tv Key Capitol Hill Hearings CSPAN March 26, 2014 2:00am-4:01am EDT
>> louisiana senator chaired the two hour hearing. >> good morning, everyone. thank the member for attending and thank our witnesses for being a part of this important hearing. it is my pleasure to bring the energy community to the opening session on the subject of natural gas and importing energy and exporting gas; can this be reversed.
senator senator ron whied wydide for hi n -- i want to thank senator ron wyden for his support and look forward to working with him and all members of the community on both sides. members of this committee attended numerous meetings to consider the 2005 energy act. and we discussed the need to import more natural gas to meet our growing energy demands. thanks to a extraordinary and swift advances in technology to locate, capture and produce natural gas, this committee will talk about the expanded
opportunities to export liquidified natural gas and create high paying jobs in america and support allies in europe and budding demomeracies across the world. when president bush signed e-pac the price of was $13 less than in october and by the end of the year it was $15 higher. this forced factories to head oversees. this affected michigan, louisiana and other industrial states and they did so in droves. the fact that less than ten years later, we are in a four-year period of domestic gas prices at $5 or less is stunning with only a long-term favorable outcome ahead of us.
because of this price reduction and price stabilization the largeest producer of ethanol is breaking down a factory piece by piece from chile and shipping it back to the guys in louisiana where it originally was. what caused this and what action was involved and what action should the u.s. take given the data and facts. it has buffered us from a deeper recession and paying high paying jobs. this is evident in the home state of louisiana and all along the gulf coast; america's energy
coast. according to a 2013 study, 200,000 jobs will be created by new unconventional production in louisiana alone by 2019. this isn't considering the other jobs in other states around the country. it is quite promising. and the oil and gas industry supports 300 in louisiana and secures below average unemployment for the last five years. for states such as north dakota that have had increased ongoing production, colorado, etc. a recent lsu report esmated from 2012-2018 $47 billion dollars of private sector projects will be made in alan paris, jefferson
davis and parishs that people on the committee and in america that haven't heard of. but these are real places of people. that investment is expected to create more than 37,000 new jobs. high paying jobs. in america, lng exports will drive continued investment in domestic production and create jobs, but they are a powerful gop political tool particularly in light of russia's illegal aggressi aggression. putin is going to use allies to pressure us and advance his agenda. russ russ russ russia put sanctions on nine
people and i was one of them. it is encouraging me to double my efforts of energy production and make the united states a global leader in energy exports. america can and should be an emergency -- energy -- super power in all aspects including new alternative fuels and sources. we know real competition in real open markets drives efficiency and lowers prices for everyone. the last thing putin and his cronies want is competition from the united states of america in his energy race. tyrants have had many reasons to fear revolutions and this is one they should keep their eyes on. i look forward to playing a role to bring independence to america
and advance freedom of religion, and the press and to hold word leaders accountable for what they do. today's hearing is part of that effort. far too often when faced with difficult challenges we stand still unsure moving in all different directions. this will not be the case with this committee under my leadership. we will advance gas, coal and alternati alternati alternatives fa alternatives. we will break the stronghold from tyrants that use this fuel to take away rights from others. i will turn to the ranking
member as soon as she is here and until then i will call on our witnesses this morning. i want to give credit the natural gas act amendment that is allowing the export to trade counties. and we look forward to hearing many more talks on this subject, both pro, con and neutral. but thank you senator udall for your introduction to this bill. i would like to put in the
record an opt-ed i thought was on point. and now i would like to begin with our witnesses. then we will go through a round of questions. our first is adam sieminsky, and ne next david goldwyn, and then edward chow, and we are pleased to have the minister of energy from the republic of lithuanlit and mr. david goldwyn as well. please mr. sieminski, proceed.
>> thank you for the opportunity to be here today. eia is a statistical agency -- >> can you speak closer to the microphone? >> thank you. >> as you know, the eia is a statistical and analytical within the department of energy. it's data and analysis are independent by any other office of the united states government so my views shouldn't be construed as representing any federal agency. the total natural gas consumption is going to average 71.5 cubic feet a day. that is a slight dropnist last year.
in 2015, forecast natural gas consumption falls slightly as the decline in commercial use offset the increase in demand. on the supply side, eai forecast the rate grows at 2.5% in 2014 and 1% in 2015. the growthed center in pennsylvania and evident in west virginia is noteworthy. and they expect drilling in louisiana, arizona and texas. the past winter of prolonged widespread and cold weather, which is continuing, throughout the northeast and throughout much of the united states has led to a record-breaking natural gas with draw. we expect the inventories will be at the lowest level but
operators will make record high storage injections between april and october to rebuild inventory levels. it is having a significant impact on trade by displacing imports from canada and enabling pipe exports to mexico. as plants come on stream, eix expects the united states to be a net exporter of gas beginning this decade. turning to the projections in the annual energy look, shell gas, pipe gas and offshore gas grows increasing 56% between 2012-2040 wh 2012-2040. shell gas is the largest con tributer and it will be over 50%
of total production with pipe and offshore gas increasing. alaska's natural gas recognizes t the ability to import to natural partners. the complete report released next month will include circumstances that can change this outlook. projected gas in 2040 is 10% above the reference case level in the high oil price and 20% about the reference case in the high oil and gas resource case. projected prices and resource levels differ across the cases as well. as producers develop lower-grade resources over time they see the price increasing at 7 3.7%
increase from a low of 2.75 milli million btu to 7.65 million btu in 2040. the availability and price of natural gas are attractive. generators using natural gas with expected to capture a growing share of the production. pipeline experts to mexico grow by 40%. united states exports of lnd increase by 3.5 trillion cubic feet and original volumes starting from export carts from the atlantic coast and in
>> i thought you would ask questions. >> we will do the panel and then ask questions. >> i am honor today testify here. it was my privilege to lead the study of the macroeconomic impact of gsl exports that national resource economics did were the department of energy and our update to the study. i provided a copy of the updated report along with my testimony and like to request it is entered to the record. >> without objection. >> my report represents my opinions and i don't speak for the energy company that funded the update but only myself. we tried to address issues about the earlier study. two in particular, one that
using 2011 data made our study too out of date. we updated it to the energy information administration's most recent set of full forecast. we used the 2013 outlook was they haven't published to side cases that were critical for our analysis of scenario. we have to look at the scenario because it is difficult to predict the level of exports. dealing with concerns that we don't have access to the full export levels. we examined them all the way up to what they could be if the department of energy put no restrictions and found lng exports provided benefits all of the areas. there is no sweet spots that justified limiting them below the economic levels.
another point that is raised is the notion if we export natural gas it will not be available for manufacturing in the united states. t the united states chemical industry was threatened in 2005, but at this point it has a very large advantage and it will not be taken away by the affect of lng exports. there is ample guess for both and the increase demand in the scenario is satisfied by increased were introduction. none of it is taking away from domestic use of higher prices. i would like to cover two other topics. one extending the economic
analysis and talk about jobs. there are two things i am convinced that are true. first is that lng has to be built before the gas can be loaded and the investment from that is coming up front. we calculated and this is on page 8 of the testimony and i believe the committee has a handout. we calculated the annual employment just direct jobs, building liquid faction facilities and that could be 30,000 jobs between now and 2018. of course, the faster we export gas, the more jobs and the faster we get going on building the facilities, the more jobs there will be. i mentioned the year 2018 because i think it is important.
the congressional budget office does economic forecast for the budget and it always assumes the economy is going to be back at full employment after we come back from the full cycle simply because we cannot do better and that has been the long-term trend in the economy. so the period between now and when we reach full employment which cbo projects 2018. so these jobs are coming when they are needed: during a period we are looking at unemployed workers that can be brought back into the labor force. and we project 30,000-40,000 would be put back to work by there construction of the entire enterprise of gearing up for lng exports. the final point i would tliek talk about is russia.
i asked myself what would be a credibility promise of punishment for russian aggression and i believe that is lng exports. if you look on page 13 of my testimony, we have taken a look at what would happen to russia's revenues if two things happen. one thing is a policy however it is phrased in law that committed the u.s. not to put a cap on lng exports combined with putting serious efforts into making sure we don't cut off the shell regulations without hand regulation or giving into groundless fears and encourage production. those two things are needed. with that we could see russia's export dropping by 5.23 million
cubic feet for year. that is what happens if russia doesn't meet the competition and if they do they will have to sell it at lower price and that ads up between a 40%-60% loss in export revenue through natural gas for russia from the process of lng entering the doctor. >> mr. goldwyn. and then i will come back to the minister at the end. >> thank you, madam chair, ranking members and members of the committee. thank you for allowing me to mere be here. i also speak on my own behalf. every credible estimate of your
future supplies suggest we will have exports of natural gas for decades to come. this could position the nation as a reliable supplier of national gas from countries that are unstable. the question isn't whether we have this potential but whether we will realize it in time to help friends and allies. this power can be wielded good for and create competitive prices but it could be wielded for ill as we are seeing with russia using it's power against his neighbors. the government doesn't dictate where the supply will go, it does control how fast we will connect to the markets.
it is putting our friends at the back of the line. the chris in ukraine should cause us to think about this process and see if we can leverage our natural gas bounty to help our allies by considering the network applications so they can plan for the day when they can breakoff from russia. we should compete for the asian market as well before russia gets to them. my results focus on europe because of the crisis in europe and reflect an article i published for brookings which i would like to enter to the record. the russian challenge is going
to be with us as long as putin is in power. it is threat to european computer and leadership. the president has responded with savvy and skill by targeting the int intercircle that is trying to use russia's private resources for gain. but russia's neighbors rely on them for natural gas. europe needs to make strides to integrate it's gas markets and promote internal market reform and develop further infrastructu infrastructure. the united states will need to recommit to the caspian policy. we can make further integration
of europe's gas market a key of the engagement as well. but lng being available to allies puts immediate pressure on russia's market share and help accelerate gas in infrastructure in europe. their interconnections plan to move gas to poland and finland. removing the uncertainty that when and where lng will get the approval will excaccelerate the financing of u.s. and european import projects. and those that dismiss acc accelerate these underestimate the impact it will have on rush
auchrush rush -- russia. investing in europe makes the companies less attractive. markets reacted today to news in the future. finally allowing lng to access henry hub pricing makes them more financeable. it maybe true that asian buyers buy more but the more u.s. henry hub price gas hits the market the greater the marketing power of european buyers. these are serious times that call for serious solutions. having a refreshed energy policy and an accelerated lng exports are part of the toolbox.
they maybe long-term measures but they are serious and time to get started is now. >> thank you very much. >> madam care and members of the committee, it is an honor to speak here. first of all, let niasia ellme c confor inviting he me seb. i understand you would like to me focus on the gas exports particularly in light of the cr crimea threat. the long-term impact of the unconventional revolution is
just beginning to be felt. studies indicate shell plates exist in different parts of the world. the history of technology makes me optimistic this will be transferred to other countries. it will take just take time as the application of new technologies are learned. oil and shell gas revolution has already made important contributi contributions to the global markets. thanks to shell oil, 2 million billion increase in oil were introduction. american shell gas already had significant impact on the global lng market before the start of exports. as you pointed out, madam chair, more than 30 gas terminals for imports, not exports at one
time. imagine what the international lng market would be like if the united states had become annex -- an importer. because we have gas and gas competition in north america, natural gas prices are not linked to oil like they are in the rest of the world when gas is traded international. our export isn't tide to long-term contracts. when the first project for exporting lng from the lower 48 states is completed, it will take five years to complete the pass. negotiating purchase agreements with qualified buyers and
securing financing takes time and the construction work to build the export terminal as well. the combined capacity of the project's doe approved is higher than the total gas consumption of germany. the united states will be a major lng exporter if all of the projects are completed. more export projects can in the queue for approval. with oil, there light crude produced from shell places like the balkin can't be run by our refineries. we would maximum the economic benefits by exporting some light sweet crudes while continuing to import heavier and sower --
sour -- crudes. price levels benefit producers and long-term consumers. these are complicated issues that deserve full debate in congress as has already begun. it takes time to reexamine these policies and bend law in a new era of energy abundance. a degree of certainty is needed when billions of dollars are needed to complete a deal. some argue that hastening approval of crude oil would have a deterant effect by hostile actions by russia.
this is likely to not have an immediate affect. russia produces 10 oils a day and exports 70 million. no amount of increase in exports can begin to produce large volumes. russia exports of gas are more than twice the combined of the approved projects so far. in order to reduce the influence russia asserts through oil and gas, europe play as role as europe would do well to develop services to be less needed of
them. lithunia is one of the companies committed to developing shell gas. lng imports declined in europe as a result of more favorable pricing terms from pipeways like norway or russia. the united states doesn't direct commerce and leave it to private companies into the market except in times of war and natural emergency. we have taken a stance against using natural gas as a weapon. more importantly this could distract us from the critical task of shoring ukraine
economically. i know the committee has more questions on ukraine and it is country i have spent time working in and i will wait until the question and answer time. >> interesting perspective. thank you. we will now hear from the minister jaroslav neverovic, >> thank you for allowing me to be here. i will share a phrase freedom isn't free. i want to return to the vote in 2008 on the enlargement of nato and a year later we became members and this year we
celebrate the anniversary of our membership. and thank you for your leadership. lithuanian has become a free market and a trusted international partner. we are operating with the united states closely including fighting terrorism in places such as afghanistan. we are very proud of our achievements. i am honored to appear here before such a distinguished group of americans. the respected political affiliation you individually and collective under that unrestricted flow of goods, services, energy, resources in both inunited states and trading
partners. we are sharing the same values in international relations but despite our unwavering commitment a law enacted in your country denies us access to your abundant energy resources. let's change that. at presence, we are 100% dependent upon a single supplier of natural gas and we are force today pay a political price for this. families pay 30% more for natural gas than other cities in europe. this isn't fair. and abuse of the position.
lithuanian is taking steps to secure your future, but i am here to plead with you and your colleagues to do everything within your power to expedite your abunddant sources into the world market. the united states with your highly developed infrastructure has the market europe is trying to build. what the potential in europe to receive lng? there are 22 lng facilities with total capacity of 6.7 trillion cubic feet and another terminal with an additional capacity of 1 trillion per year. but the import fell almost half
from last year and this year. current prices are just too high to use as a result of the other countries. as a result, lng facilities are barely operating. however, this can be changed. last week, the vice president -- we are learned the hard way that protecting the sovereignty of a nati nation's defense. baltic states are working to overcome energy island situations. i am pleased to tell you in 250 more days, lithuanain will have
their own vessels and it has been named independence and its goal is to satisfy the need. our neighboring countries could use the terminal capacity to meet their needs. first our terminal and large scale lng in the baltic sea is the ice breaker for the region to insure we stay in the market. the majority of your exports are subject to a public interest review. we understand the president has the right to opening the doors to lng exports to non-fda
countries. if they don't act in a timely way, we urge congress to step in. accelerating america's entry into the natural gas market is a win-win. america wins by economic growth, more revenue and customers win by more competitive bas from the united states and operation of nato allies would be stregthen h strengthened. the present situation in ukraine has taught us one lesson: no nation should be able to use their energy supplies to punish another nation. in conclusion, we should together to let competition in and keep the monopoly out and bring natural gas prices down for customers in america and
europe. thank you. >> thank you very much. we will ging with a round of questions. the order is going to be senator wyden, senator scott, senator udall and then i will come back to the list. thank you all for being present. let me ask this first to mr. chow a chow. i think this should be better known in the united states that russia's national budget is 52% made up of energy revenues. i will ask our staff to get information about the united states budget, which i am sure is less. it has been written that russia has continued to use what has been termed, not my term, energy
blackp blackmail to keep the state coughers full. russia has used the energy blackmail more than 40 times including lithuanian who testified. mr. chow, you said there is no silver lining and our actions might not take immediate effect. dr. montgomery you were more bullish. so what are the steps that the u.s. should take to reduce russia influence, quick flow of cash, and to not promote what is in our interest. starting with you dr. montgomery. >> i will stick to energy things
because i don't offer myself a expert on others. 20% of revenue energy and 10% of the russian budget. if we could take out half that would be about 5% of the budget. i think what the budget committee members in congress would feel if that happened into the united states. i think it will be affective. i agree it is potential competition that is important. we see the monopoly restraining themselves because they know if they go above there are others in the market ready to leap in. that is where the united states needs to be. and i agree with the minister
that the critical part is some form or another of removing the exports and not to prevent trades being made that are at the advantage of our allies and ourselves and also dealing with potential problems with natural gas were introduction. dealing with issues of shale gas and regulations that could hurt it's production. >> mr. goldwyn do you have anything to add? >> i have about five. the first is diplomatic. the second is i started a program called the global shale
gas when i was at the state department. it is called the unconventional gas technology program and we could do more to help other countries develop shale gas. and the third thing is accelerate to connect with the global market gap. and encourage the european leaders to invest in the european markets. i think the european union could give credit support to build the networks and projects. and i think we should as we have encouraged for decades oil production here at home and overseas. the more supply coming from mexico or even our own exports we drive the price of oil down
and russia's revenues are reduced and other countries have choices of supply. >> dr. chow? >> i don't agree with what my colleag colleagues say except in terms of timing. being honest about the economic impact we can make while not attending to more urgent matters like shoring up ukraine. i would emphasis the fact that our european allies are the ones with leverage over russia on oil and gas imports. not us. 80% of russia's oil and gas exports go to europe. they don't have many alternatives in the short to d medi
medi medium term. a number of allies the president met today have shale gas bans. france, germany has a ban on fracking. 40% of germany's gas demand comes from russia. so getting together with allies to talk about what they can be doing to improve themselves and lesson their reliancreliance. >> thank you, madam chairman.
good to have you here next our our friend and former chair senator wyden. to those on the panel, good morning and welcome. i apologize i was tardy this morning. but because i wasn't excited to hear the poin opinions and wisdom of each of you. i thank you for your leadership in many areas. mr. goldwn you said it was rather we had time to work on the exports. we released a report about the narrowing window when the comes to the narrowing export of window. i recognize we are in a position
that is envious by many. we are up here talking about this from a position of abundance rather than scarcity and discussing the oil as a strategic asset is a remarkable story coming from the united states and the technology that is allowing us to access amazing resources in this country. it is a fabulous conversation to be having today. i want to drill down a little bit here on the discussion of what we can do today to make a difference over in the ukraine and have influence on russia.
the proposal or discussion we have been having about if in fact we were to accelerate the permitting process through doe, that doesn't get gas to ukraine or anywhere at least for a couple years. therefore if we cannot do something today to get our gas over across the water, then it isn't worth doing. i have suggested that it is about the signal that is sent. about the united states role, our leadership role, from a political standpoint that is instrumental. mr. chow you used the world it is irrelevant in the short run. i would like to hear from each
of you on how important is the signal that is sent if we are to eccelerate our permitting through the process. what does it mean from the price perspective not only in europe, but in asia if we act more aggressi aggressively with the signals that come from the ad administration that says they are ceaserious about this. how significant is a signal has opposed to actual gas into our friends and allies systems. we will start with you mr.
sieminski. >> signals are important but they to be followed up by concrete action. >> and does that need to be more than a expedited purpose? >> i think you could argue the very strong increase in domestic production has had come impact because the imports of natural gas were lower than than were projected to be five years ago. that freeed up other gas to be available to consumers like europe and asia. the possibility the united states would enter into the global market with lng exports after the completion of of lng facility at thp pass has had
impact on the long-term contracts. companies have indicated they felt they had more successful opportunities to negotiate with large gas suppliesuppliers for contract terms than they would have had had the facility in louisiana not already be under construction. >> let's go down to the minister. how would signals be received in your nation and other nation? >> thank you very much for this. i can bring your attention to the fact there are companies that trade in gas that are already moving to a pricing on more spot market model.
but majority of the contracts are still being done on the bases of long-term contracting and pricing. so this is where it is important that any signal which is there and sent to the market. it could strengthen buyers and they could feel comfortable knowing there is more gas and their position is stronger to the monopolist suppliesupplierse we don't have to attach to long-term contracts knowing there is going to be gas on the market and might be competitive. >> if the three of you would answer quickly for the senator. take 30 seconds each how
important is a signal. >> yes, i believe it is important. it is my opinion that we see evidence across economic markets that signals work. it is also important that they be creditable and that is an advantage of this signal because it is in our narrow economic interest as well as strategic. >> from a diplomatic point of view a signal is important for reassurance and we spent decades trying to get companies to provide gas to europe. increase financing. it is cheaper overseas. i think it would impact the market gap for companies in russia because if they have market shares the prices on the global market lowers.
and asian buyers are waiting to see if lng comes into the market. when why do things in the market today the signals have immediate impact. >> dr. chow and then i will turn to the senator wyden. >> i think the most important response we can give to russia is strengthen the ukrainian economy. ukraine can be sufficient in gas faster than you can build the center. it is the basic corruption in the ukrainian system that is making them vulnerable. they continue to transit more than 50% of russia's gas to europe. if we strengthen ukraine, that would be the most important signal it would seem to me.
a billion loan guarantee is a feeble response to what has happened. >> senator wyden. >> thank you. madam chairman, i want to say congrats and you will do a great job chairing the committee. i think all of the colleagues will be well served by having there two of them lead us. yesterday's decision to approve the jordan cove facility in my home state reinforces by view that there is a sensible place between no energy exports and approving everything application on offer. now a year ago in this room, that was called finding a sweet spot. you factor in the needs of the manufactures, consumers and environmental questions, and national security.
my view is there is still a sweet spot, recognizing that the gopolitical and national security confederations have changed in the last year. yesterday's decision with the cove showed the kinds of consideration that need to go into the mix. jordan cove is the only west coast facility that is now on track for approval for exports. and there is going to be less impact on american gas because a portion of the gas for jordan cove will come from canada. it will not be american supplied. so, let me in light of that, kind of pick up on what the senator was talking about with
respect to the situation in eastern europe. and in looking at the range of events surrounding the ukraine, i was struck by how the mention of potentially significant shale formations is coming up more often with respect to eastern european countries like poland and i am sure there is going to be more discussion. it will take a lot of money and time to build an lng terminal. ...
>> today the ukraine imports gas from russia, a thousand cubic meters going up to 400 by april 1. it provides $40 for a thousand cubic meters for the same for domestic productions. so this incentivizes the domestic production and all that needs to change. and it's not an accident in that part of the world, but it facilitates corruption in the permian energy sector that had been hampered by corruption from the very top. so if we do anything at all, we should condition the a that we are considering given the ukraine for both the imf and others on fundamental structural reform of the energy sector. >> i heard you talk about this in addition to what we are doing now to help these countries
shake free. >> great, thank you for your leadership on the issue. i think we need to do both. providing technical assistance to countries like romania, bulgaria, poland, it will also help them to develop over time. you have shown that europe has terminals that have not use their maximum capacity and spain is kind of an island for the rest of europe and i think that the process of interconnection and creating a unified area before they need to build and terminals. you can do a lot with more pipelines and rivers flows into places like the ukraine. so i think that they need to do both and i think that the timescale for getting more energy into central and eastern europe can happen more quickly than the time it takes to build a new import facility. >> my time is up, but i'm very interested in this question
because it's fine to talk about this and if you could get back to the chair and ranking member so it can be shared with all of us, thank you. >> thank you, senator. senator barrasso. >> i would like to point out that this is the third committee that we have had a hearing on for the gas exports in the last 2.5 years. we have three of those and i believe we are moving out of snail's pace. the administration has users to approve only seven applications to export this, meanwhile the
administration continues to sit on 24 pending applications and i believe that the delays have been inexcusable. so i think that we need hearings like this and we need to vote and we need to have action on the exports buried yesterday i filed an amendment to the ukraine bill which would expedite this to the ukraine and members of the north atlantic treaty organization. these nations are pleading for american natural gas may want the senate to do something. what we have heard is one excuse after another for why the senate should act in two weeks ago the chairman arbitrarily block my amendment to ukraine bill and other members have said that the administration should stop the exports altogether. if my colleagues are serious about permitting l&g exports, we
should let the senate do its job. call upon the majority leader to allow them to vote on the exports and this is one way that we can make progress on this issue. today's from now on thursday it will be asked to vote on the nomination of the assistant secretary of the interior. she has called natural gas production easily the single greatest threat to the ecological integrity of the west. if she is confirmed, she could block access and would block access to our nation's natural resources. very difficult for me to understand why this would hold a committee in the l&g exports today and on thursday. i would like to urge our colleagues in the committee needs to send a strong message
that we are in support of natural gas and not in opposition to it. in your testimony from you explain that bulimia is totally dependent on russian natural gas. lithuania along with three other nato allies and other european nations, 100% dependent upon russian gas and we are explaining complete with congress to do everything within our power to expedite our abundant resources into the market. and we hope that the administration will expedite that l&g exports rid of the administration fails to act, congress should work to expedite this. has the administration given them any indication that it's actually going to expedite the l&g exports? >> think you very much for these questions. i have a very good meeting planned in a very short timeframe and the department of
state and we had a very good discussion where we introduce the position with the energy exporter. as i understand we need to find this sweet spot that we share as was briefly mentioned in understanding the current situation politically and it should be not [inaudible] and the signals are important for countries like us, which specifically we are developing the infrastructure which allows us to bring gas from the apply an american gas which would appear on the world market would make a difference in so i would
continue just to encourage the congress to do anything possible to speed up this process. >> so they talked nice too but they failed to give you the assurance that we would actually get the action. i would think that in the administration isn't ready to make that commitment today that it is dependent upon congress to act. mr. goldman, in your testimony you clear the clear signal would be available to european allies to put immediate pressure on russia's market share. you explain some respective analysts have been too quick to dismiss the connection and increase the european energy security. you talk about unanswered questions related to that. and you go on to say that in dismissing the connection they make a lot of mistakes. can you please explain these mistakes the members of the
committee? >> i think some analysts say it won't matter to the u.s. l&g experts because they go to asia and not europe enough to finish her assumption to make. no doubt european gas prices would go up. the buyers like other of buyers often have diversity security. so it's premature to make that judgment. they also downplayed the price formation because energy buyers by long-term and they're not buying for next year but the 2018 through 2022 period. so they are negotiating today and it has the features price and they are going to calculate and adjust prices. the third thing they underestimate has an impact on
financing because for all the products that have been approved, only one has reached the final investment section. but if you're going to try to finance the project, you are going to finance a project that is lower and your gas is cheaper. so i think that it impacts the stability. last, the markets score prices for equity investments today on future performance and if there is a clear signal that russia's future market share that will be less than anticipated, the price of crude oil in any of these companies which have publicly traded shares, a calculating future income from gas or oil into their projections will be impacted and those happen today as long as we create certainty about tomorrow. >> thank you very much. thank you for the building of interviews along with senator begich. >> thank you, madam chair. i want to acknowledge and
welcome our new chair. she has a vast amount of energy expertise and energy. she will bring both of those two us. i want to also acknowledge the minister and i'd do want to of knowledge that your country is small geographically, but it is enormous when it comes to the courage current unresolved and america is certainly proud to be your ally. we are well aware of the history of the baltic states in all its various iterations. thank you for being here today. i, too, want to acknowledge and i want to talk to chairman landrieu. our nations cleanburning and creating natural gas can play and should play a role in strengthening national security. the ongoing crisis which we are discussing today in the ukraine and around the world, and russia's threat as a weapon shows why we need to have our own natural gas to expand our
capacity abroad. i share the frustration that the department of energy has moved slowly to approve exports to non-fta countries. it would end us at the department of energy to be in the public interest showing that this bill is bipartisan and shortly after increasing this, we presented similar bill in the house and i've made this point publicly over the last few weeks. the crisis has refocused on how the u.s. national gaps gas exports can stabilize u.s.
security. and th is why it will allow the immediate approval. i do think that the department of energy is heeding the calls that i put forth and others have put forth to approve additional permits and the senator mentioned yesterday that the department approved this facility, something that i have been pushing for in a signal that we have been making known. they keep reporting additional buses on this and the importance of our allies is the importance of the rationale of approval. so i'm hopeful that this refocused emphasis on the security energy exports we included more movement in the coming weeks and months. there are still 24 permits pending. with that, let me turn to the witnesses and direct a question to the panel. much of the focus of l&g exports has been at the review of the applications.
but isn't it true that even with doe approval, it is dependent on many financial considerations as well as approval from other considerations. would it be fair to say that the approval gives the greenlight for a market driven process? unwelcome comment from any of you on the panel. >> chow, you have said some important things on the matter. perhaps we will start with you. >> senator, thank you for your question. as i said in my testimony, there are lots of good reasons as to why we should proceed with the serious consideration that maybe speeding up the process for licensing crude exports as well as more l&g facilities. i think at one point i would make is that not only does it
send a signal to the market but the fact of the matter is the sweet spot and grows as the estimates grow as our ability to recover from this. i imagine that it also sends the message to the market but the department of energy is confident and have confidence that we have sufficient resources to entertain exports as well as domestic demand. >> the answer to your question is yes. it is really just a license to market and it just says that you are able to go to customers and say that you can go after them. but it's not an indication that you've made environmental clearance. it's not an indication that you have gotten consent to to build a project and it doesn't mean you have financing. and i think that is part of the challenge of the process right now is that people swear these
doe approvals like their real product, but they are not. all you need is a letter and a stamp. for further approval you have to have millions of dollars in environmental assessment and credible financing and i have written an alternative proposal if i could enter for the record called the modest proposal on this. if you talk about the formal application going to the head of the line, you would be accelerating projects which are not just license in this to market the products that have been commercially mature and i think that that would solve a lot of this confusion about whether we will have this everyday and projects. we are not going to just by giving their approval to the products that are ready to go. >> limited you for a question. natural gas prices, they might be able to stabilize his fluctuations for consumers and
producers. in my home state of colorado you see a surge in the winter and exports get an opportunity to maintain production levels during seasons of high demand. >> it is certainly possible. the availability is associated with this export facility, some of that might be available at prices higher than what the gas could get in the global markets that could've been a useful thing, for example, if there had been someone to did it quickly into boston during the polar vortex. going back to your earlier question, we believe that there are lots of factors that enter into that export calculation, including what oil prices are in the global market and how quickly oil and gas prices
converge in with the pace and growth in supply and demand are inside and outside. so yes, i think we can all agree that there are many factors both in the energy markets and the financial markets that come into play that determine whether this facility got old and used. >> thank you. let's find the sweet spot. >> thank you very much for bringing up the key process. senator mccaskey and i are really going to focus on that because there are a lot of questions. and thank you. your report will be cemented for the record and be referenced in response to that question. and i think we have the senator here. senator manchin is next. we are going in order. i'm sorry, then we have senator manchin. actively change sides, that is all right. >> we will never allow that.
[laughter] >> although he has tried on occasion. we will never allow it. >> is checking. [applause] >> sir, give me a sense of the world market here. i visited several years ago a facility in trinidad and most of that was coming to the states and now we are almost a net importer or barely a net importer. what is that going and what kind of margin do they operate under? is that going back to south america or the caribbean or some of that going to europe? what is the price point needed with existing natural gas facilities like this. >> i don't have those numbers are in front of me. but my guess is that the gas from there it is going to the european markets and there's also a couple of terminals.
one in chile one in mexico that might be available. the markets are developing very rapidly. even with the estimates but they have made for the u.s. exports, it's still a fairly small proportion of the global market and there are many other competitors within my market. including australia and indonesia and some of the west african countries and others who are entering the market. >> i'm just wondering if you could tell me how would russia react if we were to start permitting the process. the signal was sent the price was dropped. will russia act much like opec did earlier or does any cartel
in this fashion lower prices discourage investments and other facilities elsewhere are not how will russia react and at what point -- how much lower with the other prices have to be in order to discourage investment it needs to happen in these other countries, including the u.s.? >> thank you for the question, senator. i only went to law school, i didn't get my phd. my wife did. but i think that first russia has not shown any ability because it doesn't control enough world supply to try and lower its prices to try to impact its investments or to save its market. so as the doctors explained, the surplus forced russia to renegotiate a lot of long-term contracts of your because they were able to buy a spot. so that was one impact and they also have this stockman project with a thought that they would
have major exports. and the fact that they didn't have this anymore made it too expensive. so it wasn't so much them deciding that they were going to kill investment elsewhere by lowering prices and getting more market share but they were to lose it to the market if they didn't lower their prices. so we are about to see what the negotiation with china whether, in fact, they will lower their prices or lower the correlation between gas and oil prices in order to have a market share. they've been negotiating a great deal and they have been at loggerheads for years over price. this junior wednesday if they will pay and my guess is that they will and they will agree to a better price still not because they're trying to kill investment but because they have no other choice. and that is the trend that we want to drive further because that just squeezes their cash flow. >> that is important. i've been wondering how big the market share is and what ability they have to lower that
investment elsewhere or not as much. ukraine itself, because of corruption and you mentioned their inability to produce their own, whether it shale gas or conditional gas, if they were to ramp up the production significantly how quickly could they become completely independent of russian gas or could they? >> i don't think the aim is to be completely independent of russian gas, but not to be so dependent on russian gas. 60% depend upon it in an economy that is very gas heavy. 40% of primary energy comes from natural gas. so that dependency on russia is very significant.
i think to get above a 50% self-sufficiency level the ukraine can do it within two to three years with the right kind of policies and the right kind of investments. two that is a likely combination in terms of the use of gas. >> yes. certainly efficiency would help right now and their demand has come down mainly because of the collapse of the domestic economy and not because of the efficiency improvement. wendy economy grows some of that will come back although creates greater gdp with the use of the same amount of gas. >> thank you very much. >> thank you, madam chairman. thank you for your presentations today. i want to thank senator landrieu is our new chairman of this committee and i look forward to working with her as well. as well as creating a national
policy and also chairman wyden and ranking member mcaliskey to see in all of the above energy policy in our state and wind and solar and everything and it is most needed as far as our policy for this country also. my home state has been blessed to have a little bit of everything. and we will use everything that we have also not writing one off against the other. so what i would do is i would like to ask a question and with the polar vortex that we just had basically saying that we will need fossil coal for the next two or three or four decades and you know the problems we are having a source
producing macros here in america. are you concerned about the max that we are having right now that the utilities are having with their portfolio and i'm told that we were very critically close to having some serious blackouts during this polar vortex because of the coal fire plants that are going off-line? >> but electricity issues because of the growing dependence on natural gas in the pipeline constraints getting gas into this as well. some of that was dealt with by switching to fuel and in the longer term production we actually have coal consumption is coming off a little bit.
and it is on the basis of existing regulation which does include names like mercury and other toxic fuel and so on. one of the interesting things, senator, that you brought up and i might ask, is there something that europe can do. as you know, the u.s. has been exporting coal to europe. it wasn't for the market we would have no market in west virginia. and in fact, the all of the above strategy that you indicated that the administration has been pursuing here in america is one that probably makes sense for many countries. >> do you truly believe that we are pursuing this policy? >> i'm going to stay out of the policy. the bacher question of the energy mix. >> we have been pretty straightforward.
>> what we see is natural or renewables moving forward. >> anyone that doesn't think that is true, they are deniers. >> right, but the overall mix of fuels in the united states changes somewhat. even in 2040 we will be very blind on fossil fuels for energy consumption. >> we should tell some of our friends that surely don't want to hear the facts of how we can deal with that much better. there's more demand around the world than ever before. >> demand in general is rising very rapidly. we think overall energy demand between now and 2040 will be up by more than half. a lot of the growth is going to be in two countries.
china and india alone. so it will be a challenge to fill that. >> it will be a better policy for global climate if we reduce the particulars in this country through our trade policies. >> one of the things i have been asked in the past is when you look back at the forecast or four years ago back in 2011, had we seen demand increases for natural gas and how does that relate active export question. yes, we do see higher demand and it's even more robust and what that suggests is that there is ample gas for both domestic and export. >> if i may ask you, do you believe that you have the geological deposits where we could explore more and do more and more development in your
country and other european countries that would give you more freedom from russia's grip? >> thank you very much for your question. i certainly do believe that we should investigate it if we have this and we should explore it. i had to learn that for this to happen it took a lot of support from the department of energy to investigate and it took up to 30 years for this revolution to happen. so it's hard to expect that it would be possible to do this very quickly, even considering that we can use the know-how. we need to have this learning process both on the level of the
administration and also on the level of local communities and there are groups that are presenting this investigation of shell gas is a threat. a major threat to local communities, which is usually not the case. it was appropriate protection for the environment to investigate. so after we get through all of these legal environment adjustments so that it is encouraged, it would eat possible to do it in lithuania and it's already happening here and other european countries as well. >> thank you. take you so much. senator stabenow and then senator baldwin. >> thank you very much and congratulations again on chairing the committee. we look forward to working with you. i do want to take a few moments because it's a perspective not
represented here today to talk about not only the u.s. energy revolution but the fact that we also need to make sure that it is part of the u.s. manufacturing revolution. we know we have been talking a lot about signals today, sending signals overseas and it's also important to send a signal to american manufacturers are looking at bringing jobs home because of low energy prices to make sure that if there is a signal for them as well, the low energy prices that you have been talking about are really making a difference in terms of creating jobs here at home and with manufacturing. so i welcome each of you and we have the minister welcome each of you as well. but it is important for the record that there was a study by charles river associates and we
found that by using our own low-cost natural gas to increase american manufactured output is twice as valuable to our overall economy and create the times as many jobs as sending this important american resorts overseas. i am not suggesting we should cap exports. but what i am advocating for is a thoughtful and honest approach at others have said, to make sure that we find the sweet spot. we saw 10 million people out of work in this country. and people know that manufacturing jobs are good jobs for us. so i think that we have an important balance to do. with monday's announcement the doe has now approved six export facilities with the capacity of over 9 billion cubic feet per day. i think it's very important that we move forward with the right kind of does about the impact on prices that we don't know for sure and i'm concerned that as
we look at updating studies that the company building it actually funded the update and i think with their other perspectives that are important, including one from purdue university that found that exports between six and 12 early in cubic feet a day result in declining american gdp and higher energy prices for consumers. they have concluded that while the natural gas sector benefit from more exports come other industries and consumers lose out due to high costs. it is important and we can debate that, that may be true and it may not be true and it may be that it may not be true that as we move forward we will find that we can do both at the panel has talked about, which is the best of both worlds to be able to do that. but i do believe that the doe should conduct a new study on the economic impacts of this and
move forward in a thoughtful way because of the impact on the american economy. i am deeply concerned about what is happening in the ukraine and i do not underestimate what is happening around the world. but i also think we should look at what is happening here at home. especially with a renaissance in manufacturing leading our recovery that is so very important. the boston consulting group concluded that affordable natural gas to 5 million more manufacturing jobs by the end of the decade. the american chemistry council has identified 120 newly announced chemical and plastics manufacturing projects with over 100 billion investments. this is such great news for us. yet the study did not include these projects and nor does the 2013 annual energy outlook is used updated study. that important to say that for the record, and i will get in a
question, all of you talked rightly about this being long-term as we look at the export potential. and so i think it is important to talk about it taking several years online. once they are approved and it's up to private companies to decide. they will decide based upon market pressures. so it seems to me when we look at the fact that in asia prices are $60 million, $16 per million, which is europe and prices that are $10, i would ask what you think that company would want to go to the higher its bitter and chances are the natural gas will be going to asia? >> that may be true, senator,
but i also think that you will continue to maintain a level of competitiveness in this country because we have sitting at the source rather than $46 just to liquefy and transport this classification. so some level of competitiveness will be retained. the other point that i would want to make to you is to consider the long-term investors and manufacturing also need to know that there would be a supply of gas that is available including that supply not for
this other situation. >> i look forward to working with you. but i do think that this is not easy. i don't support capping exports, but i do think it's important that we move forward in a very thoughtful way. >> thank you, senator, we will get to the bottom of these facts. senator scott was here first. we will recognize him and another all blend in and senator murkowski and i was closing questions. thank you and i know you had to slip out. so we are happy for your questions now. >> thank you, madam chairwoman. thank you to the panel as for being a part of the conversation >> the committee will later hold
an important vote to defend fish and wildlife and parks and it's almost hard to ignore the economy and the strong support for natural gas has been displayed at this hearing with the stated opposition to increase natural gas production. the first question is a book of your testimonies are an immediate announcement by the situation with the u.s. immediately allowed crude export as well? >> i think that both crude oil exports and natural gas exports
can serve to diminish russia's revenues and would therefore have an effect. i think that it's less a matter of immediacy in terms of crude oil versus natural gas. i think in both cases that the importance of the announcement is that it establishes expectations over the longer term as mr. baldwin was saying over what natural gas would be available over the long-term contracts that people are now signing. over that term we can look at the exports being possible and how it has a substantial effect on russia. a this point the issue with it appears to be one of the mismatch between what we are producing in our complex refinery. so i think an announcement of this would certainly have a
signaling effect. we're just starting to work on this and it will mean more crude production in the united states that has benefits. >> there is a consistent formula that produces a consistent result, it seems. >> i agree with crude oil or global supply particularly on these prices and that is what we are typically priced with. right now we have a task force on assessing crude oil exports
and a lot was done because everyone is asking this question about whether there will be a day of reckoning and i think that it's clear that there will be a day of reckoning with how much they can use in our refineries and then it will start to impact production. the question about is a complicated answer that we need serious analysis. and we hope by june that it will have that study done to address exactly that question. >> would you call this be equal integrity of the west and could the obama administration up hold that view and how could that mindset impact natural gas production in the future of the exports? >> i do not think that natural gas production is a major
threat. i think that natural gas production can be carried out in an environmentally sensitive way that avoids harm to regions that is consistent with wild rice preservation and he is an avid environmentalist and works on oil and gas exploration and i think that there is a great deal of misinformation and fear mongering about this. many of the claims being completely untrue. the expert opinion is quite clear that tracking does not produce groundwater problems. the problems are because of wastewater disposal practices. but it is clear to solve this problem they have worked closely with the governor of colorado to