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tv   Senate Energy Hearing on U.S. Natural Gas Exports  CSPAN  July 16, 2019 2:01am-3:59am EDT

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the senate energy and natural resources committee held this hearing.
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>> morning everyone the committee will come to order, we are meeting this morning to examine the evolving global natural gas markets, the increasingly important role of u.s. liquefied natural gas as well as the competitive outlook for elegy. america natural gas production has literally change the game, we say that a lot around here about that, but, it has been a game changer. our production has started to the levels that many never even thought possible a decade ago. this in turn is boosting our economy as well as our national security. it is providing a long-term low- cost low emissions source of energy for our manufacturers and residential consumers alike. we have such a massive resource base and that we can send substantial values abroad. we are now leading the world and natural gas production, hopefully soon we will also lead in exports. mobile demand for lng, we know is increasing. more u.s. lng export facilities are coming online and more of our friends and allies around the world are building import
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facilities. for the first time since the 1950s we are now a net exporter of this abundant resource and our production is driving the formation of a global market for natural gas. again, the dynamic around natural gas, around lng is extraordinary. the consensus among experts is that experts elegy will continue to be a major driver of demand growth well into the next decade and developed countries in europe, the fast- growing economies like india. a few of those experts are with us on today's panel there here to tell us what is driving these trends and where they may be headed and how u.s. lng fits into the equation. we know that we are dealing with a competitive global market. what i have referred to as a narrowing window of opportunity. i use the term quite frequently and it seems that i have been using it for a long period of time. it is, i believe a narrow window of opportunity to
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establish leadership in the global gas trade. i hope your courtier some ideas this morning on how to make our expertise more competitive. i am particularly excited coming from alaska about the roles of my state complaint. they have just released the draft for the alaska elegy project and move through reserves of gas on the slope market. a pretty important milestone for any federal permitting process and we continue to remark that alaska's gas is a remarkable resource that will add to the security of the u.s.
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import bank is nearing the sunset of its current authorization in september. the spray work about you have in front of you will guide my participation in that discussion this report is for those of sitting out there with reports available on our committee website and i would be happy to refer you to energy.senate.gov so stay tune for more. i think that this conversation proceeds i think we will have an uptick in interest on these very important matters what you think are witnesses for joining us i thank you for your testimony as well as your insight on this important topic.
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binky madam chairman i want to thank each and everyone the panelists were trying to help us through this. there has been a growth in domestic gas production in the last decade driven in large bite research and development in the department of energy. there is potential for more including opportunity in my home state of west virginia which sits on top of an ocean of energy, the marsalis of utica and now we find the rogersville shelter. production has increased, as has the volume of natural gas exports. in fact the united states became a natural gas exporter in 2017 for the first time in 60 years which is pretty special. that is important for our economy and for geopolitical balance around the world. was completed, he was elegy export is expected to reach 9 billion can defeat.
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>> will continue to use these resources and infrastructure in times of conflict. and try to divide us. it is unacceptable to me that our european allies could be held hostage because of
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another nation. u.s. natural gas is abundance and much more attractive for our allies to buy from a democracy than it is from our authoritarian regime . china is purchasing natural resources around the world, and large parts of africa to asia. for certain commodities including energy technology china has become the price setter and exerts enormous influence. most strategically to integrate manufacturing interceptor such as solar panels for economic value before selling them to u.s. and other markets. that is why i support the appalachian storage hub. here at home, i just don't believe we should be granting the chinese government unfettered access to natural resources, when
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that access is not reciprocated. ensure willingness to manipulate u.s. energy resources to advance the long-term strategic positions. in a time when all countries need to focus on solutions for the use of natural gas. for gas emissions, gaining the global energy economy only benefits our adversaries. with that madam chairman, i look forward to hearing from our witnesses today. and having this important discussion. and to thank you senator. in our invitation, we will lead off the panel this morning with stephen lindbergh who is the assistant secretary for fossil energy at department of energy. it's good to have you here the executive vice president in the group, president for the
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energy, thank you for being here. the senior fellow and director of the china program at the center for american progress, we look forward to your input this morning. the executive director at the center for lng, and finally the senior fellow for the center for strategic and international csi us as we know around here, we think each of you for your participation here this morning. for your information we were scheduled to have a series of three votes at 11:00 this morning. the time is less than certain around here so we will see how that goes. what we would like to do is get your testimony here and have an opportunity to ask questions, i think you will see members coming and going. do not take this as an indicator of interest or lack of interest as there's a lock going on this morning. we will continue to move the
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committee through those votes but we will give you more updates as those come. so again, we will begin with you mr. wind bird and ask you try to keep your comments to five minutes with statements included. >> thank you chairman, ranking mentioned, it's good to be here with you and it is my pleasure to appear before you today to discuss the status of the natural gas market and the work done by the office of fossil energy to support record-setting u.s. natural gas production i had the opportunity this morning to read the power so disposed and where the department stands ready to assist in whatever way we can. as the senator mentioned saying the united states is now the world's largest
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producer of both natural gas and crude oil, each month we are setting a new record level of production, the surgeon natural gas production amounts to the increase of over 60% from 2009. this year's production is on pace to exceed last year's by nearly 10%. the exports that we are now in our third consecutive year as the exporter of natural gas and we estimate the united states will be a overall exporter of energy next year. these exports are reducing our trade deficit by billions of dollars each year and increasing the national security. cargoes have landed in europe, asia, africa, the middle east, south america, north america, and the caribbean, 36 countries in total. so far in 2019, they have exceeded 65 cargoes through april of this year asia has been the top importing region
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over the last three years but much of the this year has been going to europe and at the same time natural gas has become the primary fuel used in electricity generation responsible for fueling over 45% of the power generated in the united states in 2018. the increased use of natural gas has helped lower energy- related carbon emissions to a level not seen since the late 1980s, u.s. energy-related carbon dioxide emissions will be 4% below 2018 levels in 2050 as the use of natural gas in the united states continues to increase. fossil energy works on both research and development of natural gas technologies as well as the regulatory space. we strive to enhance u.s. economic and energy security by managing and performing
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research that maximizes the efficient and environmentally sound production and the use of natural gas and other fossil fuels. in our regulatory program, we support the development of policy options that benefit the u.s. public by ensuring access to adequate supplies of affordable and clean energy. the administration ideally has also made this a top priority to highlight the economic benefits of the appalachian petrochemical industry made possible by the surge in natural gas production in the region. industry is estimated that the appalachian petrochemical industry would support a total of five methane crackers, 100,000 jobs, contributing to the revitalization of the region. these petrochemical plants would also bring in tax revenues to communities, provide opportunities for hard- working americans, to fundamentally transform their lives and give the opportunity to diverse and patrick amo
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production. we remain committed to working with stakeholders at all levels of government, industry, and academia to promote these developments. there is no doubt that natural gas has transformed our nation and the world for the better. it has grown the economy and created countless american jobs and made our air cleaner. further increased exports have given our allies the secure source of energy, natural gas has proven to be and will continue to be a vital part of the trump administration's commitment to the all of the above approach to energy. i thank you for the opportunity to appear before you today and look forward to your questions and finally, i want to thank my wife and our daughter for being here with me today. it's always good to have family backing you up. thank you. >> that's great, thank you.
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we welcome you and your family. >> good morning and thank you chairman and ranking members . i'm the executive vice president for simpor energy. we've been in the natural gas business for over 150 years. we are one of the largest utility holding companies in the united states with nearly 20,000 employees serving more than 40 million customers worldwide. such as leaders in north america's growing export market representing five strategic export opportunities in north america with access to both the atlantic and the pacific basins. our projects include two in louisiana and one in texas and two on the west coast of mexico that together could export 45 million tons of american lng in the future and this morning i would like to spend a couple of minutes on the u.s. natural gas supply
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and how we see its impact in the american economy and how exports could reduce trade deficits and benefit foreign relations and the environmental benefits of lng. as mentioned, the u.s. became a net exporter of natural gas in 2017, for the first time since 1957. that is really thanks to american ingenuity and to the gas revolution, the supply of inexpensive natural gas is expected to increase to 90,000,000,000 ft.3 per day in 2020. this is a 30% increase from 2017. the growth in natural gas is good for american consumers, our industries, for electric generation and for international buyers of lng. the u.s. accounts for about 22% of the global gas production and is on track to be the largest exporter of lng by 2024 or maybe sooner. growing natural gas production and lng exports are having a
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strong positive impact on our country with the potential to add millions of jobs throughout the entire value stream . we seen this firsthand. the economic benefits on the export facility in louisiana. on may 14, we produced our first lng at our cameron facility with the honor of being joined by the president of the united states, diplomats from the eu and japan as well as by some of your colleagues senator cassidy was able to attend as well. on may 31 the first tanker departed cameron with american lng for the world market so we were proud of this moment. the u.s. economic impact from cameron lng estimated to be $336 billion over the life of the project and should generate about 53,000 direct and indirect jobs annually over 20 years which is equal to 1.1 million job years. at the port arthur project in
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texas which we are developing, we estimate the economic contribution at nearly $290 billion. or slightly over $11 billion annually over 25 years with the average of nearly 5700 direct and indirect jobs in texas and about 41,000 nationally through 2043. so it is clear, lng exports create a lot of jobs, good paying jobs here in our country. today, asia accounts for 70- 75% of lng demand and in europe about 15%. while most, not all, but most of the u.s. export capacity exists today or is developed in the gulf coast region which takes the lng tanker about 21 days to travel to asia through the panama canal, that is impacting our competitiveness . however, separate expects to cut that to 12 days or even last by developing more in our facility in baja california
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and mexico and when they are completed, they will connect with pipelines from texas to form what we are calling, the pacific highway. the american lng will be more competitive as a result. of the 10 asian countries this accounts for 80% of the trade deficit which happened to be countries that need lng, exporting this not just to china which is the largest importer in the world, but the countries like japan, south korea, vietnam, india and others, this could be a true game changer for our trade deficit and since they all purchase lng, why not buy from the united states as long as we are competitive? now, at the same time lng trade could strengthen our relationships with foreign governments by providing alternatives to russian gas and so, simpor has signed a 20 year agreement with an oil and gas company with preliminary agreements for major natural gas companies in europe and asia. as a result of the contracts, the u.s. will benefit and lng
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exports will benefit our partners as well. more than half of the countries in asia have air quality challenges and need cleaner natural gas to displace less clean resources and combat climate change, so the trend obviously is to phase out coal fire power, natural gas is a logical substitute because it is comparatively low cost with environmental benefits and emits 50% of the carbon dioxide and incompetence the growth of renewable resources like wind and solar, as part of the overall portfolio, natural gas makes sense. in conclusion, the role of the exports in the u.s. global energy leadership, i think this is larger than any of us could actually imagine and will continue to grow and this is focused on helping our country realize its full energy potential by being a leader in the energy export market. i appreciate the opportunity to be here and look forward to your questions. >> thank you mr. arriola. doctor hart welcome. >> thank you. thank you for
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the opportunity testify today. i work as a china analyst for two decades and i'm here to weigh in as china's role as a potential expert destination for lng . there is tremendous speculation for the potential of further the large export. some analysts argue that exporting u.s. lng will help rebalance the trade deficit and generate american jobs and help china transition away from coal. i'm here today to share a different view. arguments calling for the u.s. to export large volumes of lng to china reflects some deep misunderstandings about the way global lng markets work and deep understandings about china's national interest and how beijing intends to pursue the interest.
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i would like to focus my opening remarks on four key points. first, transporting u.s. lng to china is prohibitively expensive, there's currently not a strong commercial business case to do so and in large volumes. china does not desperately need u.s. lng, they are already exporting this from 17 different nations and the shipments they receive are among the most expensive in their supply chain. that is simply because the gulf coast is located far away from china's import locations far from their other major suppliers. it takes a tanker, when transporting the natural gas, the tanker from the u.s. gulf coast must fill two days longer then one from qatar and 15 days longer than one from western australia. as a result, shipping costs from the u.s. art wife those from qatar and almost 3 times those from australia.
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what we have to understand, if china chooses to purchase large volumes of u.s. natural gas, they are paying a price premium to do so. for that reason we have to question what intentions are in paying this price premium when they have 17 different suppliers to choose from. secondly, the most foolish analysis of u.s. china trade potential, hoping that long- term infrastructure investment projects will make the trade economically feasible. these are projects where a chinese investor would come in and invest billions in the u.s. natural gas project and gain access to the gas this produces for 10-20 year time. unfortunately these deals are out of step with current market trends, the market is shifting toward short-term contracts, particularly in asia with the chinese purchases. also, technical innovations are making it possible to use
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floating gas liquefaction and loading we gasification terminals so we don't have to spend $50 million for export facilities. anyone assessing the feasibility of those high dollar long-term chinese projects which require chinese investments should question why we are not considering some of the more flexible and cheaper alternatives emerging on the market. third, at best, u.s. lng would be a short-term fix for china, chinese leaders do not intend for their nation to be dependent on the united states for its energy supplies. in fact, the u.s. energy information administration estimates that china may have more shale gas reserves than the united states. china is not doing a good job at developing and exporting those reserves but beijing is determined to turn this around and to follow the u.s. is example. we should not underestimate the probability that those determinations will become the reality given the amount of
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money that they are willing to invest in doing so. china is already the third largest global shale producer behind the united states and canada. we should not put all of our eggs in the basket of expecting china to be a massive importer of lng for decades to come. if chinese leaders use state funds to pay a price premium that they do not need and do not intend to utilize over the longer-term, they will expect something in return and we need to understand exactly what that is. at a minimum, even if beijing's intentions are completely pure, large export deals would increase u.s. economic dependence on china in a time when they could not be more clear that that dependence brings growing risks . u.s. states, companies, workers, and families whose livelihoods depend on lng shipments to china or continue chinese investments in large developers projects, could one day find themselves in the exact same situation that our soybean farmers are
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in today. they are in-state shipment twice before needlessly deepening the economic dependence on our biggest competitor. if china agrees to purchase u.s. lng a large volumes or invest hundreds of billions of dollars in u.s. natural gas projects in exchange for the u.s. agreements to back down on court trade complaints or any other critical u.s. national interest, a deal of this nature could undermine u.s. economic security for decades to come. thank you again, and i look forward to your questions. >> thank you doctor hart. mr. riedl. >> good morning chairman murkowski , thank you for allowing me the opportunity to testify this morning. i'm the executive director at the center for liquefied natural gas. this represents the value chain providing with unique and site that lng provides to the local economy. operating with the natural gas supply association represented
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for more than 50 years. this gives us the steep understanding of the entire u.s. natural gas supply portfolio. i appreciate the opportunity to address the committee about the evolving global natural gas market and the many economic benefits. america's abundance of natural gas has led to our emergence as a low-cost exporter of energy trading u.s. jobs, growing our economy and significantly strengthening mobile and lg security while reducing emissions and pollution. the united states vast supply of natural gas is the reason we are here this morning and able to have the conversation about lng exports without it we would likely be having a conversation this morning focused on lng imports. it is this supply growing by the year that underpins the benefits we could achieve with exports. technological breakthroughs and the oil and natural gas industry have unleashed a natural renaissance establishing the u.s. as us in
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a place of leadership. we reached a all-time high according to u.s. potential gas committee. amazingly those increases are up 69% since 2005 according to the eia while prices for natural gas have fallen 64% over that same time period. some new domestic supplies for affordable natural gas have created the competitive advantage for u.s. manufacturers as well leading to greater investment, industry growth and new jobs. exports forecast eight additional investment of roughly $135 billion to build 59 new projects and 11 expansions between now and 2022. according to studies for the department of energy and exports they will not compete with the manufacturing sector here in the united states and it's important to understand that the exports will be met by the natural gas production. to illustrate how quickly the u.s. has moved being in the exporter of natural gas, we only need to look back 11 years. in 2008, the annual energy outlook forecasts by 2030 that
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the united states will need to import roughly 8 the annual energy outlook forecasts by 2030 that the united states will need to import roughly 8,000,000,000 ft.3 of lng per day fast forward to the annual energy outlook, the forecast is vastly different. exporting by 2030, 13 1/2 per day. this is a swing of 21 1/2 without having any material impact on the net price of natural gas here domestically. so what we are finding is that lng exports can and will react to the global marketplace. with wide demand for exports today approximately 37,000,000,000 ft.3 projected to increase to around 67,000,000,000 ft.3 per day by 2035. exports create numerous environmental and economic benefits for the united states and global consumers. i'd like to focus the remainder of my remarks this morning focusing on these two areas. conducted by the department found, exports could reduce global greenhouse gas emissions by displacing more carbon intensive fuels for
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importing nations, the studies have also shown how natural gas and renewables are ideal partners for improving quality and omission. a prime example of where that is taking place is in india, some 400 million people are lacking access to reliable electricity. we sent 36 cargoes to india roughly 100 bcf of gas. what we've seen in that time. , since 2016, serving that market, we are seeing greater adoption of electricity greater generation cleaning up the air. in 2015, again in 2018, finding exports or net benefits for the u.s. economy. that's by the department of energy finding that the results, the increase in the u.s. household incomes and their welfare the department study determined the increase production will drive investments to revitalize the economic region that bring
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thousands of jobs to the area. the promise of more facilities in the united states also brings the promise of a new era of benefits for the u.s. economy and our environment, our norris natural gas resource base is positioned to help the united states compete on a global level for the lng market share. still providing a economically affordable adventitious fuel source for the u.s. customers. the exports benefit everyone with billions of dollars in investments and thousands of dollars in good paying jobs here at home while creating a cleaner future for our world. in closing i commend chairman murkowski and the committee and their commitment to helping find solutions to address energy needs and i look forward to your questions. thank you for the opportunity this morning. >> thank you . tsafos welcome. >> thank you. inc. you for the opportunity to speak today. as everyone has attested to, we are living in this transformational moment and global gas markets. in the united states we are at
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the center of this transformation so i want to commend the committee because it's leadership and the actions that have taken place over the past few years have made this possible. what i want to leave you with is for things. the global gas market is changing, there's no doubt about that. that change, it sometimes caricatured, the headlines don't quite do this justice, to the complexity of the system. in my view, i wanted to share four profound shifts taking place in the global gas market that i think should guide our decisions and thinking. the first is complexity. 20 years ago this used to be a simple system, a handful of producers and a handful of consumers and today we live in a world of 20 exports of lng, and 20 countries imported. this is a more complicated system, the second shift is structure with more
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transactions taking place in a short-term market. this is a encouraging trajectory but at the same time the long-term markets still dominate. if you look at the spot market for lng it's about 4% for the gas used in the world. it's important to focus on the market and it's important to understand the context for which the market exists. the third shift is in pricing. even in 2018 less of the world's gas was priced with gas on gas competition with regular pricing and oil fixation is very important. the price that consumers paid for lng tracks the price of oil very well. it is important, whenever we talk about pricing to look at the details and look at the nuance because the headline stories sometimes do not do this justice to what's really happening. the third shift is in geography. we have a monumental shift where these will be the top
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three suppliers with russia emerging as a clear force, china has become the largest source of incremental lng in the world overtaking south korea and in the futures this will over take the past. what happens in china it will have a profound impact on the market and we have to think about what this means. so, my point for these shifts, it's clear, changes taking place that changes sometimes evolutionary not revolutionary. we should understand and embrace the complexity of the system. the second observation i want to make about the current moment we are living in. prices are down, in europe, and at the same time companies are investing with a new wave of supplies. the new wave will be more competitive, it will be more diverse and it will be canada, it will be east africa, it will be southeast asia and so,
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one of the key challenges will be to find a role for the united states to compete in that marketplace, companies will change, business models will turn to states for support with judah little geopolitical drivers in the market. the third observation i want to leave you with is about institutions. we desperately need the common basis for which to talk, this means data, publicly accessible data, data that everyone could rely upon to have a good conversation about what's happening with natural gas. when we talk about oil, it could all look at it, a certain number of reports having a common foundation for discussion. we don't have the same thing for global gas. the second aspect of the institution as the conversation on gas and energy security with different reasons for different understandings of gas security which is incumbent upon the united states for its part in the international revitalization
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of the conversation to measure gas security and how to enhance this altogether. my final observation, this is about enhancing and supporting u.s. lng exports. my observation has been, if you want to build lng anywhere else in the world, you could probably get the u.s. government to help you. if you try to buy u.s. lng, you're kind of out of luck. and so, i think we really need to have a better conversation about sharpening the tools that the u.s. government already has two build the ways to get countries to import lng with gas more broadly, giving the rituals and resources that they want and need to make this possible. thank you very much for your time and i look forward to answering your questions. >> thank you mr. tsafos. great perspective here this
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morning. we will begin with our questions. we are trying to figure it out from here. i will start my questioning by focusing on alaska. none of you have talked about it, we recognize when we think about the strength of our natural gas in this country, we have extraordinary resources down in the golf talking about how that is poised to move out in a significant way. mr. tsafos you recognize your work in the community here moving forward with an expedited process to help facilitate some of these exports, we have not been able to move out on our natural gas pipeline or a way to get our gas to market but we do have an opportunity to be a serious contributor in this more global discussion. our market is not in the lower 48, our market is asia. doctor hart, you mentioned one of the challenges when used inc.
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about united states natural gas, lng going over to china , is that it is expensive to move this from the golf. the time involved, it's more considerable land bringing it up from cutter. if you bring it down from alaska it's 7-9 days, it's what i'm told. one of the advertising points that we have coming out of alaska, we don't have any chokepoints and we don't have any pirates. but, as doctor hart has pointed out, our gas will be more expensive, at least right now, given the design of our project. because of the geographic reality that we are dealing with in advancing, our gas line or some alternative to move. i want to talk about ways that alaska lng could be more
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competitive. i would ask your views on that mr. tsafos, and specifically, what do you think about the potential chinese investment in the project? then i would like to go to you doctor hart for your views on that . it does not sound like you're necessarily advocating a ban on lng imports to china but you are certainly urging great caution. i would like you're very specific views on the alaska potential, the potential alaska lng project because of the agreement that our state signed with china. a memorandum of agreement to buy alaskan gas. >> thank you senator. when i think about alaska, i think about two challenges. one is getting permits and the second is getting the math to work. >> not a permanent part.
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>> i think that the economics out there are very difficult. in 2012, when companies propose to the state to join to develop this project, this was a different market, the market has changed. i think that there's sort of a narrow commercial window in which the project would be successful. i expect to see --. >> defined? >> i'm curious, how much time you think given all that's happened globally. >> i apologize i don't mean time. the window of time always moves. the window i'm talking about is the commercial margin. could you make money delivering this to asia? as you know very well, alaska's challenges, are in part, this is a long pipeline, these are the main things that challenge the competitiveness of the project. i look forward to seeing what the new governor puts forward in terms of how to structure
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the project. i think there is a structure that could work. my view having worked on the alaska project at a previous capacity is bad, there's a world for the states taking a leadership position as long as the risk and the reward is appropriately distributed, which brings me to my comment on china, the concern i've had in the past, about possible chinese involvement, in the project, it's been that the structure that we discussed put a lot of risk on the state may be, the successful model has a find a way to have everyone bear the fair share of risk with the project being made possible for one party with a disproportionate amount of risk. >> doctor hart. >> thank you very much for the question. as i understand the alaska project, there's a planetary agreement between the state of alaska and three chinese central enterprises which would be china investment corp., bank of china, as i understand, the project, they
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would in theory bankrolled a price line infrastructure over alaska in exchange for guaranteed access to 75% of the gas produced over the lifetime of the project. i have a few concerns and i will outline my concerns about that. the first is that these are state owner prices, the answers to the chinese communist party, the answer to the chinese national interest. right now, as part of the u.s.- china trade war, we see how the chinese communist party is leveraging american business and american state and american worker dependence on the chinese economy on chinese market access, in a bid to bring the u.s. to heal. and pressure the u.s. to back off. personally, i don't agree with the way the united states has pursued trade in stressed interest but this is an opportunity to watch china use the leverage of perceived it
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had over the united states. it clearly uses those levers strongly. so we should be cautious about allowing a chinese enterprise to control that degree of decision-making and financial resources in the american project. currently the united states, the u.s. congress, they have allowed chinese state enterprise to have a minority stake in natural gas projects and oil projects. we've never allowed a central enterprise to have a majority stake in the u.s. natural gas project. so that's something to think about very carefully, second, my understanding is that, multiple commercial oil, and gas firms have walked away from this particular project because of its cost required to bring it online. i would question why is it that the chinese company is willing to pursue commercial companies viewed is not
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commercially feasible, we should have a lot of oversight over, ideally we would have an open bidding process for development projects in the united states, those would go to the best commercial bidders. if this not was something feasibly commercially but something the communist party is willing to invest in, this to me, it speaks of more interest than commercial ones being involved in the deal, so this is something that would require very serious u.s. congressional oversight in my opinion, to make sure that we aren't making a deal that would be bad for the united states over the long-term. third, i would have to ask you to wrap that -- third the finances we would need finances over that with examples from sri lanka and other countries about the risks of being in debt to china for infrastructure projects. and fourth, because of these risks, i think we cannot have too much oversight for investments of that nature. we probably have some differences here in terms of the role that this would play
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out sign of the financing but i appreciate your views and i would like to talk more about this. >> thank you madam chairman. i have tremendous concerns about china and russia. their geopolitical role, real quickly just say yes or no. you all have the same concerns, you've got doubts about what russia and china are trying to do and it's in your political arena of having this energy, do you believe that china is a threat? >> russia is a threat with the north stream pipeline. i think with respect to china, the trump administration is addressing a lot of the issues that we were talking about with respect to structural, fundamental structural changes that need to happen between our two countries and how we
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do business, things like forced technology transfer, i was on the negotiating team over there in november then again in january. they are very interested in u.s. lng but we need to fix the structural challenges we have. >> it may go into this if i can. are we as americans allowed to go into russia and by their resources, develop resources and control the flow of resources back to the u.s.? doctor hart? >> i can't speak to russia , we are not allowed to do so in china. in fact china's information about the shell gas resources is classified so our companies are also not allowed to fully assess what they have in the ground in order to understand how they might weigh in as a potential exporter over time. >> you would think that we would reciprocate this, china is coming out with, if you all know about the deal they want to make with west virginia, my
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state, they said they want to invest $83 billion over 20 years, you can imagine that kind of carrot being swung out there. this is a tremendous thing for a small state. $4 billion per year. they would invest $83 billion, what would be their interest. we can't find out what the ml you is, i've asked indirectly to the energy company, we can't do get a direct answer. my company tells me they want propane, methane, and butane but we do not have a review on. our building stock for manufacturing, i can't believe that this administration would allow in any way shape or form that type of project to go on. there's another problem, american methane, american methane is by the russian oligarch. and what they are doing here in america to take out our building stock. i do not know why we have not stepped up and just slapped a
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stop and cease order on this. do you have any comments on this or anyone else? >> on the issue of u.s. access in china, i would like to remind the committee, president obama actually signed the shale gas cooperation agreement with china in 2009. that agreement was intended to give u.s. companies access to china's shale sector, unfortunately the access was not exactly forthcoming so there's an agreement on the books that was not fully honored by the chinese side. their geological data is still classified. we don't have anything like reciprocal access in the chinese market. regarding the project with american, with the project in beaumont texas, you know i come from that town, i've got a lot of personal and professional concern about the project. >> with american methane? >> yes. i would very much like to know, many more details that have been released publicly. they are counting on the chinese counterpart to build cracker facilities to take.
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>> they're not going to build a crackers in texas or west virginia. >> indeed. i am not sure if they received the permits to build those facilities so even that might not be feasible. >> i want to address your point on russia , specifically. you know, we signed a contract with poland, poland did not want to solely rely on russia. what we are finding is that other countries like germany and croatia and greece, they are building lng import terminals because they don't want to just deal with that one country. so, we think having u.s. lng available to europe, it's giving them option analogy, it's good from a competitive standpoint and good from the energy independent standpoint for those countries. >> do you have input on this service ? you are looking to market a different view. >> i don't see this the same way. i think, if you look at the european energy system, there's a lot of things that
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are happening. >> do not see the threat with their intent to be especially china? >> i got a lot of concerns about china, absolutely, russia, i have some concerns, i think sometimes we overstate these concerns. and i think, there's may be ways to neutralize those concerns. >> i think from the standpoint of russia, i think what we are seeing references thrown in the opening remarks, you get to look at the broader european market and the decline in gas supply in the field they've historically relied on and the follow-up, for the idea that u.s. lng provides the alternative or different outlets for these buyers in europe really decreasing the opportunity for russia to behave in a manner that they have in the past. so the whole that creates this account to be accountability issue. from the chinese perspective, i think looking at what's
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happening as the secretary was saying, the issue was china that we continue to sort of be aware of, is how they want to participate in these projects, the precipitate their particular their participation has been one on the buy side. looking at this from the united states or our competitors, looking at how competitive could this be in the u.s. markets? we are concerned about what their intent is. >> looking at this from this perspective only which is what we are here to talk about, i look at it from that standpoint. >> thank you for being here. >> anytime we have an inquiry as we are today into evolving , the world of the united states might play a role in those markets. i think we have to evaluate, honestly, what domestic laws
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we might have on our books that would have an impact on global markets. we've got a lot of testimony we've heard today. i appreciated your reference to the fact, in your testimony, the united states has abundant supply of natural gas. unfortunately, as was noted, the united states has no u.s. flagged lng specialty carriers that are themselves, compliant with the jones act. and as a result, there is severe limitations in how lng could be transported between u.s. courts. this ends up having a very significant impact, not only on domestic supply or domestic markets, but also on international markets as well. so, is it true that the lack
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of lng specialty carriers, has forced some states and u.s. territories to have to import gas from other countries ? even including russia? to meet their energy needs, notwithstanding our abundant supply of natural gas. >> that is accurate, senator, thank you. there is a concern with regard to the jones act that it will not allow within the facility allowing it to travel to different destinations within united states. it seems that these requirements are forcing us to consider more expensive solutions, solutions, that in many cases threatened to inhibit our own energy needs domestically. this could end up affecting the price for consumers. looking at a region like the northeast where they are constrained from a pipeline issue of natural gas, yes this could be a impact for the price of gas. natural gas is very valuable
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to us. we have it in great supply, we consume a lot of it and we produce a lot of it. we are slight net exporters of it. in order for this to benefit american consumers in the way it ensures us to be able to develop the resource we have to be able to get this from point a to point b. sometimes our domestic laws interfere with our ability to do that but given these circumstances, do you think we should perform reform our cabinets loss? especially the jones act, so as to give us more flexibility , the kind of flexibility that we need for lng transport? >> absolutely, i think if you look at scenarios that you are outlining, the ability to move gas into areas that are there pipeline constrained or rely on natural gas, especially heating or electricity generation, the ability to do so, we have a facility in maryland down the street which
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two point would be a very logical opportunity to move lng coming out of the marsalis , moving gas from the marsalis into the northeast where they are pipeline constrained with an alternative until pipelines and infrastructures developed to reach those markets. >> what would be the argument against doing that , in other words why, on what planet, in what universe would this make sense for us to keep those laws and to not amend them so as to allow for a commodity that americans produce a great abundance and rely on a great abundance to be transported from u.s. port to another without a jones act compliant u.s. flagged ship that doesn't even exist? what could be the plausible cost qualification for keeping such a law and not creating an exception for a law like that? [ laughter ] >> this is a great question, one that i think is probably, looking at it, trying to answer that question, as i
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think about the opportunity that exists and the cost associated, taking a look at this, the cost of building a carrier in a u.s. ship yard, it was cost prohibitive that delivering gas, to your point, it's cheaper to bring it from other countries that are not flagged vessels. so when you think about this from the point you are making a security standpoint, it does not make good sense. >> international trade is important, in energy and in many other areas . sometimes this makes sense to import certain things from other countries. one thing mr. riedl, and madam chairman, to all my colleagues here, that makes no sense, is for us to be importing gas from russia to new england simply because of the 100+ euro law that makes no sense that law needs to be reformed but i prefer it would
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be repealed altogether, it needs to be amended at a minimum, to send natural gas from one u.s. port to another without a u.s. flagged jones act compliant ship, capable of transporting such shipments, that today do not exist. thank you madam chair. >> thank you senator. i'm going to run off and go vote when the senator has concluded with senator gardner. you'll have the opportunity to ask a question but i will be back in a couple of questions. >> thank you madam chair for your hearing and to our witnesses, i want to talk about something that i've concern about. this is from the standpoint of, the state of michigan, a great manufacturing state, specifically i want to ask a few questions that build on what senator manchin talked about in terms of methane, which is critical for american manufacturers. in november which is critical
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for american manufacturers. in november 2017, the president presided over a series of trade agreements with chinese companies, one of the biggest was the $26 billion deal to supply liquid methane to china, critical for american manufacturers that we don't want to go up in price in terms of american jobs. there's no question that china's interest in access to u.s. methane, it's intent on increasing its ownerships take in its critical manufacturing sector. attracting new manufacturing investments in their country, of course being able to do finished products and sell them back to the united states. this is a relatively new dynamic, u.s. exports have increased 37% over just the last two years. this strikes me that before we continue this trend, now is the time for us to think about how further increasing exports of this critical feedstock for
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american jobs in manufacturers, is done, the significant investments in the united states that have been made by our manufacturers because of affordable access to ethane. i have three questions i would like to ask doctor hart and mr. tsafos. i'm curious to hear your thoughts on several questions. first, what is the importance of stable and affordable supplies to u.s. manufacturers? second, our countries, are they interested in having a firmer grasp and are we beginning to see the critical resource with foreign powers that don't always have the best interest in mind? lastly, do you believe that this is an area where all of our agencies, commerce, energy, defense, state, should be carefully looking at how we go
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forward to ensure our manufacturing interest, american manufacturing interest and jobs are sufficiently considered as exports rise? >> thank you for the question . you know, china is developing its petrochemical industry. one trend we see across the industry is that they are interested to import the feedstock and do the refining and manufacturing i will leave it to my experts. on what this could mean for jobs, from a manufacturing for us to be playing that role. in the value chain, in particular the deal that is proposed where they are building export
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terminals along the river to export to china i'm unable to find details about that deal myself. as an analyst to comes from the area i don't have the information to make the assessment. i would ask you, as members of congress, to please, help american citizens understand what we are giving away, what we are getting, and what we are risking, particularly deals that as this one does, involve not only china, but also russia, two countries that are not exactly our, proven to be our best partners in the i. >> i can just say on behalf of manufactures i've talked to, the idea of us giving up that critical feedstock is something people are concerned about in terms of american manufacturing
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jobs. >> senator, i think it's something i don't follow follow quite as much of too much substance so i think i'll pass. >> one more thing. you talked about exports to china and a parallel to our situation with our sorting farmers. i have sorting farmers very deeply concerned and are sacrificing tremendously given what's happening. can you sort of lay out what's happening here in terms of our independence and reliance more on china and those things? >> thank you for the question. in the soybean sector china is a massive source of demand. they have 1.4 billion people, so that demand market is really hard to replicate anywhere else. so for a soybean farmer or corn farmer you can have big sales in the china market that you just
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can't replicate anywhere else in the world. at lng we don't have that situation right now. there's a broad diverse school in the market and create new sources of demand. i am particularly concerned about the united states creating a false dependence on china that would risk putting some of our lng companies, workers and community in the same situation that our soybean farmers are in today. i hate seeing what is happening to the families that depend on the chinese agriculture market. we should think twice to extending that to other industries if we don't have to do so. >> thank you very much. >> thank you, madam chairman, for the opportunity to be here today. we're leaderless today so i wasn't sure who's yielding to us, but thank you very much for
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the witnesses for being here today. congress passed last year and the president signed into law on dps 31st legislation that myself and senator markey introduced that created a u.s.-yisha partnership the goal being to work with countries across asia to export u.s. energy products and lng, working with people in taiwan for renewable energy, working with south korea on lng and others. so obviously colorado being in the rockies and the west, we have a lot of competition in our west and a lot of sort of barriers to midwest markets because there's so much production taken place there.
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so by placing this facility you talked about in the west, west coast that would reduce shipping time, would it be closer to home so to speak? >> it definitely would. i think one of the things that does make the gulf coast gas not as competitive as it could be in asia is travel time. it's having to go through the panama canal, the congestion, and i think having, you know, sites on the west coast, on the pacific, getting access since we do have the infrastructure and pipeline system to be able to draw the gas together i think provides a lot of optionality not just for u.s. producers but also for asian buyers. >> and did your company consider building a facility in the united states and i know you
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talked about the facility in mexico. but what issues did you look at when considering to site in the u.s.? >> we over time have looked at different opportunities say on the west coast of the united states, but we found there were other parts of the country and north america that were much more amenable to getting these things done. >> is that because of the hostile environment in the west coast? >> yes. >> i think that's something that's a huge concern, that you have production jobs and opportunity to develop and states are being held up by anti-energy regulations in the west coast that prevent us from reaching our full potential. it's not just the full potential of jobs in colorado but the opportunity to provide south korea, taiwan, japan and beyond with u.s. energy opportunities, affordable abundant u.s. energy creating u.s. jobs and wealth that we can't get out of this country because you have states like california or others that don't allow these to be built.
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that's a significant problem. >> what i would tell you is we tend to focus on those parts of the country like where senator cassidy comes from that welcomes these opportunities that understand the economic impact, the positive economic impact it can have and where these can get permitted and approved in a satisfactory manner. >> thank you. and a facility in the northwestern united states i'm interested in and supportive of because of its potential to help colorado producers and our asia energy partners have access to u.s. produced energy. you described a littlmited wind of opportunity because of competition the u.s. faces. can you talk more about other facilities? >> when we think about a project like jordan cove on the west coast, that's a project that has
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had numerous challenges from the regulatory permitting process. and if we look at sort of the window of opportunity you hear testimony talking about the efforts from other countries that are producing lng, but qatar making commitments to increase their production by 20%, australia increasing their production. so when we talk about these markets and a project like jordan cove for instance would be competing against it, are these large producing countries of lng, like qatar and australia that are already in the process of building and expanding their lng infrastructure. so when when we talk about a project like jordan cove they are competing against those projects and will continue to compete against those projects. so any delay they suffer in the regulatory process will obviously slow their opportunity to market and opportunity to contract. >> i'm out of time but i would
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like to follow up with you on personnel issues, coordinating issues and the work they do. they're making sure we have the personnel necessary to get the job done and carry out the analysis and cooperating status you have. do you have a team line on jordan cove or a rough estimate when we could be looking at jordan cove? >> yes, according to the first schedules they put out last year this year they'll come out with a total of their final eis and they're total will come out in january next year. and as the department of energy has done on the last several authorizations we will expedite it and move it out. we're prepare today move it as quickly as we possibly can. i will tell you the last couple we've done, we've done in two weeks. i can't promise you that on jordan cove, but we will do it
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as quickly as we can. >> thank you, senator. >> thank you, madam chair. thank you for this conversation. i really appreciate the opportunity to have this hearing today. since becoming a net exporter of lng in 2017 has u.s. consumers experienced fluctuation and cost? in other words, are consumers experiencing increase in cost as the u.s. grows in the global market? i'm going to open it up to the panel and let's start here. >> senator, u.s. gas prices are about as low and as nonvolatile as they've been in recent memory, in 10, 15 years. >> but what about the consumer? what is the consumer saying as a result of this? that's my question. are there fluctuation costs or concerns energy costs are going to increase when it comes to the actual kaurm at the end of the
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day? >> i'm talking about the whole sale price of gas, so the reference price is quite low, has been quite low in recent years and have not seen any substantial increase. >> so no impact to the consumer is what you're telling me. >> the price yesterday closed at $2.46 which is lower than it's been in the last eight months. so when we look at the price of natural gas the cost for consumers has actually gone down. >> and do we have any concerns that as we continue to export and grow, that there will be a negative impact to the consumer at some point in time in the future, that it would grow? >> so there's two points to make there. the first is when you look at sort of the forecast eia puts out on a yearly basis and project natural gas to stay below $5 at the price, so you will see a slight increase, but that will obviously be tied to
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inflation costs. and the eia expects we will be up about 111 billion cubic feet mer day. the other piece of this that we don't often talk about is we have not yet climbed the learning curve in this unconventional oil and gas in terms of productivity. and the department of energy has a number of projects and efforts under way in our rnd to increase that productivity. and i'm quite sure as we move
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forward in time we're going to see productivity increases. and then finally we also have the issue of sfranded gas, primary coming out of the permian basin. as we get that infrastructure out to move that gas out of the basin into the markets, i believe we're going to see long-term stabilized practices of natural gas. the only issue that we have with respect to the consumer is probably up in the new england area because we have a lack of infrastructure to get gas from the area of pennsylvania, ohio, and west virginia up into the new york, new england markets. >> thank you. let me ask dr. hart jumping back to -- thank you all for your written testimony. i noted in your written testimony, your testimony today, you state if chinese entities import large quantities of lng from the united states they will be paying a price premium to do so. that races questions ability the potential political intentions
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behind those purchases. and you say long-term investments are out of step with the global lng market and the risk undermining u.s. national security. can you address that for me? i think we've all had this discussion and concerns about the united states economic advantage over china and what we see with our belt and road initiative and their massive investments around the world including some now here in the united states, the impact. so can you address that a little bit more for me? and if you would, touch on more flexible floating import-export terminals as that plays into this as well as chinese state owned enterprises that are actually making investments here in the united states. >> absolutely. thank you for the questions. so because of the transport distance between the u.s. gulf coast and china, the shipments of lng that china receives from the united states are more expensive than about 70% than the rest of its lng supply
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chain. so that can make sense to do for small shipments to meet times when the chinese energy market is up and high. it doesn't make sense to do commercially in very large volumes. they would have to give up cheaper gas in exchange for more expensive gas. and a company isn't going to do that just for commercial reasons, but they might do so if the chinese communist party is supporting them with cash to do that for political reasons. so that would be a noncommercial decision that we would -- i would appreciate congressional oversight over to make sure there are not political considerations in that deal that are bad for u.s. national security. and the same thing applies when china is coming in to make investments in the united states. there is the proposed investment in alaska. there's a proposed long-term investment in west virginia. there's proposed investment in beaumont, texas. and one angle we should look at with those investments is do the long-term investments actually make sense in today's market?
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the market is moving towards more short-term contracts instead of long-term ones. short-term trading currently accounts for about one third of natural gas trading and it's particularly prevalent in asia and particularly in china. so if the market is moving towards short-term anyways, is it a good choice for the united states to lock in long-term gas purchase agreements that make us dependent on our biggest economic competitor? >> thank you, i appreciate that. >> thank you. first, great event with president trump town in camden parish. and senator gardener was speaking about the jobs, and those three folks that spoke, the woman with breast cancer i think, the woman who had been unemployed, her husband was unemployed and went back to work and how the job opportunity at that lng terminal changed their lives. the scripture says the sins of our parents can go down through generations. i say in this case the virtue of
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a great job, better opportunity and better opportunity for the children pays benefits throughout generations, too. so i just kind of want to stress that part of what you were referring to and senator gardener was alluding to. perhaps related to that, what would be -- or dr. hart, if you were able to send gas from alaska or from the west coast to asia, what would be that price differential relative to coming out of the gulf coast? any sense of that? >> if i can give a slightly different answer, senator. when you look at western canada coming from sort of north of british columbia because it's slightly cheaper gas but they have more infrastructure and have to build a new facility, those things sort of offset the shorter transportation costs so it's not as straightforward.
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>> well, it's green fields but sooner or later you make the investment and after you make the investment you basically have the cost of production. >> so operating costs would be lower. >> and transportation costs, you have 70% of the gas chinese are buying is more expensive, is cheaper than that which is from the u.s. because of transportation from australia. >> you would probably save about a $1 to $1.50 in terms of the price of shipping cost if you didn't have to go through sort of that long -- >> and that is quite significant on something of that magnitude? yes, ma'am? >> and if i can respond as well, it is important to note the cost to develop the gas is higher as well. and so at the end of the day based on a pure commercial transaction you're paying less to ship it but more to pull it out of the ground. and that is why multiple commercial companies have walked away from that particularly project. the chinese communist party appears to be interested. i have questions about why the
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chinese communist party is interested in a project that non-chinese commercial companies view as potentially not feasible. >> but one thing i've read or i've been told is that the chinese would be interested in building a terminal off the panama canal that they would ship gas to south america through that terminal. they would be cannibalsizing a market that presumably u.s. companies already have access to. knowing there is gas within south america, but that could be a purchase that would offset the negative balance of trade with them. but on the other hand it would still again not be to our ability. do you know of such a project or is that just urban myth that i was told? >> it doesn't sound like something that the chinese companies would do. >> i was told that by a
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government agency, but that is not to say it's not necessarily true, no offense to you. i'm also struck that one of the problems of selling more of our gas overseas with all the economic benefits for us and the environmental advantages for the world if you're replacing is a lack of infrastructure in other countries. is there some role for the bank to contribute to building the infrastructure that might be used in pakistan, for example, or someplace else? >> yes, senator. very briefly import infrastructure has historically been sort of paid for by the countries that do it. in repeat years we've seen multilateral institutions, the i fc is part of the world bank, step in and finance. we've seen the japanese and koreans start to take a role in this import and power plants. i think there's a case to be
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made the united states should look into the same and has not really done so yet. >> it seems to make sense. i do read where pakistan brings up a boat that uses that as a platform. so there's imagine negative solutions but still had does seem that would be something good for our economy. again if you're replacing coal as feedstock. i'm out of time i will yield. >> thank you, senator cassidy. senator king. >> madam chairwoman, there's an alice in wonderland sort of thing. they started exporting in a big way about ten years ago. their prices doubled for their consumers between 2015 and 2018. the one law this congress cannot appeal are the laws to supply and demand. and the number of lng terminal applications now approaches 60% to 50% of the total production
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in this country and you're telling me it's not going to affect domestic prices? that doesn't pass the straight face test. you cannot argue that the dramatic increase in demand caused by lng exports is not going to expect domestic prices. you said it was $2.50 the other day. in australia ten years ago it was about 3 million to be used. today it's 8, 9 and $10. and today they're talking about looming shortages in one of the countries that has the greatest natural resources on earth. for the department of energy to continue issuing these permits which under the law are supposed to take into consideration the public interest without even doing as i understand it a recent study of what the elasticity of demand is and what the effect of prices, i think is utterly irresponsible. i'm not opposed to all exports of natural gas. all i want is some analysis of
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what the effect would be on domestic prices and not warm fuzzy assurances, don't worry, we're always going to make more. that hasn't happened in australia. i realize there's some differences between west and east coast. but the bottom line is you cannot tell me we're going to zrasically increase the demand for a product and its price to local consumers is not going to increase. if we get to a place where natural gas prices are internationally set, we're sunk. natural gas prices in this country right now are one of our major competitive advantages in terms of our industry, in terms of our consumers. to give that away to any country in the world just strikes me as totally outside the idea of what is in the public interest. can you assure me that the department of energy is going to take seriously its public
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interest responsibility in making this kind of analysis? >> yes, senator, i can assure you that and we have. >> when was the most recent time you did a study of the imports of natural gas? >> it was the fifth study that was done last year. the preceding studies were done in the previous administration, and all of those studies, all five of those studies included that the overall economic benefit to the united states was not a net positive, that the price of natural gas was not going to increase. when you talk about australia, and you referenced it, to a large degree that's an infrastructure issue getting the natural gas from the producing centers to the demand centers. with respect to -- >> where are we now in terms of
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approved lng products visa vi total natural gas production? >> right now we have -- we're exporting about 4 billion cubic feet a day of natural gas. we are producing about 90 billion cubic feet a day. we have total capacity of about 6.5 billion cubic feet a day. so 6.5 out of 90 is 6%, 7%. >> if you can assure me or will accept an amendment or law that says we won't go above 6.7% or 5% or 8% or i remember hearing we said 9%, i'm happy. but that doesn't seem to be the direction we're heading in. because the number of terminal lng applications in the queue go well beyond. >> most of that has not reached
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final investment decision. >> but we have to look beyond next week. so if you've approved 33, total production is 90, so you've not approved lng exports of 30% of the total production in the country. >> but we don't stop at 90%. eia projects by 2040 we're going to be up to 100 billion cubic feet per day. we're turning the line on conventional oil and gas on production in the united states. >> how many are in the queue? >> right now we have 14 bcf a day that is either in operation or under construction. >> how many applications are pending? >> there are 11 billion cubic feet of applications. >> so 33 plus 15 plus 11 -- >> i'm sorry, no. it would be in total right now there are 44 billion cubic feet
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of in-construction that we have approved and that's a grand total of 44. >> i have a hard time accepting you're going to go to almost 50% of production in a new market and it's going to have no substantial effect on consumer prices. i hope we can continue this discussion, but this is of grave concern to me. i think we're making a historic, hes torq historic mistake unless we put some control and limit based upon science and data on this trend of what appears to be unlimited export of natural gas. >> happy to send the report to you. >> thank you. >> thank you, senator king. this is subject of discussion we've had here around this committee and of the cumulative impact then that we have with additional volumes that are being exported, what that does that mean for pricing. we've heard here in terms of pricing, we haven't really seen that bump, that jump.
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and i think it's because as you have pointed out, secretary winberg, our production is increasing. you know, at some point in time maybe that production curve starts to go down a little bit, but we're certainly not seeing that at this point in time. it is something that we want -- we want a level of vigilance. we want to understand all the market conditions and forces out there not only domestically but what is happening with our global position out there. but i think one thing that has been just so remarkable about the discussion of natural gas and lng is we -- we keep producing more. we keep finding more. our technologies are allowing us to access more. >> which is great. i'm just worried about the -- fair enough. at some point in time things cross, so we want to make sure we are ahead of that and don't allow that to cross. >> at some point in time demand
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starts to put pressure on supply, prices go up. >> as you say it's basic law of supply and demand, and i think part of our role here as a committee is to maintain a level of vej ligilance and understand as to what is actually happening in that vein with a number of exports that have been approved as you've indicated, mr. winberg. you've got some that have come before you, but those projects haven't advanced because, how expensive are these? these are not cheap propositions? >> demanding on the size of 10 to $11 billion. and no one is going to start construction until they have contracts. so although the numbers that secretary winberg talked about are a lot potentially, i don't believe you're going to see that much capacity come onto the market without contracts. >> trust and verify is my motto. >> i understand.
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>> that's -- these are fair -- these are good conversations to have. but again i think some of these economic drivers out there can also be a limiting factor to what you might be able to get the permit, but if you can't get that financing there, then nothing happens. i want to ask one quick question and then i'll turn to the senator who's joined the committee. but this is back to you secretary winberg, earlier in the administration the department proposed a rule to increase the volume for these deminmist exceptions for the permitting requirements. and this was looking specifically to the opportunities to increase product to caribbean and latin-american markets there. has it opened up the opportunities that we were hopeful what we would do, is it working? >> thank you, it's a good question. we have not seen an uptick in
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small scale lng exports yet. we do have one facility which is america lng out of florida. they've done 278 shipments to barbados, bahamas, haiti and puerto rico. and haiti is i think only within the last couple of months. so we are seeing shipments. we have had one additional small -- potential small scale developer that has come to us. they have not made a decision yet. senator, i think the issue here is perhaps a chicken and egg issue. and there was discussion ural about xm bank's role in the developing import facilities and regasification facilities on the small island communities in central america. and a developer of lng exports in the united states is not
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going to develop a facility if they don't know the customer. i think there is a role for the xm bank and other u.s. entities to assist with that. and then i think we will start to see more small scale exports either in smaller ships or containers. >> that was certainly the thought when we advanced tathat. so understanding kind of where we are is appreciated. let me turn to senator hogan. >> thank you, madam chairman. secretary winberg in north dakota we're producing an incredible amount of natural gas. we don't grow for natural gas. we grow for oil and produce huge amounts of natural gas as a by-product of that drilling. but the challenge we have is monetizing it. getting it to markets and monetizing it. how do we get more pipelines?
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how do we get more capacity not only to move that natural gas around the country but also to ship overseas whether it's to the pacific rim or to europe, which not only is a monetary economic win for the united states but it's a national security win by supplying energy to our allies rather than having them get their energy from russia or some other adversary. >> yes, sir, i absolutely agree, it's an imperative. we have no shortage of entities that want to obstruct natural gas pipelines. and for that matter, oil pipelines and so we're moving oil by rail, and it's much, much safer to do it by pipe. how do we expedite that? the president has an executive order for us to evaluate in certain parts of the country where we've seen pipeline
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infrastructure not being built and what can be done about that. in the short-term, senator, what the department of energy is doing and in particular my office is we are developing management of small modular units. and the attractiveness of these small modular items to produce power or other products is once the pipeline is built and that gas can go for a much higher value use, we can move that facility to another location. because as we build out the unconventional oil and gas we're going to continue to have this issue until the pipelines in effect catch up with the production. and so we have an opportunity to utilize that stranded gas. >> we have the technology to capture it. it's the pipeline capacity and, you know, the lng facility capacities to both move it
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around the country and to export it. that's the key. and the irony is here we're in a situation where our country is infrastructure constrain immediatech and the biggest challenge to developing more infrastructure is the cost to build it. and here the companies will pay the full cost to build that pipeline infrastructure taking vehicles, rail cars and everything else off, rail tracks off the road. in addition to all the other benefits. how do we -- how do we get you know the consensus to get through some of the bottlenecks as you know we're facing throughout the country. whether it's new england, the west coast, whenever it may be. >> i think taking a good hard look at interstate commerce might be a step in the right direction. >> if you would update me as to where you are in the fossil energy programs because the
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other thing is if we can't move the product to the market how do we convert the product whether it's natural gas or carbon into a product on site that we can monetize and use? >> we've had long-standing relationship with the university of north dakota, erc continues to do great work, senator. as we look at the carbon capture utilization se utilization we're cutting across the natural gas and coal capture. we've been at this for 25 years now, and the department of energy has been developing technologies in reducing the cost. and opportunities for utilizing
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that co2 and perhaps down the road product development so across the slate of technologies we're working very hard. in many cases we're working with eerc on those. >> well, this is incredibly important right now and it really is the solution to the concern about capturing carbon. the example you said at one of our facilities as you know we are capturing the carbon and using it for -- for oil recovery. but what the latest project they've engaged in is they now take a lot of that carbon capture and making anhydrous ammonia and uria, making fertilizer which we can use across the midwest. so there's another case of
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converting it to a different product we can use to get rid of these transportation barriers we were talking about earlier. these are the solutions. there's tech logical viability and there's economic viability, commercial viability. that's where we've got to crack the code. just look we cracked the code with the shale play and look what's happened with oil. i'd ask you to come back out to north dakota this summer and meet with some of our planners again working on this. would that be something you'd consider doing? >> absolutely. >> okay, thank you very much. >> thank you, senator. you know, i'm reading press clips last night, this morning and obviously a great deal of tension in the persian gulf, seems like there always is but now even more so. yesterday at least three armed iranian boats reportedly tried to seize a british oil tanker in
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the persian gulf, they were unsuccessful. the tanker was crossing into the strait of hormuz when the iranians ordered the ship to change course. that's oil. but natural gas would also be out in these same -- same areas and yet the word hormuz, the straits of hormuz do not appear in the latest iea gas security review which is how can you not? how can you not include that as part of a security, of a natural gas security review. why not? are we not discussing this? i'm assuming that doe has examined the potential impacts of hormuz incident on lng flows
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and what that might mean to us. so if we can have a discussion here, they haven't called this second vote, so that means i've got a little bit of time. this is the geopolitical reality. and i mentioned earlier when i was asking about the alaska situation, one of the benefits that we have is we don't have to go through the panama canal. we don't have the check points, we don't have the pirates. we are not the strait of hormuz, but that factors into the discussion about availability of supply. right now we know what we know geopolitically but next week it could all go to hell in a hand basket. so how do we factor this in as we're talking about lng and the future of lng exports from this country and more globally? >> thank you, senator. i think what you highlight is incredibly important. and the way i think about it is
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in this country in particular oil security at least since 1973 people have been talking about, thinking about it, writing about it, convening and we just have not had the same exposure and experience with gas internationally and with lng. so i think it's just a matter of the market advancing a little bit faster than our institutions. to be fair to them, it's a review of gas security, of what has happened. but i think one of the examples that i wrote in my testimony is the european union does stress test. so we may have possibly on january 1st a disruption of gas flows through the ukraine. and we have an idea of what that would do to different markets because there's an organization that runs stress tests to understand how these countries can cope with these kinds of disruptions. so i think there's a role to play to develop more tools, more
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information, try to understand, frens, if you did have a disruption, who would be most exposed, how would it respond, what kind of policy mechanism might be required to make the response better. these conversations are just far, far behind and i think it's time to elevate those, and i think that's one area where u.s. leadership with other countries can play a very important role. >> secretary? >> clearly the straits of hormuz are a very significant issue. it's primarily an oil issue more than it is a natural gas issue, but i think it's also worthy of note that despite these attacks, if we had had these attacks ten years ago, i think you would have seen a massive spike in the price of oil. and we're not seeing that so much and that's because we have more distributed production coming out of the united states.
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with respect specifically to u.s. lng we're moving a lot of that into the european markets so the straits are not an impediment. let's talk about the constraints in the panama canal, those are congestion constraints, not geopolitical constraints. but we have a wider variety of outlets and routes that we can move the lng whether through the panama canal or whether it's through the cape, around the cape of good hope or straight over to europe. so it's not so much affecting lng. again, that's not to say that's not critical, that's not important. but it is more of an oil issue than it is a natural gas issue at this point. >> at this point. and i think that's important to recognize. and i appreciate what you said about the iea report being kinds of a look back instead of
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projecting forward. but i think that this is something that we need to be thinking about not just for the perspective of where -- how do we move our gas, but how do others move their gas to supply those markets whether it's china or wherever. and if that is disruptive what that then does to the broader mix. >> yes, senator, what i would tell you is we're dealing with very sophisticated customers out there where they don't just look at price. they're looking at availability, the reliability of where it's coming from, congestion points. and i think at the end of 2018 we had less than 600 tankers out there. in the oil market, there are thousands of different sizes. so that's why you have more liquidity in the market as well. but i think what we're finding is customers especially in asia and in europe are becoming much
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more sophisticated and concerned from a risk management standpoint of all of those factors. so we think that security of the supply is extremely important. >> so i mentioned that the iea is a look back. we heard some say that global lng infrastructure can actually become stranded assets as we see the mix -- the energy mix change in the years going forward. is this a concern that you all think about? when you're talking about a re-gasification facility, export facilities, these are substantial investments. and, you know, here we've got a case and point here in this country where about 10 years or so ago we were talking about we
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need to build more import lng terminals. we've turned that around and gone the other way with exports. so we know how things can change. is that something you're worried about right now, or it's just too far-out on the horizon or you're just thinking about other things? dr. hart? >> if i could comment from a china angle, china is planning for a renewable non-fossil energy to account for 20% of their energy mix by 2030 and over 50% of their energy mix by 2050. we should definitely take that long-term goal into account before dpet getting too excited what lng could play in their energy mix. >> as a developmenter of export terminals we look at diversity of supplier and/or diversity of customers very importantly. at our lng facility we've got three major customers that each
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take a third and they're diversified geographically and the customers they serve because we want diversity. as we think about what we're doing in the other facilities in louisiana, texas or from mexico, we want to make sure that we have multiple potential customers and maybe even potential equity investors so you can reduce that risk of somebody walking away and you have an empty plant. >> go ahead. either one of you. go ahead. >> senator, i worry about this a little bit in part because i've done a lot of forecast in my life so i know how wrong they tend to be. having said that i think there's two reasons people don't worry as much as i do. one is if you look at most long-term scenarios even in the transition of the energy system towards a perilous plus or minus world, gas does well. that's sort of the base. the second thing i think is even less understood is the system is
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sort of shifting from relying on power generation as a source of growth to relying on industry and buildings. so power generation is the area where gas has a lot of competition. the competition into buildings and the industrial sector is less severe, so i think there are a lot of people comforted by the fact they're not just relying on power generation but they have a broader sort of customer base, and that therefore even in transition of the energy system, those areas of consumption will remain. so i think those are the things that people respond to me to make me worry less. but i still worry about, you know, whenever you make 25-year bets, you know, some people are bound to be wrong. >> the only thing i would add there, i think those are fantastic points. i think one thing important to talk about is the development of technology on the import side especially as senator cassidy was making suggestions about the
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km bank and their involvement. the ability to invest in an asset no longer an onshore asset and no longer stranded so to speak especially in emerging markets where maybe credit worthiness might be a challenge for those countries looking to transition into natural gas, having that ability to move, a re-gasification floating rather than an onshore facility gives that optionality whether we run into a change whether from a financial staptd or technology standpoint that allows a different adoption of a different fuel. now all of a sudden we have the ability to move that asset to someplace else. i would suggest as technology on the importside continues to develop it reduces that risk you were asking about. >> this has been a great conversation. i'm just thinking some years back i -- i tasked by energy team to help us put some focus on what we called our energy 2020.
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it sounded so far away. and flow we're working on 2030, but at that time, you know, it was just -- it was really kind of a vision that we might be able to get to a point where from an lng perspective we were actually a player. and we have gone from just dreaming about being a player to being the player in many ways. and so it is a reminder to us that the technologies have allowed us to do so much, but it's also a reminder and you mentioned this dr. hart to not assume that the markets that we're banking on today are still going to be those great customers for us ten years from now because they may do exactly what we did in this past decade in terms of our ability to ramp up and so i think we recognize there is a fair amount of --
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this is a dynamic environment. i don't recall which one of you used the terminology as an evolutionary rather than a revolutionary, but sometimes that evolution happens quicker than any of us could have imagined or dreamed. so staying on top of things is critically important to us to also recognizing the role that we can play from a geopolitical perspective, our strategic role. and again that's why we have rolled out this first of a series of white papers in terms of our global strategic energy competition. because we -- we are at that place where we can be engaged in that global competition and how we assert that leadership is going to be an important part of the mix moving forward. so thank you for the conversation. very helpful to what we have
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been talking about here as members of this committee. but i think you challenged us to think a little more broadly about the opportunities but also to be cautious about some of the hurdles or pit falls that may lie ahead. dr. hart, you raise a fair and legitimate concern about when somebody is willing to pay a premium price they're usually looking for something in return. i think that you certainly heard from senator mantion, an air of caution there. alaskan's eyes are clearly eyes wide open as they have looked to how they can move natural gas. we certainly don't want the chinese to have control, and that was made very, very clear. but again you go into these agreements making no assumptions
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that it's going -- it's going to be an easy road when you've got partners that may have some different interests than you. with that, senate adjourned.
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