U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

21–113 2016

THE TRADE IMPLICATIONS OF U.S. ENERGY 

POLICY AND THE EXPORT OF LIQUEFIED 

NATURAL GAS (LNG) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TRADE 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

APRIL 9, 2014

Serial 113–TR04 

Printed for the use of the Committee on Ways and Means 

( 


joloto on DSKB35BYQ1 with HEARING
ii 

COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON TRADE 

DEVIN NUNES, California, Chairman 

KEVIN BRADY, Texas 

DAVID G. REICHERT, Washington 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

CHARLES B. RANGEL, New York 

RICHARD E. NEAL, Massachusetts 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 


joloto on DSKB35BYQ1 with HEARING
iii 

C O N T E N T S 

Page 

Advisory of April 9, 2014 announcing the hearing ............................................... 2 

WITNESSES 

Judy Hawley, Chair, Port Commission, Port of Corpus Christi .......................... 16 

Matthew Klaben, Vice President, General Counsel and Secretary, Chart Industries, Inc, on behalf of National Association of Manufacturers .................. 6 

Sarah O. Ladislaw, Director and Senior Fellow, Energy and National Security 

Program, Center for Strategic and International Studies ................................ 39 

Daniel J. Weiss, Senior Fellow, Center for American Progress ........................... 24 

SUBMISSION FOR THE RECORD 

Susan L. Sakmar, letter .......................................................................................... 72 


joloto on DSKB35BYQ1 with HEARING

joloto on DSKB35BYQ1 with HEARING
(1) 

THE TRADE IMPLICATIONS OF U.S. ENERGY 

POLICY AND THE EXPORT OF LIQUEFIED 

NATURAL GAS (LNG) 

WEDNESDAY, APRIL 9, 2014 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON TRADE, Washington, DC. 

The subcommittee met, pursuant to call, at 1:33 p.m., in Room 

1100, Longworth House Office Building, the Honorable Devin 

Nunes [chairman of the subcommittee] presiding. 

[The advisory announcing the hearing follows:] 


joloto on DSKB35BYQ1 with HEARING
2 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.001
3 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.002
4 

f 

Chairman NUNES. Good afternoon. 

I want to welcome everyone to today’s hearing on the trade implications of U.S. energy policy and the export of liquefied natural 

gas. Today’s hearing focuses on the enormous potential of the U.S. 

energy revolution of the past decade. 

I would like to make four main points before we hear from our 

witnesses: 

First, the exploration of unconventional energy reserves has 

strengthened the U.S. energy security and positioned us as a net 

exporter. This energy revolution has already cut U.S. dependence 

on foreign energy by almost half since 2005. This dramatic shift reduces our dependence on imports from unstable and unfriendly 

sources. At the same time, these resources are being developed in 

an environmentally sensitive way. 

Second point. Increasing exports of LNG and building LNG export facilities will create U.S. jobs and support economic growth. 

Exhaustive studies by the Department of Energy show that LNG 

exports on net substantially benefit the U.S. economy. In fact, the 

studies find that the more we export, the greater the benefits. In 

addition, as we will hear today, the development of export facilities 

can also help build important domestic infrastructure and address 

barriers to greater domestic use of LNG. 

Third, today’s discussion of LNG exports is especially timely in 

light of Russia’s recent belligerence against Ukraine. Developing 

the capacity to export LNG from the United States is an important 

component to a comprehensive U.S. geostrategic policy. While it 

will take time for U.S. exports to begin flowing to Europe, these exports can offset Russia energy dominance there and create competition against major state-owned enterprises, like Russia’s Gazprom. 

U.S. exports could also encourage structural reforms and good business practices worldwide, including in Ukraine. 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.003
5 

Fourth and final point I will make is, to take full advantage of 

the opportunities presented by the American energy revolution, we 

must address unnecessary regulatory barriers and outdated policies 

at the Department of Energy. Above all, we must ensure that natural gas development is not subject to unrealistic and damaging 

regulations that suppress production, as is the case with coal and 

other energy sources, and that Federal lands and waters be opened 

to natural gas development where appropriate. 

As for LNG exports, legislation introduced by Rep. Gardner to 

allow U.S. exports to all WTO members would create U.S. jobs, promote our geostrategic interests, and allow the United States to 

compete in the lucrative market, all without negatively impacting 

prices or the environment. 

And I should note that that legislation has passed out of the 

Committee today, and we hope to have it on the floor soon. 

Making it easier to export LNG also sets a good example for our 

trading partners and promotes our broader free trade agenda. 

Finally, in considering this issue, we should keep in mind that 

Congress is constitutionally vested with the authority over foreign 

trade. 

I will now yield to—do you want to make an opening statement, 

Mr. Neal, at this time or should we wait? 

Mr. NEAL. Mr. Chairman, I would prefer that, at the time he arrives, Mr. Rangel be allowed to offer an opening statement, if that 

is his choice. 

Chairman NUNES. Sure. Yes. We will do that. 

Thank you, Mr. Neal. 

Today we are joined by four witnesses. First, we will hear from 

Matt Klaben, Vice President, General Counsel, and Secretary of 

Chart Industries based in Ohio, and is also testifying on behalf of 

the National Association of Manufacturers. 

Chart Industries manufactures key components for LNG facilities and has manufacturing facilities across the United States, including in Representative Boustany’s and Representative Kind’s 

districts. 

Second, we will hear from Judy Hawley, who is Chair of the Port 

Commissioners at the Port of Corpus Christi in Texas, which is 

slated to build a large LNG export facility. She has served on the 

Port Commission for 10 years and previously served in the Texas 

State House with Representative Brady. 

Third will be Dan Weiss, Senior Fellow at the Center for American Progress. 

Finally, we will hear from Sarah Ladislaw, Director and Senior 

Fellow in the Energy and Natural Security Program at CSIS. 

We welcome all of you, and we look forward to your testimony. 

Before recognizing the first witness, let me note that our time 

this afternoon is limited. We do have your testimony. If the witnesses will keep their time limit on their testimony to under 5 minutes, we would really appreciate it. 

And, with that, Mr. Klaben, you are recognized for 5 minutes. 


joloto on DSKB35BYQ1 with HEARING
6 

STATEMENT OF MATTHEW KLABEN, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, CHART INDUSTRIES, INC, 

ON BEHALF OF NATIONAL ASSOCIATION OF MANUFACTURERS 

Mr. KLABEN. Good morning. Thank you, Mr. Chairman. 

My name is Matt Klaben, and I am Vice President and General 

Counsel and Secretary at Chart Industries. 

Chart is a leading manufacturer of equipment for a wide variety 

of cryogenic and gas processing applications. Our equipment is 

used in the production, distribution, and end use of atmospheric 

and industrial gases, as well as natural gas itself. 

We have about 3,000 employees at locations in a dozen States 

across the U.S., from communities in Minnesota to Texas and California to New York and in between. My colleagues make high-quality products for both domestic consumption and export to markets 

around the world. 

Today’s hearing is about the potential opportunities that exist for 

companies like mine and our employees and communities across 

the United States from LNG exports. Chart plays a vital role in the 

LNG supply chain, producing equipment for applications from liquefaction to end use. 

For liquefaction, at facilities in places like La Crosse, Wisconsin; 

New Iberia, Louisiana; The Woodlands, Texas; and Tulsa, Oklahoma, we design, manufacture, and fabricate equipment such as 

heat exchangers, pressure vessels, and cold boxes that customers 

use to process and chill natural gas to produce LNG. 

Continuing along the LNG supply chain in places like New 

Prague, Minnesota, and Canton, Georgia, we design and manufacture vacuum-inflated tanks and transportation equipment which 

customers use to store and deliver LNG. 

Finally, we design and manufacture fuel tanks for trucks, buses, 

locomotives, and even ships in places like Canton and New Prague. 

Chart’s participation in the LNG value chain has put us in a position to create many good-paying jobs in communities across the 

U.S. In recent years, we have invested tens of millions of dollars 

to expand our facilities in various American communities for these 

opportunities. 

Let me take a few moments to tell you about just one of those 

in La Crosse, Wisconsin, where we recently completed the expansion of our brazed aluminum heat exchanger manufacturing plant. 

This $50 million project increases the manufacturing capacity of 

our heat exchangers in La Crosse by 40 percent, doubles our engineering capacity, and includes an additional brazing furnace, which 

is the largest of its type in the world. 

Our La Crosse facility employs more than 600 people and has a 

rich heritage boasting more than 60 years of uninterrupted heat 

exchanger manufacturing. We have a 5-year contract with Machinists Union Local Lodge 2191, which continues our proud 60-year 

partnership with the International Association of Machinists and 

Aerospace Workers. 

In La Crosse, as we have done in other American communities, 

we have laid the foundation to support job growth in anticipation 

of LNG opportunities continuing on their natural course without 

artificial barriers. 


joloto on DSKB35BYQ1 with HEARING
7 

Manufacturers believe LNG exports should be governed by principles of free trade and open markets. Manufacturers also oppose 

barriers to exports. We call on the DOE to accelerate the decisionmaking process for LNG exports. This process has become a regulatory choke point, contrary to American traditions and our international obligations. Approval of pending LNG export terminals 

will place Chart in a position to create jobs in the U.S. 

Chart designs and manufactures equipment that is needed to 

construct terminals in communities like La Crosse, New Iberia, 

The Woodlands, and New Prague. If Chart is selected to supply 

equipment for just one average-sized terminal, it would support 

hundreds of jobs at our facilities and further hundreds of jobs with 

our suppliers in other communities around the U.S. 

Chart and its suppliers are not alone. We represent just one 

small part of the LNG value chain and the total work needed. Each 

LNG export terminal costs roughly $10 billion to construct. Each 

project would create thousands of jobs and generate billions of dollars in economic benefits. 

Importantly, even after construction is completed, the operation 

of LNG export terminals could put Chart and others in a position 

to create many more American jobs while enhancing American energy security through the creation of needed domestic infrastructure. The ongoing economic impact of these terminals would create 

opportunities for us in our communities. 

The U.S. has led the world in adopting international rules to prohibit export restrictions, such as WTO rules that were recently invoked to rein in restrictions on exports of rare earth materials from 

China. 

For the U.S., the same principles must apply. We should not ourselves be in violation of these very same commitments. At Chart, 

last year we sold over $800 million of high-quality products from 

communities across the U.S. We exported over 44 percent of those 

American-made products to customers around the world in places 

as diverse as China, Europe, and Australia. 

Chart benefits from the principles of free trade to support American manufacturing jobs from coast to coast and in between. Deviations from those principles, whether at home or abroad, can only 

hurt us in our communities as a whole. 

Thank you for the opportunity to appear today. I look forward for 

your questions. 

[The prepared statement of Mr. Klaben follows:] 


joloto on DSKB35BYQ1 with HEARING
8 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.004
9 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.005
10 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.006
11 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.007
12 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.008
13 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.009
14 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.010
15 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.011
16 

Chairman NUNES. Thank you, Mr. Klaben. 

At this time I would like to take a pause in the witnesses and 

recognize our ranking member, Mr. Rangel. 

Mr. RANGEL. Thank you, Mr. Chairman. 

My apologies to the members as well as to our witnesses. 

I welcome the exchange on this very important subject. I think 

America, once again, is blessed with this boon we see in natural 

gas. 

It is my understanding that the current law provides the President of the United States with flexibility in order to consider the 

public interests, but that, under existing law, it is almost automatic and that nobody that has applied for a license have had it 

turned down. 

Having said that, and recognizing that we are trying to negotiate 

quite a few expansive trade agreements with the European Union 

as well as Asia, it just seems to me that how we handle this could 

be possibly a negotiating item that could be in the quiver of our 

U.S. trade representatives. 

But I do hope, since I regret that I have heard Mr. Klaben’s testimony, that the witnesses could share with me the downside of existing law as it relates to the public policy—the public interest, 

rather, of the United States of America and what fear is there that 

this President or any President would not want to export a valuable commodity, especially at a time that we have a negative trade 

balance. And I assume the question as to the price of liquid gas to 

our businesses and as well as to homeowners will be included in 

the testimony. 

But I just want to thank you, Mr. Chairman, for giving me this 

opportunity. I look forward to the testimony of the distinguished 

witnesses. 

Chairman NUNES. Thank you, Mr. Rangel. 

At this time we will proceed with the presenters, and we will go 

to Ms. Hawley. 

You are now recognized for 5 minutes. 

STATEMENT OF JUDY HAWLEY, CHAIR, PORT COMMISSION, 

PORT OF CORPUS CHRISTI 

Ms. HAWLEY. Thank you. Thank you, Chairman Nunes and 

Ranking Member Rangel and the Members of the Subcommittee. 

It is a great honor to be in front of you today on such an important issue. My name is Judy Hawley. I am testifying before this 

subcommittee as Chair of the Port Commission of the Port of Corpus Christi. 

I am pleased to have served in the Texas House for 8 years, 

served on Energy and Transportation Committees, and chaired the 

Southern States Energy Board for a couple of years as well. 

The Port of Corpus Christi, just to orient you, is the fifth largest 

port in terms of tonnage in the United States. In addition, 86 percent of the port’s tonnage comes from energy. That is our historical 

base. Historically, we have been an importer of heavy crude. But 

in the past year, the Port of Corpus Christi has become, as many 

ports have, a major exporter. 

The port serves as a nexus for the input of stakeholders and interested parties ranging from our local communities to interVerDate Sep 11 2014 08:34 Nov 04, 2016 Jkt 021113 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21113.XXX 21113

joloto on DSKB35BYQ1 with HEARING
17 

national businesses. In my 10 years on the commission, I have a 

bird’s-eye view of the local economic impact of Federal energy policy and a broader view of how energy policy can affect local, national, and international issues. 

Locally, it is hard to overestimate the economic benefits resulting 

from the energy exploration and development of the Eagle Ford 

Shale formation in Texas. In a few short years, the Eagle Ford 

Shale has become the largest single oil and natural gas development in the world, based on capital expenditures, creating over $61 

billion in economic impact and over 116,000 full-time jobs, with an 

annual payroll of almost 5 billion. 

But may I emphasize again that the growth in the energy sector 

translates to growth in jobs. Our unemployment rate in South 

Texas had consistently been well below the national average. It is 

now below the national average, and that includes the influx of 

new workers coming in seeking jobs. We are now at 5.5 percent unemployment, which is historic for us. 

But more than just addressing the unemployment issue, we are 

also addressing the underemployment issue. And that has come 

about because of the expansion of natural gas and has come about 

because of the interest in LNG. 

Our community colleges, our universities, and our craft training 

centers are ramping up at full speed to meet the demand that we 

have right now for qualified technicians, for welders, for environmental engineers, for petroleum engineers, and the list goes on and 

on. 

Being able to meet the needs of the underemployed has really 

been a tremendous godsend out of this Eagle Ford Shale move and 

out of this LNG business that we are embarking upon at this point 

in time. 

I would like to describe one particular energy project to illustrate 

the vast economic and job growth that can result from expanding 

exports of LNG. 

Cheniere Energy is a company that is building a facility down on 

our coast, on our ship channel. They are going to take 673 acres. 

It is a newly expanded, newly dredged ship channel. 

And their investment, as a previous speaker identified, represents about $11 billion in an investment, similar to, actually, an 

LNG facility that they put in Sabine Pass, Louisiana. 

We are anticipating 1,800 construction jobs over a 5-year period, 

3,000 jobs at the peak of construction. You know, just imagine 

what 3,000 new construction jobs would do in anybody’s district, as 

an influx of capital, an influx of energy, and an influx of a trained 

skilled labor force. Once the project is built, it is estimated that the 

Corpus Christi Cheniere facility will support 8,000 jobs in the region permanently. 

One LNG facility will benefit not just South Texas, but, also, the 

national economy. The Corpus Christi facility is projected to require over $2 billion in U.S.-sourced equipment and to have a positive impact—and this is what the chairman was alluding to, and 

I think this is the key point that I would like to make today—it 

can influence our balance of trade with exports up to almost $10 

billion annually. You know, the numbers are just overwhelming 

when we consider what we will be able to do with that LNG. 


joloto on DSKB35BYQ1 with HEARING
18 

While these economic benefits for the Nation are important, the 

export of LNG is important for building stronger ties with our allies abroad, freeing countries from economic oppression through 

threats to their national gas supplies, and supporting the use of 

safer and more environmentally sound natural gas over other energy sources. 

As a result of preparing, really, for the last 20 years for the Panama Canal’s expansion to handle larger ships, including LNG tankers, the Port of Corpus Christi is ready to support increased exports of LNG. In the past decade, the Port of Corpus Christi has invested $25 

million, leveraged with the Federal Government’s investment of 

nearly 60 million, to deepen and extend the ship channel to accommodate those LNG exports. That investment has attracted over $22 

billion in new industrial growth in our region. That investment has 

really transformed a formerly economically disadvantaged area. 

Finally, my final comment is that the Port of Corpus Christi is 

a strategic military port. Having the ability to export LNG out of 

our facility strengthens our position. And we are very proud of the 

support that we give to this Nation in terms of being a strategic 

military port, and we think the LNG exporting strengthens that 

position. 

Thank you very much. 

[The prepared statement of Miss Hawley follows:] 


joloto on DSKB35BYQ1 with HEARING
19 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.012
20 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.013
21 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.014
22 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.015
23 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.016
24 

Chairman NUNES. Thank you, Miss Hawley. 

Now we recognize Mr. Weiss for 5 minutes. 

STATEMENT OF DANIEL WEISS, SENIOR FELLOW, CENTER FOR 

AMERICAN PROGRESS 

Mr. WEISS. Thank you, Chairman Nunes, Ranking Member 

Rangel, and members of the Trade Subcommittee. Thank you for 

the opportunity to testify today. 

The Department of Energy must continue its public interest assessment of proposed liquefied natural gas export applications. 

The following four criteria are essential to evaluate whether 

pending applications are in the public interest: First, assess the impact of additional LNG exports on natural gas prices and electricity 

costs; second, evaluate the impact of higher natural gas prices on 

U.S. manufacturing; third, determine the climate impacts of increased natural gas production; fourth, are there other options that 

can deliver natural gas cheaper, faster, and more securely? 

First, the Department of Energy has already approved LNG terminals that could export approximately 18 percent of total domestic 

natural gas production by 2020. The Energy Information Administration forecasts that, even with a modest level of exports, the price 

of natural gas for domestic electricity would grow by nearly onethird by 2020. This price increase could have severe impacts on 

family and small business budgets. 

Second, a recent study found that lower natural gas prices have 

fueled an additional 200,000 new manufacturing jobs. However, if 

more LNG exports boost natural gas prices, the industrial sector 

could experience nearly a one-third price increase in natural gas 

costs by 2020. This price rise could reduce manufacturing jobs. The 

nearest study commissioned by DOE determined that the expansion of LNG exports would provide net economic benefits to the 

U.S., but warned that, ‘‘Higher natural gas prices in 2015 can also 

be expected to have negative effects on output and employment.’’ 

Number three, DOE must consider climate change when evaluating additional LNG exports. The hundreds of scientists on the 

International Panel on Climate Change just issued yet another 10- 

alarm warning that, ‘‘Impacts from recent climate-related extremes, such as heat waves, droughts, floods, cyclones, and 

wildfires, reveal significant vulnerability and exposure of some ecosystems and many human systems to current climate variability.’’ 

Methane contributes nearly one-tenth of U.S. climate pollution. 

The oil and gas sector is the second largest source of domestic 

methane due to fugitive releases during production and leaks during distribution. 

For instance, a study by Senator Ed Markey estimated that, in 

2011, aging natural gas pipelines leaked large amounts of natural 

gas, the pollution equivalent of 6 million cars. Leaking natural gas 

also cost consumers at least $20 billion over the past decade. 

Ranking Member Rangel recently introduced legislation that 

would begin to plug pipeline leaks, and this program would create 

jobs, save consumers money, and cut pollution. 

Additionally, the Energy Information Administration predicts 

that further gas exports would spur additional gas production, 

which would lead to more methane pollution, exacerbating climate 


joloto on DSKB35BYQ1 with HEARING
25 

change. The Obama administration’s new methane reduction program must limit fugitive methane from fracking. 

Lastly, some want to assist Ukraine by skipping reviews in the 

public interest review to fast-track approval of additional LNG export facilities. However, LNG exports to Ukraine require infrastructure that would take years to build. 

The first export facility at Sabine Pass that Ms. Hawley talked 

about may not be ready until 2016, and its gas is already contracted to go to India and South Korea. 

In fact, some call fast-tracking LNG exports like answering a 911 

call from Ukraine. If so, the fire department won’t arrive for 2 

years and then it will go to a different address than the one that 

is making the call. 

Faster, more effective assistance would be—to the Ukraine would 

be investments in energy efficiency, particularly since Ukraine is 

the second-most energy-wasteful nation. 

The U.S. has already successfully invested 15 million in Ukraine 

for efficiency projects that save 380 million cubic meters of natural 

gas and cut carbon pollution equal to 150,000 cars. 

Promptly and significantly expanding these efforts now that reduce gas waste is an effective way to help Ukrainians reduce their 

reliance on Russian gas rather than waiting at least 2 years for 

LNG export terminals to be completed. 

The cheapest, fastest, most economically beneficial method to 

meet energy needs in the U.S. or Ukraine is to capture fugitive 

methane, make buildings more efficient, plug leaky pipes, as Mr. 

Rangel has proposed, and reduce other sources of energy waste. 

Thank you. And I look forward to taking your questions. 

[The prepared statement of Mr. Weiss follows:] 


joloto on DSKB35BYQ1 with HEARING
26 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.017
27 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.018
28 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.019
29 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.020
30 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.021
31 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.022
32 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.023
33 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.024
34 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.025
35 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.026
36 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.027
37 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.028
38 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.029
39 

Chairman NUNES. Thank you, Mr. Weiss. 

Ms. Ladislaw is now recognized for 5 minutes. 

STATEMENT OF SARAH LADISLAW, DIRECTOR AND SENIOR 

FELLOW, ENERGY AND NATIONAL SECURITY PROGRAM, 

CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES 

Ms. LADISLAW. Thank you. 

Good afternoon, Chairman Nunes, Ranking Member Rangel, and 

Members of the Committee. My name is Sarah Ladislaw. I am the 

director of the energy program at the Center for Strategic and 

International Studies. 

Thank you for the opportunity to testify today on the trade implications of U.S. energy policy and the exports of liquefied natural 

gas. It is an honor to appear before the subcommittee and address 

this timely topic. 

I will focus my remarks this afternoon on the geopolitical impacts of the surge in U.S. natural gas production and the prospects 

for U.S. LNG exports to enhance global energy security. 

The extraordinary pace and scale of U.S. natural gas production 

has managed to surprise even the most seasoned energy observers. 

As recently as the early 2000s, U.S. natural gas production was declining and the country was projected to grow its reliance on imports. 

Today U.S. dry gas production is the highest it has ever been and 

the United States is projected to be a net exporter of natural gas 

by the end of the decade, largely thanks to the production of shale 

gas. 

This surge in U.S. natural gas production and the resulting future LNG exports are likely to have profound impacts on the 

United States and for global markets. These impacts could be summarized in four broad categories: An energy policy reconsideration, 

competitiveness issues, perceptions of leverage, and resource optimism. 

First, the ultimate impact of the unconventional gas on global 

markets and geopolitics depends not just on the U.S., but, also, on 

other policy decisions other countries make. To date, the production 

of shale gas has been limited mostly to the United States and, to 

a lesser degree, Canada. 

But other countries have significant conventional and shale gas 

potential. Other countries are starting to explore their own shale 

gas resource space and evaluate investment, policy, and other 

logistical options for commercial production and consider what potential they have for better—what the potential for better supplied 

markets means for their energy strategy. 

How other countries respond will have a significant impact on 

the extent and scope of the geopolitics of energy trade. 

Second, on the domestic front, energy has been a bright spot in 

an otherwise uneven economic recovery. Cheap and abundant natural gas has boosted the U.S. economy, making export-oriented industries with high energy costs more competitive on the global 

market. 

Unconventional natural gas has also created jobs and contributed 

to changes underway in the electric power markets and other industries, as well as helped the United States reduce greenhouse 


joloto on DSKB35BYQ1 with HEARING
40 

gas emissions, along with lower demand and energy efficiency improvements. 

North America is currently among the most attractive and competitive places in the world to locate and invest in energy-intensive 

endeavors. This boost in relative U.S. economic competitiveness is 

not lost on other countries with whom we are carrying out trade 

negotiations, many of whom exist in parts of the world with much 

higher natural gas prices. 

Third, by taking itself out of the LNG import picture, the United 

States has freed up supplies of LNG and even pipeline gas from 

Canada to go elsewhere and traditional U.S. suppliers are increasingly servicing other markets. 

This is a positive development for global gas consumers because 

the anticipation of extra supplies has given previously captive natural gas buyers additional leverage in negotiations for long-term 

supply contracts. This has been particularly true in Europe, but, 

also, evidenced in Asia. 

Fourth, much has been said about the United States’ new energy 

posture and the shift in mindset from one of energy scarcity to one 

of energy abundance. While the new U.S. production is indeed remarkable, it does not necessarily translate into an era of global energy abundance. 

Perhaps a more appropriate term for the shifting global mindset 

is ‘‘resource optimism,’’ the idea that more resources can be found 

when and if the right technology, price, and market conditions 

occur. 

Resource optimism has a number of important implications. 

From a climate change standpoint, the question now becomes about 

how to reduce emissions in the face of a more promising future for 

oil and gas. 

From an oil and gas producer country standpoint, the global 

landscape in competition for capital looks more difficult. 

From a technological standpoint, there is renewed interest in 

how to cultivate new applications to extend the current production 

surge, make it safer and more sustainable, or build towards the 

next great technological advancement. 

Finally, while the outlook for oil and natural gas production is 

much more optimistic, it still takes a great deal of time, large-scale 

investment, including infrastructure, coordination, and policy certainty to deliver resources to market. And as the United States 

learned with the propane shortages of this past winter, even abundant supplies don’t guarantee the absence of supply disruptions 

and price hikes. 

One final point about energy trade and foreign policy. There has 

been a lot of recent interest about whether or not U.S. LNG exports 

can or will be the source of greater foreign policy leverage or influence. It is important to recognize that the impact of unconventional 

gas and the future impact of U.S. LNG exports is diffuse and market driven and not easily controlled from Washington. 

The decision to export gas is ultimately made and carried out by 

companies, though the U.S. Government does play a role in evaluating and permitting export facilities across a range of factors, and 

has less to do with foreign policy priorities of the government than 

commercial opportunities and relative prices. 


joloto on DSKB35BYQ1 with HEARING
41 

In general, the question is about whether we use our new resources—natural gas, but, also, oil—for the purposes of leverage or 

stability. Leveraging energy trade for very specific or near-term foreign policy aims is likely to overestimate what we are able to 

achieve, but pursuing U.S. LNG exports can help foster our broader 

foreign policy goals. 

LNG exports are consistent with longstanding U.S. energy and 

trade policies of promoting freer markets and a diversity of supply, 

which will, in turn, help make energy markets more competitive, 

diverse, and stable. 

Thank you for your time and the opportunity to address the subcommittee. I look forward to your questions. 

[The prepared statement of Miss Ladislaw follows:] 


joloto on DSKB35BYQ1 with HEARING
42 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.030
43 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.031
44 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.032
45 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.033
46 

Chairman NUNES. Thank you, Ms. Ladislaw. 

At this time I will postpone my questioning and I will yield 5 

minutes to the gentleman from Washington, Mr. Reichert. 

Mr. REICHERT. I appreciate that, Mr. Chairman. Thank you. 

Mr. Klaben, I found your testimony about the role that LNG export facilities can play in helping to address domestic infrastructure limitations and how this is related to LNG innovation particularly interesting because, in Washington State, there is a growing 

interest in LNG-powered vessels and there is a great potential for 

growth, we think, in this industry. 

Could you explain, please, in more detail how the lack of liquefaction facilities is hindering the ability of the United States to develop and deploy LNG-powered vehicles and vessels that can be 

used in many different areas. 

And then, secondly, how will growing U.S. exports of LNG help 

to address these domestic infrastructure limitations? 

Mr. KLABEN. Yes. Thank you, Representative Reichert. 

So, first, as to the question of the supply constraints in the 

United States on liquefied natural gas, which is simply natural gas 

taken to its liquid form, we have a lot of natural gas available in 

the United States, but we do not have a lot of liquefied natural gas 

available in the United States. 

There is a lack of infrastructure to take this clean-burning, abundant domestic resource and use it in a variety of applications domestically, which can help environmentally, first, because natural 

gas gives off far less pollutants, including CO2, than other sources, 

like diesel. 

But, further, just in terms of energy security, tapping into our 

natural gas resources for transportation purposes is very positive. 

So today a lot of people are waiting to see whether the commitment is there in industry and among investors to make the plays 

to build the infrastructure, and this is slowing down the build-out 

of the necessary infrastructure plants that would liquify natural 

gas for use domestically. 

We see it moving forward in some locations. For example, my 

company is participating today in liquefaction plants in Colorado 

and in Eagle Ford Shale in Texas for domestic applications. 

A lot of this is actually powering drill rigs for shale gas so that 

they are using cleaner-burning domestic natural gas for their fuel 

uses instead of burning diesel, for example. 

But there is—the lack of supply of the LNG is, in fact, slowing 

down the ability to use LNG for transportation, whether it is locomotives or vessels that—oceangoing vessels or water vessels or 

even trucks. High-fuel-consuming vehicles for which the only real 

solution, if they are going to use natural gas, is liquefied natural 

gas. So, yes, there is a limitation. 

And the second part of your question, Representative Reichert, 

was how could export terminals help this domestic need. 

And I think the answer to that is twofold. The export terminals 

really are destined primarily for—export prices for LNG generally 

are higher outside the United States than they are inside the 

United States. 


joloto on DSKB35BYQ1 with HEARING
47 

We believe that market forces over time are going to lead to— 

if you look at the studies, the international prices are projected to 

come down over time as more production comes on scale. 

But when the infrastructure exists, this is infrastructure on our 

continent, which is plugged right in here to the local gas supply 

that can easily be used to provide local needs as well. In fact, we 

see this in at least one terminal where there is suggestion about 

taking part of the off-take and using it for workboats in the Gulf 

of Mexico. 

But, beyond that, this environment of investment that I talked 

about is really important. Investors are fickle people. This is privately funded infrastructure. When they see a commitment to LNG 

going forward, it helps them make more confidence to put in place 

their infrastructure for domestic plays as well. 

And we think there is going to be a positive follow-on effect for 

that, which will give us more of this LNG resource for high-fuelconsuming vehicles right here in the United States. 

Mr. REICHERT. I appreciate that. 

Just real quickly, follow up with a more general trade question. 

I think the answer is obvious. Let’s hear it. 

About your company, I noticed in your testimony 44 percent of 

your products manufactured in the United States are exported to 

other countries. 

How important is an aggressive trade liberalization agenda to 

your company and to your plans for expansion in the United 

States? 

Mr. KLABEN. It is highly important. Some of that is LNG products or equipment for LNG that we are exporting to places like 

China. 

China is one of our biggest markets for buying U.S. LNG equipment. Because they get it in China. They are using their local resources to liquefy their natural gas and use it to reduce the pollution in their country. 

But we also manufacture a lot of other equipment for other markets. For example, we manufacture medical oxygen equipment. And 

if there is a normalization or a reduction in trade barriers going 

into Europe, it is a huge market for our U.S.-manufactured medical 

oxygen equipment. 

So it is highly important to us and other U.S.-based manufacturers. 

Mr. REICHERT. Thank you, Mr. Chairman. 

Chairman NUNES. Thank you, Mr. Reichert. 

At this time I would like to introduce the ranking member for 

5 minutes. 

Mr. RANGEL. Thank you, Mr. Chairman. 

Is there any member of the panel that believes that the President’s authority is too rigid as relates to getting licenses to export 

liquid gas? 

Is there any reason to change the existing law as relates to the 

President’s authority to pass on the question as to whether or not 

the export is consistent with our national interest? 

Mr. WEISS. Mr. Rangel, I believe that the law is adequate as is, 

does not need to be changed. What I propose is some different or 

more detailed criteria that applications need to meet in terms of its 


joloto on DSKB35BYQ1 with HEARING
48 

impact on price, manufacturing jobs, climate change, and is this 

the fastest, cheapest way to secure more natural gas. 

Mr. RANGEL. Well, I agree with you. 

But I am asking the panel or the people who disagree with you 

and believe that there should be changes in the existing law as relates to the Department of Energy. 

Mr. Klaben. 

Mr. KLABEN. Yes. I would be happy to comment on that, Representative Rangel. 

I think whatever the law is, we need to be cautious about putting 

discretion in the hands of people who may exercise it in ways that 

aren’t taking all the factors into account. 

Mr. RANGEL. I don’t think we are talking about people, Mr. 

Klaben. We are talking about the President of the United States. 

Mr. KLABEN. Thank you, Representative Rangel. 

So I think a system that provides for more assurance that these 

things will be given a fair shot up or down—— 

Mr. RANGEL. Let me ask you, Mr. Klaben: Have you got any 

evidence at all that the President’s authority has prevented anyone 

from getting a license? 

Mr. KLABEN. I—— 

Mr. RANGEL. No. 

Mr. KLABEN. I am looking at it. From what I know, I am not 

an expert—— 

Mr. RANGEL. I am assuming the answer is ‘‘no.’’ If you come up 

with a ‘‘yes,’’ then I want to tell the administration that they misled me. So we will keep it open. 

But having said that, if I were right and we are trying to work 

our way through it—as Mr. Weiss says, there are up and downs in 

everything. There are trade agreements. This is a pretty good hand 

that has been dealt us. 

But, like any hand, it depends on who you are negotiating with, 

what they need, what they want, what we need. And, of course, we 

have to stay within the restrictions of the WTO. 

But when you are negotiating, you are negotiating. Right? 

So I just want to know—of course you have to be careful when 

you give authority to the executive branch. No one knows that better than the Congress. 

But do you have any reason to believe that that authority has 

been abused or not used in a way that most Americans would want 

it used, and that is that it takes a pretty good reason to deny someone a license to export? 

Mr. KLABEN. As I understand it, this is a $50 application for 

this license and, yet, it is taking months upon months or years to 

move forward. That does seem inconsistent with—— 

Mr. RANGEL. But you don’t have anything wrong with the reg. 

You have wrong with the implementation, the regulatory issues, 

which a lot of us do. 

But you are not here to change the law. Is that correct? 

Mr. KLABEN. I don’t know enough about the bill that has been 

proposed to be able to comment intelligently on it. I think things 

that would help it move forward more on a streamlined basis would 

be good for everyone. 


joloto on DSKB35BYQ1 with HEARING
49 

Mr. RANGEL. I agree with you. Always—there is always room 

for improvement. 

So everyone is happy with the President and existing regulatory 

law, and you hope that we make certain that it is in the interest 

of the people, our homeowners, our manufacturers, and our national interests. And I agree with that. 

So I yield back the balance of my time. 

Chairman NUNES. I thank the gentleman. 

And I think the point is, Mr. Rangel, that—this is not a hearing 

on a bill, on legislation. But I think the issue is that there are several dozen permits that are taking a long time to get permitted. 

And I think that—— 

Mr. RANGEL. We can speed that up, as long as we are not legislating. I will join with you in all that I can do, Mr. Chairman, in 

making certain we expedite these applications. 

Chairman NUNES. Thank you, Mr. Rangel. 

With that, I will recognize Mr. Buchanan for 5 minutes. 

Mr. BUCHANAN. Thank you, Mr. Chairman. 

I just happened to be at a town hall yesterday and it came up 

about natural gas, and you hear different stories. But, you know, 

as our economy limps along at 2 or 3 percent, we are going backwards, in theory. 

We need to find a way to move it 4 or 5 percent, in my mind, 

like we did in the 1990s. I think a lot of that was technology driven. My sense of it is that natural gas could be that silver bullet 

in terms of an opportunity going forward. 

But I do want to get your thoughts on some of this in terms of 

the bigger picture. So let me start with you, Ms. Ladislaw. 

In terms of looking at it in the bigger picture, how much, in 

terms of reserves, do we have in the country? I hear different numbers. I don’t know there is an exact number, but I hear 100 years. 

Is that a possibility? 

And I guess it probably depends on technology and getting at it, 

environmentally sensitive—getting that from an environmentally 

sensitive standpoint. 

But what is your thought on that issue in terms of the reserves 

we have in the U.S.? And then maybe you can comment on Canada 

as well. 

Ms. LADISLAW. Yes. I am going to try really hard not to get 

wonky on you too fast. 

But, you know, reserves—— 

Mr. BUCHANAN. Just in general. Because I have got a few 

other questions. I am trying to get the big picture in 5 minutes. 

Ms. LADISLAW. Yes. 

The long story short, in about 5 years, we have discovered we 

have got a heck of a lot of gas. The best price control we have got 

is—— 

Mr. BUCHANAN. Is that 100 years? Have you heard that? 

Ms. LADISLAW. Yes. If you take sort of—there is reserves, 

which we have got—you know, I think the number is now up to 

sort of 300 tcf or so. If you look at sort of total in-place resources, 

it is about 700. 

When you look at some of the—— 

Mr. BUCHANAN. 700 what? 


joloto on DSKB35BYQ1 with HEARING
50 

Ms. LADISLAW. 700 trillion cubic feet. 

Mr. BUCHANAN. Okay. 

Ms. LADISLAW. So when you look at sort of the more sort of 

outward-size numbers about where we could produce, what is in 

the ground, maybe not economic today, but could be in the future, 

the numbers get shocking. They are very, very high. 

Mr. BUCHANAN. So let’s just say there is 100 years, possibly, 

or somewhere in that ball park, maybe more. How big is the market potential in the U.S. and abroad? I mean, I am just trying get 

your sense of it. And if you can distill it down, I would appreciate 

it. 

Ms. LADISLAW. The market potential in the United States is 

very large. It is really only sort of constrained by how much we are 

growing. Right? We are not growing as fast as a lot of other places 

in the world. 

Mr. BUCHANAN. When you look at the U.S. and abroad, how 

big is that market potential? Do you have—I know you don’t probably have a number—an absolute number. I am just trying to get 

a sense from your standpoint. 

Ms. LADISLAW. Well, natural gas is one of the fastest growing 

fuels out there. Right? 

So, for example, one of the big questions now is, if you have got 

all of these gas supplies and you have got China growing the way 

that they do, with the dependence on coal that they do have, and 

India and some other places around the world—the question is how 

much of that can be displaced by this natural gas. So—— 

Mr. BUCHANAN. From a competitive standpoint, in terms of 

other countries, in terms of trade, how many competitors do we 

have that are serious competitors in terms of natural gas? 

Ms. LADISLAW. For consumption. 

Mr. BUCHANAN. Yes. 

Ms. LADISLAW. Probably a handful of regions. 

Mr. BUCHANAN. Ms. Hawley, I just want to—you had a very 

impressive—just kind of the numbers you went through. I haven’t 

heard those numbers. I am from Florida. We have 14 ports in Florida. So we would like to get some of that business at some point. 

But let me just—what’s your thoughts on it? I mean, what is 

your understanding how big the reserves are, how big the market 

is? 

You touched on it, and you mainly talked about Texas. But I— 

it is impressive, the number of jobs. But I am just thinking in 

terms of the country, the opportunities there. 

Ms. HAWLEY. Thank you. 

Yes. I agree with your number—your outnumber. That is what 

we hear as well. 100 years is a pretty good benchmark. And I think 

that is conservative, from what we are hearing. 

Your question was whom are the consumers of the—— 

Mr. BUCHANAN. No. I was looking at who are our competitors 

of our companies abroad. I mean, is this something where we have 

got the momentum and we could really be a dominant player in the 

world? 

Ms. HAWLEY. Absolutely. 


joloto on DSKB35BYQ1 with HEARING
51 

Mr. BUCHANAN. That is what my sense of it is. But I think it 

could be a huge advantage that we could have, you know, in the 

next decade or so. 

Ms. HAWLEY. I think the timing is absolutely critical to this 

play. And I think you hit on an excellent point. Because right now 

we are underway with a number of these LNG facilities. They have 

invested, you know, millions and millions of dollars in getting to 

this point. 

So they are really sitting in the catbird seat to be able to capture 

this export market and, being able to do that, they are already 

ahead of the competing countries that will be developing their own 

LNG. 

That supports the manufacturing here in the United States. It 

also supports the natural gases. The LNG supports the manufacturing among our allies. 

And there is an enormous price advantage right now—a little bit 

of a differential between Asia and Europe—in being able to export 

that. But that is maintained at this point in the market because 

we have this abundant natural gas. 

So to specifically answer your question, yes, this is the moment. 

These are the few years. And the quicker we can expedite going 

through a very thorough permitting process, but making sure that 

we expedite it, we are there. 

Mr. BUCHANAN. I guess my point, I will just say quickly, it just 

seems like the time is now. 

Ms. HAWLEY. It is. 

Mr. BUCHANAN. It is a great opportunity. It is environmentally 

friendlier than, you know, what is available out there today, and 

I think we have got a jump start on it. 

I think it could make the difference in our economy growing. We 

need to get back to 4 and 5 percent. And I think—moving forward 

in a positive energy basis, I think it is a huge opportunity not just 

with our market, but in terms of exports. 

I’m out of time. 

Chairman NUNES. Gentlemen’s time has expired. 

Mr. BUCHANAN. I will yield back. Thanks. 

Chairman NUNES. The gentlelady from Kansas is recognized for 

5 minutes. 

Ms. JENKINS. Thank you, Mr. Chairman. And thank you for 

holding this important hearing. 

And thank you all for being here. 

Ms. Hawley, I understand that the licensing process to build an 

LNG export facility is expensive and time-consuming. The one estimate I saw said it would cost up to 200- to $300 million to complete 

the FERC permitting process. 

Could you please describe that process and how it ensures that 

environmental impact is carefully evaluated before construction begins. 

And, finally, are there measures, perhaps, that can be taken to 

make this process more efficient? 

Ms. HAWLEY. Thank you. Great question. 

Yes. The—the permitting process is thorough. Just in—from the 

FERC perspective, over 40 different permits are involved in permitting one facility. The process takes years. The ones that we have 


joloto on DSKB35BYQ1 with HEARING
52 

been engaged with from the port’s perspective has—we have been 

involved with this for several years, maybe three. 

And, actually, it is kind of interesting because that LNG facility 

10 years ago was going to be an LNG importer, which is somewhat 

interesting because that is how they hit the ground in the Corpus 

Christi area. And the economy has changed so quickly that now 

they are positioning to be an LNG exporter and well along the way 

with their permitting. 

Many, many agencies take a look at this. The community input 

is phenomenal. We have had hearing after hearing in the community. The stakeholders in the community, the agencies that are 

there, are very, very much engaged. 

The Coast Guard has been enormous partner with use. The 

Corps of Engineers has been involved. Just from the port’s perspective, we were working with our pilots in designing the ship channel 

as we extended it to make sure that we had the appropriate turning basins to accommodate the LNG ships. 

There are so many pieces that go into making sure that it is safe, 

making sure that it is environmentally sound. I am just giving you 

just a couple of little pieces from our perspective. 

The EPA weighs in on it. All of the Texas agencies weigh in. I 

told you about the Coast Guard. The Department of Transportation 

weighs in. We have so many eyes on it. That is probably the reason 

the process takes so long. 

And one of the questions that had come up during—as I was preparing to visit with you, was about what would you recommend. 

How would we change this? 

And the FERC process is thorough. It needs to be faster. I don’t 

know if it is because we don’t have enough employees there addressing this. Maybe we can—you can have parallel paths. 

But the process is so incredibly time-consuming and frustrating 

for those investors who need the stability that, once they make an 

application, it is going to be an up or down. They can move forward 

or it is not going to—we had two or three other facilities that were 

looking at being there. 

So it is a very thorough process, very time-consuming. But anything that can be done to streamline that process, expedite that 

process, not shortcut that process—you can do things parallel— 

would be a great advantage to not only the industry, but, I think, 

also, to our balance of trade. 

Ms. JENKINS. Okay. That is helpful. 

Did you have something to add? 

Mr. WEISS. Yes. Thank you. 

First, I would note that nearly all, if not all, of the LNG export 

permits have been granted under the current administration. 

Second, the process is not quite as thorough as Ms. Hawley described. Because the Environmental Protection Agency asked 

FERC if they assessed the impact on climate change of reviewing 

and citing these permit applications, and FERC has not done so. 

And that is pretty important, given particularly these facilities 

are going to be going—many in coastal areas. They may be subject 

to sea level rise, storm surge, other things like that. 

And, lastly, the—part of the process that the current legislation, 

as the chairman mentioned at the beginning of the hearing, that 


joloto on DSKB35BYQ1 with HEARING
53 

passed the Energy and Commerce Committee today would truncate 

the DOE National Interest Review, which, as I understand it, only 

takes about 50 days. It is the FERC part of the process that is very 

lengthy. 

Ms. JENKINS. Ms. Hawley, does that sound correct to you? 

Ms. HAWLEY. We certainly took into consideration, as you would imagine, with an $11 billion investment, being in flood 

plains and, you know, those issues, hurricane-proofing these facilities. So all of that has been weighed—you know, considered in the 

siting of this facility and in its construction, from our perspective. 

And the climate change piece, I don’t know about that. 

Ms. JENKINS. Okay. Thank you. 

I yield back. 

Chairman NUNES. Thank you, Ms. Jenkins. 

I will now yield 5 minutes to the gentleman from Massachusetts, 

Mr. Neal. 

Mr. NEAL. Thank you very much, Mr. Chairman. And I want to 

thank you for holding the hearing. It is timely, and I hope we will 

be able to do a few more of these. The economics of energy supply 

are always challenging. 

But let me speak specifically, since Mr. Buchanan gave me the 

opening when he talked about the bigger picture, New England. 

That is part of the bigger picture. 

And part of the bigger picture is what happened to heating bills 

this year in New England. Now, granted, it was a cold winter by 

any standard. Some might argue it is cold in New England yearround. But there is another compelling fact, and that is what we 

have gotten through this year. 

So let me suggest that the premise is slightly incorrect. And 

rather than ask the question on whether we should ship this fuel 

overseas, maybe we should first ask ourselves whether or not all 

Americans can partake in cheap natural gas. The phenomenon I 

would hope would be applied to all parts of America’s geography. 

Now, this is really a good news story. The whole energy story is 

transformative, if done correctly, and the opportunity here to really 

embrace what those of us in America have talked about now, since 

the gas lines of the Nixon years, energy independence, so that we 

might not send America’s sons and daughters off to defend oil. 

Instead, what we produce here in America ought to make us not 

only independent in terms of the economics of the situation, but 

more independent in terms of some of the positions we have been 

compelled to take. 

But, in New England, the shale gas boom really has not been felt 

very well. And, in fact, this year, despite all the talk of energy pricing across the country, people in New England this year actually 

paid more than we have paid in the past. 

Now, I understand oil is an international commodity, it is tough 

to score it in terms of markets, but not to miss the point that domestic production could alleviate some of this opportunity. 

So, in New England, capacity is a question, and it may only get 

worse as natural gas forces other power sources to go offline. 

What is interesting here is the impact that natural gas is having 

on nuclear development and on coal. And those, as all of us would 

agree, are factors in the marketplace and that opportunity. 


joloto on DSKB35BYQ1 with HEARING
54 

But it is reasonable to debate—even if we hear compelling economic arguments, it is reasonable to debate this whole notion of 

shipping gas thousands of miles overseas to satisfy frequently geopolitical questions after we have made the argument about economic independence based upon not needing this remedy and providing cheap energy to all members of the American family. 

So I give it to you, as panelists, to give me your 2 seconds on 

it, or 2 minutes. 

Mr. WEISS. Thank you, Mr. Neal. 

There have been three major studies on the impact of increased 

LNG exports, two by the government, one by Dow, which is an opponent of increased exports. 

All three of them found that, under a level of exports of which 

we are going to exceed with the already-approved facilities, that 

there be anywhere from a 14 percent to 35 percent increase in natural gas prices. 

In other words, we will be taking our gas, sending it overseas. 

The natural gas companies will make more money because they 

can get a higher price for it in Europe or even a much higher price 

in Asia while domestic natural gas prices will rise, which means 

electricity and heating prices here will rise, as well as harming 

manufacturing. 

So that is very—something to consider, that all three of these 

major studies, two by the government, one independent, have all 

found the same thing. 

Ms. LADISLAW. You know, I think that we got to keep some 

stuff in perspective. I mean, the United States, for better or worse, 

is going through a supply shock, the good parts and the bad. Right? 

And so the comment I made about sort of propane shortages, 

heating oil and heating—and gas—and natural gas costs in the 

Northeast are part of the story that we are producing gas in places 

where we didn’t think we ever would be and we are needing it in 

places where, you know, we don’t have the infrastructure to get it 

there. 

And so we are an energy-abundant country now not, you know, 

exporting any LNG, and we are experiencing some situations that 

raise us questions about sort of the redundancy and the ability of 

our infrastructure to respond. 

We should cut ourselves some slack. This has happened over, 

like, a 5-year period of time. It is an enormous resource boom, and 

we are going to feel some of the adjustments from that. 

The broader policy question is: What do you do to sort of take 

advantage of the boom? Do you try and sort of keep, you know, resources here and control prices? We used to have price controls in 

this country. It didn’t go very well. It ends up stymieing supply. 

Right? 

And so the question is how do you perpetuate producers to 

produce more of this resource, but then, also, for us to make the 

right infrastructure decisions and the right domestic, you know, decisions with nuclear, coal, the rest of it, to sort of meet our needs 

at home. 

And that is a very complicated conversation for us to have. We 

are in a far different position than we were. We are not growing 

as fast. We have a very active debate on where we should be headVerDate Sep 11 2014 08:34 Nov 04, 2016 Jkt 021113 PO 00000 Frm 00058 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21113.XXX 21113

joloto on DSKB35BYQ1 with HEARING
55 

ing in terms of carbon emissions. And we have got a major resource 

boom that the entire world is looking at and saying, ‘‘Gee, how do 

we replicate?’’ 

There aren’t necessarily particularly easy answers. And I think 

there is going to be a lot of growth pains sort of between here and 

there. 

I would just caution to say that, you know, these sort of percentage increases in the number of—over the price of natural gas have 

to be taken into context. You know, a 30 percent increase on $3 gas 

is not very expensive gas. Right? We were paying $13 in MMBTU 

not too very long ago. 

So I think the question is, you know: What is sort of the appropriate range of that price? And how do we allow that investment 

to take place? 

That is a much more nuanced discussion. And I think many people in the private sector get their frustration with our process in 

saying, ‘‘We can’t pick the prices. We were the ones building the 

import facilities. Remember?’’ So I think they are worried that we 

will try and over-think it. RPTS KERR DCMN WILTSIE [2:30 

p.m.] 

Chairman NUNES. I think the lady makes great points. The 

time of the gentleman from Massachusetts, however, has, expired, 

but thank you for your comments. 

At this time I want to introduce the gentleman from Louisiana, 

Mr. Boustany, for 5 minutes. 

Mr. BOUSTANY. Thank you, Mr. Chairman. 

I think Ms. Ladislaw went a long way to dispelling some of the 

statements that Mr. Weiss made earlier. And with the two government studies, they are somewhat dated because things are moving 

very quickly in this whole area of the shale gas revolution and 

what is happening with exports. 

My district is in coastal Louisiana, and all of this started there, 

in effect. It is the epicenter of the shale gas revolution from the expertise in doing exploration production around the country to the 

Henry Hub, where pricing is done, is in my district, as well as the 

first export facility that is under construction today, having gone 

through the process with plans to export in late 2015 or early 2016. 

We are now on the verge of a major revolution, and this is just 

the very beginning. It is a new era of energy diplomacy, in effect, 

which is monumental, unlike anything we have seen in decades. 

And part of this is going to entail North American energy integration with Canada, the United States taking a lead in this, and, 

hopefully, Mexico now with the new reforms coming online, which 

will open up shale in Mexico, as well as offshore opportunities and 

onshore opportunities. 

Ms. LADISLAW. Okay. 

Mr. BOUSTANY. This changes the entire calculation. And, as 

Ms. Ladislaw mentioned, the geopolitical consequences are immense. 

Ms. LADISLAW. Yeah. 

Mr. BOUSTANY. The economic consequences for our country are 

immense. But, also, at the micro-level—I will just give you some 

basics on this—Lake Charles, Louisiana, which is a city of about 


joloto on DSKB35BYQ1 with HEARING
56 

80,000 in Southwest Louisiana, to date, $65 billion in new investment related to natural gas and growing. 

I just met with somebody last week who was talking about another couple of billion dollars of potential investment. This means 

jobs. It means greater energy security. And it fits into our values. 

If we move forward on—with exports not only of natural gas, but 

condensates and liquids as well as, potentially, crude, if circumstances work out, this is going to—this is a game-changer for 

the United States. And I think it is really important to understand 

both the microeconomics of this and the macroeconomics. 

But there is a lot of interest going on around other countries, 

from Ukraine—I met with Ukrainian delegations a year ago before 

all this broke. They were interested in shale exploration as well as 

the potential for getting exports. 

But this is changing the way people think about energy markets, 

and the impact on pricing has already occurred just because of 

diversi-—the potential diversification of supply. 

And so I would like for Ms. Ladislaw to address that question on 

what does she think might happen, this suggestion that there will 

be convergence of pricing, depending on what happens in, you 

know, in Australia and other areas where there may be potential 

shale. 

We have a time-limited opportunity for U.S. companies to take 

advantage of this and create U.S. jobs. Do you have a sense of what 

kind of time we have in this as things evolve, as they are evolving 

rapidly? 

Ms. LADISLAW. Yes. If I can just take a bit of a different tack 

on the question, I mean, I think for right now the question is—I 

mean, we have got sort of different natural gas markets. As the 

gentleman before was mentioning, it is not the same as the oil 

markets. Right? We don’t have the same kind of price convergence. 

It has been a longstanding sort of tentative U.S. policy to try and 

have a global gas market so that we could have that—you know, 

the flexibility and the security that comes with that kind of system. 

There is a lot of argument over whether that is possible in the 

near term, and there is a lot of discussion about how the real advantage that sort of U.S. LNG exports have, especially the 

brownfield ones where you have got a facility that was sort of 

ready-made to be an importer—is that there is a significant economic advantage to sort of being part of that market for the here 

and now. 

The question sort of, you know, beyond 2016, 2020 is how—you 

know, how competitive will that market be and will we be able to 

compete in that, and I think that there is a lot of questions about 

that. 

And I think the only really true implication of the delay in permits that we have seen so far, whether you want to change the law 

or not, is that it takes people longer and longer to see what the impact on market is and to make the decision about whether or not 

they are going to do a new, you know, LNG export project in Australia or East Africa or, you know, other places around the world. 

And so I think the sort of lack of clarity on the U.S. side about, 

you know, how we are going to be playing in this market and, really, for people to figure out how much LNG we can actually export, 


joloto on DSKB35BYQ1 with HEARING
57 

you know, what our markets are going to absorb and what the impact is, just takes the market a longer time for it to be able to resolve itself. 

So we don’t really know what sort of the price convergence is 

going to be. We assume, you know, the gas markets are fundamentally different. We have gas-on-gas competition here. They don’t 

necessarily have as much of that in Europe, and they certainly 

don’t have as much of that in Asia. 

We hear from people in Europe and Asia that they would like to 

have greater linkages so that they are able to sort of progress their 

markets, you know, to sort of function a little bit more differently. 

So I think people are looking around the world for signals from 

us about, you know, how we intend to play in these markets and, 

really, to be able to read what the market opportunities are. 

Mr. BOUSTANY. All right. Thank you very much. 

Chairman NUNES. Thank you, Mr. Boustany. 

I will recognize the gentleman from Nebraska now, Mr. Smith, 

for 5 minutes. 

Mr. SMITH. Thank you, Mr. Chairman. 

And thank you to our witnesses here today for sharing your expertise and insight. 

Obviously, there is a lot that has been discussed about infrastructure and balancing. You know, certainly I hope we can always 

keep the consumer in mind. 

And sometimes it is unsuspecting how much, perhaps, consumers 

can actually benefit from, you know, more velocity in trade and 

various components. 

But, Ms. Ladislaw, I think you have been elaborating a bit on infrastructure, if you would care to have more time to finish your 

previous statements, perhaps. 

Ms. LADISLAW. On sort of domestic energy infrastructure 

or—— 

Mr. SMITH. Right. Well, domestically and how that can prevent 

disruptions. Obviously, a reserve means very little if there is a disruption in delivering that reserve to where it needs to be and how, 

perhaps, a broader view that might involve some export opportunities would actually help domestic infrastructure. 

Ms. LADISLAW. Yeah. I think that, you know, one of the big 

questions is we have long looked at sort of U.S. infrastructure for 

moving natural gas and oil around the country as being fairly dedicated and static. Right? 

And because there is so much change, you know, certainly on the 

oil side you are seeing, you know, oil by rail, another topic I know 

that everyone is talking a great deal about these days, come up 

just to be able to have this kind of flexibility. 

I think that there is a lot of people who are thinking about, you 

know, if there was a lot more natural gas being produced, you 

would have a lot more economic reasons both to work within sort 

of like the transport side, whether it is, you know, seaborne transport or land-based transport, and then also, for shipping and transporting overseas, you would have lots more economic reasons to 

have optionality within your infrastructure system. Right? 


joloto on DSKB35BYQ1 with HEARING
58 

I mean, nobody is going to pay for a pipeline that they don’t necessarily need and certainly not redundancy, which is certainly 

helpful in a time of disruption. 

But the question for, you know, all of you, as policymakers, and 

those of us who engage in that debate is: What kind of infrastructure is necessary to make sure that consumers have supply protection? 

And so people are similarly starting to think about—you know, 

with our strategic petroleum reserve or the amount of gas stocks 

we keep on hand, whether that is adequate in today’s market. 

And I think, if you are still questioning, you know, whether or 

not we were going to be trying to produce as much of this in an 

economic way as possible, there is a lot of question about, you 

know, whether the infrastructure is going to come online to do this. 

The administration, to their credit, has launched a massive 3- 

year study, the Quadrennial Energy Review, to look at some of 

these questions of energy infrastructure, and it deals with aging infrastructure, impacts from climate change and these, you know, 

changing market forces, which are quite a big deal. 

So there has been some argument that, you know, the more that 

we produce, the better your ability of being able to have the options 

to move it around the country and do different things with it are. 

I focus it from more of a global standpoint, which is, you know, 

when we were looking out into the future and it was imports as 

far as the eye could see, we argued with everybody around the 

world that they should be exporting and trading—freely trading 

and producing their resources to the best of their economic capability, and that was to shore up everybody’s, you know, energy security. 

I would hope that, when we are on the flip side of that equation, 

we still mean that. So that is—— 

Mr. SMITH. Okay. Mr. Weiss and then Mr. Klaben. 

Mr. WEISS. Thank you. 

I just want to quickly add that, in terms of the natural gas delivery infrastructure, it is aging. This one service we talked about estimates that we lose as much natural gas every year through leaks 

that would be enough to power the State of Maine for a year 

and—— 

Mr. SMITH. Mostly from aging infrastructure? 

Mr. WEISS. Yes. Aging pipelines and leaky pipelines. 

Mr. SMITH. What is the safest way to transport this energy? 

Mr. WEISS. I am guessing pipelines. But there was a study by 

CRS when it came to oil, which is, I know, different, found that 

pipelines actually, on a mile basis, leaked more than rail for oil. 

But that was long before the oil-rail boom. 

When it comes to the aging infrastructure, Mr. Rangel’s bill 

would plug those leaks and provide much more natural gas supply 

now than waiting 3 years. 

One last quick point. We are a—— 

Mr. SMITH. Very briefly. 

Mr. WEISS [continuing]. Natural gas importer right now. 

Mr. SMITH. Okay. Mr. Klaben. 

Mr. WEISS. Thank you. 


joloto on DSKB35BYQ1 with HEARING
59 

Mr. KLABEN. What I see in my business, as a participant in the 

infrastructure chain, first of all, there is a real benefit to building 

infrastructure in your country because you are building the supply 

chain to build that out further. 

If this infrastructure is being built abroad, those supply chains— 

those manufacturers very often are outside the United States. If 

you see more U.S. manufacturers participating, this means we 

have the capacity to do more because we have the knowledge, we 

know how to solve these problems, we are solving them right here 

in our country. That is what building infrastructure does. 

Second, I believe that the export terminals are going to lead to 

more—you know, it is an optimalization. And this is going to sound 

a little bit like what everybody says, but the market is intelligent. 

If we let the market focus on where the demand is, it is going 

to build out the infrastructure and, I believe, over the long term, 

like Ms. Ladislaw said, it will figure out how to provide the right 

structure to the right people to avoid supply shortages. 

But, again, for my company, as a participant in the infrastructure supply chain, I can see the knowledge base increase, the workforce increase, the overall ability to build more infrastructure. It is 

enhanced if we are building our own infrastructure right here at 

home. 

Mr. SMITH. Thank you. 

Thank you, Mr. Chairman. 

Chairman NUNES. The gentleman’s time is expired. 

I now recognize the gentleman from Wisconsin for 5 minutes. 

Mr. KIND. Thank you, Mr. Chairman. Thank you for holding 

what I think is a terribly important hearing, review of this incredibly important issue. 

I think this committee certainly needs to delve into this in a 

much more extensive fashion and Members of Congress, quite 

frankly, to get this policy right. 

Mr. Klaben, I want to personally welcome you here today and 

thank Chart for the commitment you have made to my hometown 

in La Crosse, Wisconsin. It is an incredible facility. 

I have had a chance to visit on a couple of times. Great jobs and 

a great workforce that is supporting the growth and expansion 

there. So anything we can do to help, we are certainly interested. 

Listen, I am one who has always been a proponent of good, fair 

trade policy; so, I have been wrestling with this issue and the domestic implications. 

Let’s be honest. I mean, the producers of natural gas, the distributors, they are looking for a higher price, and I think that is 

why you see a big push for the export of this product. 

But we are coming off one of the worst winters in the Upper Midwest in some time. Propane prices skyrocketed, and we got hit 

right between the teeth, quadrupling of those prices. 

I literally had homes burning in Western Wisconsin because families were burning charcoal grills in their living room to stay warm 

or natural gas grills to stay warm and fires were being caused because of that. And as we in the Upper Midwest delved into this 

issue more, two facts jumped out of me. 

We are producing a heck of a lot of propane in this country, but 

at the same time—we are exporting a heck of a lot of propane in 


joloto on DSKB35BYQ1 with HEARING
60 

this country at the same time. And we got caught with our shorts 

down over the winter, and it had a devastating impact for families 

and businesses alike. 

And that is why I think it behooves us to do further economic 

studies of the impact of increased LNG sales into the international 

market. I mean, right now we are not pegged to the international 

market price with natural gas, unlike oil. 

What are the implications if we do significantly ramp up export 

production in a world that is growing more thirsty for natural gas 

and access and the geopolitical implications of that? 

Mr. Klaben, let me ask you with the time that I have. There is 

a huge internal fight going on with domestic manufacturers in this 

country over this issue and the competitive advantage that they 

are currently enjoying with significantly less energy costs that they 

are experiencing here and, as a consequence, a lot of the insourcing that we are seeing coming in. 

Now, you kind of have a foot in both quarters here as far as what 

that means for domestic manufacturers having access to this 

cheaper fuel compared to our foreign competitors, but, also, the industry you are directly involved in, the potential for further growth 

if we do export more. I am sure you have been looking at that issue 

very closely. I am wondering if you can render an opinion. 

Mr. KLABEN. Sure. I spent a lot of time thinking about this 

issue to come and testify—prepare for testifying before you today 

because, as a manufacturer, we both participate in the building of 

this infrastructure. And I have given you examples of that. 

But we have a lot of other product lines where we are consuming 

basic materials, we are consuming energy in the United States, and 

we also sell equipment for natural gas vehicles and natural gas 

transportation in the United States, which benefits from lower 

prices for natural gas. 

I can tell you this. It is—reading the studies that are out there, 

it seems, on average, that the overall benefit of additional economic 

activity—and we are talking activity right here in the United 

States—on average, as a whole, is going to be beneficial for the 

whole country over the small increases in price that are predicted 

if we export some of this gas. 

Now, one thing we all need to remember is that production of 

natural gas is not a static thing. Today a lot of producers are shutting down their wells and just not pulling out of the ground because the prices—— 

Mr. KIND. Right. 

Mr. KLABEN [continuing]. Are so inexpensive in the United 

States. 

So if we do see greater international demand, it is not as if we 

are going to take a finite commodity in the United States and 

share some of that with our partners around the world. Our capacity increases as price goes up. So it is an iterative kind of equation. 

So the studies I have read and, after spending a lot of time 

thinking about it, preparing, since we do have a leg in both camps, 

both producing the equipment and benefiting in the buildout, but, 

also, producing equipment for domestic consumption of natural gas, 

and we ourselves as the manufacturer and for our employees in our 


joloto on DSKB35BYQ1 with HEARING
61 

various communities around the country, including up in La 

Crosse, just looking out for our—— 

Mr. KIND. And I appreciate that very honest response. I have 

seen it with frac sand mining in Western Wisconsin. A lot of them 

are shutting down now because—you know, just for the price—the 

market price is gone for them. 

But, obviously, increase in exports will be great for the producers. But what is it going to mean ultimately for the American 

consumer, both residential and business? And I think we are going 

to need to look at that a lot closer. 

One other area I think—and this is where we need to engage 

U.S. TRs. How much of a leverage is this in ongoing negotiations? 

Because the presumption on public interest lies with FTA agreements that already exist, but not with countries that don’t have 

that with us. 

And this seems to be a tremendously powerful bargaining chip 

that we have with TPP, TTIP, especially, you know, with what 

Russia is doing. 

How much of that are we willing to sacrifice or give away in the 

course of these trade negotiations? So I think it is a whole other 

area we need to look at closely. 

Thank you, Mr. Chairman. 

Chairman NUNES. Thank you, Mr. Kind. 

Gentleman from Pennsylvania is recognized for 5 minutes. 

Mr. KELLY. Thank you, Mr. Chairman. 

Ms. Ladislaw, I am really interested because what Mr. Kind just 

talked about, what is going on in the world right now today, this 

is the first time, I think, we really addressed Russia as the—not 

so much as the 800-pound gorilla in the room, but maybe the 800- 

pound bear in the world. 

Let me ask you—because I do believe geopolitically and the 

geostrategic purpose of this—we have an asset that really gives us 

great leverage in the world. 

I have had the opportunity to travel to that part of the world 

and, when you talk to people and say about sanctions, ‘‘We don’t 

want you to buy certain products from these people’’ and—they say, 

‘‘That is fine. Can you replace what you are asking us not to buy?’’ 

Because a sanction only works if you can really work it to your advantage and say, ‘‘Fine. We can supply it.’’ 

And I was looking at the chart. The ability that we have to deliver LNG at a price that is still profitable for us and undercuts 

what Russia is doing—they have a stranglehold on Europe right 

now, and you see what they are doing. Just your thoughts on that. 

Because I noticed in your testimony you talked about whether we 

use that as a leverage or not. I think we would be fools not to. I 

just look at an opportunity right now for the States—the United 

States—which I think is the greatest emerging economy in the 

world and maybe the world has ever seen because of the assets 

that we have and the ability to get things done. 

But just—if you would, just a little bit on our—our position and 

how we could use that to influence our geopolitical position in the 

world. I just think, if America is truly going to lead again, it is 

going to have to lead by using the resources it has to the best of 

its ability. It seems to me it is a win-win for everybody out there. 


joloto on DSKB35BYQ1 with HEARING
62 

Ms. LADISLAW. And I think it is a very timely question. We 

have been dealing a lot with this lately. 

I think that the troubling thing on the Russia side, in particular—there is a lot of—I mean, the—there is a lot of reasons 

why using energy export as sort of an acute tool in the way that 

it is being suggested—and it is, quite frankly, very natural from 

the messaging that everybody is hearing about how much natural 

gas we have—is maybe not the most appropriate thing to do in sort 

of our relationship vis-a`-vis Russia. 

I, in fact, think that—if you will notice, Russia hasn’t cut off gas 

supplies to anybody yet. And, very interestingly, I think that that 

is part of this longstanding narrative we have had with Russia 

about not doing that. 

In 2006, 2009, when they did that to Ukraine, when they overpriced negotiations and put Europe in a very difficult position, we 

repeatedly told them that that is not how we think energy should 

be used within the international system. Right? 

So, for example, my point is a little bit more nuanced than that, 

which is I think we should be exporting natural gas because it is 

within the current agreement of our trade obligations, quite frankly. I think the people are giving us a pass because we have basically taken some time to absorb what the heck is going on in our 

domestic market, and that is fine. 

But our longstanding trade and energy interest—which I actually 

think not only helps us in this Russia situation in particular, but, 

also, in future situations in the Middle East, in situations that we 

may encounter in the future with China—is to say, ‘‘No. We don’t 

use energy-directed trade as a foreign policy tool.’’ We would be 

tempted to do so now. We may come up short. Right? 

I do think, though, it has given us one very, very important 

upper leg that people don’t talk about within the current situation 

with Russia in the fact that we are not talking about our imports 

from Russia. Early 2000s we were projected to be a new market for 

LNG exports for Russia. We are not that now. We are not even 

talking about that. 

Mr. KELLY. But if you are Russia right now, they have so few 

things that they can actually sell to the world and that they can 

have any leverage with. 

The one thing you have to do, you have to be able to run your 

factories. You have to be able to heat and light your homes. You 

have to be able to do all those things. 

When you take that source away or when you jeopardize that 

source, you are at the table with an altogether different opponent. 

See, I don’t have any qualms about what Russia is trying to do. 

They will try—this guy will try to bully his way through the whole 

world. 

Ms. LADISLAW. Uh-huh. 

Mr. KELLY. And if we don’t learn anything from history, we 

ought to learn that bullies just don’t go away because we say it is 

the 21st Century and that is not really the way we like to play. 

This is a different playground. 

Ms. LADISLAW. Uh-huh. 

Mr. KELLY. This is where the bully dominates the playground 

and you have to—got to—send somebody else there that is a little 


joloto on DSKB35BYQ1 with HEARING
63 

bit bigger, a little bit stronger, that is not afraid to punch them in 

the face and get them off the playground. 

I just worry about this because I think we should use it as leverage. I think it is a card we can play. I think it builds a relationship 

with the rest of the world. The rest of the world looks to us for who 

we really are, and that is a leader—— 

Ms. LADISLAW. Uh-huh. 

Mr. KELLY [continuing]. In the world and not somebody who 

thinks that somehow through negotiations or sitting down and 

playing nice we are going to win that. You are not going to win 

that battle with these folks. In fact, they interpret kindness as 

weakness. 

Ms. LADISLAW. Yeah. If I might, just to build on that, I do 

think that your point about sanctions is sort of a different point. 

Right? 

I mean, the idea that Europe, in particular, that would feel economic harm from those kinds of sanctions, is willing to take that 

step to stand up to the Russians is, in fact, a whole different 

ballgame. Right? 

Whether we can compensate them through near-term natural gas 

supplies is sort of a logistical point that I am not sure is one that 

we need to—— 

Mr. KELLY. Well, I will tell you what. I will feel more strong 

with that position when I see Germany, who the rest of Europe 

looks to, to lead the way on that. 

Because as long as they are where they are right now, I don’t 

think our other friends out there really believe that we are as 

strong as we need to be or can be. So I kind of—I wonder about 

that. 

The other thing comes down to pricing. Coming from the private 

sector, I have got to tell you, all my life I have listened to this. If 

it costs you more to get it out of the ground than what you can sell 

it for, probably not a good idea to keep trying to get it out of the 

ground. 

So I like to see markets rise to wherever they can. I really do 

believe that is what works. That is what has always worked before. 

I haven’t seen anything come forward yet that would change my 

mind, but I have got too many—too many experiences with people 

that work with fossils, and I have seen what we have been able to 

do with them. 

We can put them out of business just by regulating them and 

putting in a position—when it comes to permitting, Mr. Weiss, I 

got to disagree with you. 

I have friends that actually tried to get permits. The 60 days is 

something that maybe is a nice thing to talk about. That is just not 

reality. And that may come from a study that is in a drawer somewhere that is kind of dusty. 

But I got to tell you, when you talk to people that make a living 

that way, when you talk about—to people that need to have that 

certainty going forward and all of a sudden you are still waiting 

for a permit up to 2 years, now, I don’t think that is working in 

the best interest of those folks or the United States. 

Mr. Chairman, thank you for allowing me to sit in. 

Chairman NUNES. Absolutely. Thank you, Mr. Kelly. 


joloto on DSKB35BYQ1 with HEARING
64 

The gentleman Mr. Larson from Connecticut, recognized for 5 

minutes. 

Mr. LARSON. Thank you, Mr. Chairman. 

And let me add to the chorus of those who have already said 

thank you for this very important hearing. It’s—thank you and Mr. 

Rangel. 

I want to also thank Mr. Rangel. I had asked—and I will ask 

that we submit testimony by way of an article from T. Boone Pickens in Forbes magazine entitled, ‘‘Oil and Natural Gas as Weapons 

of War.’’ 

[The information follows: The Honorable John Larson] 


joloto on DSKB35BYQ1 with HEARING
65 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.034
66 

f 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.035
67 

Mr. LARSON. And I have become a big fan of T. Boone and part 

of the Pickens army that believes that natural gas—and he has 

been saying this for more than 7 years now—is—holds the future 

for this country and it is abundant, American, and it is ours. 

But it seems to me, in light of what is happening in the Crimea—and his article addresses this—is that we are putting the 

cart before the horse and that the focus needs to be on making sure 

that we are doing everything that we can here in America first. We 

should help America first. 

You heard from my colleagues from Wisconsin and Massachusetts about the severity of the winter, but Boone Pickens would go 

right down the line and talk about, for every diesel that we change 

and we got to—and we convert and incentivize through this Tax 

Code to be driven by natural gas, it is the equivalent of taking 

more than 300 cars off of the road. 

That helps us in terms of carbon production. It also helps us in 

terms of sending a strong message to the rest of the world. 

An LNG facility, at best, you are talking about 2 years down the 

road, and even the current ones that are in process. In order for 

us to have an impact on the situation in the Crimea or foreign policy, however plausible that might be and laudable as a long-term 

goal, the short-term goal is to get the policy right here at home. 

We haven’t done that through successive administrations. It was 

George W. Bush who said that we had this crisis and that we were 

going to tackle it. 

We have bills currently before us that deal—and the President 

has in his proposal to address natural gas, to incentivize the building of these heavy-duty trucks, to incentivize the pipeline experience. 

We live in an area of the world where the Algonquin line needs 

to be expanded and made more efficient so that New England can 

get the resources that it needs. 

However, that requires an investment in infrastructure, but we 

are in a Congress where no one believes in infrastructure investment where it costs money. Well, all of this, by the way, costs 

money. 

Now, Mr. Pickens says, ‘‘I will tell you what. You incentivize people to build the trucks. You incentivize the municipalities to be 

able to purchase them. And then you are right, Mr. Kelly. The private sector will help expand and build those pipelines. And the government should make sure that they are safe and secure and do 

it in the best possible way.’’ 

But I am interested in what you would think of Mr. Pickens’ 

analysis of all of this. And I will start with Mr. Weiss. 

Mr. WEISS. From my view—I have not seen Mr. Pickens’ analysis. 

But, from my view, as Mr. Kelly said, if you would like to punch 

Russia in the nose, the fastest, cheapest way to do that would be 

to help Ukraine, which is the second-most energy-wasteful country 

in the world only after Uzbekistan, help them become much more 

efficient. 

We have already got a program there that has worked. Let’s just 

invest more in it. The less gas they have to buy from Russia, the 

less leverage Russia has over them. 


joloto on DSKB35BYQ1 with HEARING
68 

And you can wait for 3 years for an LNG terminal to be ready, 

and then you are going to have to force the company not to sell 

their gas to South Korea or India, which is where the contracts are 

for now, or we can go into Ukraine right now and help them make 

their buildings more efficient, make their factories more efficient, 

make their pipes more efficient, saving them money, creating jobs 

there, creating jobs here because they are going to use American 

equipment here like made by Honeywell and other American companies, and that is how you punch Russia in the nose, is reduce 

the demand for Russian gas rather than to wait 3 years to try and 

increase a competitor’s supply. 

Mr. LARSON. Yes, ma’am. 

Ms. Hawley. 

Ms. HAWLEY. Thank you. 

I want to address your concerns about taking care of home. And 

this, again, is from a local perspective. But I think one of the 

speakers or one of your panel said that this has happened in 5 

years, it is a revolution. And it is. And it has happened so quickly 

that all of us are scrambling to put the infrastructure in place to 

accommodate it. 

And let me just give you an example just with our port. We are 

converting major ship docks to barge—oceangoing barge docks. We 

are doing everything we can to lobby to deepen the Intracoastal because that is how we get natural gas and oil to the East Coast. 

You are huge market. The East Coast is an enormous market for 

us, but we don’t have the infrastructure in place. So we have reformatted our entire ship channel to be able to accommodate getting 

that product to the places where it needs to go. 

Our pipelines have been reversed. They were going one way. Now 

they are going another way. Again, all of that infrastructure piece 

is critical to being able to—it is a logistics problem, being able to 

get that stuff to where—— 

Mr. LARSON. We are all for infrastructure, you know. 

Ms. HAWLEY. Absolutely. 

Mr. LARSON. And to make that investment and to—because 

that puts the country back to work. 

Ms. HAWLEY. But identifying where those pieces have to be put 

in place, that is the key to being able to distribute the natural gas 

or the product to where it needs to go. 

Thanks. 

Mr. LARSON. Agreed. 

Thank you, Mr. Chairman. 

Chairman NUNES. Thank you, Mr. Larson. 

Ms. Hawley, I know that you didn’t get a chance earlier to respond to Mr. Smith’s question. Would you like a minute to do that? 

Ms. HAWLEY. I know I had a great answer, but I forgot the 

great question. 

Do you remember what you asked me? 

Chairman NUNES. The question was for the entire panel, if I remember right, and you were in line to—— 

Mr. SMITH. Well, it was a discussion about domestic infrastructure, perhaps safest delivery. 

Ms. HAWLEY. Right. 


joloto on DSKB35BYQ1 with HEARING
69 

And I think, you know, pipeline was one of the pieces. We are 

doing a lot with rail and we are doing a lot with—obviously, with 

ship and barge. 

So, you know, we are just scrambling to get enough pieces in 

place to be able to get it out—get the product out to the market. 

You know, it is an enormous opportunity. 

But, again, converting that to LNG helps. It is just another 

mechanism for us—another delivery system, if you will, for us to 

be able to get product to market. 

And I don’t know if you asked this question, but I think it is important that we look at it again. 

It is a market-driven system, and all of our local producers— 

what were our drillers, the people that are out there in the field— 

I think maybe you said it, Mr. Chairman. 

They have really slowed down their production of natural gas in 

response to the market at this point in time. So we are, again, 

missing that opportunity because we don’t have the LNG pieces 

and the distribution mechanisms in place. 

Mr. SMITH. Well, I would add that there is concern out in the 

Heartland that oil is displacing grain via rail and causing some 

concerns there. 

And so I would hope, on the infrastructure piece—and we know 

that grain is processed into energy as well. But we need some flexibility out there to answer the needs—not just the market—well, we 

know the market is consumers, and we need to keep consumers in 

mind. 

Thank you. 

Ms. HAWLEY. Well, may I just add one more thing? 

I just spent last week with the folks up at BNSF—Burlington 

Northern Santa Fe—again addressing that very issue, how oil has 

surpassed—really supplanted their use, their hauling of grain, a 

huge problem, a huge problem, for folks in our area as well. So, 

again, another dynamic. 

Thank you. 

Mr. SMITH. Thank you. 

Chairman NUNES. Thank you, Mr. Smith. 

Ms. Ladislaw, have you ever seen a country that experiences economic growth and has a decrease in the consumption of energy? Do 

you know of any examples of that? 

Ms. LADISLAW. A country experiences economic growth—— 

Chairman NUNES. In order to have economic growth—— 

Ms. LADISLAW. Uh-huh. 

Chairman NUNES [continuing]. Do you have an increase or a decrease in the consumption of energy? 

Ms. LADISLAW. Well, it depends over what period of time. You 

tend to have an increase. 

Chairman NUNES. An increase. 

Ms. LADISLAW. Yeah. But over time, you know, we are still increasing and the rate at which we consume energy goes down. So 

you become more energy efficient. But that is at the latter half of 

the development stage. 

Chairman NUNES. Uh-huh. 

Mr. Klaben, can you answer that? I know it may not be your 

area of the expertise, but—— 


joloto on DSKB35BYQ1 with HEARING
70 

Mr. KLABEN. I think the—Ms. Ladislaw is right, that as economies develop, they tend to consume energy, but as they mature, 

they get better at that. 

And some of the things that, you know, Mr. Weiss speaks 

about—better investments, and new technologies, and efficiency— 

can result in more output, even though you are better at what you 

are doing. 

Natural gas is a great example of that. We are moving from fuels 

that put out more carbon emissions to an abundant fuel, if we let 

the market kind of follow its own course, that emits much less carbon. 

So, you know, in the U.S., I think we have gotten better in efficiency over time, and even recently we have reduced our carbon 

footprint back to early 1990s level, in part, through natural gas. 

So I think, if you let the market pursue its own natural course, 

you can get economic expansion and marginal efficiencies as that 

expansion goes forward. 

Chairman NUNES. Ms. Hawley. 

Ms. HAWLEY. I would concur with both of them. 

I think we are seeing that. I think we are seeing a lot more efficiency, but we are seeing greater production. So it has to do with 

the volume as well. 

And as we increase our manufacturing facilities here, obviously, 

our carbon—not our carbon—our energy use is going to increase as 

our population increases or as our markets increase. 

But, generally, I think we are getting more efficient. I think we 

are reducing our carbon footprint, and I think natural gas is a key 

piece to that. 

Chairman NUNES. Mr. Weiss. 

Mr. WEISS. Well, first, I think you can take, for example, California, which is like the 8th or 9th largest economy in the world. 

And they went on a crash diet to become more economically efficient—sorry—energy efficient over the last 30 years, and they 

have, and they use less energy per dollar than many other places, 

and, yet, the economy there has grown. 

Another good example is fuel economy standards. It is projected 

that our fuel—our fuel use—our oil use is going to remain pretty 

flat over the next 10 years, at least, go up a little bit, even though 

our economy is projected to grow and we are going to have more 

people and more cars on the road. 

So there is another example of economic growth occurring as we 

use our energy much more efficiently. 

Chairman NUNES. Well, I would just add to that, Mr. Weiss, 

that I am from California, and there are actually two different 

Californias, the one where I come from and the one that does not 

experience economic growth. 

In fact, we have had almost no growth and about 15 percent unemployment. And then I think what you are referring to is on the 

coast, where they have had a lot of energy savings, but it is also 

one of the most pleasant places on the planet in terms of a very 

mild climate. 

So where you don’t have to run your air conditioner and you 

don’t need a lot of heating, it is fairly easy to increase your capacVerDate Sep 11 2014 08:34 Nov 04, 2016 Jkt 021113 PO 00000 Frm 00074 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\21113.XXX 21113

joloto on DSKB35BYQ1 with HEARING
71 

ity to consume energy. But inland, where you have high temperatures and low temperatures, it is not real beneficial. 

Mr. WEISS. Well, as you know, they did market reforms about 

30 years ago that are statewide, so—to help electricity rates be decoupled from profits so that utilities had an incentive to provide 

electricity more efficiently rather than have their profits linked to 

selling more electricity. And that has benefited everyone, I am 

guessing. I don’t have any data right with me, though. 

Chairman NUNES. Well, I want to thank the Ranking Member, 

I want to thank all the panelists today and all the members for 

their participation in today’s hearing. And without any further 

comment, we will adjourn. 

[Whereupon, at 3:05 p.m., the Subcommittee was adjourned.] 

[Submission for the record follows:] 


joloto on DSKB35BYQ1 with HEARING
72 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.036
73 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.037
74 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.038
75 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.039
76 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.040
77 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.041
78 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.042
79 

Æ 


joloto on DSKB35BYQ1 with HEARINGInsert 21113.043