Summary of Hearings on Energy

11/20/13

  • October 10, 2013: Natural Resources Subcommittee on Energy and Mineral Resources Oversight Hearing on “EPA vs. American Mining Jobs: The Obama Administration’s Regulatory Assault on the Economy”
  • October 01, 2013: Senate Committee on Energay & Natural Resources Hearing on the "Transboundary Hydrocarbon Agreement"
  • July 25, 2013: House Committee on Science, Space, and Technology Subcommittee on Energy Hearing on the “The Future of Coal: Utilizing America’s Abundant Energy Resources”
  • July 24, 2013: House Committee on Science, Space, and Technology Subcommittees on Environment and Energy Hearing on Lessons Learned: EPA's Investigations of Hydraulic Fracturing.
  • July 17, 2013: UPDATE: House Energy and Commerce Subcommittee on Energy & Power Hearing on H.R. 1900, the Natural Gas Pipeline Permitting Reform Act
  • July 16, 2013: Senate Natural Resources and Energy Full Committee Hearing to Explore the Effects of Ongoing Changes in Domestic Oil Production, Refining, and Distribution on U.S. Gasoline and Fuel Prices
  • June 11, 2013: House Committee on Natural Resources on Subcommittee on Energy and Mineral Resources Legislative Hearing on H.R. 2231 Day 2
  • June 6, 2013: House Committee on Natural Resources on Subcommittee on Energy and Mineral Resources Legislative Hearing on H.R. 2231
  • May 7, 2013: House Committee on Science, Space, and Technology Subcommitees on Energy and Environment Hearing on the Keystone XL Pipeline: Examination of Scientific and Environmental Issues
  • March 5, 2013: House Committee on Natural Resources Subcommittee on Energy and Mineral Resources Oversight Hearing on America’s Offshore Energy Resources: Creating Jobs, Securing America, and Lowering Prices
  • February 13, 2013: House Committee on Science, Space, and Technology Subcommittee on Energy Hearing on American Energy Outlook: Technology, Market, and Policy Drivers
  • February 12, 2013: Senate Committee on Energy and Natural Resources Hearing on Opportunities and Challenges for Natural Gas
  • February 5, 2013: House Committee on Energy and Commerce Subcommittee on Energy and Power Hearing on American Energy Security and Innovation: An Assessment of North America’s Energy Resources

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BAR

Natural Resources Subcommittee on Energy and Mineral Resources
Oversight Hearing on “EPA vs. American Mining Jobs: The Obama Administration’s Regulatory Assault on the Economy”
October 10, 2013

Witnesses (with links to opening statements):
Edmund Fogels
Deputy Commissioner, Alaska Department of Natural Resources
State of Alaska Representative, Interstate Mining Compact Commission
Sheldon Maier
President, Fortymile Mining District
Chris Hamilton
Senior Vice President, West Virginia Coal Association
Norman Van Vactor
Chief Executive Officer, Bristol Bay Economic Development Corporation


Committee Members Present (with links to opening statements):
Doug Lamborn (R-CO) Committee Chairman
Rush Holt (D-NJ) Ranking Member
Peter DeFazio (D-OR)
Don Young (R-AK)
John Fleming (R-LA)
Rob Bishop (R-UT)
Kevin Cramer (R-ND)
Dan Benishek (R-MI)
Chris Stewart (R-UT)
Steve Daines (R-MT)
Louie Gohmert (R-TX)

On October 10, the House Subcommittee on Energy and Mineral Resources held a hearing on what Chairman Doug Lamborn (R-CO) called "abusive actions" by the U.S. Environmental Protection Agency (EPA) against U.S. mining operations, including EPA’s watershed assessment of Bristol Bay, Alaska. The goal of the hearing was to offer solutions to create jobs and grow the economy by bolstering America’s mining industry. Witnesses from the mining industry as well as the Bristol Bay Economic Development Corporation provided testimony. Due to the government shutdown, no representatives from the EPA were able to attend.

The subcommittee was divided; with Republican members placing blame on the Obama Administration for creating a “war on coal,” and Democratic members, conversely, focused on the need for increased regulation. Republican members showed their discontent with the increased emission standards on pre-existing and new coal power plants. Opponents of the increased regulation argue that the technology to affordably reduce carbon emissions at coal power plants is not readily available or affordable and will drastically increase the cost of electricity.

Witness Edmund Fogels, Deputy Commissioner of the Alaska Department of Natural Resources, expressed that states should have more jurisdiction in mining regulation and management of natural resources. Fogels added, “The states’ familiarity with the specifics of their respective local mining industries is irreplaceable, and federal agencies must recognize the states’ role in representing their citizens’ economic and environmental interests.”

Members of the subcommittee referred to the Obama Administration’s coal regulation as a “war on coal.” "The Obama Administration’s ‘war on coal’ can be felt throughout the country,” Lamborn stated.  “Now it has seemingly expanded to an all-out ‘war on mining jobs’ threatening workers from Chicken, Alaska, to Superior, Arizona.”  Rush Holt (D-NJ), however, emphasized that under the Obama Administration the mining industry has experienced the largest increase of mining jobs in 15 years.

Van Vactor, CEO of Bristol Bay Economic Development Corporation, noted the importance of the Bristol Bay's salmon fishery and the role the EPA has played to help protect the region. Vactor told the committee that EPA’s watershed assessment has been vital in sustaining the future for the Bristol Bay watershed.

The split committee heard mixed testimony from witnesses; with three of the four witnesses expressing that the EPA’s coal regulations were harming industry growth. One witness representing the Bristol Bay Economic Development Corporation applauded the EPA’s regulations in protecting the watershed and sustaining the diversity of the Bristol Bay. The mixed reviews from witnesses and split committee failed to find solutions on how to bolster the economy and increase mining jobs.

Opening statements, witness testimonies and an archived webcast of the hearing can be found on the Committee’s web site.

-SKF

Senate Committee on Energy & Natural Resources Hearing on the "Transboundary Hydrocarbon Agreement"
October 01, 2013

Witnesses (with links to opening statements):
Witness Panel 1
The Honorable Carlos Pascual
Special Envoy and Coordinator, U.S. Department of State International Energy Affairs
Mr. Tommy P. Beaudreau
Acting Assistant Secretary, U.S. Department of Interior Land and Minerals Management

Witness Panel 2
Ms. Jacqueline Savitz
Vice President, Oceana
Mr. Erik Milito
Director, American Petroleum Institute Upstream and Industry Operations

Committee Members Present (with links to opening statements):
Ron Wyden (D-OR) Committee Chairman
Lisa Murkowski (R-AK) Ranking Member
Mary Landrieu (D-LA)
Joe Manchin (D-WV)

On Tuesday, October 1 the Senate Committee on Energy and Natural Resources held a hearing to discuss proposed energy legislation. The legislation in question would approve an agreement between the U.S. and Mexico to develop oil and gas reserves that cross the maritime boundary in the Gulf of Mexico.

So far, two bills have been proposed:

In June, the House passed H.R. 1613, a bill to amend the Outer Continental Shelf Lands Act to provide for the proper management and oversight of transboundary hydrocarbon reservoirs. Critics of the legislation refer to H.R. 1613 as the “poison bill” because it exempts extraction companies from the Securities and Exchange Commission (SEC) natural resources extraction disclosure rule of the Dodd-Frank Wall Street Reform Law and Consumer Protection Act, which increases accountability and transparency between governments.

The Senate introduced their own version of the bill in April, S. 812, which excludes the SEC provision. Proposed by Committee Chairman Ron Wyden (D-OR) and Ranking Member Lisa Murkowski (R-AK), S. 812 authorizes the Secretary of the Interior to take actions to implement the transboundary hydrocarbon reservoir agreement between the United States of America and Mexico in the Gulf of Mexico. 

Commenting on the Senate legislation, Administration witnesses focused on the economic benefits of the proposed legislation. Tommy Beaudreu, acting Assistant Secretary of U.S. Department of the Interior Land and Minerals Management, said that legal uncertainties regarding oil development in the border region have kept development companies at bay. He then pointed out that only 14 of 379 available blocks on the U.S. side of the boundary have been leased. Carlos Pascual, Special Envoy and Coordinator at the U.S. Department of State International Energy Affairs Program emphasized that this bill would increase North American energy independence and create jobs. Pascual also stated that both the U.S. and Mexico would benefit, and that “the agreement would allow U.S. inspectors to join Mexican inspectors on their rigs and vice versa,” creating uniform safety standards.

Many concerns were raised about the proposed legislation. Jacqueline Savitz, Vice President of Oceana, testified that it is unclear whether Mexico would be held to the same safety standards as the United States, and that the current penalties and safety standards in place are too low. Senator Mary Landrieu (D-LA), however, stated that her support for the agreement depended instead on the regulations surrounding revenue sharing. Sen. Landrieu's Gulf of Mexico Energy Security Act (GOMESA) in 2006 established that oil and gas royalties paid to the federal government for development would be shared with Gulf Coast states.

Senators Wyden and Murkowski stressed the urgency of the bill. Wyden noted that the moratorium on drilling and exploitation in the boundary waters between Mexico and the U.S. known as the Western Gap was originally set to expire in January 2011 as part of the Western Gap Treaty; however, that deadline was extended until January 2014. After January, Mexico’s state owned petroleum company, Pemex, can begin developing oil and gas reservoirs along the border without the regulations set by the U.S.-Mexico hydrocarbon agreement. Officials from both the U.S. and Mexico signed off on the agreement, but it awaits Senate approval. Senator Murkowski also emphasized that U.S. and Mexico relations could be hurt if Congress does not move forward with this bill.

Opening statements, witness testimonies and an archived webcast of the hearing can be found on the Committee’s web site.

-SKF

House Committee on Science, Space, and Technology Subcommittee on Energy Hearing on the “The Future of Coal: Utilizing America’s Abundant Energy Resources”
July 25
, 2013

 

 

Witnesses (with links to opening statements):
Mr. Chris Smith
Acting Assistant Secretary for Fossil Energy, Department of Energy
Mr. Ben Yamagata
Executive Director, Coal Utilization Research Council
Mr. Don Collins
Chief Executive Officer, Western Research Institute
Ms. Judi Greenwald
Vice President, Center for Climate and Energy Solutions

Committee Members Present (with links to opening statements):
Cynthia Lummis (R-WY), Subcommittee Chairman
Eric Swalwell (D-CA), Subcommittee Ranking Member
Eddie Bernice Johnson (D-TX), Full Committee Ranking Member
Randy Neugebauer (R-TX)
Marc Veasey (D-TX)
Thomas Massie (R-KY)
Mark Takano (D-CA)
Randy Weber (R-TX)
Ralph Hall (R-TX)

On June 11, 2013, the House Committee on Science, Space, and Technology Subcommittee on Energy held a hearing to discuss the future of coal in the United States. The hearing focused on the increasingly strict regulation of coal and the state of technologies for carbon capture, enhanced oil recovery, and high efficiency coal burning. 

In her opening remarks, Subcommittee Chairwoman Cynthia Lummis (R-WY) criticized the President’s policies on coal, calling them a “hostile attack” on the coal industry. She emphasized that, in addition to effectively prohibiting the development of new power plants, EPA's new power plant regulations have been cited as a contributing factor in the closing of “288” coal plants. Additionally, Lummis suggested that efforts to regulate domestic coal are negligible on a global scale, explaining “China continues to build a coal plant a week and global coal demand is projected to continue to grow significantly over the next half century, regardless of U.S. domestic policy.”

In their testimonies, Subcommittee Ranking Member Eric Swalwell (D-CA) and Full Committee Ranking Member Eddie Bernice Johnson (D-TX) emphasized their interest in clean coal technologies, such as enhanced oil recovery and carbon capture and storage, as the US begins to move away from traditional energy sources and toward cleaner energies. Swalwell explained that new policies should not be seen as an attack on coal, but rather as a retreat from coal as the country moves toward cleaner energy resources.

Witness testimony focused on carbon capture utilization and storage and enhanced oil recovery as the primary use of captured carbon. Judi Greenwald, Vice President of the Center for Climate and Energy Solutions, explained that enhanced oil recovery “could double or triple U.S. oil reserves and store 10 to 20 billion tons of CO2,” offering an opportunity to “transform an environmental problem into an energy solution.” Chris Smith, acting Assistant Secretary for Fossil Energy at the Department of Energy (DOE), mentioned the DOE Draft Advanced Fossil Energy Solicitation, which provides $8 billion for projects that focus on advanced carbon capture and storage, improved energy efficiency of coal, low-carbon power systems, and advanced research development of fossil fuel technologies.

Questioning focused on pending EPA regulations, climate change, and new coal technologies. Thomas Massie (R-KY) and Randy Neugebauer (R-TX) asked about pending EPA emission regulations, which may require new coal power plants to utilize carbon capture technologies that are not currently available on an industrial level. Neugebauer asked Smith about the status of this technology and what will happen if the technology does not become available. Smith responded that the technology for carbon capture is fairly well understood, and that DOE is working to bring costs down for commercial release. The DOE, Smith said, is also involved in the pending EPA regulations, and is working with EPA and industry to shape the regulations.

Many questions revolved around climate change, the President’s “all-of-the above” energy strategy, and the “war on coal.” All witnesses seemed to agree that human-caused greenhouse gas emissions contribute to climate change, although Don Collins, the Chief Executive Officer at Western Research Institute, stressed that there are many natural cycles which also contribute to climate change. Smith and Greenwald agreed that the President is working toward an “all-of-the-above” energy strategy, and the “war on coal” is, if anything, supporting the coal community by creating the technology necessary for coal to keep up with regulations.

The last area of questioning revolved around coal technology that will improve the efficient use of coal. Collins spoke about two developing technologies, water extraction and a bacteria process, which would both improve energy utilization from coal. Water extraction involves recovering water produced through the removal of moisture from low-grade coal; reuse of this water could cut water consumption at power plants by up to 60 percent. The bacteria process that consumes CO2 and produces biocrude oil, turns the carbon in coal into an additional economic resource. Collins said that since we live in a carbon-rich world we should explore different ways to utilize this resource, instead of focusing on carbon-free technologies.

Opening statements and witness testimony, as well as a video archive of the entire hearing, is available from the committee web site.

-CDK

House Committee on Science, Space, and Technology Subcommittees on Environment and Energy Hearing on Lessons Learned: EPA's Investigations of Hydraulic Fracturing
July 24
, 2013

Witnesses (with links to opening statements):
Dr. Fred Hauchman
Director, Office of Science Policy, Office of Research and Development, Environmental Protection Agency
Dr. David A. Dzombak
Chair, Environmental Protection Agency Science Advisory Board, Hydraulic Fracturing Research Advisory Panel
Mr. John Rogers
Associate Director, Oil ad Gas, Division of Oil, Gas, and Mining, Utah Department of Natural Resources
Dr. Brian Rahm
New York Water Resources Institute, Cornell University

Committee Members Present (with links to opening statements):
Chris Stewart (R-UT), Environment Subcommittee Chair
Suzanne Bonamici (D-OR), Environment Subcommittee Ranking Member
Cynthia M. Lummis (R-WY), Energy Subcommittee Chair
Eric Swalwell (D-CA), Energy Subcommittee Ranking Member
Lamar Smith (R-TX), Full Committee Chair
Eddie Bernice Johnson (D-TX), Full Committee Ranking Member
Mark A. Takano (D-CA)
Randy Weber (R-TX)
Dana Rohrabacher (R-CA)
Donna Edwards (D-MD)
Randy Hultgren (R-IL)
Marc Veasey (D-TX)
Ralph M. Hall (R-TX)

On July 24, 2013, the House Committee on Science, Space, and Technology Subcommittees on Environment and Energy held a hearing on Lessons Learned: EPA’s Investigations of Hydraulic Fracturing.

The focus of the hearing was EPA’s ongoing study of the potential impacts of hydraulic fracturing on drinking water resources, which is required by the fiscal year 2010 Department of the Interior, Environment, and Related Agencies Appropriations Act (P.L. 111-88). A final study plan was released in November 2011, and a progress report was released in December 2012. The final report will be released in late 2014 for peer review and public comment.

In their opening statements, Representatives Chris Stewart (R-UT), Cynthia Lummis (R-WY), and Lamar Smith (R-TX) expressed concern with the EPA’s investigations of the impacts of hydraulic fracturing on groundwater in Parker County, Texas; Pavillion, Wyoming; and Dimock, Pennsylvania. The investigations were initiated in response to concerns that hydraulic fracturing had contaminated groundwater in these areas, but ended with the EPA providing no evidence of a link between hydraulic fracturing and groundwater contamination. Stewart argued that these investigations were characterized by a “rush to judgment” on the part of the EPA, and worried that preconceived notions about the impacts of hydraulic fracturing on groundwater would skew the agency’s ongoing study.

Opening statements from Suzanne Bonamici (D-OR), Eric Swalwell (D-CA), and Eddie Bernice Johnson (D-TX) emphasized the importance of the EPA study to ensure that hydraulic fracturing is done in a manner that safeguards public health. “We have to be careful that we extract this resource safely, without unintended, serious consequences to either our health or the environment,” Swalwell stated.

Witness testimony focused on the ongoing EPA study, its peer review by the Hydraulic Fracturing Research Advisory Panel, and how scientific information can be used in designing effective hydraulic fracturing regulations.

Many representatives raised questions about the scope of the EPA study. Randy Hultgren (R-IL) asked why the report will not include an overview of current state rules and regulations on hydraulic fracturing, and Mark Takano (D-CA) queried whether the report will consider induced seismicity from wastewater injection. Fred Hauchman of the EPA’s Office of Research and Development responded that neither of these topics are within the scope of the report, and added that the EPA is coordinating with the U.S. Geological Survey on the induced seismicity issue.

Questions from Swalwell, Bonamici, and Marc Veasey (D-TX) centered on the EPA’s efforts to engage stakeholders and collect data. Hauchman stated that the EPA has reached out to stakeholders in academia, industry, government, and non-governmental organizations via roundtables and workshops. He added that the EPA is collecting data from many of these sources and is carefully evaluating the data to ensure that they are scientifically sound.

Stewart and Takano inquired about how the study will assess risk. Takano asked if enough data are available for a quantitative risk assessment, and Stewart worried that without such an assessment the EPA would treat all risks equally, regardless of their likelihood. Hauchman stated that a quantitative risk assessment will not be included and opined that there are not enough peer-reviewed data for such an assessment to be made. However, Hauchman and David Dzombak, Chair of the EPA’s Hydraulic Fracturing Research Advisory Panel, assured the committee that the study’s findings would be presented in context, using a risk assessment framework that includes sources, transport, and potential impacts.

Representatives Stewart, Lummis, and Hall questioned whether the EPA could be trusted in this study after the Parker County, Pavillion, and Dimock investigations. Hauchman and Brian Rahm of Cornell University’s New York Water Resources Institute clarified that these prior investigations had a limited scope and were designed to address specific, localized complaints. In contrast, the current EPA study is designed to broadly investigate the impacts of hydraulic fracturing on groundwater, and Hauchman assured the committee that the study will be done with integrity, transparency, and rigorous peer review.

Some representatives suggested that hydraulic fracturing should not be regulated at the federal level, whereas others were interested in exploring potential benefits of federal or regional regulatory partnerships. Randy Weber (R-TX) argued that states effectively regulate hydraulic fracturing and that federal regulations would have negative economic impacts. Dana Rohrabacher (R-CA) cautioned that the real motivation for regulating hydraulic fracturing is to force Americans off fossil fuels due to climate change concerns. Lummis added that federal regulatory action should at least be postponed until the EPA study is released in 2014.

Bonamici asked in what areas it might be justified for the EPA to require minimum standards for hydraulic fracturing, and Rahm responded that issues such as chemical disclosure, well casing and cementing, and wastewater treatment could be candidates for federal standards. Swalwell and Donna Edwards (D-MD) asked about the usefulness of regional policy collaborations. Rahm responded that the Susquehanna River Basin Commission is a good example of a successful collaboration between state and federal governments and local stakeholders, and added that additional regional efforts would likely be valuable.

Opening statements and witness testimony, as well as an archived video of the hearing, are available on the committee website.

-BLH

*UPDATE* House Energy and Commerce Subcommittee on Energy & Power Hearing on H.R. 1900, the Natural Gas Pipeline Permitting Reform Act
July 17
, 2013

Witnesses (with links to opening statements):
Panel I
The Honorable Philip D. Moeller
Commissioner, Federal Energy Regulatory Commission (FERC)

Panel II
David Markarian
Vice President, Governmental Affairs, NextEra Energy, Inc.
Maya K. van Rossum
The Delaware Riverkeeper, Delaware Riverkeeper Network
Rick Kessler
President, Board of Directors, Pipeline Safety Trust
E. Alex Paris III
Distribution Contractors Association
Donald F. Santa, Jr.
President and CEO, INGA

Committee Members Present (with links to opening statements):
Ed Whitfield (R-KY), Chairman
Fred Upton (R-MI), Full Committee Chairman
Jerry McNerney (D-CA)
Lee Terry (R-NE)
Paul Tonko (D-NY)
Bob Latta (R-OH)
Gene Green (D-TX)
John D. Dingell (D-MI)
Mike Pompeo (R-KS)
Joe Barton (R-TX)
Kathy Castor (D-FL)
Henry A. Waxman (D-CA)
Morgan Griffith (R-VA)
Bill Cassidy (R-LA)

Update: H.R. 1900 was approved by the House Energy and Commerce full committee on Wednesay, July 19, 2013, with a vote of 28-14. A proposed amendment from Representative Jerry McNerney (D-CA), which would have prevented the Federal Energy Regulatory Committee from accepting applications that did not include the use of available technology or practices to minimize methane admissions, was defeated by the committee. The bill now moves to the full House, although there is no indication of a timetable for a vote.

On July 9, 2013 the House Energy & Commerce Subcommittee on Energy and Power held a legislative hearing on H.R. 1900, the Natural Gas Pipeline Permitting Reform Act. H.R. 1900 was introduced by Representative Mike Pompeo (R-KS), and would amend section 7 of the Natural Gas Act by adding three new provisions. The provisions impose a strict 12-month deadline for the Federal Energy Regulatory Commission (FERC) to approve or deny a pipeline certificate request, codify the 90-day regulatory deadline for all relevant agencies to approve or deny a permit application once FERC completes the final environmental document relating to the project, and requires a permit become effective if any of the relevant agencies do not respond by the deadline.

Chairman Whitfield (R-KY) and Representative Pompeo spoke out in support of the bill. They cited the growing need for natural gas pipeline infrastructure and underlined the need for “the law to keep up with technology.” Whitfield went on to say that the pipeline projects presented great opportunities, and that these opportunities could be stalled or lost for good if the “red tape from the past” was not eliminated. According to Pompeo, delays of 90 days or more have increased by 28% since 2005, and delays of 180 days or more have increased by 20%.

The Honorable Phillip D. Moeller, the current commissioner of FERC, testified that FERC could meet the committee’s 12 month deadline, and emphasized the need for high-level agency oversight if the bill were to become law. Questions for Moeller focused on whether we need to improve and streamline the permitting process, and whether the bill would actually improve the permitting process. To which Moeller replied that the process should be streamlined, given that the need for pipelines will probably increase in the near future.

Questions from the other members focused on impact of the bill itself. Representatives Morgan Griffith (R-VA) and Jerry McNerney (D-CA) were concerned that the bill allowed for incomplete applications to be submitted, and that the clock would begin ticking on applications as soon as FERC received an application. Henry Waxman (D-CA), Kathy Castor (D-FL), John Dingell (D-MI), and Gene Green (D-TX) doubted the necessity of the bill, indicating that 90% of permit applications are currently approved or denied within a 12 month period anyway. Representatives Waxman, Castor, and Dingell, as well as Barton and Pompeo asked Moeller if he believed that the bill would streamline the permit process, to which Mr. Moeller replied that it was certainly a possibility, but that it would definitely “add a layer of responsibility to the process.”

The second panel was divided in their support of the bill. Maya K. van Rossum and Ryan Kessler opposed the bill, while David Markarian, E. Alex Paris III, and Donald Santa, Jr. supported it. Kessler and van Rossum argued that it would adversely affect the ability of pipeline projects to comply with environmental and safety regulations, thereby increasing future risks to public and environmental health. Karkarian, Paris, and Santa, said we need to improve the permitting process to meet the growing demand for pipeline infrastructure, and to address the detrimental effects caused by delays.

Questions from the members again focused on whether the proposed bill would streamline the permitting process or whether it would have little, or even negative, impact. Representatives Waxman, McNerney, and Paul Tonko (D-NY), were concerned about the lack of distinction between small and complex projects, and consulted the panel for their opinion on the matter. Kessler and van Rossum both felt that a “one size fits all” piece of legislation would lead to increased risk to environmental and public health. The same committee members expressed concern that the legislation wouldn’t change much, and Kessler and van Rossum agreed. Representatives Pompeo and Whitfield asked the panel about the need for a streamlined permitting process for the future, to which Markarian, Paris, and Santa, responded in support, citing the increased need for pipeline infrastructure in the future, and the need to plan for “20-25 years down the road.”

Opening statements and witness testimony, as well as an archived video of the hearing, are available on the Committee on Natural Resources website.
 

-JTK

Senate Natural Resources and Energy Full Committee Hearing to Explore the Effects of Ongoing Changes in Domestic Oil Production, Refining, and Distribution on U.S. Gasoline and Fuel Prices
July 16
, 2013

Witnesses (with links to opening statements):
The Honorable Adam Sieminski
Administrator, Energy Information Administration (EIA)
Jeff Hume
Vice Chairman for Strategic Growth Initiatives, Continental Resources, Inc.
Bill Klesse
Chairman and Chief Executive Officer, Valero Energy Corporation
Dan Gilligan
President, The Petroleum Marketers Association of America
Chris Plaushin
Director of Federal Relations, AAA
Faisel Khan
Managing Director, Integrated Oil & Gas Research, Citigroup Inc.

Committee Members Present (with links to opening statements):
Ron Wyden (D-OR), Chairman
Lisa Murkowski (R-AK), Ranking Member
Maria Cantwell (D-WA)
John Barasso (R-WY)
Debbie Stabenow (D-MI)
Al Franken (D-MN)
Tammy Baldwin (D-WI)

On July 16, 2013, the Senate Energy and Natural Resources Committee held a full committee hearing to explore the effects of ongoing changes in domestic oil production, refining, and distribution on U.S. gasoline and fuel prices. Testimony was received from a panel of witnesses comprised of representatives from oil producers and  refineries, marketers and consumers, and independent industry analysts. The purpose of the hearing was to examine how the current boom in domestic oil production, as well as the changes in the refining industry and distribution system, has affected or could affect gasoline and fuel prices.

In his opening statement, Chairman Ron Wyden (D-OR) addressed the lack of benefits seen by consumers from the recent explosion in domestic oil production and the availability of “new lower cost sources of crude oil.” Citing figures showing that the U.S. has gone from importing 60% of its crude oil in 2007 to 40% in 2013 – the lowest level since 1991 – and that the U.S. has transformed from a net importer of petroleum products to a net exporter, Chairman Wyden wondered why prices are still so high in the U.S. when “there is so much extra gas and diesel fuel that it can actually be exported.”

Ranking Member Lisa Murkowski expressed the need for continued growth in domestic oil production, and for stabilizing gas and fuel prices by permitting oil production on federal lands – such as those in her home state of Alaska – and by approving necessary projects like the Keystone XL Pipeline.

Testimony from the witnesses focused on the current state of domestic production, the refining industry, and the distribution system. Adam Siemenski, an administrator for the Energy Information Administration (EIA), discussed the increase in domestic production in the last three years, the largest since 1992, as well as the complexity of the network (e.g. pipelines) linking regions of the U.S., and the challenges facing the transportation of domestic crude. Jeff Hume and Dan Gilligan discussed current practices that have a negative impact on the industry, such as export restrictions and credit card fees at the pump. Bill Klesse and Chris Paushin addressed pricing more directly, stating that prices at the pump are set by station owners, not refiners, and that the price of oil is dependent on global market conditions, not just domestic production. Finally, Faisel Khan addressed the future of oil production, indicating that he believed the U.S. will achieve energy independence by the end of the decade, and that industry seems to work regardless of regulatory hurdles, such as pipeline permitting, but at a greater cost of doing business and potentially greater risk.

Questions from the members focused on why the consumer isn’t feeling positive effects from this increase in domestic oil production, as well as transparency in the refining process and how prices are set. Chairman Wyden cited studies indicating that oil makes up 67% of the cost of gas and that refining margins are the highest in years. Subsequently, Wyden wondered why consumers have not seen the benefits. Siemenski noted this was due to the fact that “product prices are set in a global market” and that, as a result, an increase in domestic resources will be reflected in refining margins rather than in prices at the pump.

Senators Tammy Baldwin (D-WI) and Maria Cantwell (D-WA) questioned the panel on the impacts of refinery outages on gas prices: citing an incidence in California where a refinery outage led to a 50 cent price increase within the span of a week. They expressed concern over the opaque nature of gas pricing, to which Klesse responded that supply and demand is followed, but that it is based on the expected duration of outages.

Chairman Wyden and Ranking Member Murkowski echoed calls for greater transparency in the refining and pricing process, which were supported by Siemenski. Chairman Wyden concluded the hearing by promising to take a thorough, non-partisan look at pricing, the refining process, and the ultimate impact on the consumer, indicating that both sides of the aisle were committed to making sure consumers see the benefits of the increase in domestic oil production.

Opening statements and witness testimony, as well as an archived video of the hearing, are available on the Committee on Energy and Natural Resources website

-JTK

House Committee on Natural Resources on Subcommittee on Energy and Mineral Resources Legislative Hearing on H.R. 2231 Day 2
June 11
, 2013

Witnesses (with links to opening statements):
Panel 2
Dr. Donald Boesch
President, University of MD Center for Environmental Science, Former Commissioner, National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling
Mr. Michael LeVine
Pacific Senior Counsel, OCEANA
Mr. Sean Dixon
Coastal Policy Attorney, Clean Ocean Action
Ms. Ryan Alexander
President, Taxpayers for Common Sense

Committee Members Present:
Doc Hastings (R-WA), Full Committee Chairman
Alan Lowenthal (D-CA)
Joe Garcia (D-FL)
Steven Horsford (D-NV)

The House Committee on Natural Resources Subcommittee on Energy and Mineral Resources held a follow-up hearing on June 11, 2013 to consider the Offshore Energy and Jobs Act (H.R. 2231). If passed, the act would increase energy exploration and production on the U.S. Outer Continental Shelf (OCS). The second day of the hearing, requested by members of the minority party in response to what they deemed a hastily put together first hearing, featured different witnesses regarding the current state of OCS energy production.

Donald Boesch, President of the University of Maryland Center for Environmental Science and former Commissioner for the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, testified that although some improvements regarding safe offshore drilling have been made, many unaddressed problems still remain. Boesch identified several problems including the fact that the recommendations of the commission, available in their final report, have not been codified in legislation, and funding issues regarding the regulation of the oil and gas industry. Boesch went on to say that “the relatively modest liability cap and financial responsibility requirements provide little incentive for oil companies to improve safety practices.”

Michael LeVine, the Pacific Senior Counsel for Oceana, and Sean Dixon, the Coastal Policy Attorney for Clean Ocean Action, testified that the Offshore Energy and Jobs Act would prioritize oil and gas above other industries that rely on the ocean, and put coastal jobs and economies at risk. LeVine explained that more detailed scientific research is required in order to understand the risks involved in drilling offshore, especially in the case of the Arctic Ocean where changing conditions make it difficult to predict potential problems. LeVine also points out that “leases currently owned in the Chukchi and Beaufort seas were purchased more than five years ago,” and “companies have yet to complete any exploration wells on those leases.”

During questioning, Alan Lowenthal (D-CA) asked if a single Environmental Impact Statement (EIS), which the bill currently requires, is sufficient to understand the risks involved in opening the OCS for leasing. LeVine responded that one EIS is insufficient and may not account for changes in geology, ocean chemistry, and other factors.

Joe Garcia (D-FL) questioned the witnesses as to why there are many already-leased areas that remain undrilled. LeVine responded that large tracts of currently leased land remain undrilled in the Arctic Ocean due to challenges such as cold weather, ice sheets, and the lack of a proven method to respond to oil spills.

In addition to the hearings, the House Natural Resources Committee held a full committee markup of the bill on June 12, 2013, in which the committee approved an en bloc amendment proposed by Doug Lamborn (R-CO). Lamborn’s amendment, which was mostly technical and did not alter the intent of the bill, directed the President to conduct new OCS sales in Virginia, South Carolina, and California. H.R. 2231 was adopted and reported to the House of Representatives for a vote.

Witness testimony, as well as a video archive of the entire hearing, are available from the committee website.

-CDK

House Committee on Natural Resources on Subcommittee on Energy and Mineral Resources Legislative Hearing on H.R. 2231
June 6
, 2013

Witnesses:
Dr. John Felmy
Director, Chief Economist API
Mr. Richie Miller
President Spectrum Geo Inc.
Mr. Christopher Guith
Vice President for Policy Institute for 21st Century Energy U.S. Chamber of Commerce
Mr. Michael Conathan
Director of Ocean Policy Center for American Progress Action Fund

Committee Members Present:
Doug Lamborn (R-CO), Subcommittee Chairman
Rush Holt (D-NJ), Subcommittee Ranking Member
Doc Hastings (R-WA), Full Committee Chairman
Peter DeFazio (D-OR)
John Fleming (R-LA)
Alan Lowenthal (D-CA)
Jeff Duncan (R-SC)
Joe Garcia (D-FL)
Rob Wittman (R-VA)
Kevin Cramer (R-ND)

On June 6, 2013, the House Committee on Natural Resources Subcommittee on Energy and Mineral Resources held a legislative hearing to amend the Offshore Energy and Jobs Act (H.R. 2231) to increase energy exploration and production on Outer Continental Shelf (OCS) land in the U.S. that is currently unavailable for exploration or leasing.

In his opening statement, Subcommittee Chairman Doug Lamborn (R-CO) explained that the Obama Administration has closed off production of 85 percent of OCS land, and allowed no new development on the OCS in their proposed offshore leasing plan for 2012-2017 (H.R. 6082). Lamborn said that as sale and production of crude oil on offshore federal lands is decreasing “…we must turn the corner to keep the United States competitive, especially as other countries begin to develop their own deep water resources.”

Arguing against the Offshore Energy and Jobs Act, Ranking Member Rush Holt (D-NJ) explained in his opening statement that before offshore leasing is available further studies, such as seismic surveys, should be done in order to confirm older data. Holt also argued that while production of federal lands is decreasing, oil production in the U.S. is at a 20-year high and natural gas is at an all time high. As such, leasing new OCS land is unnecessary at this time. Holt also claimed that this bill hearing was hastily arranged and called before a bill was presented, preventing the Department of the Interior from providing a witness.

Full Committee Chairman Doc Hastings (R-WA) addressed some of Holt’s concerns in his opening statement, saying that the current increase in production does not mean that we do not need to expand production on federal lands. According to Hastings “[t]his viewpoint is not only wrong, but incredibly shortsighted,” and that this act would provide increased jobs, revenue, and economic security.

John Felmy, the director and chief economist of American Petroleum Institute (API), emphasized in his testimony that there are an estimated “88.6 billion barrels of oil and 398.4 trillion cubic feet of gas” on land that remains unavailable for leasing due to federal restrictions. Furthermore, Felmy noted that these numbers are based on 30-year-old data, and that new surveys would likely increase estimates substantially.

In his testimony, Richie Miller, president of Spectrum Geo Inc, explained that OCS land should be made available now because the exploration process, which includes performing surveys and interpreting data, can take upwards of 20 years to complete. H.R. 2231 would provide the incentives, Miller explained, to help increase OCS exploration that otherwise would not have happened without an economic incentive.

Michael Conathan, the director of the Ocean Policy Center for the American Progress Action Fund, argued in his testimony that exploration on OCS land would damage current industries that rely on the OCS, such as fisheries, tourism, and recreation, which “accounted for 2.7 million jobs and contributed more than $250 billion to our gross domestic product.” Conathan said that exploration in the OCS would prioritize one industry – oil and gas – at the expense of the others. Conathan also said that while oil is booming in the Gulf of Mexico and onshore, we need to begin to work toward cleaner energy sources like offshore wind, which has already shown success in countries like Denmark and Germany.

During questions, members of Congress asked the witnesses if the U.S. could remain environmentally safe while developing land on the OCS. Felmy testified that this is doable, and that industry has been greatly improving technology and practices that led to environmentally cleaner drilling. Conathan argued that we have not yet codified reforms in the aftermath of the Deepwater Horizon oil spill, which released 4.1 million barrels of oil into the Gulf of Mexico over a three month period in 2010, and until we do we cannot risk exposing new areas to these hazards.  

Peter DeFazio (D-OR) asked why we need to develop new areas of the OCS when “85% of acreage under lease is not producing,” and areas in the Gulf of Mexico under lease have an estimated “17.9 billion barrels of oil and 49.7 cubic feet of natural gas.” Felmy responded that it is because of the time it takes to fully develop these prospects. Joe Garcia (D-FL) argued that since the amount of imported crude is at a low and continuing to decrease, we do not need to open up new OCS land. Christopher Guith, the Vice President for Policy Institute for the 21st Century Energy U.S. Chamber of Commerce, responded that although imports are low, we are still importing nearly 50 percent of crude oil, and Felmy, Guith, and Miller all stressed the time it takes to develop a prospect.

Opening statements and witness testimony, as well as a video archive of the entire hearing, are available from the committee website.

-CDK

House Committee on Science, Space, and Technology Subcommittees on Energy and Environment Hearing on the Keystone XL Pipeline: Examination of Scientific and Environmental Issues
May 7
, 2013

Witnesses:
Mr. Lynn Helms
Director, Department of Mineral Resources, North Dakota Industrial Commission
Mr. Brigham A. McCown
Principal and Managing Director, United Transportation Advisors LLC
Mr. Anthony Swift
Attorney, International Program, Natural Resources Defense Council
Mr. Paul “Chip” Knappenberger
Assistant Director, Center for the Study of Science, Cato Institute

Committee Members Present:
Lamar Smith (R-TX), Chairman
Chris Stewart (R-UT)
Suzanne Bonamici (D-OR)
Eric Swalwell (D-CA)
Cynthia M. Lummis (R-WY)
Dana Rohrabacher (R-CA)
Mark A. Takano (D-CA)
Randy Weber (R-TX)
Julia Brownley (D-CA)
Kevin Cramer (R-ND)
Marc Veasy (D-TX)


On May 7, 2013, the House Science, Space and Technology Subcommittees on Energy and Environment held a joint hearing on the Keystone XL Pipeline. The hearing, held in anticipation of an Administration decision on the future of the proposed pipeline, focused on how Keystone XL would or would not bolster the economy, affect the environment, and increase energy security in the United States.

According to a report by the U.S. State Department, the proposed Keystone XL pipeline would stretch from Alberta, Canada and the Bakken Shale Formation in North Dakota to refineries along the Gulf Coast. It would allow delivery of up to 830,000 barrels of crude oil per day.

Concerns over the strength of the economy and health of the environment dominated much of the conversation at the hearing. In his opening remarks, Chris Stewart (R-UT), Chair of the Subcommittee on Environment, praised the economic benefits associated with the pipeline. Stewart insisted construction would add, “42,100 average annual jobs across the U.S.” which could translate into “approximately $2.05 billion in earnings.” Alternatively, Ranking Member of the Subcommittee on Environment, Suzanne Bonamici (D-OR) and Julia Brownley (D-CA) countered that the pipeline would create only temporary jobs during construction and, in the end, contribute only “35 permanent jobs.”

Witness testimony addressed many of the environmental concerns posed by lawmakers. Lynn Helms, Director of the Department of Mineral Resources for the North Dakota Industrial Commission, explained in his testimony that the construction of the pipeline would, contrary to opponents’ beliefs, benefit the environment. Helms explained that the construction of the pipeline in North Dakota would cause “300-500 truck-loads per day” of Bakken crude oil to be taken off the roads, as well as “1-2 [fewer] trains per day leaving North Dakota.” This decrease in traditional transportation methods for heavy crude from the Bakken Formation would result in “450,000-950,000 Kg/day [fewer] greenhouse gas emissions in North Dakota, as well as significant decreases in dust and 60-80 fewer spills per year.”

Brigham A. McCown, Principal and Managing Director for the United Transportation Advisors LLC, addressed safety concerns over the pipeline in his testimony. McCown noted that based on total accidents per billion ton-miles shipped, an accident is “530% more likely to occur when shipped by rail, 1330% more likely when shipped by vessel, and 49,590% more likely when shipped by truck” than when transported by pipeline.

Members peppered the witnesses with questions regarding the extraction of the crude oil without the creation of the pipeline. Chairman Stewart questioned the validity of statements citing that some environmentalists may oppose the pipeline because they believe the oil may otherwise remain in the ground. Helms defied that argument, explaining that 71% of Bakken oil is already transported by rail, and that less safe innovations by industry will most likely continue to extract all the resources they can. McCown continued that other pipelines, barges, and rail are already carrying the oil to market.  

Proponents of the pipeline further nullified safety and environmental concerns over the creation of the pipeline. They cited a draft of the Supplementary Environmental Impact Statement (SEIS) put forth by the U.S. State Department, which concluded that spills associated with the pipeline are “expected to be rare and relatively small,” especially when coupled with industry standards and practices, including the 57 project-specific special conditions developed by the Pipeline and Hazard Materials Safety Administration (PHMSA). The report also determined that “climate conditions during the 1- to 2-year construction period would not differ substantially from current conditions.”

However, many members remained hesitant about the environmental impacts of the pipeline, including Reps. Bonimici, Brownley, Eric Swalwell (D-CA), Mark Takano (D-CA), and Marc Veasy (D-TX). Bonamici urged members to consider these impacts, and to reconsider the sense in investing “new infrastructure in an old energy source.” Brownley echoed the Ranking Member’s dissents, arguing that more effort should be put into creating a robust alternative energy economy that could create more long-term jobs.

Ultimately, the hearing showed signs of softening and moderation from both sides of the aisle: Lamar Smith (R-TX) recognized the concerns of pipeline opponents in his opening remarks, and Takano noted that it would be better for the crude to be refined in the U.S. where environmental regulations are stricter than in Canada or other competing countries. Swalwell, Ranking Member of the Subcommittee on Energy, agreed that it is necessary to weigh the environmental impacts against the economic growth, but said “if we can make [the pipeline] safe, we should make it happen.”  

-ARS

House Committee on Natural Resources Subcommittee on Energy and Mineral Resources Oversight Hearing on America’s Offshore Energy Resources: Creating Jobs, Securing America, and Lowering Prices
March
5, 2013

Witnesses
Cory Kief
Director of Business Development, Crosby Tugs, LLC
Chett Chiasson
Executive Director, Greater Lafourche Port Commission
Brian Kroll
Senior Economist, Virginia Economic Development Partnership
Bob Mitchell
Chief Executive Officer, Atlantic Wind Connection

Committee Members
Doug Lamborn (R-CO), Subcommittee Chairman
Doc Hastings (R-WA), Full Committee Chairman
Rush Holt (D-NJ), Subcommittee Ranking Member
Rob Wittman (R-VA)
Steven Horsford (D-NV)
Louie Gohmert (R-TX)
Jared Huffman (D-CA)
Jeff Duncan (R-SC)
Alan Lowenthal (D-CA)
Kevin Cramer (R-ND)
Matthew Cartwright (D-PA)
Jon Runyan (R-NJ)
Joe Garcia (D-FL)
John Fleming (R-LA)
Peter DeFazio (D-OR)

On March 5, 2013, the House Committee on Natural Resources Subcommittee on Energy and Mineral Resources Oversight held a hearing to receive testimony assessing America’s offshore oil, gas, and wind energy resources. The hearing discussion focused primarily on the potential economic benefits of offshore energy development.

In his opening statement, Subcommittee Chairman Doug Lamborn (R-CO) cited a study by the Institute for Energy Research that found that opening currently closed areas onshore and offshore to oil and gas development could generate 552,000 jobs within seven years and another two million per year for 30 years. The report also projected an increase in GDP of $14.4 trillion, in federal tax revenue of $2.7 trillion, and in state and local tax revenues of $1.1 trillion over the next 37 years. He discussed benefits of offshore energy development such as economic growth in communities throughout the nation, job creation, and possible lowering of energy prices. Lamborn concluded stating that Congress “cannot stand by as energy production on state and private lands carries the day while production on federal lands withers – this is especially true of our nation's Outer Continental Shelf – where the Administration has left 85 percent closed for the next half decade.”

Ranking Member Rush Holt (D-NJ) argued in his opening statement that “offshore wind…is the new frontier in energy production,” noting that the nation installed over 13,000 megawatts (MW) of wind capacity in 2012, “more than any other generating source, including natural gas.” He outlined improvements in oil and gas development including the 20 year high in domestic oil production and record levels of domestic gas production. He noted that the U.S. is projected to surpass Russia and Saudi Arabia in oil production in three to four years, 2012 oil import levels were the lowest in 20 years, and foreign oil dependence is down to 40 percent. He stated, “Even with geology dictating that the vast majority of shale oil development is happening on private lands, production on federal lands is also higher today than at the end of the previous administration” and 2012 saw more offshore oil produced than 2008. Holt expressed concern that the sequester and Congress’s inability to balance the budget could “threaten” these offshore energy resources by “hamper[ing] the [Department of the Interior’s] ability to issue permits, to plan new projects, to conduct environmental reviews, and to lease new federal lands.”

Full Committee Chairman Doc Hasting also emphasized the booming production on state and private lands in his opening statement. He credited the “paralyzing web of bureaucratic red tape” for hindering development on federal lands as well as President Obama’s policies that “locked-up 85 percent of our offshore areas to new energy production.” Hastings cited a different report projecting that opening offshore areas to development would create 1.2 million jobs and increase GDP by $8 trillion. He noted that “energy production on federal lands is the second highest source of revenue to the Treasury, bringing in an estimated $16 billion in 2012” and questioned Obama’s policies in lieu of the sequestration, “budget crisis,” and debt. He stated, “If reducing the debt is a priority; if growing our economy is a priority; if creating new American jobs is a priority; and if lowering gasoline and energy prices is a priority -then we need to make increased American energy production a priority.”

Cory Kief, director of business development at Crosby Tugs LLC, testified on “how important offshore drilling, exploration, and production are to [Crosby Tugs], and how it supports our operations.” He stated that his company focuses on “shallow water rigs” and “the more rigs that are working, the better it is for us and our industry.” Additionally, his company assists in building infrastructure, such as pipelines and platforms. He discussed the far economic reach of oil and gas production as his company relies on supplies from other industries around the country.  Kief stated, “Our industry is ready to help make this country more energy independent. Exploration, development, and production of our own resources are essential to achieve that objective and are vital to our economy.”

Executive Director of Greater Lafourche Port Commission Chett Chiasson discussed in his testimony “the importance of Port Fourchon to the offshore oil and gas industry; [its] contribution…to the national economy; and the importance of robust oil and gas lease sales in the Gulf of Mexico.” He noted that Port Fourchon serves as a transport point for 675 million barrels of domestic and imported crude oil and “plays a key roll (sic) in 18 percent of the nation’s oil supply.” He included a study in his testimony by Loren Scott, former Chair of the Louisiana State University Economics Department, which found “that more than $63 billion in total value of oil and gas are associated with Port Fourchon.” Chiasson emphasized that “industry needs to have confidence that the investments made in domestic offshore energy production will not be overly impeded by governmental regulations, and that our Nation’s domestic energy policy will continue to sustain investment of all energy types.”

In his testimony, Brian Kroll, senior economist at Virginia Economic Development Partnership (VEDP), discussed how “electricity generated by offshore wind energy could benefit Virginia’s economy by creating new jobs and new tax revenues.”  He divided establishment of VEDP’s wind farms offshore Virginia into two phases: phase I consists of building a 1,000 MW wind farm over five years and phase II involved installing additional wind farms over another five years. He calculated that VEDP’s wind farms “could support 4,250 direct jobs and 9,670 total jobs in Phase I and 3,920 direct jobs and 7,190 total jobs in Phase II.” Wind farms would offer “career-length jobs” and add $9 billion to Virginia’s GDP and $119 million in state tax revenue.

Bob Mitchell, chief executive officer at Atlantic Wind Connection, testified that “offshore wind can create tens of thousands of jobs and add over $30 billion to the US economy…lower energy prices in the long-run…add diversity that is critical to a secure supply…[and] reduce congestion and improve reliability” in the electric system. He stated, “we have been pleased with the role that the federal government has taken to facilitate offshore wind” and highlighted the Department of Energy’s National Offshore Wind Strategy, the Department of the Interior’s Smart from the Start program, and the Investment Tax Credit for “offshore wind in the fiscal cliff legislation” as beneficial federal actions. Mitchell expressed concern over the potential impact of the sequester on “leasing and permitting, supply chain development, technology [research and development], and lowering costs” in the wind energy sector.

Lamborn began the question and answer section by discussing Chiasson’s statement that Port Fourchon is responsible for 18 percent of the nation’s oil supply. Chiasson talked about the challenges and delays the port faces during hurricanes and other natural disasters.  He noted that opening other ports is “good for our national security and energy security.” He confirmed that opening additional outer continental shelf areas to development would relieve the “overdependence” on Port Fourchon.  Kief confirmed that with expansion of offshore oil and gas development, he could create jobs in other areas.

Matthew Cartwright (D-PA) asked the witnesses to describe the potential impact of the sequester on their respective industries. Kroll stated that sequestration would “slow things down and it’s unfortunately an already slow moving process.” Mitchell agreed and added that “the states working together with the federal government can help accelerate” the process. Turning to oil, Cartwright referenced “500 exploration plans and development documents that are anticipated for review this year” and asked, “How would those delays in oil and gas development due to this sequester, impact your industries?” Kief responded that delays in permitting would result in delays in drilling which would have a “negative impact” on Crosby Tugs and similar businesses. Chiasson stated it would have an impact, but he was “not sure” how much given the already slow 12 to 18 month permitting process.

A discrepancy in statistics for oil and gas production trends on federal lands occurred toward the end of the question and answer period between John Fleming (R-LA) and Peter DeFazio (D-OR).  Fleming stated that oil and gas production on federal lands and offshore is down 15 percent. While DeFazio cited statistics from the Energy Information Administration report Sales of Fossil Fuels produced from Federal and Indian Lands Fiscal Years 2003-2011 showing production of more barrels of oil from the outer continental shelf and Gulf of Mexico in 2012 than 2008.

Holt focused his questioning on wind energy and asked for an outline of the current status and potential for wind. Mitchell responded that the wind industry is looking at machines that have evolved from producing 35 kilowatts of energy in 1991 to now planning for 6 MW machines. He anticipates that this will “drive down costs and make it more efficient to build” offshore wind farms. He noted that a wind farm with a capacity for 3000 MW would be the equivalent of removing the pollution generated by 1.5 million cars; it would also produce enough energy to power 1 million homes. Holt inquired about the permanent oil and gas tax subsidies and whether it was fair to have tax subsidies on renewables that must be renewed annually. Mitchell discussed the problem of the nation “picking winners and losers” in the renewables industry and the lack of a national energy policy. He advocated for taking a “long range view.”

Opening statements, witness testimonies, and an archived webcast of the hearing can be found on the Committee’s web site.

- KAC

House Committee on Science, Space, and Technology Subcommittee on Energy Hearing on American Energy Outlook: Technology, Market, and Policy Drivers
February
13, 2013

Witnesses:
The Honorable Adam Sieminski
Administrator, Energy Information Administration, U.S. Department of Energy
Robert McNally
President, The Rapidan Group
Lisa Jacobson
President, Business Council for Sustainable Energy

Committee Members Present:
Cynthia Lummis (R-WY), Subcommittee Chair
Eric Swalwell (D-CA), Subcommittee Ranking Member
Lamar Smith (R-TX), Full Committee Chairman
Ralph Hall (R-TX)
Dana Rohrabacher (R-CA)
Randy Weber (R-TX)
Randy Hultgren (R-IL)
Daniel Lipinski (D-IL)
Joe Kennedy (D-MA)
Marc Veasey (D-TX)

On February 13, 2013, the House Committee on Science, Space, and Technology’s Subcommittee on Energy held a hearing to receive testimony assessing the current state of America’s energy technologies and policies and their potential impacts on energy markets.

Chair of the Subcommittee on Energy Cynthia Lummis (R-WY) began her opening statement declaring, “Plentiful and affordable energy is arguably the single most important factor to enabling our prosperity—from our health and wellness to our national and economic security.” She advocated for “an ‘all of the above’ energy strategy” and indicated the “potential for increased energy production to help address the nation’s spiraling debt.” For the next seven years, an Institute for Energy Research report projected an annual increase in GDP of $127 billion and an annual increase in federal tax revenue of $24 billion. Lummis cited the International Energy Agency (IEA) study that indicated that the U.S. would surpass Russia and Saudi Arabia in oil production by 2020. She emphasized the importance of coal by stating that the IEA projects “that coal will be the dominant energy source globally by 2030,” and that it “is the only source of energy that can meet the scale of energy demand for the billion people worldwide who live with no electricity at all.”
 
In his opening statement, Ranking Member Eric Swalwell (D-CA) stated, “It is time for us to get serious about creating a coherent green energy policy to enable us to compete globally.” The U.S. energy future lies in “our ability to transition to new, cleaner, more sustainable resources” given that “the U.S. uses 20 percent of the world’s oil but has only two percent of world’s oil reserves.” Swalwell noted that the increase in wind power in 2012 outpaced natural gas. By 2018, Pew Charitable Trusts estimates that domestic clean energy installations will increase U.S. market revenue by a compound annual rate of 14 percent or a total of $2 trillion. Swalwell emphasized the need to take public health, the environment, and climate change into account when developing energy policies. He indicated a need to “engage our world-class scientific enterprise” and to “leverage equitable and innovative financing mechanisms.” In addressing the uncertainty often associated with investing in research and energy, he stated “we need to be willing to take risks.”

Adam Sieminski, an administrator for DOE’s Energy Information Administration (EIA), outlined in his testimony the recent energy production and consumption statistics issued in the Short Term Energy Outlook (STEO) and 2013 Annual Energy Outlook (AEO). The recent STEO is the “first to include the extension of the federal production tax credits for certain renewable energy sources.” The EIA expects an increase in domestic crude oil production of 1.4 million barrels per day by 2014. Over the next two years, they project a fall in crude oil prices and a rise in natural gas prices. An increase in natural gas prices will “contribute to a modest rise in coal-fired electricity generation.” Sieminski also stated that EIA expects electricity generation from renewable resources to grow; wind power generation is anticipated to increase by 16 percent in 2013 and 8 percent in 2014, and all solar power generation by 30 percent in both years.

The 2013 AEO projects that natural gas will comprise 30 percent of U.S. energy generation in 2040 and will reach “other new markets, such as exports, as a fuel for heavy-duty freight transportation like trucking, and as a feedstock for producing diesel and other fuels.” In his testimony, Sieminski noted that the rate of “renewable fuel use [will grow] at a much faster rate than fossil fuel use,” increasing from “13 percent in 2011 to 16 percent in 2040.” The increase in renewables and efficiency will prompt a “shift away from the most carbon-intensive fuels,” leaving the “U.S. energy-related carbon dioxide (CO2) emissions…more than 5 percent below their 2005 level through 2040.” He added that, among other reasons, the increase in efficiency means that the projected increase in electricity usage is “less than one percent per year.”

In his testimony, Robert McNally, president of the Rapidan Group, set out five observations and suggestions for dealing with energy markets, technologies, and policies. First, he stated that “ample” amounts of energy, particularly from fossil fuels, are necessary to “sustain our standard of living.” Fossil fuels are “far superior to other primary energy sources because they are dense, highly concentrated, abundant, and comparatively easy to transport and store,” according to McNally. Second, he issued a reminder that transforming existing energy systems takes time. Third, he urged policymakers to be cautious in making predictions and setting “unachievable targets.” Fourth, he noted that “we live in a global oil market, no matter how little we import” and that can have undesired consequences such as the “short-term crude and gasoline price volatility caused by a fundamentally tight and fearful global oil market.” Fifth, McNally stated that “not all surprises in the energy sector are unpleasant.” He pointed to the innovation in technology that “enables the energy industry to find and produce enormous reserves while protecting the environment and conserving natural resources.” Accessing methane hydrates, he advocated, could be a “plausible” innovation in the future.

As president of the Business Council for Sustainable Energy (BCSE) which represents energy efficiency, natural gas, and renewable energy industries, Lisa Jacobson discussed the recent “real market penetration of a wide range of sustainable energy technologies and resources” in her testimony. She stated that for such growth to continue, “long-term, stable polices” needed to be enacted “to level the playing field and to provide market access to sustainable energy technologies.” Jacobson highlighted the crucial nature of federal investments in energy R&D noting BCSE’s “strong support” of continued federal funding for basic and applied research to “ensure that products do not sit on laboratory or university shelves, but are transferred to the private sector to achieve the intended public benefit.”

Lummis began the question and answer section asking Sieminski about EIA’s projections for exporting coal. Sieminski indicated that coal demands are “growing rapidly” in underdeveloped areas; however, since U.S. electricity will only grow by less than a percent, “our options are limited.” Domestic use of coal will increase slightly, Sieminski stated. He noted that not only does the opportunity to export coal exist, but the U.S. has already been exporting coal to Europe. He told Lummis that more information would be available with the publication of EIA’s International Energy Outlook this summer.

Swalwell discussed President Obama’s challenge in the State of the Union address to cut in half U.S. energy consumption. Given that commercial buildings consume about 19 percent of all energy in the U.S., Swalwell inquired, “Is there an opportunity for us to have commercial buildings working better with public utilities to connect to the grid…[and to] install clean energy technology on these buildings to make them more energy efficient, reduce their consumption, and also create more made in America jobs?” Sieminski replied that there are “lots of opportunities in the business sector for improvements in energy efficiency,” and that EIA is implementing a survey of energy consumption in different types of buildings to identify such opportunities. Jacobson brought up the Better Buildings Initiative which brings together stakeholders to “overcome the barriers” to implementing efficiency increasing measures. She noted the high standards for building efficiency and the beneficial fact that “energy efficiency jobs can’t be outsourced.”

Joe Kennedy (D-MA) asked for additional recommendations for improving efficiency. Jacobson responded that new buildings have good standards, but retrofitting old buildings is “challenging.” She noted the importance of current tax incentives for renewables, but noted a need for long-term planning to foster investment especially given that alternative energy resources are not yet “competitive” price-wise. McNally argued that eliminating the tax incentive and instead using the funds to invest in basic research is a better way of developing clean technologies.

Ralph Hall (R-TX) brought up the issue of EPA regulations and how such actions could affect energy production. Jacobson voiced support for the state-based regulation plan outlined by Governor John Hickenlooper (D-CO) at the Senate Committee on Energy and Natural Resources hearing on February 12, 2013. Hickenlooper stated that “states are the laboratories” indicating a hope that “federal regulations would be modeled after [those of] a group of states” rather than added on top of state regulations. Jacobson noted a need to be careful and ensure that correct data is utilized in regulations, but also pointed out the importance of generating public confidence in production safety.

Regarding natural gas, Dana Rohrabacher (R-CA) asked if federal policies and regulations were “stifling” hydraulic fracturing and natural gas production on federal lands. Sieminski pointed out that some fracturing occurs on public lands; however, geologically most reserves are on private lands. Rohrabacher also asked about the peak oil and gas hypothesis, to which Sieminski replied that the “problem with the peak oil and gas hypothesis was that it was entirely geology based” but didn’t account for the role of technology or market price.

Marc Veasey (D-TX) inquired as to the practice of flaring and if there was “technology on the horizon to make it so that we don’t have to flare natural gas.” Sieminski pointed out that much of the flaring occurs in locations of new oil and gas developments that have yet to be connected to existing pipelines. He stated that it “takes time” for those areas to get connected. Additionally, he stated that there are companies considering using small natural gas liquefaction containers that allow for easier transport. In Alaska, much of the extracted gas gets reinjected, thereby reducing the need for flaring, Sieminski noted.

Daniel Lipinski (D-IL) discussed issues of nuclear energy and EIA’s projections for the nuclear industry. Sieminski responded that the projected growth in nuclear stems from the construction of new plants and improvements in efficiency technology. Rohrabacher and Lummis expressed an interest in discussing additional “approaches to nuclear energy” including light water and small modular reactors.

Randy Hultgren (R-IL) inquired as to what would be the best use for limited energy resources and funding. McNally replied that beneficial uses included research into improving batteries and extracting methane hydrates safely and efficiently.

Opening statements, witness testimonies and an archived webcast of the hearing can be found on the Committee’s web site.

- KAC

Senate Committee on Energy and Natural Resources Hearing on Opportunities and Challenges for Natural Gas
February
12, 2013

Witnesses:
The Honorable John Hickenlooper
Governor of Colorado
Andrew Liveris
Chairman and Chief Executive Officer, The Dow Chemical Company
Ross Eisenberg
Vice President, Energy and Resources Policy, National Association of Manufacturers
Frances Beinecke
President, Natural Resources Defense Council
Kenneth Medlock
Senior Director, Center for Energy Studies, James A. Baker III Institute for Public Policy, Rice University
Jack Gerard
President and Chief Executive Officer, American Petroleum Institute

Committee Members Present:
Ron Wyden (D-OR), Chairman
Lisa Murkowski (R-AK), Ranking Member
Maria Cantwell (D-WA)
Debbie Stabenow (D-MI)
Mark Udall (D-CO)
Al Franken (D-MN)
Joe Manchin (D-WV)
Christopher Coons (D-DE)
Martin Heinrich (D-NM)
John Barrasso (R-WY)
Mike Lee (R-UT)
Lamar Alexander (R-TN)
John Hoeven (R-ND)

On February 12, 2013, the Senate Committee on Energy and Natural Resources held a hearing to receive testimony assessing the opportunities and challenges facing the U.S. with regard to natural gas. The recent and ongoing oil and gas boom in the U.S. has created a need to reevaluate projections for oil and gas production, exportation, regulations, and more.

Chairman Ron Wyden (D-OR) began his opening statement declaring, “When it comes to natural gas, America is the land of opportunity.” He outlined some of the benefits of natural gas as giving the U.S. a “competitive advantage” in the energy market, initiating a “manufacturing renaissance,” and increasing national security. Natural gas is also 50 percent cleaner than other fossil fuels and contributed to the decrease in U.S. carbon dioxide emissions, noted Wyden. He stated that “production could soon outstrip American demand” raising issues of exporting liquid natural gas (LNG). He focused on the need to find a “sweet spot” that will “strike a balance between the environmental and economic” impacts.

In her opening statement, Ranking Member Lisa Murkowski (R-AK) pointed to the economic improvements and job creation in states that host the natural gas industry. She noted the 44 percent increase in resource estimates associated with the “natural gas boom.” Advantages of the boom include “abundant clean energy,” “economic growth and security,” and fixing of the trade imbalance should the U.S. begin exporting LNG. She raised the issue of regulations, noting that geology differs from region to region and policymakers should rely first on state regulations. Rather than simply implementing blanket nationwide rules and standards, the government should “look at existing laws and determine where there are deficiencies” and address them.

Governor John Hickenlooper (D-CO) opened his testimony discussing the “three interconnected issues facing our country right now”—economic recovery, national security, and climate change—and stating that the “crux of each of them is energy.” Natural gas offers the prospect of jobs, domestic industrial development and investment, less dependence on foreign oil, and lower emissions, Hickenlooper indicated. He stated that he believes the U.S. is “on the threshold of achieving energy independence,” but that the “future is more secure with energy that is sustainable and renewable” and the U.S. needs an “all of the above policy.” Between 2005 and 2012, U.S. importation of oil decreased from 60 to 41 percent.

Hickenlooper focused primarily on how to best regulate natural gas extraction. He emphasized the need to “take full advantage of technology” while “ensuring that we have the strongest safeguards we could possibly have.” Colorado passed a law requiring disclosure of the contents of hydraulic fracturing fluids and is requiring green completions, “robust” groundwater monitoring, and assurance of well integrity. Additionally, universities are studying air quality around fracturing fields. He declared the state’s primary goal as ensuring “sufficient” and “balanced” public and industry involvement to create a level of transparency that provides the public with confidence that they are not “working against some unseen villain.”  He hoped that Colorado’s state regulations could offer a national model.

In his testimony, Andrew Liveris, chairman and chief executive officer of the Dow Chemical Company called natural gas “essential for American industry, and growth in shale gas production...a bright spot for the U.S. economy.” He discussed the manufacturing “renaissance” that has resulted substantially from the “reasonable and stable natural gas prices,” and will inspire new investments in U.S. based production facilities and create “approximately 5 million manufacturing jobs.” Liveris noted that manufacturers “conduct two-thirds of U.S. research and development.” Policies, he noted, greatly affect natural gas supply and demand, price, investments, and job creation; therefore, Liveris urged caution in developing policies encouraging using natural gas over other resources, exporting LNG, and enacting “unreasonable” regulations.

Ross Eisenberg, vice president of Energy and Resources Policy for the National Association of Manufacturers (NAM) highlighted in his testimony the fact that manufacturers represent a third of U.S. energy consumption and stated, “Natural gas is a critical component of an “all-of-the-above” energy strategy that embraces all forms of domestic energy production.” A PricewaterhouseCoopers report that he cited indicated “full-scale and robust development of U.S. shale gas plays could result in 1 million new manufacturing jobs by 2025.” He added that the natural gas boom would draw companies to move production to the U.S. and positively impact manufacturers “across the supply chain.” Summarizing the NAM’s position, Eisenberg stated that “if the federal government takes an overly prescriptive or reactive approach to permitting, regulations, or exports, then our natural gas fueled manufacturing renaissance will be over quicker than it began.” He agreed with Hickenlooper that regulation should be state-based.

President of the Natural Resources Defense Council Frances Beinecke stated in her testimony that “shale gas is changing our nation’s energy profile,” but pointed out that “natural gas, even if properly produced and consumed, is not a panacea for our energy challenges. It is still a fossil fuel, burned it produces fossil fuel pollution and contributes to climate change.” She called into question the current exemption of hydraulic fracturing from the Clean Water Act, Safe Drinking Water Act, Clean Air Act, and other regulatory laws. She emphasized a need for federal safeguards as opposed to a “patchwork” system of state regulations. Beinecke stated that there is “mounting” evidence of the damaging effects of fracturing and that “people want to know that their water is safe, that their air is clean, and that their lands and farms are protected...[and] their children are healthy.” She was in favor of a policy that would increase use of renewables and improve efficiency.

In his testimony, Kenneth Medlock, senior director of the Center for Energy Studies at James A. Baker III Institute for Public Policy at Rice University, stated that the U.S. regulatory system has created “arguably the most efficient market in the world” as any consumer or producer can access it. The current regulatory system “encourages competition, entrepreneurship,” and is the reason behind the current “shale gale.” He argued “anything that stands to disrupt this very well functioning market…would be a detriment to this country and to the natural gas industry.” Medlock noted that the three countries most affected by the natural gas boom will be Russia, Iran, and Venezuela which raises significant geopolitical issues. Finally, he discussed how natural gas generated more power than coal in 2012, carbon dioxide emissions fell to the lowest levels since the 1990s, and the Environmental Defense Fund is examining methane leakage from the wellhead to end use.

Jack Gerard, president and chief executive officer for the American Petroleum Institute stated in his testimony that the developments in natural gas are a “game changing opportunity” and have resulted in the “emergence [of the U.S.] as a superpower in global energy production.” He emphasized the role of oil and gas in creating American-based jobs given that “unconventional natural gas production supports 1.7 million [upstream segment] jobs.” Such jobs are expected to increase to 2.5 million by 2015, 3 million by 2020, and 3.5 million by 2035 with unconventional natural gas and oil generating over $2.5 trillion in tax revenues by 2035. He touched on geopolitical issues referring to LNG exports and the ability to “improve our trade deficit and spur major investment in infrastructure, which will strengthen our energy security.” Gerard also noted the reduction in U.S. carbon emissions to 1992 levels and credited this mainly to the growing use of natural gas.

Much of the question and answer session was spent discussing the prospect of LNG exports. Liveris prominently emphasized the need to be “careful of unintended” consequences of exports and to approach the issue cautiously. One potential consequence he noted was the risk of “indexing the domestic gas price to the global oil price.” This could occur, he argued, because while the U.S. has a domestic gas price, the “world gas market doesn’t exist” and gas prices are set at the same level as oil prices.  Medlock disagreed stating that gas prices were set at the level of oil because the gas market lacked liquidity which is “gained as the market matures” and is a process that shouldn’t be hindered.

Wyden asked the witnesses for recommendations on finding the “sweet spot” in natural gas policymaking “where American can have it all: economic growth, lower emissions, cheaper power, and reduced trade deficit.” Hickenlooper cited the need for “appropriate regulations.” Liveris stated that the U.S. should continue to “follow current laws and regulations,” be cautious in moving forward to enact “responsible regulations” and ensure that supply and demand don’t become unbalanced. Eisenhower focused on the need to streamline and speed up permitting. Beineke replied that issues of public protection and increasing public confidence in gas extraction processes and safeguards are essential. Medlock indicated a need for transparency and stated that markets should be left free to respond naturally. Gerard seconded allowing the market to “sort out and adjust” for the natural gas boom and exports.

Murkowski asked Hickenlooper if he thought the U.S. needed federal regulations on hydraulic fracturing on top of the Colorado state regulations, or if they would add an “unnecessary layer” of rules. Hickenlooper responded that “states are the laboratories” indicating a hope that “federal regulations would be modeled after [those of] a group of states” rather than added on top of state regulations. He referred to the state-based plan as a “template” allowing “different states to work together with the federal government…[to] cut the red tape and yet still maintain a very high and rigorous set of regulatory environments.”

John Hoeven (R-ND) also inquired as to the “state’s first approach” asking about transparency, regional differences, and building consensus. Beinecke advocated that there be “federal minimal standards” but did not discount the prospect of regulations created by a state becoming the federal standard. She noted that there are regional differences in geology to take into account and stated that “most [federal] environmental laws recognize” differences from state to state. She emphasized the need to make people “confident that standards will protect them” and bring together all of the stakeholders to address concerns. Gerard stated that regulations at the federal level should not be rushed and regulation should start at the state level.

Environmental questions focused on methane emissions and increasing renewable energy use and development. Mark Udall (D-CO) stated that committee’s primary goal should be to “protect the health and well being of citizens” and asked about fugitive methane emissions from natural gas extraction. Hickenlooper stated that the issue of methane emission is “crucial” as methane is “very harmful” and extensive loss will negate much of natural gas’s environmental benefits. The University of Colorado is studying air quality to obtain data on methane leakage. He noted that this methane is a product that companies can capture and sell.  Beinecke indicated a need for measuring methane loss, monitoring air quality, and implementing technology to reduce fugitive emissions.

Udall and Al Franken (D-MN) raised the fact that oil and gas is the second largest methane emitter in the country. Franken promoted investing in renewable technology development now given that the Department of Energy invested in research in the 1970s that paid off 30 years later with the current natural gas boom. Medlock agreed and praised the “remarkable foresight” of government investment. Hickenlooper also agreed but noted that renewables can be intermittent and that natural gas is the “perfect partner” for renewables to ensure efficient and consist power.

Maria Cantwell (D-WA) inquired about responding to climate change so as to reduce future spending on natural disasters. Beinecke insisted that “natural gas isn’t a solution in the long term” and that there needs to be a switch to renewables. She again mentioned the unknown potential health consequences and “lack of safeguards” associated with natural gas.

Opening statements, witness testimonies and an archived webcast of the hearing can be found on the Committee’s web site.

- KAC

House Committee on Energy and Commerce Subcommittee on Energy and Power Hearing on American Energy Security and Innovation: An Assessment of North America’s Energy Resources
February
5, 2013

Witnesses:
Adam Sieminski
Administrator, U.S. Energy Information Administration
Daniel Yergin
Vice Chairman, HIS
Jennifer Morgan
Director, Climate and Energy Program, World Resources Institute
Mary Hutzler
Distinguished Senior Fellow, Institute for Energy Research
Harry Vidas
Vice President, ICF International

Committee Members Present:
Ed Whitfield (R-KY), Subcommittee Chairman
Bobby Rush (D-IL), Subcommittee Ranking Member
Fred Upton (R-MI), Full Committee Chairman
Henry Waxman (D-CA), Full Committee Ranking Member
Steve Scalise (R-LA),
John Shimkus (R-IL)
Joseph Pitts (R-PA)
Lee Terry (R-NE)
Michael Burgess, M.D. (R-TX)
Bob Latta (R-OH)
Bill Cassidy (R-LA)
Pete Olson (R-TX)
David McKinley (R-WV)
Cory Gardner (R-CO)
Mike Pompeo (R-KS)
Adam Kinzinger (R-IL)
Morgan Griffith (R-VA)
Joe Barton (R-TX)
Jerry McNerney (D-CA)
Paul Tonko (D-NY)
Edward J. Markey (D-MA)
Gene Green (D-TX)
Lois Capps (D-CA)
Michael F. Doyle (D-PA)
John Barrow (D-GA)
Doris O. Matsui (D-CA)
Donna M. Christensen (D-VI)
Kathy Castor (D-FL)

On February 5, 2013, the House Committee on Energy and Commerce Subcommittee on Energy and Power held a hearing to receive testimony assessing North America’s energy resources.  The hearing was the first in a series on “American Energy Security and Innovation.” The recent and ongoing oil and gas boom in the U.S. has led the subcommittee to reevaluate the development of policies passed on the previous “belief of ever dwindling energy resources.”

In his opening statement, Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) hailed the increase in oil and natural gas resource production as “a very pleasant surprise” that prompts a “wholesale rethinking of energy policy” so that it is no longer “rooted in the assumption of domestic energy scarcity,” but in “energy abundance.” He referenced the Energy Information Administration’s (EIA) prediction of continued increase in domestic oil and gas production and a need to approve the Keystone XL pipeline. Whitfield promoted domestic production as a means to “lower energy prices, create jobs, and strengthen national security,” but also recognized the need to use a “diverse mix of our resources: coal, oil, gas, and renewables.”

Energy and Commerce Committee Chairman Fred Upton’s (R-MI) opening statement focused on domestic oil and gas production as providing “game changing potential for North American energy independence.” Noting previous concerns over heavily relying on oil from countries in the Organization of the Petroleum Exporting Countries (OPEC), he emphasized the new standing of the U.S. as the “world’s leading producer of natural gas” and predictions “that by 2020, U.S. oil production will exceed Saudi Arabia’s.” Upton expressed concern that federal laws will hinder domestic production while listing benefits of such production, including boosting our economy, creating jobs, and enhancing energy security. He also mentions the need to improve infrastructure such as by approving the Keystone XL pipeline.

In his opening statement, Energy and Power Subcommittee Ranking Member Bobby Rush (D-IL), outlined the importance of “enacting an energy blueprint” that focuses on four areas: providing “safe, reliable, and affordable energy to all Americans,” providing “additional jobs and economic opportunity to all sectors of our populations,” addressing the “consequences of climate change,” and becoming “self-sufficient and energy independent.”  Rush promoted the use of renewable energy sources and emphasized the National Renewable Energy Laboratory’s finding that the U.S. could meet 80 percent of the nation’s energy needs with renewable sources by 2050 given existing technologies.

Ranking Member of the Full Committee Henry Waxman (D-CA) gave an opening statement focusing on the question of “whether we are on a sustainable course for the years to come.” He cited President Obama’s inaugural address in which responding to climate change was a major theme. Waxman stressed that there was a “limited amount of time to respond to climate change” and that the problem is becoming more and more difficult and costly as time passes.  He discussed the how oil and gas innovations “are all positive developments” but stated, "The biggest energy challenge we face as a country is carbon pollution. We can't have a conversation about America's energy policy without also having a conversation about climate change."

In his testimony, Adam Sieminski of the U.S. Energy Information Administration provided extensive data on the state of domestic energy resources.  He announced that “EIA estimates that U.S. total crude oil production averaged 6.4 million barrels per day in 2012, an increase of 0.8 million barrels per day.” New technologies in tight oil extraction generated this increase and production should continue to increase to 7.9 million barrels per day in 2014. Average 2012 natural gas production equaled 69.2 billion cubic feet per day. While oil and gas production excelled, domestic coal production fell by 12 percent over the past four years. Sieminski discussed the 17 percent wind and 32 percent solar increase in renewable energy consumption. Biofuel consumption increased, but hydropower decreased due to drought conditions. Overall 10.3 percent more renewable resources were consumed in 2012 than in 2010.

Daniel Yergin, Vice Chairman of IHS, began his testimony stating, “The United States is in the midst of the ‘unconventional revolution in oil and gas’ that...supports 1.7 million jobs.” He continued with statistics that domestic shale gas production increased from 2 to 37 percent in 10 years and U.S. oil output “by about 38 percent since 2008.” Yergin noted that such changes in domestic resource production stimulate questions on the environmental impacts and exporting of said energy. It alters global geopolitical interactions with effects on the Iranian sanctions, discussions of exporting LNG to Japan given their energy shortage, and concerns of European countries over the U.S.’s increasing energy competitiveness as expressed at the World Economic Forum.

The Director of the Climate and Energy Program at the World Resources Institute, Jennifer Morgan detailed in her testimony the need to “factor in both opportunities and risks” when dealing with energy resources, and “consider the risk of climate change” for current and future resource development.  She addressed a number of key points including creating bipartisan legislation to support improving energy efficiency, diversifying domestic energy production, funding low-carbon and clean energy technologies, and minimizing environmental impacts. Morgan emphasizes that any plan must consider climate change and policies “should be comprehensive, long-term, targeted, and inclusive.”

In her testimony and posted summary, Mary Hutzler, a distinguished senior fellow with the Institute for Energy Research (IER) said that the “question is whether the federal government will permit us to have access to our abundant energy resources not whether sufficient resources exist.” She outlined the abundance of resources noting the 400 percent increase in shale oil production in the last 10 years and more than 300 percent increase in shale gas production between 2007 and 2010. Combining hydraulic fracturing and horizontal drilling “revolutionize[d] the industry” and Hutzler used the 25 fold increase in estimated technically recoverable oil in the Bakken Formation as an example of the results of this “energy miracle.” An IER study showed that, were the U.S. to open federal lands and offshore areas to development, the nation’s “economic activity” would gain $14.4 trillion in 30 years.
 
Harry Vidas is the Vice President of ICF Internation and in his testimony he described the current state of the domestic oil and gas resources as “extremely robust and diverse.”  ICF assesses “the geology, historic production and costs of all major U.S. and Canadian plays” using a geographical information system (GIS), and found that “resources are geographically widespread, and are economic to develop at moderate wellhead prices.” Vidas states that, assuming use of current technologies an no additional large plays, the “technically recoverable U.S. natural gas resource base is 3,850 trillion cubic feet (Tcf), representing about 155 years of current annual consumption.” The 264 billion barrels of oil “represents 110 years of current annual production.”

During the question and answer session, Gene Green (D-TX) asked about the future of natural gas production. Sieminski replied that the EIA expected production to “hold even” as price increases will allow coal to better compete with natural gas. Ed Markey (D-MA) questioned the reliability of EIA data and projections citing discrepancies between projections for 2010 to 2012 and the “real data.”

Rush raised the issue of job creation in unconventional oil, to which Yergin responded that jobs would be spread across states because there are direct, indirect, and induced jobs to consider. He stated that he believes the U.S. is prepared for this level of job growth but it will require some training.

Given the increase in domestic resource production and availability, Joe Barton (R-TX) asked if the U.S. could be “self-sufficient in oil production in 10 years.” Sieminski said that it was possible but more still need to be done, such as spacing wells closer together. He projected that 30 percent of the U.S. oil would remain imported.

Lee Terry (R-NE) asked the panel to comment on the likelihood of liquefied natural gas (LNG) use in vehicles in the future.  Yergin and Hutzler agreed on use of LNG fuel for heavy trucks but noted that the level of infrastructure needed for expanding that use to private vehicles was too difficult. Vidas indicated that while LNG use in vehicles would triple, it would still be only a small percentage increase and LNG would contribute more to private vehicle fueling through generation of electricity for electric cars.

Steve Scalise (R-LA) inquired as to why there was such an increase in production on non-federal lands as opposed to federal lands. Hutzler claimed that the fact that 96 percent of production was on non-federal lands because it takes 300 days to obtain a federal permit and only 30 for a state permit. She advocated for streamlining the permitting process. Michael Doyle (D-PA) challenged her statements with a map showing the lack of overlap between federal lands and the location of shale reserves, stating that “geology works in the favor of private owners.”

John Shimkus (R-IL) and Mike Pompeo (R-KS) brought up the status of pipelines for transporting oil and gas. Yergin, Hutzler, and Vidas described pipeline as the “most efficient,” “least expensive,” and a “safer” means of transporting materials.

Shimkus inquired as to what effect increased domestic production would have on global geopolitical affairs in terms of exporting LNG. Yergin responded that given the huge supply, the U.S. needs a larger market. Bill Cassidy (R-LA) emphasized the need to provide Japan with LNG to “protect their economy” after the loss of the Fukushima reactor. Yergin agreed with this statement.

Pete Olson (R-TX) focused on “geopolitical challenges” asking about how foreign affairs would be affected, particularly with regard to Eastern Europe. Yergin responded that the U.S. would become more self-sufficient causing countries in the Middle East to increasingly export to eastern Asia. He spoke about Brazil being “on course to be a global energy powerhouse” and Poland and Ukraine desiring to develop further energy independence from Russia.

Democratic members focused their questions on topics of energy efficiency, renewable energy, and the relationship between climate change and energy policy. Their questions primarily addressed Morgan. Rush inquired as to what prevents the further development of renewable energy and how the U.S. can become an exporter of renewables.

Morgan responded that the lake of a national energy plan that provides a “long-term certainty” that stretches beyond three years is needed to “create investment security” and prompt further renewable energy development. She referenced Germany and China’s energy plans as successful examples of long-term investment in renewables. Additionally, while the U.S. is “doing well” in research and development (R&D), the country is not moving fast enough and should, thus, establish innovation centers.

Lois Capps (D-CA) discussed the impact of climate change on coastal communities in her district, noting that many are beginning to build seawalls for protection. Both Capps and Morgan described the fact that many coastal communities “struggle with the cost” of implementing such measures.

Doris Matsui (D-CA) asked about the “economic benefits of expanding renewable energies.” Morgan replied that with the expansion of renewables, there is a prospect of having “more jobs created than in oil, fossil fuel, and coal combined.” She projects that if the U.S. had 30 percent of its energy from renewables, there would be four million jobs created by 2040.

Waxman’s questions were exclusively on how to factor climate change into policies. Morgan stated a need to address greenhouse gas emissions as the carbon dioxide reduction rate has reached a plateau and methane continues to increase. She advocated for a “carbon pricing” policy as is in place in Europe. Waxman and Morgan focused on the idea that environmental considerations should be taken into account when developing policy.

Opening statements, witness testimonies and an archived webcast of the hearing can be found on the committee’s web site.

- KAC

 

Sources: Hearing testimony.

Contributed by Wilson Bonner, AGI Geoscience Policy; Kimberley Corwin, 2013 AAPG/AGI Spring Intern, Clinton Koch, 2013 AIPG/AGI Summer Intern.

Please send any comments or requests for information to AGI Geoscience Policy.

Last updated on November 20, 2013