications of the investments and what
those mean in the long term is going to be very important and
very helpful.
Mr. Tonko. Thank you. And is there a risks to the United
States economy if companies fail to make these disclosures?
Dr. Kennedy. The risks of climate change itself are
actually very great for the U.S. as we are already seeing
significant impacts.
From the changing climate, from increased severe weather,
from increased sea level rise, storm surge, a wide variety of
impacts are already starting to show up and we can only expect
those to continue to increase over time, particulate if we
don't find ways of reducing emissions.
So the more that can be done from a variety of perspectives
including in terms of how investment decisions are made is
going to be critically important to address those real risks,
going forward.
Mr. Tonko. Thank you. According to Sempra's 2015 corporate
responsibility report, Sempra began responding to the annual
carbon disclosure project--CDP survey--in 2006, which reports
the emissions of major companies and releases and assessment of
their potential climate risks.
Since 2015, Sempra has scored 100 out of 100 on disclosure.
Mr. Arriola, why has Sempra made this a priority and do you
believe that such disclosures are important across the energy
sector?
Mr. Arriola. Congressman, it's important to us because it's
important to our consumers in the communities where we do
business as well as to our shareholders.
As you have mentioned, there's been a trend I would say
over the last decade that really started in Europe but now has
come more forcefully to the United States where investors--and
I am talking about large institutional investors--really do
want to understand what companies are doing to address climate
change, but not just climate change--how they're dealing with
water, how they're dealing with diversity in companies--really,
both sustainability and corporate responsibility.
And we--this is something that we take very seriously in
our company and actually on Friday we'll be releasing our most
recent sustainability report, which I think continues to get
better and better and it gets acknowledged by different
organizations because we go beyond what we need to because we
think it's important for investors to understand what we are
doing on their behalf.
Mr. Tonko. Thank you. And Mr. Hamm, Continental Resources
is one of the largest non-responders to CDP's annual disclosure
request. Any reason why you do not participate?
Mr. Hamm. Excuse me. There's not any specific reason. You
know, climate change--I am a geologist. I believe that we can
affect the climate and I certainly think that investors can
pick or choose which company that they would want to invest in
and who are the best stewards of the land and water, air.
Continental certainly fits in at the top of that rank. With
horizontal drilling, there's a lot of drilling that goes on but
it certainly doesn't look like it.You know, the methane
emissions that you talk about, our company has been doing green
completions as long as I remember. So----
Mr. Tonko. But that being said, why not then respond to
CDP's annual request?
Mr. Hamm. You know, I don't believe we've had the specific
annual request in that regard that I recall.
Mr. Tonko. OK. I yield back, Mr. Chair.
Mr. Upton. Thank you. The Chair would recognize Mr. Latta.
Mr. Latta. Thanks, Mr. Chairman, and thank you very much
for holding today's hearing and thank you very much for our
panelists for being with us today.
It's very, very important as we go forward with energy
development in this country.
Mr. Yergin, if I can start my questions with you. You know,
we on this committee have a great opportunity to speak with
political leaders and business leaders across the world, and
it's very interesting through the last several years I've had--
the discussions I've had with those individuals they've all
asked this one question--how is it the United States has been
able to do what you have done and be able to accomplish it so
quickly.
And then the next question would be is do we have any
competitors or other countries that are out there that are
trying to do the exact same, maybe to duplicate, you know, what
we've done in this country and are they able to do that as we
did in this country.
Dr. Yergin. Do you mean in terms of the unconventional
revolution or in general?
Mr. Latta. Correct.
Dr. Yergin. I think aside from what we've seen in Canada,
which is kind of like an offshoot of here, no, nobody else, and
it's a combination of the resource base, the ecosystem, our
legal system, our entrepreneurial system and the fact that we
have all these supply chains to respond to it.
So that's why, you know, it is something you look at and
you say things don't happen normally this fast and this has
really happened fast.
Mr. Latta. Well, I know someone had asked a little bit
earlier a question to you and you responded back about what's
happening with Iran and in Venezuela.
Where do you see the United States--I know this has come up
in some of the other questions--but when you're looking around
the world--our place in the world, because it's hard to explain
to people that don't remember the mid-1970s and understand what
happened in this country, and trying to explain to people that,
you know, in some areas of the country either, A, you didn't
buy gas on certain days because your license plate didn't end
with a even or odd number, or, you know, people were just told
we didn't any energy in this country.
But where do you--you know, where do you see this country
and what that means for us geopolitically then?
Dr. Yergin. I think it's--I mean, at that time the view was
that, you know, we were just going to be held hostage--that
we'd lost control of our lives on a daily basis in terms of gas
lines and in terms of our economy, and this has been such a
turnaround.
Ben Bernanke, when he stepped--was at our conference just
after he stepped down as head of the Federal Reserve, said this
unconventional revolution was one of the most positive, if not
the most positive thing, to have happened since the 2008
crisis.
Clearly, people who don't remember, you know, it's--you
know, they see grainy images maybe on television of gas lines
and said, what is that all about.
So that's why it's such a big turnaround, and I think it
took a few years psychologically for people to--you know, for
many people to realize that this is for real.
Mr. Latta. Thank you. Mr. Hamm and Mr. Arriola, what growth
have your companies seen in job creation and career
opportunities as a result of the shale revolution?
Mr. Arriola. Sure. Starting at Sempra Energy, if you would
have looked at our company just over 10 years ago, our LNG
business really didn't exist.
So we've hired, I would say, hundreds of people to help
develop our LNG projects in Mexico and Louisiana, and we are
looking forward to hiring even more in Texas.
I think that's probably the biggest part. I can't give you
an exact number but it's in the hundreds, of well-paying jobs.
Mr. Latta. Mr. Hamm.
Mr. Hamm. Well, you know, our company, like a lot of
independents, you know, we've had good growth over this period
of time and the industry in total has added over a million
jobs--you know, basically, every sector from the service
sectors through B and P production and exploration, and so it's
been a tremendous driver of the American economy.
Mr. Latta. Well, I think what was just brought up is also
important because I think that sometimes when we talk about a
company and how many jobs are being created it's not all the
folks out there who are, you know, in--on the steel end and
those who produce the pipe, and you name all the different
things that have to be done to get there, and so all of the
other jobs that are the offshoots. So it's been a great boon
for the economy.
Mr. Arriola. Congressman, if I could also just interject
that----
Mr. Latta. Yes, absolutely.
Mr. Arriola [continuing]. The jobs I was talking about were
directly at Sempra.
Mr. Latta. Right.
Mr. Arriola. If you look at the projects that we've had--
for example, our Cameron LNG facility--there are over 10,000
people on the job today. Once we develop our Port Arthur
facility, there will be over 3,000 jobs going for 4 to 5 years.
So it's not necessarily just the jobs directly at our
company that are important from an economic perspective but
it's all of the jobs that get created by these projects.
Dr. Yergin. We calculated a couple of years ago that it was
well over 2 million jobs because the supply chain in the Middle
West that was a very big beneficiary because of the supply
chains, because of the manufacturing capabilities that fed into
this.
Mr. Latta. Thank you very much, Mr. Chairman. My time has
expired.
Mr. Upton. The gentleman from Texas, Mr. Green.
Mr. Green. Thank you, Mr. Chairman and the ranking member,
for holding this important hearing, and I am glad to know that
the World Gas Conference is here in Washington.
Dr. Yergin, I remember a few years ago we had one of our
conferences in Houston and you interviewed our EPA
administrator, Gina McCarthy, and I think that was the first
time she went to an energy conference, and I appreciate the
hospitality and also representing an area that deals with
environmental issues every day because that's our job base, our
refineries, our chemical plants in east Houston and Harris
County.
So Texas is the largest generator of wind power in the
country right now and, hopefully, we can do other things. But
what we've seen, though is that the mix of the electricity--and
we do need electricity plants to produce those for those
electric cars--and, you know, our choices are in Texas we have
20 percent nuclear power.
That's the base power. You know, wind energy--coal has
actually gotten down lower because the price of natural gas is
so cheap and that's why it's--I think that mix works and we'll
continue to see renewables pick up some.
But it's easier to turn on a burner on a natural gas plant
than it is to try and keep a coal storage facility.
The--our American energy renaissance--because I've been in
Congress since 1993 and it's been amazing what's happened. Mr.
Arriola, in your testimony you talk about how the U.S.
regulatory certainty at FERC could hinder U.S. LNG development
in comparison to countries like Russia, Australia, Qatar, or
Mozambique. What changes would you like to see in the
regulatory process?
Mr. Arriola. Thank you, Congressman. You know, I think we
believe that it's important to have a very thorough and
exhaustive review process on any permitting, especially from
FERC and the DOE.
What we'd encourage is just making sure that it's as
streamlined as possible--that it's efficient but that we check
the box as quickly as we can--that we don't recreate the wheel
on every project, and I will give you an example.
When we went through the process for our facility in
Cameron, Louisiana, it took FERC 553 days to get through the
entire project.
As we are seeking approval here for our Port Arthur LNG
facility in Texas, it's essentially the same engineering design
that we are trying to duplicate in Texas. Right now, we are
estimating that it's probably going to take closer to a
thousand days.
Now, granted, there are more projects that FERC is looking
at and we've been working very constructively with their staff
and everything.
But I think part of it is just making sure that they have
not just more resources but the right resources and that the
agencies like FERC and DOE work together to eliminate the
bottlenecks to the extent that they can.
Mr. Green. Right now I've been told--and if you could
confirm it--the Trump administration's approval time line for
LNG export permitting trails that of the Obama administration.
Is that correct?
Mr. Arriola. That's our understanding.
Mr. Green. I think that would shock a lot of us.
Mr. Arriola. Yes.
Mr. Green. And I want to make sure that FERC has the staff
it needs to move efficiently through the permitting process.
I've also--in fact, this committee passed legislation on
cross-border pipelines to sell natural gas from Texas or New
Mexico to Mexico, and Mexico has--literally, can only refine
about 60 percent of their petroleum they need for diesel and
gas and 40 percent of that comes from typically the refineries
along the Gulf Coast.
The Eagle Ford Basin doesn't stop at the Rio Grande River
either and there'll come a time in the future that Houston's
petrochemical industry may need the gas from Mexico and those
pipelines could benefit us in our industry and east end.
Mr. Mullin and I addressed this with the cross-border
pipeline that passed the House last summer, and I am pleased
that Senator Hoeven introduced companion language in the Senate
last week to move it quickly to conference.
Mr. Arriola, could you speak how our energy relationship
with Mexico has shifted recently? What benefits does the U.S.
stand to gain from an integrated North American energy market
between Canada, Mexico, and the United States?
Mr. Arriola. Sure, Congressman. I think it's--you know,
this truly has been a win-win situation between the United
States and Mexico as it pertains to energy trade.
In fact, in the most recent year that I've seen the
numbers, there's actually been a trade surplus from U.S.
products and services related to energy that go to Mexico.
In fact, I think the last number what I saw was, roughly,
an $11 billion surplus on the side of the U.S. We are
continuing to provide them with natural gas. We are continuing
to provide them with other petro fuels sources, for example.
If you look at gasoline, diesel, and other jet fuel
resources, the United States has, roughly, a 90-day inventory
supply. Mexico has two to three days.
So there are more opportunities to build infrastructure in
Mexico that can receive future U.S. products and that's one of
the things that we are looking at.
Mr. Green. Mr. Chairman, I know I am out of time but if----
Mr. Upton. We are going to have votes on the House floor
shortly. So----
Mr. Green. OK. Well, I was just going to say that it's not
just Mexico. It's also LNG exports. In fact, my joke is anybody
in Louisiana and Texas who has a five-foot ditch off the Gulf
of Mexico they want an LNG export facility.
Thank you, Mr. Chairman.
Mr. Upton. Gentleman's time has expired. Mr. McKinley.
Mr. McKinley. Thank you, Mr. Chairman. Thank you for
holding this meeting.
As Dr. Yergin noted earlier in his testimony not only this
time but previously, there is indeed an abundance of natural
gas located in the Marcellus and Utica shale gases in West
Virginia, Ohio, and Pennsylvania, and it's estimated that this
region will produce about 37 percent of the Nation's natural
gas production by the year 2040.
These shale gases underscore this potential of a historic
renaissance that he referred to in American energy. But as
we've heard earlier, the naysayer continue to trot out their
tired, disproven talking points.
Unfortunately, the facts have proved otherwise. Just the
last 10 years, CO2 emissions in America have gone
down by 20 percent.
Shale gas has given the Appalachian area a breath of fresh
air, perhaps a chance finally to transform and revitalize a
whole region of the country, and subsequently Rick Perry and
the DOE have concluded that there's a need, perhaps, to develop
a second petrochemical center located in the Appalachian
region.
A recent study by HSS Market have concluded that the
economic advantages of extracting ethane in the Appalachian
region--has concluded that the resin could be produced at 23
percent lower there than being shipped down to the Gulf Coast
to the crackers and back up. So I think that was an interesting
conclusion with that.
Now, we can achieve lower energy costs and dramatically
decrease it if we take a different approach and work together.
Congress should fully innovate research to reduce
emissions--the concern, Dr. Kennedy, you're concerned about--if
we just put the money into research.
The technology of American scientists developing higher
efficiency and low emissions could be sold around the world--
marketed around the world--and thereby address this worldwide
concern about greenhouse gases, because we've got to remember
the world is going to increase its energy production and use by
28 percent by 2040, and fossil fuels by will count still for 75
percent of the energy use.
So what my concern is, if that's the case, what are we
doing with China and India? Isn't it time that some of our
Members recognize that, until the rest of the world--especially
India and China--produces electricity more cleanly, continuing
to overregulate fossil fuel in America will have virtually no
effect on the global environment.
Therefore, shouldn't we be first--innovate first, do the
research, then regulate?
So, Dr. Yergin, with this shale gas present, this
revolution going on in Kentucky, Ohio, and West Virginia, what
potential do you see for a potential petro chemical industry up
in the Appalachian area and with projection they're saying as
much as $36 billion invested and maybe 100,000 jobs? Do you
believe that.
Dr. Yergin. Some people see the Marcellus, now the region
in the Utica as the largest gas field or gas concentration in
the world.
I thought that some companies had actually committed to
build petro chemical facilities there. I thought Shell was
doing it but you have a----
Mr. McKinley. Shell is doing it in Monaca, Pennsylvania.
That's one portion of it, but there are others. I know they're
doing some--the ethane storage hub that we've been promoting
here has been the--the question is whether or not any of you
have the realization that could this be a center of a
secondary?
We are not trying to replace Houston, but just is there a
secondary--is there a second--possibility of a secondary?
Dr. Yergin. Yes. Sure. I mean, the resources is so enormous
there. I mean, as you said, it's going to be such a large part.
Also, I did want to say--you mentioned the R and D. One of
the big themes over at the World Gas Congress has been
specifically about methane and applying the technologies to
address methane.
So, I mean, there is definitely a research agenda to
address the questions you're talking about including methane.
Mr. McKinley. Dr. Arriola, any comments from you?
Mr. Arriola. I really don't have anything to add on that
other than given the infrastructure that we have and lacking
pipelines in some parts of our country, it may make sense to
develop those centers that you're talking about closer to the
source themselves.
So from an economies of scale standpoint, that could very
well make sense.
Mr. McKinley. Thank you, and I yield back my time.
Mr. Upton. Gentleman yields back. The gentleman from
Vermont, Mr. Welch.
Mr. Welch. Thank you very much. I thank the panel.
Mr. Yergin, your opening statement indicated with the shale
gale it just has been a huge game changer in jobs and economic
activity in our ability to go from being an importer to an
exporter, maybe the largest one.
One of the other issues, though, that I would like to focus
on is energy efficiency. I mean, it's tremendous that we have
these resources and it creates the economic activity and the
jobs.
But some of us are concerned also about carbon emissions
and the impact that has, and my understanding is that the
energy efficiency policies that we've been able, and I've
worked a lot with Mr. McKinley on this actually--energy
efficiency has allowed us to save on the demand for energy.
The Alliance to Save Energy says that if we tried to run
today's economy without energy efficiency improvements that
have taken place in '73, we'd need 55 percent more energy
supplies than we now use.
Could you describe what you understand to be the Trump
administration policies on energy efficiency, A, and, B,
whether even as we exploit the shale gale, does that suggest
that we can take our eye off the importance of efficiency?
Dr. Yergin. I am not really in a position to address what
the--you know, because I haven't studied what the Trump
administration's specific policies are.
I do agree with you. When I began my work in energy, it was
based--focused on energy efficiency and, off the top of my
head, I would say that we are probably twice as energy
efficient today as a country than we were, you know, a few
decades ago.
So I think energy efficiency is a very important--you know,
I regard energy efficiency as another energy source.
Mr. Welch. And my is the energy companies have to be part
of the solution. They have to be, and I am wondering--you're
over at the meeting with the gas folks--12,000 people--are
there any topics that are being discussed specifically as to
energy efficiency?
Dr. Yergin. Well, in the speeches I heard, it was certainly
said that, you know, this has to be a big part of the energy
mix and, you know, if we hadn't become more efficient as a
country, we would be in a--we would also be in a very difficult
place.
The thing about energy efficiency so much, it's--you know,
it's--it goes through the entire economy. It's decisions that
people make when they build houses.
It's new processes in industry. What's always struck me
about it, it's a very decentralized activity. There has been a
general trend towards being more efficient.
Mr. Welch. Is there a place for appropriate regulation in
order to meet energy efficiency standards, Mr. Yergin?
Dr. Yergin. Yes. I mean, you can see it, for instance, in
housing and other places and that regulation has been part of
the mix.
Mr. Welch. Thank you. Mr. Arriola, would you agree with
that, I mean, as the representative of a major energy company?
Mr. Arriola. Yes. What we see, Congressman, is a lot of
that regulation happens State by State. So, for example, in
California, whether it's the housing codes or through our
Public Utilities Commission, there's a lot of work that goes on
in energy efficiency.
Mr. Welch. So, you know, there's----
Mr. Arriola. And our companies are directly involved to
help facilitate that.
Mr. Welch. All right. Mr. Hamm, I know you have been
supportive of the president's deregulatory agenda. We've heard
some testimony here about the appropriate use of regulations
like Energy Star.
Do you support that?
Mr. Hamm. Well, you know, the best efficiencies is gained
by the private sector. For instance, in 2014 we had 1,950 rigs
working. Today, we've got a thousand rigs doing the same job.
So, basically, you have got one rig as efficient as five
were in the 1980s. So that's efficiencies that you can gain
from the private sector ----
Mr. Welch. Well, that's efficiency in the exploitation
process, not in the use process, right? Now, do you believe
that EPA has a role--the Environmental Protection Agency--in
promulgating appropriate regulatory mechanisms for energy
efficiency?
Mr. Hamm. I don't think they--EPA is there to enforce the
law and basically ensure that rule of law is followed, and so
they have that job to do and they do it sometimes very well,
most of the time very well. But as far as efficiencies----
Mr. Welch. Right. I just have time for one more question.
What's your view on the president's tariffs on oil exports to
China--or the China retaliatory tariffs on us with respect to
our oil exports?
Mr. Hamm. Well, right now, we don't have tariffs that apply
to oil going to China, and we'll see if that happens or not.
Mr. Welch. Are you OK with the tariffs? Do you think that's
a good thing for business?
Mr. Hamm. Am I OK with tariffs? I think tariffs are
counterproductive. I think everybody here believes that.
What's going on right now is setting some of that straight.
You know, the countries have gotten too carried away with
tariffs in the past. Nothing was done about it, and so some of
those corrections are being made today.
Mr. Welch. I yield back. Thank you.
Mr. Upton. Gentleman's time has expired. Mr. Griffith.
Mr. Griffith. I thank the gentleman and appreciate it. Dr.
Yergin, appreciate you being here today. I got a couple
questions in that regard with the geopolitical aspects of all
of this.
So we've heard a lot about foreign countries, and Mr.
McKinley touched base on it, and we were talking with one of
the foreign countries earlier today.
But isn't it true that if we were suddenly to cut off
American gas exports that a lot of the countries, particularly
some of the developing economies, would just continue to use
coal from other parts of the world?
Dr. Yergin. Well, I think--I mean, we are just part and we
are still a beginning part of the LNG market. We'll have more
when you guys get going.
But I think there is--you know, there's a competition going
on on a global basis for, you know, what's going to be the
balance between coal and natural gas and renewables for
developing countries, and I think many of them--you know,
there's definitely a push towards using more gas.
We see 15, 20 countries are going to--that don't import LNG
now will import LNG because they want to have--clean up and not
use--clean up their electric generation.
Mr. Griffith. And one of the questions that I would have as
we look at this is as we go to using the LNG, are we able to
compete worldwide with that?
Because, obviously, and I represent a coal district like
Mr. McKinley does as well--obviously, you know, it doesn't make
sense very often unless you need some good high-quality, as
they called it this morning, coking coal.
But the--what we call metallurgical coal in my neck of the
woods--unless you need that, if you're just buying steam coal,
it's hard to buy that for basic energy in some parts of the
world--hard for us to ship it to them and compete against the
Australians, and insert about four or five other countries.
But from what I understand--you correct me if I am wrong--
our LNG resources can reach worldwide and be pretty competitive
wherever we go. Isn't that true?
Dr. Yergin. Yes. We are quite competitive in the market.
You know, we are maybe not as competitive as some pipeline
suppliers in Europe.
But there's definite--I mean, I saw it this morning at this
APEC conference with all these Asian countries. They're really
interested in important LNG from the United States.
Mr. Griffith. And I think that makes a lot of sense, and as
a part of that, I would have to say that while I don't have any
of the Marcellus.
DOE, earlier this year, announced a project in conjunction
with Virginia Tech in my district to investigate the
resources--the resource potential for reservoirs in the Nora
Gas Field in southwest Virginia, and I am excited that this
research is being conducted to improve our understanding.
But it appears that we are down another level from what
they've looked at before and so they're drilling some deep
mines or some deep wells to see what we have down there, and we
are excited about that because we have coal bed methane but we
haven't been doing much on any other gas.
We don't have the Marcellus or the Utica shale. But we may
have this and we are excited about that. We already have some
petro chemicals--Eastman Chemical, even though it's in
Kingsport, Tennessee, and people say, why are you interested in
it.
They have 10,000 employees and a thousand of them drive the
eight miles from my district to the plant. So we are excited
about that.
But I think it's important that we realize that, as we move
forward, this is important for the world. I also would echo
some of the comments my colleagues have made that we need to do
the research, because it's not just the United States that we
are dealing with.
It's the world and we are looking at global warming, et
cetera. If we don't provide the research to burn our fuels more
efficiently worldwide, and something that the rest of the world
can also afford and obtain, then they're going to continue to
burn coal.
They're going to continue to burn all kinds of products and
put stuff in the air, and I know it bores people but it's just
my favorite factoid of all time.
NASA did a study. They followed a sandstorm from Central
Asia in the middle of the Gobi Desert, and it takes 10 days for
the air to get from the middle of the Gobi Desert to the
eastern shore of Virginia, based on their satellite research.
So we need to work on this from a worldwide viewpoint and
not put American jobs out of business because we are trying to
set the standard, because the rest of the world is looking for
jobs, period, and if they have to use something improper or
less efficient they'll do it.
But if we can find a way to do it through research they'll
share in that. Everybody wants to have a cleaner world, but
they want to have jobs first because the number-one--the
number-one thing is to have jobs and that helps your health as
well.
Wouldn't that be correct, Dr. Yergin?
Dr. Yergin. Yes, and I love your factoid. I've never heard
that before.
Mr. Griffith. It's a fun factoid. All right. I yield back.
Mr. Upton. Mr. Walberg.
Mr. Walberg. Thank you, Mr. Chairman, and thanks to the
panel for being here.
Mr. Yergin, in your testimony you mentioned that by 2025 as
many as 4 million jobs--direct, indirect, and induced--could be
supported by unconventional oil and gas activities.
Could you explain in further detail for us the types of
jobs that are supported by unconventional oil and gas
activities?
Dr. Yergin. Well, those three categories are really
categories that the Department of Commerce uses. The direct
jobs would be working on one of Harold Hamm's rigs, working in
the oil field.
Indirect would be kind of service jobs supporting that, and
then the induced jobs is the money that flows into the
community because, as we've seen in Pennsylvania, suddenly
people are able to buy cars, are able to buy houses.
Realtors service computer specialists in California,
financial people in New York, and so that's kind of the
methodology that's used for estimating that, and what it really
says that these supply chains go all the way the across the
country and the money that's being spent is staying in this
country and being distributed in our economy.
Mr. Walberg. Moving along with that, several of you
mentioned the numbers of jobs--direct, indirect, in
construction as well as exploration for finding all that go on
there.
Let me ask Mr. Hamm and Mr. Arriola, what types of job
training and recruitment efforts are you using to meet those
needs?
I mean, we see all across the vocational spectrum today a
real lack of people to do the jobs--real rural jobs that we
need--and what are you doing to train people for the jobs?
Mr. Arriola. Congressman, I can tell you, in the case of
the LNG facilities that we are talking about, we work very
closely, obviously, with our subcontractors that are hiring
people but we are also working directly with the trades to
train people, whether it's welders, whether it's supply
procurement experts.
There's a whole host of jobs, whether they're low skilled
or high skilled that we are trying to do, and I think one of
the great things is we are creating a pipeline of skilled
workers that--especially in some of these areas that workers
that wouldn't necessarily have opportunities that can now go
from facility to facility to continue to build.
So sometimes we think of these as temporary jobs but
they're really skills that are being developed that can be
utilized across the construction industry to continue to build
energy infrastructure.
Mr. Walberg. So you're working with the trades. What
other--I mean----
Mr. Arriola. We are working with the trades in the case of
our utilities where we are enhancing pipelines to carry natural
gas.
We are working with the junior colleges and other
organizations to identify people that are coming directly out
of high school or junior colleges to give them the skills that
they need to be able to be productive members of our team.
Mr. Walberg. Mr. Hamm, I would ask you if you'd respond as
well, especially since being an innovator--innovation in
directional drilling and all of that.
Mr. Hamm. Thank you. What we've seen, really, that added so
many new jobs is these very expensive petro chemical plants
that have been added with all the natural gas resources that we
have.
In fact, it's been estimated that one out of eight people,
you know, have been associated with our industry. So it's very
intense, particularly in Houston and some of the areas that
these plants locate.
And so it's very intense. Vocational technical training has
helped a great deal in places like Oklahoma. As far as our
industry goes, it's been a great resource.
But it seems like the--you know, we are down to about 3.8
percent of unemployment in this country now, which is
wonderful, and the closer you get to the 3 percent level, the
harder it is to find those employees that you need.
But so far, we've been able to do it.
Mr. Walberg. Recruit and train your own? Is that how you--
--
Mr. Hamm. We recruit and we've trained. We train both at
the company level and then also we use technical schools for
training as well.
Mr. Walberg. Thank you. I yield back.
Mr. Upton. Mr. Duncan.
Mr. Duncan. Thank you, Mr. Chairman. Thanks, everyone, for
being here. It's been a great hearing so far. As we all know,
the United States is well on our way to becoming a net energy
exporter by 2020--I think a natural gas exporter--it was the
first time last year--first time since 1957, I believe.
I commend the Trump administration's support for robust
domestic energy production, which has consequently strengthened
our leadership on the world stage.
Mr. Arriola, you note in your testimony that the failure of
the U.S. to seize the current LNG opportunity has international
implications.
I couldn't agree with you more, and besides the fact
exporting gas to U.S. allies will contribute up to 452,000
American jobs from 2016 and 2035, add about $73.6 billion
annually to the U.S. economy. It can also provide energy
security to our allies.
Prior to serving on the Energy and Commerce Committee, I
served as chairman of the Western Hemisphere Subcommittee on
the House Foreign Affairs Committee and I utilized that role as
that chairman to focus on energy opportunities in North and
South America and how we can work to achieve not only America
energy independence and energy security but also hemispheric
energy security and independence.
In this region of the world, we have the ability through
U.S. LNG exports to help the energy poor. Countries reduce
their dependence on corrupt state-owned regimes and increase
the quality of life for so many people around the world.
I talk about quality of life a lot of times, how energy can
improve the quality of lives. Just in infant mortality rate--
through energy and a constant 24/7 baseload power supply that
that energy, possibly with LNG natural gas-fired power plants
providing that electricity can keep babies alive. Where you
have intermittent power now in neonatal intensive care and
incubators cannot run to keep those babies alive, you see a
high infant mortality rate.
A lot of quality of life issues that we, as Americans, with
our energy--abundant energy resources, exporting those to our
friends and allies around the world to improve the quality of
life of folks elsewhere.
So, Mr. Arriola, from your perspective, how can LNG
terminals further open up access for U.S. LNG in these markets?
Mr. Arriola. Well, Congressman, your point about natural
gas and different types of energy impacting more than just the
economic side is truly right on.
In fact, I saw--I spoke to a professor from the Stanford
Natural Gas Initiative yesterday and he shared with me in a
conference we were at that, although we don't talk about it
very much, indoor air pollution is one of the largest killers
in this world, and we don't think about it here in the United
States because we have, for the most part, natural gas or
electricity to help, from a cooking fuels perspective.
But if you go to other countries--developing countries,
they use wood. They use dung. They use charcoal, and last year,
roughly, 4 million people died from indoor air pollution caused
by cooking fuel.
Mr. Duncan. And I am glad you said that. I talk about that
all the time. The indoor air quality is terrible when you're
burning on wood, charcoal, dung, other things that people
around the world have to cook on, and the fact that they don't
have a 24/7 baseload power supply to keep their food fresh in a
refrigerated environment.
Mr. Arriola. So not only are we impacting economic
prosperity around the globe by being able to export clean U.S.
natural gas, but we are changing people's lives. We are
changing the health and their livelihood.
Mr. Duncan. Improving lives of so many people around the
world through American resources that we take for granted. We
take for granted that that light is going to come on when we
flip the switch.
We take for granted that the machines of industry to
produce the widgets that America produces--that that
electricity is going to be there to provide for those
machineries to turn on.
But you know what? It's not just a third world problem.
Even in second world and first world Europe they have problems
with intermittency and power supplies.
So this is geopolitics of American energy. When I was in
Spain--and I understand Portugal is the same way--but they want
to be the LNG importer for Western Europe because right now,
Western Europe is relying on who? Russia.
Russia is a gas station masquerading as a country. But
they're providing that natural gas to Europe and they use the
levers of influence of turning that spigot on and off to affect
policy not only in Eastern Europe but in Western Europe, and as
those pipelines continue to be built to provide that natural
gas, Western Europe is looking west to the United States, a
stable energy producer, an ally and a friend, to provide LNG so
they can meet their energy needs and lessen their dependence
not on the Middle East for their energy but lessen their
dependence on Russia and their less dependence on Russian gas
and more strong dependence on, possibly, hopefully, American
LNG exports to provide that energy.
So the geopolitics are real. I appreciate your comments,
and let's improve the lives of folks around the world through
American energy production.
With that, Mr. Chairman, I yield back.
Mr. Upton. The gentleman yields back. I regret to say that
votes on the floor have started again. They're not going to be
completed, they tell us, until after 4:00 o'clock.
I know a couple of our witnesses have to leave by 3:45. So
I am going to ask that Mr. Olson, who's next in line for
questions, take the chair and he will ask questions, at which
point we will adjourn, and those Members wishing to still ask
questions will do it in writing, and if you could respond on a
timely basis we'll adjourn rather than keep you here until
4:15, knowing that all of you are pretty much gone.
Mr. Olson.
Mr. Olson [presiding]. I thank the Chair, and welcome to
our four witnesses.
I want to start by saying congratulations to our friends
at--our good friends at Sempra. Big merger with Oncor.
Congratulations.
Mr. Arriola. Thank you.
Mr. Olson. Mr. Arriola, your company is working on some
significant LNG export terminals along the Gulf Coast. You
mentioned Cameron being up and running, Port Arthur coming
online.
Can you talk about why getting American liquefied natural
gas to market is time sensitive? Why does it matter how fast we
ramp this production up? What markets are in jeopardy if we
delay or drag this out?
Mr. Arriola. Sure, Congressman.
I think, as we've discussed, when foreign countries decide
to enter into contracts for LNG, they're ordinarily in the 20-
to 30-year timeframe. And so as I am buying a product or a
service for 20 or 30 years, I don't need to come back every
year and re-up.
And so as U.S. companies, including Sempra, look at
building a project, whether it's in Cameron or in Port Arthur,
we are really focused on trying to get all those contracts
together up front so that we can get them financed and to build
the project.
If we can't get those projects this year or next year
because somebody else has already signed up these 20- to 30-
year contracts, we are out of the market, and the construction
jobs that we've been talking about and the impact to the local
economy goes away, or never develops, I should say.
Mr. Olson. Yes. Thousands and thousands of American jobs.
Mr. Hamm, the people back home in Texas 22 want me to thank you
for your efforts in the Bakken shale play to change the entire
world and America's energy future.
We are now an energy dominant country because of you, Mr.
Hamm, and a Texan named George Mitchell at the Barnett shale
play.
My question is, can you talk about the most important
actions that the Trump administration can take to help you with
oil and gas production?
You mentioned adjusting the CAFE standards, ACC. How about
public lands, capturing other things? What can we do to help
you out and make sure this production continues and doesn't get
stifled by Washington, DC?
Mr. Hamm. Well, we have a friendly audience here that
listened to us today, which is good. We need to do a lot with
Federal lands. They should also participate in this energy
renaissance, and they haven't up to this point.
The bulk of what has been done has been on fee lands,
particularly in the Bakken and Texas, and we need to get it
where permitting could be done rapidly instead of waiting, you
know, 6 months to a year, and so that's one thing we are
working on that.
And we have an audience that's listening and wanting to do
the right thing. So I think we are moving in the right
direction. We just need to keep the ball rolling to get it
corrected while we are doing it.
Mr. Olson. Yes, and thank you for your example of what the
private sector can do. The private sector developed directional
drilling and hydraulic fracturing.
That wasn't something that came from DC. That came from
Harold Hamm and George Mitchell. So thank you for that.
My final question is for you, Dr. Yergin. Let's talk about
CERAWeek. It used to be CERADay, maybe CERAHour in 19, what,
83? You got that ball rolling, and now it rolled into the
energy capital of the entire world--Houston, Texas.
Your testimony mentioned how the revolution in shale oil
and gas--the shale gale--has had enormous impact on our
relationships abroad.
I've seen that firsthand. You mentioned India. I went there
this past March. Their motto is, natural gas for today--
renewables for the future.
But as you mentioned, right now they've signed a contract
for 20 years of liquefied natural gas I think somewhere about
14.4 million metric tons from America to India. That helps them
get their air cleaner. It helps them where they want to go.
Also, as you mentioned, they've got, I heard, 2 million
barrels of American crude oil that they haven't had for almost
50 years. They are taking the wood to OPEC and Russia with our
energy.
And so my questions are can you tell me more details about
what that means for allies? We can help out India. We can help
out South Korea, Japan, even help out China getting their air
cleaner. How can we use this energy renaissance to make the
world better?
Dr. Yergin. I think, first of all, by helping to reduce
conflict.
Secondly, I think it builds confidence. I think it really--
what's happened here in the United States is actually a big
contribution to energy security for the whole world and we
benefit from that.
So I think it radiates out from it, and I think what you
described in India--I've seen it in other countries, too--it
gives a--they have a deeper relationship with the United States
and it connects them more to us, and I think that's very
beneficial for our overall political situation in the world.
Mr. Olson. One example--Mr. Shimkus signed this poster on
the floor last week--this big tanker ship called Independence
was pulled into Lithuania.
Probably 500 people--normal people from Lithuania--were
greeting this tanker ship going, ``Yay! Yay!'' That's because
they know that takes Mr. Putin's weapon away from him forever.
Dr. Yergin. Well, I think it's true that what's happened
with LNG to Europe--and it's not only us but from others--it's
really, in a sense, depoliticized--it turns Europe more into a
gas market and takes out the kind of political implications for
it.
So I think it's something that's very welcome in those
countries--that they know that we are there and we are their
friend.
Mr. Olson. I am out of time.
Just one warning, sir--my Houston Astros will beat the
Boston Red Sox again this year, going for the World Series.
Dr. Yergin. What a forecaster.
[Laughter.]
Mr. Olson. Pursuant to committee rules, I remind Members
that they have 10 business days to submit additional questions
for the record.
I would ask that witnesses submit their answers--their
responses--within 10 business days upon receipt of those
questions.
Without objection, this subcommittee is adjourned.
[Whereupon, at 3:36 p.m., the committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Bobby L. Rush
Thank you, Mr. Chairman, for holding today's hearing.
Mr. Chairman, I have repeatedly signaled my support for an
all-of-the-above energy portfolio, however, I feel this hearing
represents a missed opportunity.
Instead of simply focusing on oil and gas production, I
believe a more worthwhile topic of discussion should be
centered on shifting geopolitics based on the American energy
landscape, as a whole.
Mr. Chairman, I believe there has indeed been some
beneficial impacts of exporting liquified natural gas (LNG) and
crude oil to friends and allies who are now becoming less
reliant on Russian energy supplies.
I also support supplying Caribbean partners, including
Puerto Rico and the U.S. Virgin Islands, with LNG in order to
help them rebuild their energy infrastructures in a more
sustainable and efficient manner.
However, we should be examining the larger picture of our
domestic energy portfolio, including the benefits of investing
in renewable energy and even energy efficiency initiatives.
Mr. Chairman, by taking this holistic approach we are
better able to examine the benefits that clean energy and
energy efficient technologies have on our economy, as well as
their positive impacts related to the serious issue of climate
change.
Mr. Chairman, by most accounts, the country that innovates
and develops the clean energy and energy efficient technologies
of the future will have a leg up in all of the economic
benefits that come with selling these advancements to countries
around the globe.
However, instead of maintaining our global position as the
world leader in clean energy investment, development, and
research, the Trump administration has taken a series of
misguided policy calculations that have ceded this number one
ranking to the Chinese.
Unfortunately, this short-sighted and backwards-looking
perspective is costing our economy jobs and business
opportunities that other countries are gladly claiming.
Mr. Chairman, a smarter discussion of America's energy
future should include a more comprehensive examination of all
of the many resources we possess in the country.
That discussion should include not only the safe and
responsible production of domestic fossil fuel energy sources,
but also all of the economic stimulus and job creation
associated with moving towards cleaner and renewable energy
sources of the future, as well as additional conservation and
energy efficiency measures.
Mr. Chairman, the American people are never content to sit
and back and follow someone else's lead.
No, instead, our constituents expect us to enact policy and
make investments that help solidify our forward-looking
leadership in the world and show others what is possible.
It is high time that, as elected representatives, we
exemplify the foresight and audaciousness that has come to
define who we are as a people, and the energy sector is the
perfect place to make that mark.
So I look forward to hearing from today's witnesses and I
hope that we can have a balanced and honest debate on this
issue.
Thank you, Mr. Chairman, and I yield back the balance of my
time.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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| MEMBERNAME | BIOGUIDEID | GPOID | CHAMBER | PARTY | ROLE | STATE | CONGRESS | AUTHORITYID |
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| Upton, Fred | U000031 | 7991 | H | R | COMMMEMBER | MI | 115 | 1177 |
| DeGette, Diana | D000197 | 7859 | H | D | COMMMEMBER | CO | 115 | 1479 |
| Shimkus, John | S000364 | 7939 | H | R | COMMMEMBER | IL | 115 | 1527 |
| Schakowsky, Janice D. | S001145 | 7929 | H | D | COMMMEMBER | IL | 115 | 1588 |
| Walden, Greg | W000791 | 8115 | H | R | COMMMEMBER | OR | 115 | 1596 |
| Blackburn, Marsha | B001243 | 8154 | H | R | COMMMEMBER | TN | 115 | 1748 |
| Burgess, Michael C. | B001248 | 8182 | H | R | COMMMEMBER | TX | 115 | 1751 |
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| Bilirakis, Gus M. | B001257 | 7881 | H | R | COMMMEMBER | FL | 115 | 1838 |
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| Sarbanes, John P. | S001168 | 7978 | H | D | COMMMEMBER | MD | 115 | 1854 |
| Walberg, Tim | W000798 | 7992 | H | R | COMMMEMBER | MI | 115 | 1855 |
| Clarke, Yvette D. | C001067 | 8072 | H | D | COMMMEMBER | NY | 115 | 1864 |
| Welch, Peter | W000800 | 8204 | H | D | COMMMEMBER | VT | 115 | 1879 |
| Latta, Robert E. | L000566 | 8095 | H | R | COMMMEMBER | OH | 115 | 1885 |
| Scalise, Steve | S001176 | 7959 | H | R | COMMMEMBER | LA | 115 | 1892 |
| Guthrie, Brett | G000558 | 7954 | H | R | COMMMEMBER | KY | 115 | 1922 |
| Harper, Gregg | H001045 | 8021 | H | R | COMMMEMBER | MS | 115 | 1933 |
| Lance, Leonard | L000567 | 8049 | H | R | COMMMEMBER | NJ | 115 | 1936 |
| Lujan, Ben Ray | L000570 | 8058 | H | D | COMMMEMBER | NM | 115 | 1939 |
| Tonko, Paul | T000469 | 8082 | H | D | COMMMEMBER | NY | 115 | 1942 |
| Schrader, Kurt | S001180 | 8118 | H | D | COMMMEMBER | OR | 115 | 1950 |
| Olson, Pete | O000168 | 8178 | H | R | COMMMEMBER | TX | 115 | 1955 |
| Kinzinger, Adam | K000378 | 7931 | H | R | COMMMEMBER | IL | 115 | 2014 |
| Bucshon, Larry | B001275 | 7947 | H | R | COMMMEMBER | IN | 115 | 2018 |
| Long, Billy | L000576 | 8015 | H | R | COMMMEMBER | MO | 115 | 2033 |
| Johnson, Bill | J000292 | 8096 | H | R | COMMMEMBER | OH | 115 | 2046 |
| Duncan, Jeff | D000615 | 8143 | H | R | COMMMEMBER | SC | 115 | 2057 |
| Flores, Bill | F000461 | 8173 | H | R | COMMMEMBER | TX | 115 | 2065 |
| McKinley, David B. | M001180 | 8222 | H | R | COMMMEMBER | WV | 115 | 2074 |
| Cardenas, Tony | C001097 | H | D | COMMMEMBER | CA | 115 | 2107 | |
| Ruiz, Raul | R000599 | H | D | COMMMEMBER | CA | 115 | 2109 | |
| Peters, Scott H. | P000608 | H | D | COMMMEMBER | CA | 115 | 2113 | |
| Brooks, Susan W. | B001284 | H | R | COMMMEMBER | IN | 115 | 2129 | |
| Hudson, Richard | H001067 | H | R | COMMMEMBER | NC | 115 | 2140 | |
| Cramer, Kevin | C001096 | H | R | COMMMEMBER | ND | 115 | 2144 | |
| Collins, Chris | C001092 | H | R | COMMMEMBER | NY | 115 | 2151 | |
| Mullin, Markwayne | M001190 | H | R | COMMMEMBER | OK | 115 | 2156 | |
| Walters, Mimi | W000820 | H | R | COMMMEMBER | CA | 115 | 2232 | |
| Dingell, Debbie | D000624 | H | D | COMMMEMBER | MI | 115 | 2251 | |
| Costello, Ryan A. | C001106 | H | R | COMMMEMBER | PA | 115 | 2266 | |
| Doyle, Michael F. | D000482 | 8132 | H | D | COMMMEMBER | PA | 115 | 316 |
| Engel, Eliot L. | E000179 | 8078 | H | D | COMMMEMBER | NY | 115 | 344 |
| Eshoo, Anna G. | E000215 | 7819 | H | D | COMMMEMBER | CA | 115 | 355 |
| Green, Gene | G000410 | 8185 | H | D | COMMMEMBER | TX | 115 | 462 |
| Barton, Joe | B000213 | 8162 | H | R | COMMMEMBER | TX | 115 | 62 |
| Pallone, Frank, Jr. | P000034 | 8048 | H | D | COMMMEMBER | NJ | 115 | 887 |
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