Yet another 2013 house hearing about U.S. energy independence

House 113-1. February 5, 2013. American energy security & innovation: an assessment of North America’s energy resources. House of Representatives. 202 pages.

[Excerpts from the 202 page transcript of this hearing]

Representatives and speakers declaring the U.S. energy independent:

  1. Ed Whitfield, Kentucky
  2. Fred Upton, Michigan
  3. Joe Barton, Texas
  4. Daniel Yergin, Vice Chairman, IHS
  5. President Obama
  6. Harry Vidas, Vice President, ICF International

ED WHITFIELD, KENTUCKY: The title of today’s hearing is ‘‘American Energy Security and Innovation,’’ and we are going to focus on an assessment of North America’s energy resources. Certainly, one of the primary factors that affects the economy is energy policy, and certainly there are other factors as well but that plays a vital role.

I was reminded as I read the testimony last night that it wasn’t too many years ago when people throughout the country, experts and otherwise, were talking about the United States fossil fuels, for example, their resources were being depleted. We were running out of oil, we were running out of natural gas and we were going to have to be importing more. As a matter of fact, in January 2007, a CEO of one of our largest utility companies made the comment that we were running out of natural gas, production was declining and demand growing so he expected that imports would go from 3 percent of our national needs to 24 percent in 2020.

And then of course, we know what has happened. We have had all sorts of new discoveries—the Bakken field, the Eagle Ford, developments in Colorado—and most of these shale fields have been discovered on private lands, and even though the number of permits on public lands has gone down, the production on private lands has increased dramatically. So this is a real game changer. We have heard the term for many, many years, we have the opportunity to be energy independent, and that is actually the reality today, we have abundant resources that can meet the needs of this country on the electricity side and the transportation side for years and years to come.

We have seen increases in domestic oil production since 2007 and natural gas production since 2006, according to the Energy Information Administration. And EIA predicts that these upward trends will continue for years to come. At the same time, Canadian oil production is growing so fast that we will need the Keystone XL pipeline expansion project to bring the additional output to American refineries in the Midwest and Gulf Coast. In fact, the news is so promising that some analysts are talking about the possibility of achieving North American energy independence by the end of the decade. Of course, experts may disagree as to just how much energy potential is out there, but none would have claimed just a few years ago that our nation would reverse course and have the potential to become a true global energy supplier and powerhouse.

We are seeing a truly dramatic shift away from long-held beliefs about domestic oil and natural gas supplies. So much of our existing legislation is rooted in the assumption of domestic energy scarcity, not energy abundance. Needless to say, a wholesale rethinking of energy policy is in order, and today’s hearing is the first step in that process.

We will soon hear from one of our witnesses, Mary Hutzler of the Institute for Energy Research, America possesses nearly half of the entire world’s coal reserves. This is enough coal to continue its use at current rates for 500 years.

The good news is that a future of plentiful, affordable, and reliable supplies of North American energy is no longer just a dream.

BOBBY L. RUSH, ILLINOIS: The EIA reporting that U.S. crude oil production has increased from 5.1 million barrels per day in 2007 to 6.4 million barrels per day in 2012, the highest level since 1997. The EIA reports that in 2005, the United States imported 60 percent of the petroleum it consumed, and by 2012, that number had dropped to about 41 percent, the lowest level in decades. This decline can be attributed primarily to increased domestic oil production, the additional use of biofuels as well as the adoption of higher fuel efficiency standards for vehicles.

The EIA also projects that the United States will reduce its reliance on imported oil to less than 30 percent of consumption by 2035, and U.S. natural gas production will increase by 44 percent by 2040 due primarily to the projected growth in shale gas production.

FRED UPTON, MICHIGAN. Certainly, this hearing is a welcome one to examine the positive developments resulting from advancements in innovation and technology, the game-changing potential for North American energy independence. What was once believed to be unthinkable is certainly now within our grasp. For 3 decades, 30 years, the American people have been told that we are a Nation of declining resources at the mercy of OPEC. The story was nearly as gloomy with natural gas with forecasts of dwindling domestic supplies, higher prices, and rising imports from the Middle East.

In fact, in this committee, many may remember when we crafted a new title in the Energy Policy Act of 2005 to facilitate what we thought would be the new norm: pending reliance on imported gas from geopolitically unstable regions of the world, to add to our growing reliance on OPEC oil.

But thanks to American ingenuity and advanced technologies, the trends in domestic oil and natural gas production have in fact been turned upside down. In fact, the United States is now the world’s leading producer of natural gas, and the IEA is predicting that by 2020, U.S. oil production will exceed Saudi Arabia. 2020, let me repeat that, we are going to exceed the production in Saudi Arabia. Our overall energy landscape has changed dramatically in just a short period of time, and it is not only rewriting the economic outlook that we have as a Nation, but also beginning to change the geopolitical nature of global energy economics.

JOE BARTON, TEXAS. As we speak today, in the Barnett shale, there are over 16,000 producing natural gas wells, and last year they produced in the neighborhood of 2 trillion cubic feet of natural gas in that one field. With the miracle of hydraulic fracturing, we have unleashed a drilling and production revolution in this country, not only in natural gas but now that technology is being used in oil, and the State of North Dakota, which less than 10 years ago had probably fewer than 200 or 300 oil wells, is on track in that one State to produce over a million barrels of oil in the very near future, possibly this year. We can be energy independent if we want to. It is not a question of can we.

HENRY A. WAXMAN, CALIFORNIA. These are all positive developments. The question we must ask is whether we are on a sustainable course for the years to come. As we debate our energy future, this committee has a choice. It is an energy choice and a climate policy choice, and ultimately it is a moral choice.

Every decision to build a new fossil fuel-fired power plant, or construct a pipeline to transport tar sands, or drill for more oil off our Nation’s coasts has climate risks. We need to understand and weigh those risks before we lock in infrastructure that will produce carbon pollution for decades to come. There is an appeal to the energy resources we are discovering. We are stronger when we produce oil in the United States than when we import it from Saudi Arabia. We are better off when we produce our own natural gas than when we import LNG. But we also must recognize that the world has far more proven reserves of oil, gas and coal than we can ever safely use. The atmosphere has a rapidly shrinking capacity to safely absorb carbon.

STATEMENT OF ADAM SIEMINSKI . Drilling in tight oil plays in North Dakota, Montana, and Texas are expected to account for the bulk of the forecast production growth over the next 2 years. U.S. crude oil production could reach 8 million barrels a day in 2014, and we could get as high as 10 million barrels a day but that is not currently in our reference case. U.S. dry natural gas production has increased consistently since 2005, mainly because of the production of shale gas resources. Total marketed production averaged about 69 billion cubic feet in 2012, and EIA expects production will remain close to that level this year and next year. Crude oil and natural gas proved reserve additions

Demonstrated Reserve Base. The largest category of reserves is the demonstrated reserve base (ORB), which represents coal reserves in the ground that have been identified to specified levels of accuracy and are in thickness ranges and at depths that are considered minable. As of January 1, 2012, the demonstrated reserve base was estimated to contain 483 billion short tons. The ORB was originally estimated in 1974 by the U.S. Bureau of Mines

STATEMENT OF DANIEL YERGIN, Vice Chairman, IHS. The United States is in the midst of an unconventional revolution in oil and gas that fits that all-of- the-above strategy that Congressman Rush talked about

Those of you who participated in hearings in 2008 remember those dark, dire days when, I think as Chairman Whitfield reminded, the world was going to run out of oil and the United States was going to run out of oil even more quickly. How that has changed. Shale gas now has gone from 2% of our supply to 37% of our supply, and what is really dramatic is what has happened on oil, which instead of continuing its long decline has increased dramatically by almost 39% since 2008.

It is sobering to consider that without these technologies, and the oil output that has resulted from them, the sanctions on Iran might well have failed.

Certainly expanded domestic supply will add resilience to shocks and add to our security cushion. Moreover, prudent expansion of U.S. energy exports will actually add an additional dimension to U.S. influence in the world. However, there remains only one world oil market, and a disruption anywhere will be a disruption everywhere.

Owing to the scale and impact of shale gas and tight oil, it is appropriate to describe their development as the most important energy innovation so far of the 21st century. That is said with recognition of the major technological advances in wind and solar since 2000; but, as is described in The Quest, those advances are part of the “rebirth of renewables”. As actual innovations, solar and wind emerged in the 1970s and 1980s.

So far, this unconventional revolution is supporting 1.7 million jobs – direct, indirect, and induced. It is notable that, owing to the long supply chains, the job impacts are being felt across the United States, including in states with no shale gas or tight oil activity. For instance, New York State, with a ban presently in effect on shale gas development, nevertheless has benefitted with 44,000 jobs. Illinois, debating how to go forward, already registers 39,000 jobs.

In March, 2011, President Obama spoke about how “recent innovations have given us the opportunity to tap” large reserves of natural gas – “perhaps a century’s worth of reserves.” 

The question as to how the unconventional revolution will affect U.S. involvement in the Middle East is moving to the fore. Current net U.S. imports from the Persian Gulf are equivalent to 8% of total consumption. Even if that number goes down, the nature of U.S. interests in the region go well beyond direct oil imports to the importance of the region for the global economy and global security.

STATEMENT OF JENNIFER MORGAN. Directly relevant to this subcommittee are electric infrastructure and reliability are already being affected and are increasingly vulnerable to droughts and other disruptions caused by climate change. Current impacts on energy production are just the beginning. Unless we change course, these impacts will become more extreme, placing our energy infrastructure and our country at great risk, which brings me to my second point, which I think is very important. To avoid the most serious climate change impacts, our energy policy must drive low-carbon technologies forward now and build them out at a much larger scale.

Sea-level rise and associated storm surges and coastal flooding have significant economic implications. For example, damage estimates from Hurricane Sandy have ranged from $30 to $50 billion. In Florida, already occurring sea-level rise impacts are forcing Miami Beach to spend more than $200 million to overhaul its storm drainage system, and Hallandale Beach to spend $10 million 15 on new wells because of saltwater intrusion. Sea-level rise will require increased energy usage in the form of additional pumping for drainage and water supply, as well as for the energy-intensive process of desalinization. The vulnerability of the U.S. economy to sea-level rise is significant, with 41 million Americans living in coastal counties along the East Coast.

According to the National Oceanic and Atmospheric Administration (NOAA), over 65% of the contiguous United States experienced drought last September, causing widespread damage to the nearly $300 billion in annual agricultural commodities within the United States. Recent scientific findings have strengthened our understanding of the link between climate change, heat, and drought. For example, the heat wave leading to the Texas drought was found in a recent study” by NOAA and other institutions to be 20 times more likely to occur now than in the 1960. According to the recent draft National Climate Assessment, disruptions to agricultural production from climate change have increased in recent years and are expected to increase further over the next 25 years.

Extreme weather and climate events. According to NOAA, in 2012 the United States experienced 11 extreme weather events causing more than $1 billion in damages each? The economic losses from extreme events increased in part by the impacts of storm surge exacerbated by climate change are significant. For example, hurricanes have cost the U.S. Gulf Coast alone an average of$14 billion in damages per year, and the region could accumulate $350 billion in cumulative hurricane-related damages over the next 20 years. The 150-percent increase in population along the Gulf Coast over the last 50 years, to 14 million inhabitants, has further increased the potential for costly impacts from storm surge and associated hurricanes. The increase in frequency and cost of extreme weather events has caused ripple effects throughout the insurance industry, which recent research shows has experienced steadily increasing weather-related losses over the last two decades. Aggregate economic losses in 2011 attributed to extreme weather events were $55 billion,”and storms such as Tropical Storm Lee and Hurricane Irene were responsible for a combined $8.3 billion in damages that included coastal flooding. With the expectation that sea-level rise and future threats of storms such as Sandy will increase property losses, the financial risk will be transferred more to the public sector as the private sector cannot cover “high-risk” coastal properties.

Energy facilities will also likely be affected by sea-level rise. The contiguous United States has more than 280 electric power plants, oil and gas refineries, and other energy facilities which are situated on low-lying land and thus vulnerable to sea-level rise and episodic coastal flooding. Sea-level rise poses especially substantial challenges for sustaining reliable energy infrastructure in states such as Florida, where 26 energy facilities are located in especially vulnerable areas. In addition, power sector reliability is affected by extreme weather events. For example, in the aftermath of Hurricane Sandy and the Nor’easter that immediately followed, more than 8 million customers lost power. Refineries, natural gas distribution systems, and petroleum terminals were also affected by these storms. Meanwhile, because the majority of U.S. oil production and refining occurs in the Gulf Coast, hurricanes can impact national energy availability and price, as Hurricanes Katrina and Rita demonstrated in 2005. The nation’s power sector is also highly vulnerable to extreme drought. Water scarcity has emerged as one of the defining challenges of this century, yet a significant amount of water is needed to extract energy resources and use them to generate electricity. Limits on availability of ground and surface water are shaping the current operation and future location of America’s power plants. In 2011, over 85% of total electricity generation in the United States was produced by thermos-electric power plants fueled by nuclear and fossil energy sources, most of which rely heavily on substantial water resources for cooling, As fossil energy extraction trends toward unconventional resources and “enhanced” production, more water is needed relative to extracting the same amount of energy using conventional methods, According to the National Energy Technology Laboratory, there are 347 coal-fired power plants in 43 states vulnerable to water supply and/or demand concerns. In a future with increasing likelihood of droughts, our nation’s ability to meet growing energy needs through thermoelectric power generation will be highly vulnerable to climate change.

The U.S. power sector will require as much as $828 billion in capital investments and expenses before the end of this decade. Many of these investments will be for very long-lived assets from power plants to transmission systems. U.S. energy companies making investments today are considering 40+ year operational horizons and cannot ignore the potential for a future where climate policies and environmental risks influence the bottom line. One of the surest ways to saddle customers with higher costs from major stranded investments is to ignore the need to factor climate impacts into today’s decision-making processes. As a society, delaying the decision to act on climate change increases the overall cost of mitigating greenhouse gas (GHG) emissions. A recent study by KMPG found that the costs of environmental impacts for a wide array of industries are doubling operational costs every 14 years. The cost resulting from climate change, specifically, was estimated at 1% per year if early action is taken, but 5% per year of delay in establishing climate policy certainty. Other studies have found that climate change could put trillions of investment dollars at risk through 2030.

MARY J. HUTZLER. The Institute for Energy Research is a nonprofit think tank that conducts research and analysis concerning global energy issues.

But today’s hearing is focused primarily on the resource availability and the potential under our feet and off our shores to achieve domestic energy goals, almost unthinkable just a few years ago. In fact, for decades Americans were asking the question, where we will get the energy we need to heat our homes, fuel our cars and meet the demands of a strong 21st century economy. Due to hydraulic fracturing and horizontal drilling technologies, we no longer question whether we have the resources.

The myth of energy scarcity that has plagued our national conversation has been exposed. Just in the last year, the misleading refrain that the United States only possesses 2% of the world’s oil reserves has been replaced by the mounting evidence of our Nation’s resource abundance.

Increased oil sands imports from our neighbor Canada could free the United States from energy dependence on foreign countries where American workers face increasing threats of kidnapping by terrorists and even murder.

The United States has vast resources of oil, natural gas, and coal. In a few short years, a 40-year paradigm-that we were energy resource poor-has been disproven. lnstead of being resource poor, we are incredibly energy rich.

The amount of technically recoverable oil in the United States totals almost 90% of the entire oil reserves in the world. Technically recoverable resources are not equivalent to reserves, but comparing their magnitudes provides a way to measure size. IER’s estimate of technically recoverable oil in the United States is 1,422 billion barrels. That amount of oil can satisfy U.S. oil demand for 250 years at current usage rates or it can fuel every passenger car in the United States for 430 years. It is also more oil than the entire world has used in all human history. The technically recoverable natural gas resources in the United States total 40% of the world’s natural gas reserves. At 2,744 trillion cubic feet, it can fuel natural gas demand in the United States for 175 years at current usage rates, or selectively, it can satisfy the nation’s residential demand for 857 years or the nation’s electricity demand for 575 years.

Technically recoverable coal resources in the United States are unsurpassed and total 50% of the world’s coal reserves. At 486 billion short tons, it can supply our country’s electricity demand for coal for almost 500 years at current usage rates.

Natural Gas Replenishment

The Myth of Peak Oil, Natural Gas, and Coal For many years, we have heard of fossil fuels reaching their peak production levels or at the verge of being depleted.

The same is true for the myth of ‘peak’ coal. In 2007, David Hughes, Geologist for the Geological Survey of Canada, stated, “Peak coal looks like it’s occurred in the lower 48.” And yet, the United States still has the largest coal reserves in the world. Rather than depletion effects, our coal industry is faced with overly broad and restrictive regulations on the use of coal and increasing restrictions on coal production from the U.S. Environmental Protection Agency.

Harry Vidas, Vice President, ICF International. ICF estimates that the remaining technically recoverable U.S. natural gas resource base is 3,850 trillion cubic feet, which represents 155 years of current consumption. The U.S. shale gas resource is almost 2,000 TCF, 52% of the total.

Our current assessment of the U.S. oil resources in terms of technically recoverable resources is 264 billion barrels. This represents 110 years of production at current production rates.

Mr. SIEMINSKI. We took at look at how quickly natural gas could grow in transportation, and it is a very small number, a rounding error in terms of percentages. We use 3% of our natural gas to move natural gas in the pipelines, but when most people think about transportation, they are thinking about trucks or cars and so on. We believe that LNG in freight trucks and then eventually natural gas being turned into liquids like a high-quality diesel fuel—there is a plant under consideration down in Louisiana to do just that [my note: this project was cancelled]—could actually almost double the amount of total natural gas in transportation so that we could get up from 3% now to easily 6% and possibly as high as 8 or 9%. A lot of that is because natural gas, from a pricing standpoint, looks really, really attractive compared to global oil prices. So there is a lot of effort underway there.

Infrastructure issues take time. You can often get some production going and a lot of wells being drilled. Whether or not companies can then afford to build the pipeline infrastructure to move those products, oil and gas, around depends on their own view about how long the production activity will last. Because most of the pipeline infrastructure now is based upon traditional oil and gas and refineries and the like, not all these new plays are in areas where there is access to pipelines.

Mr. YERGIN. I think we have pretty much the same view as EIA, that, you know, it does now appear that natural gas will become an important fuel for large trucks, for railroads and so forth. At this point we don’t see it becoming a major fuel for private automobiles because of the nature of the infrastructure and so forth that would be needed.

Our thinking needs to catch up with reality. Our logistics need to catch up with new production. Everything has been turned upside down. Instead of going south-north, it is going north-south.

Mr. VIDAS. The analysis that we have done is very similar, that although we expect natural gas and liquefied natural gas vehicles to triple their use over the next 20 or 25 years, it still represents a relatively small part of the overall sector. The more likely way that natural gas could be used to displace oil would be through gas- to-liquids technologies or even using natural gas to generate electricity and then using electricity in battery cars.

Mr. BURGESS. the State of Texas has added almost a half million people over the past years from last summer to—the summer of 2011 to the summer of 2012, and the reason for that of course is the availability of energy and the cost of energy, and while energy in and of itself cannot be its own end, it does help drive our economy. So when we talk about not wanting to betray our children and future generations, I think we have a responsibility to the economy, and part of that responsibility is the energy supply that is available to our economy. Dr. Christensen talked about tipping points. I will just ask an open-ended question. I know you guys don’t like to speculate, but what kind of tipping point would we have seen with the economy in the last 4 or 5 years in the absence of shale?

Mr. YERGIN. If we had remained on the track that we had been on prior to when we were going to build all of those LNG receiving stations, we would probably be spending $100 billion a year now to import LNG into the country, so that would have been a big burden. Secondly, had we not seen this increase, this substantial increase in oil production, we would be paying a lot higher prices for oil, and it would be a much, much tighter and more vulnerable market and we would not have had what we have seen is that these supply chains are so long in our economy, these are dollars that stay here. They are going to jobs here rather than going into a sovereign wealth fund somewhere else in the world. So in that other universe, it would have been a much more difficult picture and more congruent with what seemed to be the picture in front of people in 2008.

Mr. SIEMINSKI. Virtually every economic study that I have seen suggests that higher domestic production of fuels leads to greater GDP, and when you get to the import issue you obviously have lower trade deficits. All of that helps the economy, leads to greater job creation, as Dr. Yergin said. I think one of the things to keep in mind is that the availability of relatively low-cost natural gas has actually helped to sustain some of the growth in wind and solar on the renewable side because those are intermittent sources. They need a backup supply and it is often natural gas that provides the backup for these rapidly growing renewables that are going to become a fairly significant part of U.S. energy production and consumption.

Mr. BURGESS. We have peaking demands in north Texas where in the summertime when the air conditioners are all cranked down low, even if you had a substantial wind component, you would never be able to keep up with that peak demand.

Mr. CASSIDY. Mr. Yergin, there are those that say that we shouldn’t export liquefied natural gas because in some way by doing so we will promote the production of more natural gas and therefore contribute to global warming, but what you are saying is that is absurd because if we don’t do it, Australia or Canada or some other country will export liquefied natural gas. Is that a fair statement?

Mr. YERGIN. Yes, I think people will fill the market and fill the need, and in fact are racing ahead to do that.

Mr. CASSIDY. Now, as they race ahead, it is fair to say that if is a $5 billion or $10 billion project to create one of these export terminals, those are a heck of a lot of jobs that will be sacrificed because of an absurd premise? Again, is that a fair statement? Being that if we don’t export liquefied natural gas, then natural gas will not be mined.

Mr. YERGIN. Well, I think in fact if you take a country like China, which as Adam Sieminski pointed out, it is very heavily oriented towards coal and wants to reduce its use of coal and use more natural gas to produce electricity to reduce pollution, they will look in one direction or another, and if we are sending natural gas we would be contributing to their reducing their pollution.

Mr. CASSIDY. So if we can create those jobs, we will simultaneously improve our economy, but too, improve, decrease carbon release worldwide potentially?

Mr. YERGIN. Yes. I think what is happening now is——

Mr. CASSIDY. I am going to let you hold that. If we don’t send energy to Japan, their economy will tank. That is on my mind when I go around to the exporters in Louisiana. I say what do you need to create more American jobs. They say more robust markets to export to. Right now Japan and Europe are in the doldrums. We need those economies to do better so we can create more American jobs. It is in our self-interest to make sure that they have adequate energy supply.

Mr. YERGIN. That is right, and it is in our political interest and it is in our economic interest.

Mr. DOYLE. I hear this a lot, that there is all this development that could be taking place on federal lands but the permitting process is so bad, and I think the map pretty graphically illustrates that there is just not much federal lands where the oil and gas shale plays are in the United States. I just wanted to provide that for clarification.

Mr. GARDNER.   That red spot on the map is in my district in northern Colorado. But there is tremendous opportunity for development in the gray spots, and a lot of that gray spot that you see in Colorado with the Rocky Mountain areas, it is BLM land, it is U.S. Forest Service land. They are unable to get permits through the BLM because of various bureaucracies. In fact, according to the Western Energy Alliance, over 100,000 jobs could be created in the western United States, primarily on those gray lands, if the permitting delays were simply lifted. Over 100,000 jobs could be created in the western United States. That is not because all the development is taking place in the red areas or the pink areas. That is because Bureau of Land Management and other agencies have been so slow in their permitting that we can’t get those permits through to create those kinds of jobs. So I think you would see a lot more red areas if we could actually get a government that was willing to allow us access to those resources in a responsible manner, and so I for one would like to see over 100,000 jobs being created in the western United States.

Mr. TONKO. And we are experiencing this period of relative abundance but we have been there before in our recent past history, so oil and gas markets are volatile and have led us to a false sense of energy security in the past. So how do we develop a national energy policy that is less shortsighted and more strategic? Basically, how can we best use these reserves to maximize——

Mr. GRIFFITH. So this is of great concern in my area because we have railroads, coal and utility companies. I would point out also that it is kind of interested that your written testimony indicates that the Chinese are using about 4 times as much coal as we are and that while they are building cleaner plants, they are not putting their older, less clean plants out of existence in the meantime, are they?

Ms. HUTZLER. No, they are not. With their GDP growth, they need all the power they can get, and in fact, according to the National Energy Technology Laboratory, they are building 60 to 80 gigawatts of coal-fired plants a year, and they think that will happen easily through 2016 and maybe further.

Mr. GRIFFITH. And so they are relying on coal including maybe some of our coal to generate their energy and the growth in their economy. Isn’t that true?

Ms. HUTZLER. Yes. They have to import coal now. They can’t produce enough themselves to satisfy their demand and we are exporting coal to them.

Mr. GRIFFITH. And so when I tell my constituents that not only are we damaging coal but we are also damaging jobs in the United States, we are allowing the Chinese to grow their economy while retarding our economy by not using our clean coal technology. Isn’t that correct?


Mr. GRIFFITH. And so for all intents and purposes, at least at this point in history, there is not the technology available for the United States to build any more clean coal plants, coal-fired electric generation plants, and we are really handicapping ourselves in relationship to our competitiveness with the Chinese. Isn’t that also true?

Ms. HUTZLER. Yes. Currently, CCS technology is not commercially available for these plants.

Mr. MARKEY Just a point. In 2009 in this committee and on the House Floor, Mr. Waxman and I built in $60 billion for clean coal technology, carbon capture and sequestration. We voted it out of this committee with no Republican support. Over the last 5 years, unfortunately, coal has dropped from 51% down to 35% of all electrical generation in the country, and what has gone up? Natural gas. It is less expensive and it is cleaner. So coal is being attacked but it is by the natural gas industry, so let us just get that clear, and we put the $60 billion in and the coal industry opposed the Waxman-Markey bill. They opposed now, and now they suffer from not having the investment in technology to make it cleaner. So don’t blame us, blame the coal industry for not wanting the funding and blame the natural gas industry for their technological breakthroughs that have allowed for the production of more and cheaper and cleaner sources of energy.

Mr. Sieminski, recently the Department of Energy released a study of the economic impacts associated with exporting large quantities of natural gas that was performed by NERA Consulting. The study used outdated 2010 EIA projection data and concluded that while exports would lead to higher domestic energy prices and adverse impacts to American manufacturing, the overall economic impact would be positive. Isn’t it true that EIA’s 2010 data predicted that domestic natural gas use in the power sector would decline between 2010 and 2020, though its use in the power sector has actually ended up growing by 27% just since 2010?


Mr. MARKEY. OK. That is all I needed to know. So way off. EIA was way off. Natural gas and the utility sectors not only did not go down, it has now gone up 27% since that report. Isn’t it true that EIA’s current projections of natural gas use in the transportation sector are seven times as high as the 2010 data used in the NERA study?

Mr. SIEMINSKI. And our supply estimates are also higher.

Mr. MARKEY. I am asking you to just go back to this study that is being relied upon. Is it not seven times higher in the transportation sector than NERA projected in just 2010?

Mr. SIEMINSKI. Yes, sir.

Mr. MARKEY. OK. Thank you. So this data was released in 2010, and since then 100 major manufacturing projects totaling $95 billion in investment have been announced. These are manufacturing facilities that would produce chemicals, fertilizer, steel, aluminum, gas, tires, plastics and other goods, all of which rely on cheap natural gas. That is what is driving this manufacturing. These announced projects alone would push U.S. industrial demand for natural gas 30% beyond the estimates used in the NERA study. Just yesterday, the Wall Street Journal described decisions made by German and Canadian companies to locate new facilities in the United States because of low natural gas prices. The Germans, the Canadians are coming to the United States with their manufacturing facilities. Do you believe that we should be making decisions about what to do with domestic natural gas in 2013 and beyond using data that reflected what was going on in that sector 3 years ago that vastly underestimated what is happening today?

Mr. SIEMINSKI. I think it is always better to have recent and accurate date in making forecasts but——

Mr. MARKEY. Especially since the data we are talking about is like a Frankie Avalon record except it only took 3 years to turn it into completely outdated information that was totally wrong about where we would be 3 years later. Last year your agency found that exporting 12 billion cubic feet per day of natural gas could lead to a 54% increase in domestic prices but today companies are applying to export nearly 3 times that amount. It seems to me that before we permit more natural gas exports to occur, we should have an understanding of the potential economic impacts on consumers, on the manufacturing sector and on the transportation sector in the United States in terms of our own internal domestic growth in those sectors of our economy and have it based upon real data, not old data that bears no resemblance to what is happening in the natural gas sector today.

This panel led by the Republicans voted in 2012 to repeal the ability of EPA to increase fuel economy standards for the vehicles which we drive. Let me just go down the line here and just ask each of you, do you support the repeal of the ability of the EPA to increase fuel economy standards or do you oppose repealing the authority? Can we just go down and we will just get your views on that way in which we deal with oil consumption in the United States?

Mr. KINZINGER. Last week’s Wall Street Journal, there was an article titled ‘‘Can Gas Undo Nuclear Power?’’ which discusses how low natural gas prices are problematic for our baseload energy production, and I would like to know your thoughts on low gas prices as it impacts fuel diversity into the future and existing domestic resources like nuclear.

Mr. YERGIN. I think what has happened with natural gas prices, remember, when people went out to start developing shale gas, it was—the incentive was very great for these independents. It was like $12 and now we know we are talking around $3, and that is really changing the marketplace, the electric power marketplace for everything, certainly including nuclear.

Mr. KINZINGER. So does that give you concerns for maybe the viability of nuclear in the future if this continues? And also, what do you think is going to happen? Do you think in 10 years if you can magically look forward that we will have a diverse energy supply or do you think we will have too many eggs in one basket?

Mr. YERGIN. Well, I think it is the—we have 4 reactors that are under construction, two projects now. I think that in this cost environment it is very hard to see anybody committing to a current generation of new power plants. The Secretary of Energy Advisory Board, the last session was partly devoted to small modular nuclear reactors, in other words, where there is technological innovation. And I think the other question about our nuclear fleet is, it is about 20% of our electricity. Lives have been extended. What happens after another 20 year and does that shrink away then.

Mr. POMPEO. I was reading an article about renewable energy, and in Eastern Europe they subsidized it even longer than we have and even more than we have, and they have had some power blackouts. There is an article in Bloomberg on October 25 that I would also like to submit for the record that talks about these energy blackouts. [The information appears at the conclusion of the hearing.]

You know, our grid could suffer the same kinds of things, in my view, if we have non-storable, non-reliable energy source. Do you have a view of the risk of us subsidizing this at such a rate that we get to a place where we have got less reliable electricity in America?

Ms. HUTZLER. Yes. Germany is a good example because they are phasing out their nuclear units and turning to renewable energy in its place, but obviously it has to be backed up, and it has caused instability to their grid. Neighboring countries are not allowing them to export their renewable energy, their wind energy, to them such as Poland, and in fact, industrial users are seeing some disruptions in their service that is causing them hundreds of thousands of dollars in equipment and they have already told the German government that either you fix this problem or we are going to leave.

Mr. POMPEO. Mr. Sieminski, you talked about renewables growing at a huge rate. It is easy to grow at a huge rate off a small base. It is still not a hugely important part of our energy resource base. When you made these assumptions about its economic growth, what did you assume for federal policy? Did you believe that we would continue our current—somebody on the other side of the aisle called it creative financing. But what assumptions did you make about state RPSs and these kinds of non-economic policies remaining in effect?

Mr. SIEMINSKI. Renewables go from about 13% to 16% of total electricity generation, so there is a lot of growth but it is still a small portion.

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