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BENEFITS OF AND CHALLENGES TO ENERGY ACCESS IN THE 21ST CENTURY: FUEL SUPPLY 

AND ENERGY INFRASTRUCTURE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MARCH 6, 2014 

Serial No. 113–124 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

STEVE SCALISE, Louisiana 

Vice Chairman 

RALPH M. HALL, Texas 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

ROBERT E. LATTA, Ohio 

BILL CASSIDY, Louisiana 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN D. DINGELL, Michigan (ex officio) 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Jerry McNerney, a Representative in Congress from the State of California, opening statement .................................................................................... 2 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 64 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 65 

WITNESSES

Adam Sieminski, Administrator, Energy Information Administration, Department of Energy ..................................................................................................... 4 

Prepared statement .......................................................................................... 6 

Answers to submitted questions ...................................................................... 210 

Donald F. Santa, President and Chief Executive Officer, Interstate Natural 

Gas Association of America ................................................................................. 65 

Prepared statement .......................................................................................... 68 

Answers to submitted questions ...................................................................... 213 

Richard R. Roldan, President and Chief Executive Officer, National Propane 

Gas Association .................................................................................................... 75 

Prepared statement .......................................................................................... 77 

Response to Mr. Tonko ..................................................................................... 194 

Response to Mr. Rush ...................................................................................... 202 

Answers to submitted questions ...................................................................... 216 

Andrew Logan, Director, Oil and Gas Industry Programs, Ceres ....................... 114 

Prepared statement .......................................................................................... 116 

Charles ‘‘Shorty’’ Whittington, President, Grammer Industries, Inc., on Behalf 

of American Trucking Association, Inc., and National Tank Truck Carriers . 122 

Prepared statement .......................................................................................... 124 

Answers to submitted questions ...................................................................... 219 

Michael Obeiter, Senior Associate, Climate and Energy Program, World Resources Institute ................................................................................................... 128 

Prepared statement .......................................................................................... 130 

Andrew J. Black, President, Association of Oil Pipe Lines .................................. 148 

Prepared statement .......................................................................................... 150 

Answers to submitted questions ...................................................................... 222 

Edward R. Hamberger, President and Chief Executive Officer, Association 

of American Railroads ......................................................................................... 159 

Prepared statement .......................................................................................... 161 

Answers to submitted questions ...................................................................... 229 

SUBMITTED MATERIAL

Statement, dated March 6, 2014, of Hon. David Loebsack, a Representative 

in Congress from the State of Iowa, submitted by Mr. McNerney .................. 183 

(1) 

BENEFITS OF AND CHALLENGES TO ENERGY 

ACCESS IN THE 21ST CENTURY: FUEL SUPPLY AND ENERGY INFRASTRUCTURE 

THURSDAY, MARCH 6, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:02 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Ed Whitfield 

(chairman of the subcommittee) presiding. 

Members present: Representatives Whitfield, Scalise, Shimkus, 

Pitts, Terry, Latta, Olson, McKinley, Gardner, Pompeo, Griffith, 

Barton, Upton (ex officio), Rush, McNerney, Tonko, Barrow, 

Christensen, Castor, and Waxman (ex officio). 

Staff present: Nick Abraham, Legislative Clerk; Charlotte Baker, 

Press Secretary; Sean Bonyun, Communications Director; Allison 

Busbee, Policy Coordinator, Energy and Power; Patrick Currier, 

Counsel, Energy and Power; Tom Hassenboehler, Chief Counsel, 

Energy and Power; Jason Knox, Counsel, Energy and Power; Mary 

Neumayr, Senior Energy Counsel; Chris Sarley, Policy Coordinator, 

Environment and Economy; Tom Wilbur, Digital Media Advisor; 

Alison Cassady, Democratic Senior Professional Staff Member; 

Greg Dotson, Democratic Staff Director, Energy and Environment; 

and Ryan Skukowski, Democratic Assistant Clerk. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. I would like to call the hearing to order this 

morning, and we have a panel of eight witnesses this morning, and 

we look forward to the testimony of all of you, and your expertise 

and assistance to the committee. This morning’s hearing is the second in a series entitled ‘‘Benefits of and Challenges to Energy Access in the 21st Century’’. Last week we focused on access to electricity, and today we want to turn our attention to fuel supply and 

infrastructure issues. We really look forward to this hearing this 

morning because we have representatives of the pipeline, railroad, 

and trucking industries, as well as others, to give the perspective 

on what we need to be doing to make sure that we take advantage 

of our current energy opportunities in America. 

[The prepared statement of Mr. Whitfield follows:] 

2 

PREPARED STATEMENT OF HON. ED WHITFIELD

North America’s oil and natural gas output has been growing since 2007, and the 

Energy Information Administration expects continued increases in the years ahead. 

This poses a challenge to the nation’s existing energy infrastructure—be it pipelines, 

railroads, or trucking. For one thing, this infrastructure is being called upon to 

carry more energy than ever before. For another, most of it does not serve the areas 

where energy production is rapidly increasing, such as the oil-rich Bakken formation 

in North Dakota and the gas fields in Pennsylvania. 

There is no question that the energy boom is great news for the U.S. But without 

an infrastructure boom to match it, the benefits of our energy abundance will not 

be fully realized. 

Recent events have shown the energy infrastructure to be under strain. For example, very tight natural gas supplies and high prices in New England during this 

very cold winter were not caused by any actual shortages but by the limited pipeline 

capacity serving that region. And the low supplies of propane that hit my district 

and many rural areas throughout the Midwest were attributable in part to the fact 

that we now have booming production of crude oil that is competing for space on 

trains and trucks with other commodities like propane. 

And I might add that the trains in turn are overburdened with oil in part because 

oil pipeline capacity has not been able to expand to keep up with rising production. 

So each element of our infrastructure system is interconnected with the others. Indeed, just as we benefit from energy diversity—coal, oil, natural gas, nuclear, and 

renewables—we also benefit from infrastructure diversity, but only if each mode of 

transport is allowed to expand to meet current and future demand. 

Unfortunately, the Obama administration has been considerably less than 

proactive in addressing our infrastructure challenges. We are all familiar with the 

administration’s 5-year-long delay in approving the Keystone XL pipeline expansion 

project. And Keystone is indicative of a larger indifference if not hostility towards 

infrastructure upgrades, especially those that carry fossil fuels. I fear that the Keystone XL delays and other instances of infrastructure obstructionism may be a part 

of the administration’s climate agenda. 

Compounding Keystone XL and other project delays are proposed regulatory actions that may make it much harder to transport oil and other fuels by rail. We 

need regulations that facilitate the safe transportation of energy rather than limit 

it. 

The House is already acting to address several infrastructure bottlenecks. In addition to passing H.R. 3 to greenlight Keystone XL, we have also passed H.R. 1900, 

the ‘‘Natural Gas Permitting Reform Act,’’ that would expedite and streamline future natural gas pipeline approvals. And this committee has introduced H.R. 3301, 

the ‘‘North American Energy Infrastructure Act,’’ to reduce unnecessary red tape for 

approvals of energy projects that cross the Canadian or Mexican border and thus 

help create a more integrated North American energy infrastructure. 

And we continue to consider other measures that would help give this nation a 

more robust 21st century energy infrastructure. I look forward to hearing from representatives of the pipeline, railroad, and trucking industries as well as others to 

give their perspective on what else is needed. Thank you. 

Mr. WHITFIELD. You didn’t even start my time, and I am already 

through with my remarks. So at this time I would like to introduce 

Mr. McNerney of California for his opening statement. 

OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. MCNERNEY. Thank you, Mr. Chairman, and good morning. 

This is our second hearing on energy access, and I think it is an 

important topic. As we have seen in New England, we have had 

price hikes, gas shortages, and there are other infrastructure concerns that we need to think about. The good news, of course, is that 

we are seeing a tremendous amount of natural gas and oil production. I think we are the biggest producer in the world as of last 

year. Well, the relatively bad news is we don’t quite have the infraVerDate Mar 15 2010 08:51 Sep 10, 2014 Jkt 037690 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\113-124 EA - FUEL SUPPLY BLBK EDITS\113-124 EA - FUEL SUPPLY PENDING WAY
3 

structure to make sure that all of our potential domestic customers 

have good access to this wonderful bounty that we are having, so 

it is important to hear from the witnesses this morning. 

We need to maximize what resources we have so that we can improve our manufacturing base. I think that is one of the real benefits of this, is that we have an opportunity now to regain our stature as the premier manufacturing center of the world. And with 

your all help out here, this is going to happen. So we want to hear 

what your thoughts and ideas are on how we can move forward. 

There needs to be a partnership between the Federal government 

and the local governments, on the one hand, and industry that is 

going to make these investments. We have some complaints about 

the regulatory process, how long it takes to get permits, and hearing how we can best move forward while maintaining public safety 

is critical. 

We need to worry about methane leaks into the atmosphere, so 

that means finding the best technology out there to prevent methane, which is a greenhouse gas. So we want to make sure that the 

technology is not only available, but that it is being implemented 

properly. And we would need to make sure that there is continued 

oversight so that when gas lines, oil lines, get put in, that they are 

monitored properly. No one in this panel benefits when there is a 

leak, when there is a disaster. And if we work together in a way 

that prevents those from happening, and gets potential bad players 

out of the market, then everyone is going to benefit. 

We also need to have an environment where investment is encouraged. And, again, overregulation won’t do that, but under-regulation won’t do it either, so we need some strong public/private 

partnerships. 

And, with that, Mr. Chairman, I am going to yield back. I believe 

we have votes called within an hour, so—— 

Mr. WHITFIELD. Thank you very much. Mr. Upton is not here, 

Mr. Waxman is not here, so if they come in later and want to make 

a statement, we will recognize them at that time. But in the meantime, I am sorry, you are not going to hear any more from us. We 

are going to give you all the opportunity to talk. So, on our panel 

today, we have Mr. Adam Sieminski, who has been here before, the 

administrator over at the U.S. Energy Information Administration, 

Mr. Donald Santa, who is the CEO, president, of the Interstate 

Natural Gas Association of America. We have Mr. Richard Roldan, 

who is president and CEO of the National Propane Gas Association, Mr. Andrew Logan, who is the Director of Oil and Gas and 

Insurance Programs at Ceres. And we have Mr. ‘‘Shorty’’ 

Whittington, who is president of Grammer Industries, on behalf of 

the American Trucking Association and the National Tank Truck 

Carriers. We have Mr. Michael Obeiter, who is with the Climate 

and Energy Program, Senior Associate, at the World Resources Institute. We have Mr. Andrew Black, who is president of the Association of Oil Pipe Lines. And then we have Mr. Ed Hamberger, 

who is the president and CEO of the Association of American Railroads. 

So each one of you will be recognized for 5 minutes for your opening statement. And, as you know, we have the little boxes, and 

when it turns red, that means the time is up. If it is green, you 

4 

can keep talking. So, Mr. Sieminski, we will begin with you, and 

you are recognized for 5 minutes for your opening statement. And 

be sure and turn your microphone on. 

STATEMENTS OF ADAM SIEMINSKI, ADMINISTRATOR, ENERGY 

INFORMATION ADMINISTRATION, DEPARTMENT OF ENERGY; DONALD F. SANTA, PRESIDENT AND CHIEF EXECUTIVE OFFICER, INTERSTATE NATURAL GAS ASSOCIATION OF 

AMERICA; RICHARD R. ROLDAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL PROPANE GAS ASSOCIATION; 

ANDREW LOGAN, DIRECTOR, OIL AND GAS INDUSTRY PROGRAMS, CERES; CHARLES ‘‘SHORTY’’ WHITTINGTON, PRESIDENT, GRAMMER INDUSTRIES, INC., ON BEHALF OF AMERICAN TRUCKING ASSOCIATION, INC., AND NATIONAL TANK 

TRUCK CARRIERS; MICHAEL OBEITER, SENIOR ASSOCIATE, 

CLIMATE AND ENERGY PROGRAM, WORLD RESOURCES INSTITUTE; ANDREW J. BLACK, PRESIDENT, ASSOCIATION OF 

OIL PIPE LINES; AND EDWARD R. HAMBERGER, PRESIDENT 

AND CHIEF EXECUTIVE OFFICER, ASSOCIATION OF AMERICAN RAILROADS 

STATEMENT OF ADAM SIEMINSKI 

Mr. SIEMINSKI. All right. Chairman Whitfield, Mr. McNerney, 

members of the committee, thank you for the opportunity to be 

here today. As you know, EIA is a statistical and analytical agency 

at the Department, and by law our data analyses are independent 

of approval by any other office or employee of the Federal government, so these views should not be construed as representing those 

of the Department of Energy or any other Federal agency. 

EIA is providing data and analysis related to the winter fuels 

markets. This winter we have been working very closely with the 

Department of Energy’s energy response organization to provide 

critical market information to public officials, industry, and consumers. This winter’s cold weather increased both consumption and 

prices of heating fuels nationally. This winter season has been the 

coldest since 2002–3, and in the Midwest the coldest since the winter of 1978–79. 

Let me talk a little bit about propane. U.S. propane supplies hit 

record highs last year due to increased oil and natural gas production. With supply growing faster than domestic demand, the U.S. 

has become a net exporter of propane in recent years, although imports have continued to play an important role, particularly in the 

upper Midwest and the Northeast of the United States. Last fall, 

a record corn harvest coincided with very wet weather to increase 

demand for propane in the Midwest for crop drying. As a result, 

propane stocks in the Midwest were at their lowest level for November since 1996. Stocks were further reduced when cold weather 

hit the Midwest in late December and early January. 

There are two major hubs for propane in the mid-continent, Mont 

Belvieu, Texas, which is really on the Gulf Coast, and Conway, 

Kansas, in Central Kansas. Under market conditions that prevailed from March 2010 to November 2013, prices at Mont Belvieu 

were generally above those at Conway, and that provided a signal 

for supplies to move towards the Gulf Coast. Most pipelines between the hubs carry supplies southward. Rail is the primary mode 

5 

available to move propane northward from Mont Belvieu up into 

Conway. 

At the beginning of December, wholesale prices, as reported by 

Reuters, were nearly equal at Conway and Mont Belvieu. The development of extreme propane shortages in the Midwest in January 

led to a significant rise in prices at Conway, and that provided a 

strong incentive for increased flows back up north to the Conway 

hub, and other consuming areas, by a variety of modes, including 

trucks. Imports also increased, with more propane flowing into 

Minnesota and Michigan via pipelines from Canada, and additional 

European tanker cargoes coming into the Northeast of the United 

States. Many States declared emergencies to enable more delivery 

of propane throughout the Midwest to both wholesalers and retail 

customers. 

Now I am going to talk just a little bit about natural gas. Cold 

weather affected natural gas markets, including new record high 

withdrawal of natural gas from storage, and a surge in natural gas 

prices. On February 21, storage levels were below the previous 5- 

year minimum, and natural gas prices at Henry hub increased 

from $4.32 per million BTUs up to as high as $8.15 on February 

10. In contrast to markets for propane and heating oil, however, 

where wholesale prices are quickly reflected in retail prices, electricity and natural gas rates paid by consumers who receive service 

through their local distribution utilities did not immediately reflect 

the spot market prices. 

New England faces some of the highest and most volatile spot 

natural gas prices, reflecting both pipeline capacity constraints and 

growth in demand, particularly for electricity generation. Reductions in imports of liquefied natural gas, LNG, and Canadian pipeline gas added to the strain on pipelines serving New England that 

carried domestically sourced natural gas. 

So natural gas spot prices in New England hit record levels this 

winter. Price for the first 50 days of 2014 averaged 50 percent 

higher than prices during a comparable period in 2013. Winter spot 

prices for natural gas in New England were also higher on average, 

and more volatile than elsewhere in the United States, although 

prices were high all over the U.S. In fact, EIA released a special 

report last January, which is included in my testimony, that talks 

about this in detail. An updated analysis for this winter, also included in my testimony, discusses a number of potential ways to 

lessen the impact of limited peak natural gas supply at peak demand periods, including pipeline expansions, additional fuel substitution by electric generators and other gas customers, and ways to 

save on the demand side. 

I am going to end there. Thank you for the opportunity to testify, 

and I look forward to answering questions. 

[The prepared statement of Mr. Sieminski follows:] 

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Mr. WHITFIELD. Thank you very much, Mr. Sieminski. Mr. Waxman has come in, and we will give him an opportunity to make his 

opening statement at this time. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. I welcome 

all of our witnesses today. There is a significant energy transition 

underway in the United States, and we are going to hear today 

about how we need to modernize our energy infrastructure in light 

of this transition. Building a modern energy infrastructure for the 

21st century requires more than just drilling more wells, laying 

more pipelines, filling more rail cars with crude oil, and putting 

more tanker trucks on our highway. A modern 21st energy infrastructure isn’t modern at all unless it takes climate change into account. 

We have a rapidly diminishing window to act to reduce our carbon pollution before the catastrophic impacts of climate change are 

irreversible. That means that the energy infrastructure decisions 

we make today will have a real and direct impact on whether we 

can limit climate change in the future. We need to understand this 

risk before we lock in infrastructure that will produce carbon pollution for decades to come. Every responsible business executive in 

the country knows that there will be no certainty in energy policy 

until we address climate change. 

A modern 21st century infrastructure also needs to be resilient. 

Earlier this week the Government Accountability Office released a 

report finding that U.S. energy infrastructure is increasingly vulnerable to a range of climate change impacts, such as severe 

weather and sea level rises. We need to prepare our infrastructure 

to withstand climate related disruption. We also need to have an 

infrastructure that is efficient, and minimizes waste. 

A good example of inefficiency in today’s system is methane. Far 

too often methane, a potent greenhouse gas, leaks into the air during the production, processing, and distribution of oil and natural 

gas. In North Dakota oil companies are flaring natural gas as a 

waste product, rather than building the infrastructure to get these 

resources to market. We need to find solutions to stop this dangerous pollution and put this gas to productive use. 

The future will belong to the country that builds an energy infrastructure to support a cleaner, low carbon economy. It is our responsibility to lead the country in that direction. 

I appreciate this chance, Mr. Chairman, to make this statement. 

I thank the witnesses for being here today, and look forward to 

their testimony. 

Mr. WHITFIELD. Thank you, Mr. Waxman. It is my understanding that Mr. Upton is going to waive his opening statement? 

Mr. UPTON. No, I would say just insert it in the record, but 

thank you. 

[The prepared statement of Mr. Upton follows:] 

65 

PREPARED STATEMENT OF HON. FRED UPTON

North America’s growing oil and natural gas abundance is easily the best energy 

news we’ve had in decades. The benefits for jobs, energy affordability, and national 

security are nothing less than staggering. In fact, a recent study by the Manhattan 

Institute finds that virtually all of America’s economic growth in recent years is attributable to the oil and gas sector, and that without it we would have remained 

in recession. And since the energy output is projected to continue rising, the good 

news could get even better in the years ahead—but only if we play our cards right. 

But producing more energy is only part of the job. We also must get it to the businesses and homeowners that need it, and expanded energy output presents a very 

significant infrastructure challenge. But with challenge comes opportunity, and 

building this architecture of abundance will create many jobs. An energy infrastructure expansion is a win-win for America—more jobs building and running it, and 

more affordable and secure energy because of it. The problems we will discuss at 

this hearing are good kind of problems to have. 

Nonetheless, the Obama administration has been more of a hindrance than a 

help, both on energy production and energy infrastructure. The administration has 

placed so many energy-rich Federal lands off limits that a Congressional Research 

Service report found that all of the oil and gas increase is attributable to output 

from non-Federal lands. And the administration has been just as unhelpful on energy infrastructure as it has been on energy production. At this promising juncture 

in the nation’s energy history, we need an administration that embraces the architecture of abundance. But instead, we often get Keystone-style delays and red tape. 

Granted, each new pipeline project and other infrastructure upgrade raises legitimate safety and environmental concerns that must be addressed. But these concerns 

should not be used as an excuse for indefinite delays, as we have seen with Keystone XL. After all, new infrastructure increases safety. 

Our inadequate energy infrastructure is already causing problems. This winter’s 

regional propane shortage throughout Michigan and much of the Midwest is a case 

in point. When the temperatures dropped and demand grew, there was not enough 

infrastructure to transport the propane to the customers who needed it. In the 

words of Secretary of Energy Ernest Moniz, ‘‘what we are seeing play out is also 

just one example of where our energy infrastructure isn’t quite ready for the task 

that we have today.’’ Michigan has the largest number of propane-heated households of any State. I take this warning very seriously and want to look at how this 

can be avoided in the future. 

I am convinced that we can create a new energy infrastructure to safely deliver 

the affordable energy that businesses and families need. We welcome the task of 

creating this architecture of abundance, and Congress must take action to remove 

any impediments to further progress. 

Mr. WHITFIELD. Thank you. At this time, Mr. Santa, you are recognized for 5 minutes for your opening statement. 

STATEMENT OF DONALD F. SANTA 

Mr. SANTA. Good morning, Chairman Upton, Chairman 

Whitfield, and Ranking Member Waxman, and members of the subcommittee. My name is Donald Santa, and I am president and 

CEO of the Interstate Natural Gas Association of America, or 

INGAA. INGAA represents interstate natural gas transmission 

pipeline operators in the U.S. and Canada. Thank you for the opportunity to share INGAA’s views. Our analysis points to the need 

for the U.S. to build significant new natural gas infrastructure. 

Simply put, we need to keep pace with the changing natural gas 

supply and demand picture. Infrastructure designed to meet the 

challenges of the past will not necessarily meet the challenges of 

the future. Congress can help in one area, that I will touch upon 

in a few moments. 

I do not have to tell anyone that this has been a demanding winter. With but extremely few exceptions, there have been no service 

disruptions or curtailments for natural gas pipeline customers who 

66 

contracted for reliable, firm service. The rare disruptions were 

caused by mechanical difficulties, and were limited only to a day 

or so. Given the magnitude of the demand across much of the country, the extreme operating conditions, and the resulting stress 

placed on the overall system, the natural gas transmission pipeline 

industry’s performance has been remarkable. 

This contrasts with what happened in the 1970s. A combination 

of government policies at that time discouraged natural gas supply 

and infrastructure development. Consumers, and many of our nation’s leaders, believed that the U.S. was running out of natural 

gas. This lack of interstate supply and interconnected infrastructure, coupled with severely, unusually cold winters in the late 

1970s, caused significant natural gas service disruptions. Schools 

closed for extended periods, and some businesses ceased operations 

until warmer weather arrived. 

We have come a long way since then. Congress decontrolled natural gas well head prices, thus providing an incentive to explore 

and produce new natural gas. The Federal Energy Regulatory Commission restructured the interstate pipeline sector, unbundling 

commodity sales from transportation, and thereby gave pipeline 

customers the opportunity to realize the benefits of competition at 

the well head. 

So we have gone from the mistaken impression that the U.S. was 

running out of gas to being the world’s largest producer of natural 

gas. Our robust nationwide pipeline network is the envy of the 

world. Most major markets, and all major producing basins, are 

connected to multiple pipelines, and as a result, we have competition among entities that were assumed to be natural monopolies 

several decades ago. This phenomenal transformation of the U.S. 

energy sector has provided our country a unique competitive advantage in the global market. No other country has the combination of abundant natural gas supply and robust pipeline infrastructure. Additional natural gas transmission pipelines, however, will 

be needed to keep pace with the rapid development of new natural 

gas resources, and the increase in natural gas demand. 

Two things are necessary to make this infrastructure development possible. The first is proper market signals for new capacity. 

In most regions, this is not a problem. Shippers sign contracts for 

proposed firm pipeline capacity, and if enough capacity is contracted, a pipeline project stands a reasonable chance of moving 

forward. Regions with restructured electricity markets, however, 

present real challenges. This is especially the case when such markets are capacity constrained, and rely heavily on natural gas fired 

generators. New England is the prime example. 

We have encouraged the regional stakeholders to take steps that 

will create such price signals, and recent initiatives undertaken by 

New England States’ Governors are promising. Still, the region has 

far to go in resolving the disconnect that has caused its consumers 

to pay such a premium for natural gas and electricity. 

Beyond these market signals, the pipeline permitting process 

also much work efficiently. The House has debated legislation authored by Representative Mike Pompeo to bring some discipline 

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mitting agencies beyond FERC. We support this legislation, and 

hope the Senate will act soon to move it forward. 

This winter has been challenging, but it would have been far 

worse without our new domestic natural gas abundance. Supply is 

only one side of the coin, however. The other side is infrastructure, 

because pipelines make it possible. The incentives to develop the 

shale gas, and the opportunities for consumers to realize its benefits, would not be the same without our robust, flexible, and expandable natural gas pipeline network. 

Still, we should not assume that the current natural gas pipeline 

and storage infrastructure be sufficient to handle present and future natural gas supply development. Natural gas has given the 

U.S. a phenomenal advantage. To realize this advantage fully, we 

need to build the infrastructure that will permit all Americans to 

benefit from the shale revolution. 

I thank the subcommittee for the opportunity to testify. 

[The prepared statement of Mr. Santa follows:] 

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Mr. WHITFIELD. Thanks very much. And, Mr. Roldan, you are 

recognized for 5 minutes for an opening statement. 

STATEMENT OF RICHARD R. ROLDAN 

Mr. ROLDAN. Thank you, Mr. Chairman, and members of the 

subcommittee. I am Richard Roldan, president of the National Propane Gas Association. I appear before you today on behalf of nearly 

3,000 member companies that produce, transport, and sell propane 

on both a wholesale and retail basis. By far the largest segment of 

our association is made up of retail propane marketers who provide 

the fuel to heat nearly six million American homes. I am going to 

be brief in my remarks this morning to save as much time as possible for your questions, and I ask that my extensive statement be 

placed in the record. 

Mr. Chairman, this is a particularly timely hearing, considering 

that propane retailers in several regions of the country face supply 

and distribution constraints this winter. I want to stress that our 

highest priority is to safely and reliably serve the nearly six million 

households that depend on propane to heat their homes. And I 

would like to point out that the vast majority of retail marketers 

were able to do just that, despite the significant challenges they 

faced. 

Given the experience of this winter, I believe it is incumbent 

upon us, as an industry, to understand the causes and contributing 

factors, and to propose concrete practices and policy recommendations to prevent a recurrence. In our written statement, we noted 

the role that cold weather played. The number of heating degree 

days this season was 10 percent higher than the previous year, and 

15 percent higher than the year before that. Last fall’s grain harvest came in later, wetter, and it seemed all at once. This forced 

farmers to use five times the amount of propane to dry the grain 

that was used the previous year. Altogether, weather driven demand, coupled with record crop drying usage, resulted in nearly a 

billion gallons of additional demand. 

Now I would like to point out the role that exports have played 

this year. In recent years we transitioned from being a propane importing country to being a propane exporting country. Today propane is 100 percent American made. That is offset by the fact that 

the U.S. now exports one out of every five gallons, and those numbers are growing. We believe we need to review our current export 

policies with respect to propane, and consider its effect on consumers and energy reliability. 

Finally, Mr. Chairman, I want to alert the subcommittee to the 

dramatic transition that is taking place with the fuel distribution 

infrastructure in this country. Record production of crude oil, natural gas, and propane from shale formations is changing the historical flow of fuels. Pipelines that once carried propane and other 

products from the Gulf Coast, where they were produced, northward are now being reversed to carry other products toward the 

Gulf Coast. That, in turn, is place greater pressure on railroads 

and highways. I think it is critical that we understand these 

changes, and the effects that they have on consumers. 

Mr. Chairman, I would be remiss if I closed without extending 

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tion. That includes members of this subcommittee, as well as other 

members of Congress. The level of cooperation between agencies, 

among Governors of affected States, and our transportation partners, some of whom are represented at this witness table, was not 

less than extraordinary, and have made a real difference. 

I would like to thank in particular the Department of Energy, 

the Federal Energy Regulatory Commission, the Department of 

Transportation. And I personally would like to commend Secretary 

Moniz and Secretary Foxx for their personal attention. 

Mr. Chairman, that concludes my remarks. 

[The prepared statement of Mr. Roldan follows:] 

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Mr. WHITFIELD. Thank you very much. At this time, Mr. Logan, 

you are recognized for 5 minutes. 

STATEMENT OF ANDREW LOGAN 

Mr. LOGAN. Great. Thank you, Mr. Chairman, and members of 

the subcommittee for the opportunity to be here today to testify on 

the economic and environmental impacts of natural gas flaring in 

the United States. I am Andrew Logan. I direct the oil and gas program at Ceres, and we are a coalition of institutional investors and 

environmental organizations working to make capital markets 

more environmentally and socially sustainable. We have over 100 

institutional investor members representing over $11 trillion in 

total assets united by the belief that strong environmental performance drives strong financial performance over time. Our investor 

members have significant financial exposure to the oil and gas sector, and want to see the industry succeed. 

And while Shell Oil is bringing significant economic benefits to 

the United States, we believe that the way the resource is currently being developed is shortsighted, and fails to capture its full 

value, at least in certain parts of the country. Our investors believe 

that flaring natural gas is environmentally destructive, economically wasteful, and, most importantly, almost always unnecessary. 

And, despite well-intentioned and quite significant efforts by some 

companies, the problem is getting worse, and will continue to get 

worse until the regulatory environment changes, so that flaring is 

no longer the cheapest and easiest option. 

Flaring is a problem that the U.S. thought it had left behind in 

the 1950s, but the rapid growth of tidal oil production in the 

United States has been accompanied by a dramatic increase in flaring that has propelled the U.S. into the top 10 gas flaring countries 

in the world. And most of this flaring, as you know, occurs at oil 

wells drilled in areas that lack the infrastructure necessary to capture the gas that comes out of the ground with the oil. And instead 

of investing in the necessary infrastructure to capture that gas, 

companies often choose to simply flare it off, where regulations 

allow them to do so. 

It is important to note, though, that lack of infrastructure is only 

part of the problem. Roughly half of all the flaring in North Dakota 

comes from wells that are already connected to pipelines, so we 

need better planning as well. I think we really want to see this industry plan its wells with the idea that natural gas has value. 

Flaring comes at a steep environmental cost. Flaring is a major 

contributor to greenhouse gas emissions. It is the equivalent of 

adding a million cars a year to the road in North Dakota alone. But 

the environmental impact of flaring is not its sole cost. North Dakota gas is so rich in valuable natural gas liquids, like propane, 

that this is about the last gas in the world that you would want 

to flare. In fact, over the course of 2012, North Dakota producers 

flared over a billion dollars of natural gas, a massive economic 

waste. 

So flaring is clearly environmentally damaging, it is economically 

wasteful, but most importantly, it is avoidable. The North Dakota 

Industrial Commission has run the numbers, and has concluded 

that it is economic to capture this gas, in large part due to its high 

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liquid content, but yet flaring in the State is still north of 30 percent. And that is because, while capturing gas produces positive 

economic returns, it doesn’t match the returns from drilling the 

next oil well. So if regulations allow that sort of short term decision-making, as they do in North Dakota, many companies will 

simply make that choice. 

Our investors take a long term view, and want to see the value 

of the resource maximized, and they are deeply concerned by the 

current approach to development. The Bakken Formation has been 

around for 360 million years. It is not going anywhere. If you take 

a little bit of extra time to develop the resource in a thoughtful and 

deliberate way, it seems to me that we should strongly encourage 

that. 

So we are working with our investors to push the industry to 

take a longer term view, and it is important to acknowledge that 

some companies, like Continental and Hess, are doing so. And yet 

the data are clear, the problem is getting worse, and not better. 

Flaring in North Dakota hit 36 percent in December, which is a 

new record. This means that more than a third of all the natural 

gas produced in that State is going up in smoke at the same time 

as consumers around the country are seeing price spikes, and, in 

places, actual shortages of propane. 

So, from my perspective, flaring is an indefensible economic 

waste, but it also represents a major opportunity, a billion-dollara-year opportunity, for entrepreneurs, as well as for the industry 

itself. We are seeing huge amounts of innovation going on, and 

there is a potential for a real American success story here, but this 

technology is having a hard time getting a foothold because it is 

hard to compete with free. And right now, in North Dakota, flaring 

is free. So if you take only one point away from my testimony 

today, it is that it shouldn’t be. Thank you. 

[The prepared statement of Mr. Logan follows:] 

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Mr. WHITFIELD. Thank you, Mr. Logan. Mr. Whittington, you are 

recognized for 5 minutes. 

STATEMENT OF CHARLES ‘‘SHORTY’’ WHITTINGTON 

Mr. WHITTINGTON. Thank you very much. Mr. Chairman, and 

members of this committee, thank you for inviting me here to testify on the issue of propane transportation. My names is Charles 

‘‘Shorty’’ Whittington. I am president of Grammer Industries, a forhire trucking company headquartered in Grammer, Indiana. I am 

also the former chairman of the American Trucking Association, 

and I currently serve on the Board of the National Tank Truck 

Carriers. My company operates 120 specialty MC–331 transport 

tank trailers, 115 of those which are capable of transporting propane. Not only do I haul propane, I also am a large consumer of 

propane, as a farmer, and we have about 1,500 acres. My fleet currently employs over 200 people, and the logistics personnel, and 

professional drivers. 

This past year, Grammer Industries has experienced a substantial increase in propane hauls. In an average year, Grammer dedicated between 25 and 30 tank trucks to haul propone in the winter 

months. This year, we have dedicated over 80 units to do this service. I would like to further detail Grammer’s experience this winter 

in hauling propane. 

There are roughly 11,000 tank truck trailers in the United States 

capable of hauling propane. To add some perspective to this, each 

of these specialized trailers cost about $150,000, and a new tractor 

costs $125,000. This is a sizable investment for carriers to participate in this segment of business. 

With the increase of natural gas production across the nation, 

and the corresponding increasing demands for tank truck services, 

competition for the use of the existing tank truck trailers is at an 

all-time high, straining existing capacity and new trailer production capacities at the same time. The reality of this is, if I ordered 

a new tank truck to haul propane today, I would receive it in May 

of 2015. These tank trailers have a capacity of 10,600 gallons. However, because of product expansion and government regulations, we 

can only fill these tanks to 85 percent of capacity, or, in other 

words, about 9,000 gallons. 

Typically Grammer’s average length of haul falls into the 50 to 

100 mile range. That has been the way it has been for the last 10 

years. However, given the exceedingly difficult market dynamics in 

play, we found ourselves making longer hauls that have exceeded 

800 miles this year. When propane shortages occur, like this winter, companies like mine need to be able to respond accordingly. In 

times of crisis, the tank truck community has offered its capacity 

and services to emergency respond teams many times, as our carriers haul essential products necessary for the recovery, whether it 

is from hurricane relief in the Gulf Coast, or a propane shortage 

in the midst of a devastating Midwest winter. 

As we have seen in every crisis situation, the Federal hours of 

service regulations is a key obstacle that may be waived in order 

to help our deliveries to the affected areas. While waiving these 

hours of service regulations has been extremely helpful, the current 

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suming, and the deterrent of both our customers and the critical 

service we provide. 

If the President, the Governor of a State, or an FFCSA regional 

field administrator declares a regional emergency, certain regulatory constraints are suspended for drivers and motor carriers providing direct relief to the emergency. This is true regardless of 

where the driver’s trip originates, even if the emergency was only 

declared in one State, provided they are offering relief to the affected area. 

However, enforcement officials in distant States, or even neighboring ones, may not be aware that drivers may legally take advantage of this regulatory exemption which results in the various roadside enforcement disparities. And, with today’s CSA rules, these 

disparities can put a carrier like myself out of business. Exceptions 

provided under the circumstances are usually in effect for 30 days. 

Though authorized officials may extend the relief for another 30 

days, they do not always make such decisions in a timely manner. 

To address these issues, Congress should work with the Department of Transportation to evaluate ways in which the emergency 

exemption declaration process could be improved at regional, State, 

and local levels. Additionally, the Department of Transportation 

and State should seek to improve communication with enforcement 

officials when regulatory relief has been granted, identifying which 

drivers are entitled to that relief, and what rules are for that emergency. 

Again, I would like to thank you for the opportunity to testify at 

today’s hearing, and I will be very happy to respond to any questions that you may have. Thank you very much. 

[The prepared statement of Mr. Whittington follows:] 

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Mr. WHITFIELD. Thank you, Mr. Whittington. Mr. Obeiter, you 

are recognized for 5 minutes. 

STATEMENT OF MICHAEL OBEITER 

Mr. OBEITER. Good morning, and thank you for the opportunity 

to contribute to the deliberations of this subcommittee. My name 

is Michael Obeiter, and I am a senior associate in the Climate and 

Energy Program at the World Resources Institute. WRI is a nonprofit, non-partisan think tank that focuses on the intersection of 

the environment and socioeconomic development. I am pleased to 

be here today to offer WRI’s perspective on the United States natural gas infrastructure, with a focus on the need for reductions in 

fugitive methane emissions, and forward-looking planning that 

takes into account the realities of a changing climate. 

The U.S. currently finds itself in the midst of an energy boom, 

driven by technological advances in the extraction of oil and natural gas. Our domestic energy resources are the envy of much of 

the world, yet we must also weigh the consequences of our actions 

on the natural environment. The decisions we are making will have 

long lasting impacts on air quality and the climate. 

Methane, the primary component of natural gas, is a powerful 

greenhouse gas, at least 34 times as powerful as carbon dioxide at 

trapping heat. Although natural gas emits only 50 to 60 percent as 

much CO2 as coal when burned for electricity generation, fugitive 

methane emissions throughout the natural gas life cycle undermine 

the climate advantage of switching from coal to gas. While we don’t 

yet know exactly how much methane is escaping into the atmosphere from wells and pipelines, we know enough to recognize that 

fugitive methane emissions are a significant environmental problem, and one that we know how to address. 

There are many commercially available technologies that reduce 

or eliminate methane emissions, and pay for themselves in 3 years 

or less. Analysis by WRI and others has demonstrated that a one 

percent leakage rate system-wide is an achievable and cost-effective benchmark. Below one percent, we can say with certainty that 

fuel switching from coal to gas, or from diesel to gas in heavy duty 

trucks and buses, is a net positive for the climate. 

Beyond this environmental impact, methane has economic value, 

and any cubic foot that is leaked, vented, or flared is one less cubic 

foot that can be put to productive use. The fact that emissions control technologies are not utilized to the extent they should be is evidence of a market failure that requires policy intervention. Thankfully, there are a number of options available to Congress to address this issue, including tax incentives for investment in emissions control technologies, requiring companies to perform monthly 

emissions monitoring and repair as a condition for receiving the 

right to drill on Federal lands, and supporting applied research and 

development to the Department of Energy to drive down the costs 

of emissions control technologies, and allow companies to bring 

more gas to market, in much the same way that DOE played a key 

role in the development of hydraulic fracturing technology. 

I have included additional policy options in my written testimony. As this subcommittee explores the challenges and opportunities of energy infrastructure in the 21st century, I encourage its 

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members to propose innovative ways to simultaneously cut waste, 

increase government royalties, and combat climate change by reducing fugitive methane emissions. 

Yet these unchecked emissions are merely one symptom of a national energy landscape that systematically undervalues long term 

prosperity. Climate change, and the rising sea levels, reduced agricultural yields, and more extreme weather it brings, threatens to 

alter our way of life and dampen prospects for economic growth, including in the energy sector. 

A recent GAO report found that, ‘‘climate changes are projected 

to affect infrastructure throughout all major stages of the energy 

supply chain, thereby increasing the risk of disruptions.’’ This underscores the need for the private sector to take climate into account when it makes investment decisions. While many companies 

are already incorporating a de facto price on carbon into their decision-making process, lack of clarity complicates their attempt to 

seize the economic opportunity of the transition to a low carbon 

economy. 

Luckily, smart climate policy is indisputably compatible with 

smart economic policy. Reducing methane emissions from leaky infrastructure, for example, is good for business. Numerous studies 

have made the case that inaction on climate change will be more 

expensive than taking action now to mitigate greenhouse gas emissions. Even the Defense Department is concerned, calling climate 

change, ‘‘a threat multiplier that can enable terrorist activity and 

other forms of violence.’’ 

Taken together, these arguments point to the need to take climate risks into account when making investment decisions on long 

lasting infrastructure. The infrastructure choices we make today 

will reverberate for decades. Ignoring the climate when making 

these decisions risks stranding valuable assets, or locking in dangerous levels of greenhouse gas emissions, and potentially catastrophic climate change. We owe it to ourselves, and future generations, to make sure we get those choices right. 

Thank you again, Mr. Chairman, Ranking Member McNerney, 

for the opportunity to be here today. I look forward to your questions. 

[The prepared statement of Mr. Obeiter follows:] 

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Mr. WHITFIELD. Thank you, Mr. Obeiter. Next is Mr. Black, who 

used to run the Energy and Commerce Committee, so he is recognized for 5 minutes. 

STATEMENT OF ANDREW J. BLACK 

Mr. BLACK. Thank you, and good morning. I am Andy Black, 

president and CEO of the Association of Oil Pipe Lines. AOPL represents the owners and operators of energy liquid pipelines which 

benefit American workers and consumers. Americans use pipelines 

today to fuel their vehicles, heat their homes, harvest their crops, 

manufacture consumer goods, and more. In just 2012 pipelines 

transported 14.1 billion barrels of crude oil, refined products, and 

natural gas liquids across 185,000 miles of pipelines Nearly every 

gallon of gasoline consumers put in their vehicles travels at some 

point through a pipeline. 

Pipelines allow American consumers to benefit from new crude 

oil production in the U.S. and Canada. Pipelines are also transporting growing supplies of U.S. natural gas liquids to chemical 

and plastic manufacturing facilities here in the U.S., which is creating new good paying jobs for American industrial workers. 

Pipelines are the least expensive, most reliable, and safest mode 

of transporting liquid energy. For example, shipping by rail costs 

and average of two to three times more than by pipeline, according 

to EIA. In 2012 99.9998 percent of the products transported by liquid pipelines reached their destination safely. This safety record is 

a natural outcome of the major financial investment pipeline operators make in safety each year. In 2012 operators spent more than $1.6 billion on pipeline integrity management. That is evaluating, inspecting, and maintaining 

their pipelines. The result is that over the last decade liquid pipeline incidents are down over 60 percent, and volumes released by 

pipelines are down more than 45 percent. The industry recently 

launched the Pipeline Safety Excellence Initiative to take these 

safety efforts to the next level. 

Today pipelines operate in highly competitive transportation 

markets, competing vigorously against other pipeline operators, 

and operators of railroads, trucks, and barges. New and expanded 

pipeline infrastructure is essential to delivering the benefits of 

America’s energy renaissance to U.S. consumers and workers. 

AOPL members have made substantial investments to link new 

production and supply sources to refining and consuming markets. 

Pipeline operators have been constructing new pipelines, reversing 

pipelines, converting pipelines from one type of product service to 

another, and expanding the capacity of existing pipelines. More 

than 10,000 miles of liquid pipelines have been placed into service 

in just the last 4 years. 

The importance of pipelines was underscored by what happened 

in propane markets this winter. As you have heard, propane storage inventory levels in the Midwest downstream of pipelines began 

this fall at abnormally low levels. Then large supplies of propane 

were needed to dry crops after an abundant and wet harvest. Next 

the Midwest and Northeast needed considerable supplies of propane during a winter that started early, and has been very cold. 

Liquid pipelines were asked to help, and they responded. Pipeline 

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operators coordinated with government, asked shippers of other 

products to voluntarily defer shipment so that more propane could 

be shipped, made tariff filings at FERC to facilitate additional shipments, and issued alerts to shippers about unused and available 

pipeline capacity. 

This winter’s propane supply issues were not the result of inadequate pipeline infrastructure. There is, and will be, enough pipeline capacity to transport propane supplies to where they are needed. Like FedEx or UPS delivering packages for others, pipelines 

transport energy products for shippers, who own the products being 

shipped, and decide when they are to be shipped. 

While pipeline service is available to shippers year round, propane shippers do not ship consistent amounts of propane throughout the year. Pipeline capacity exists during off peak times to help 

propane shippers ensure field supplies are sufficient to meet seasonal needs. If propane market participants want to adjust their 

supply patterns by shipping more pipeline offseason, more propane 

offseason to fill downstream storage, pipeline operators are ready. 

And if shipper expressed a need for new service by committing to 

use pipelines, pipeline operators will respond by adding new pipeline capacity. 

Government can help ensure the availability of adequate pipeline 

infrastructure. It is essentially that States make timely decisions 

on siting requests for pipelines, that Federal agencies process permits needed for construction, that FERC policies support new investment, and, of course, that the State Department efficiently decides upon requests for presidential permits for facilities crossing 

our border. 

The recent State Department analysis of Keystone XL found that 

alternative modes of transportation would result in higher costs to 

shippers, and more crude oil released in the environment. The high 

profile debate on Keystone XL has shown that more and more 

Americans recognize the benefits to consumers and workers of 

pipeline infrastructure. I want to thank the subcommittee for its 

interest in Keystone XL, and in pipeline infrastructure generally, 

including by holding this hearing today. Thank you. 

[The prepared statement of Mr. Black follows:] 

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Mr. WHITFIELD. Thank you, Mr. Black. And, Mr. Hamberger, you 

are recognized for 5 minutes. 

STATEMENT OF EDWARD R. HAMBERGER 

Mr. HAMBERGER. Thank you, Chairman Whitfield, Chairman 

Upton, Ranking Member McNerney. Thank you for the opportunity 

to appear before you on behalf of the Association of American Railroads. Our members account for the vast majority of the freight 

railroad mileage, employees, tonnage in Canada, Mexico, and the 

United States. The transportation of energy products is a central 

focus of this network, and we are proud of the role we play. By delivering coal to power plants, ethanol to fuel blenders, crude oil to 

refiners, propane to local distributors, frack sand and steel pipe to 

natural gas extractors, railroads are indispensable in our nation’s 

ongoing quest to achieve greater energy security and higher domestic energy production. 

But that would not be the case if, back in 1980, your predecessors had not passed the Staggers Rail Act, removing strangling 

regulation and releasing $550 billion of private sector investment. 

By leading that fight, this committee enabled the rail tonnage to 

double. The accident rate is down 79 percent, and rates are actually down 42 percent from 1980. The massive investments, and I 

emphasize they are private sector investments, would not have occurred, were it not for the leadership of this committee, and that 

Staggers Rail Act has made our system the envy of the world. Had 

you not done the right thing back in 1980, we would not be the 

envy of anyone today. 

In recent years railroads have seen dramatic increases in demand to transport crude oil. As recently as 2008, class one U.S. 

railroads originated just 9,500 car loads of crude oil. In 2013, that 

number is 410,000 car loads, approximately 11 percent of the U.S. 

crude oil production. And that is good news not just for the railroad 

industry, but, as you said, Mr. McNerney, for the economy as a 

whole, as we begin to produce more than we import. 

My thesis today is that our nation cannot take full advantage of 

our new crude oil resources without a safe, efficient, financially 

healthy freight rail industry. But a very close corollary to that is 

that our nation cannot reach energy independence without a safe, 

efficient, financially health pipeline industry, barge and towing industry, and yes, my good friend Shorty, a tank truck industry. 

The question that we have been hearing recently, because of 

some high profile accidents, is can railroads, in fact, move crude oil 

safely? I am here to tell you the answer to that question is yes. Our 

safety record is 99.98 percent of the time we get from origin to destination without a spill. That is pretty good, not good enough, and 

we are going to continue to try to get to 100 percent. And to that 

end, we reached an agreement just two weeks ago with Secretary 

of Transportation Foxx to implement a series of voluntary action 

items that we will take to try to improve our safety record. These 

include more frequent track inspections than required by regulation, enhanced braking systems, speed restrictions beyond those in 

the regulations, and the use of a sophisticated routing model to assess the safest and more secure routes. 

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These steps are aimed primarily at accident prevention, but the 

next step in dealing with risk is mitigation. And there we are recommending new tank car standards, including a thicker tank car, 

and a jacket around the tank cars to help them in the mitigation. 

We also believe that existing tank cars need to be retrofitted, or 

phased out of service of flammable liquids. 

Emergency response is the third bucket of activities, very critical 

as well. Last year we trained 22,000 emergency responders around 

the country, and we have stepped up, again, in the agreement with 

Secretary Foxx, to develop a very specialized emergency response 

training module at our training center in Pueblo, Colorado, the 

emergency response training center where we have hands-on experience for emergency firefighters. 

You can’t talk about energy in the United States without talking 

about coal. U.S. coal production is focused in a relatively small 

number of States, but coal is consumed in large amounts all over 

the country, made possible because the U.S. has the world’s best, 

most efficient, and comprehensive coal transportation system, with 

freight railroads leading the way. In 2012 railroads delivered 577 

million tons of coal to our nation’s electric utilities, equal to more 

than 70 percent of the total coal deliveries to power plants. That 

happens to be down 23 percent from our peak in 2008. 

The lure of higher coal exports to Asia is the main impetus for 

plans to build new bulk export terminals in the Pacific Northwest. 

For China and India, if consuming more coal means cheaper and 

more reliable electricity for the hundreds of millions of people in 

those countries who currently don’t have that electricity, then consuming more coal is what they will do. I submit to you that this 

coal could be supplied by U.S. coal producers and U.S. coal transporters, who operate under the world’s most stringent safety and 

environmental standards, or it could be supplied by producers and 

transporters in other countries, who operate under more lax standards. 

I apologize for running over, Mr. Chairman. Thank you for the 

opportunity to be here today. 

[The prepared statement of Mr. Hamberger follows:] 

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Mr. WHITFIELD. Well, thank you, and thanks all of you for your 

testimony. We appreciate it very much. I recognize myself for questions, and then we will move forward as quickly as we can. 

Mr. Black, I think you said that 99.998 percent of your products 

get to their destination safely, and, Mr. Hamberger, you said 99.98. 

Both of those are pretty good, but, Mr. Hamberger, you touched on 

this in your testimony, and there has been a lot of publicity recently about some accidents hauling oil out of the Bakken fields. 

And I was talking to some representatives of Burlington Northern 

Santa Fe yesterday, and it is my understanding they are moving 

out 700,000 barrels a day—— 

Mr. HAMBERGER. Yes, sir. 

Mr. WHITFIELD [continuing]. Which is a lot of oil. And frequently 

we get confused about barrels versus car loads. How many barrels 

of oil is in a car load? Or maybe I should say gallons. 

Mr. HAMBERGER. There are 30,000 gallons, which is 7,000 barrels, in a round figure—— 

Mr. WHITFIELD. OK. 

Mr. HAMBERGER [continuing]. And 100 cars to a train. 

Mr. WHITFIELD. OK. 

Mr. HAMBERGER. So that would be—— 

Mr. WHITFIELD. OK. 

Mr. HAMBERGER [continuing]. 70,000 barrels per train, a 

round—— 

Mr. WHITFIELD. And, you know, of course, we know about the 

Canadian accident, and there was some negligence involved there 

regarding braking systems, I believe, but—— 

Mr. HAMBERGER. Yes, sir. 

Mr. WHITFIELD [continuing]. We have heard some stories that 

the oil coming out of the Bakken is more volatile. Are you aware 

of any evidence of that, or scientific analysis of that issue? 

Mr. HAMBERGER. There is a lot of work going on in that area. 

The Pipeline and Hazardous Material Safety Administration 

launched what they termed back in August the Bakken blitz. I 

think they now call it Operation Classification. They have not yet 

issued their final report. What we have learned, just in discussions 

with them, is that there seems to be more natural gas liquids, ethane, butane, in the shale oil than some other oil. And that has led 

us to then call on the same Pipeline Hazardous Material Safety Administration, PMSA, to issue new tank car regulations which would 

be able to accommodate this more volatile oil. 

Mr. WHITFIELD. And how are they coming along on those regulations? Are they moving quickly, or—— 

Mr. HAMBERGER. They are still contemplating. They published an 

advance notice of proposed rulemaking in September, and they 

have not yet come out with a notice of proposed rulemaking. But 

I am sure they are working on it. 

Mr. WHITFIELD. Yes. OK. 

Mr. HAMBERGER. And I should point out, not to throw them 

under the bus, but we actually petitioned PMSA in 2011. And when 

I say we, I mean the American Petroleum Institute, the American 

Chemistry Council, Association of American Railroads. Tank car 

manufacturers went in March of 2011 and asked them to promulgate a new tank car standard. When they did not do so, that same 

182 

group of organizations got together and voluntarily adopted a new 

tank car standard, effective October 1, 2011, so that the tank cars 

being made since that time are dramatically an improvement over 

the current Federal regulatory standard. We think, given what we 

have just been talking about, that what was agreed to in 2011 can 

be made even more robust going forward. 

Mr. WHITFIELD. So the industry is looking for some certainty? 

Mr. HAMBERGER. Yes, sir. 

Mr. WHITFIELD. OK. 

Mr. HAMBERGER. Exactly. 

Mr. WHITFIELD. Now, I think it is great that you all are doing 

this emergency response program out at Pueblo. How is that coming along? 

Mr. HAMBERGER. We have a tank car emergency response training out there now, but it does not focus on crude oil. We are looking 

to get 20 tank cars out there, to have them arrayed as if there had 

been an accident, to have them set up so that they will, in fact, be 

on fire, have foam, have emergency response uniforms for people 

to work. We are hoping to provide at least 1,500 emergency responders the opportunity to go through that program starting July 

1, and that would be on top of the 2,000 we already train out there. 

And that would be an ongoing program into 2015 and beyond. 

Mr. WHITFIELD. OK. Thank you. At this time, Mr. McNerney, you 

are recognized for 5 minutes. 

Mr. MCNERNEY. Thank you. I ask unanimous consent to include 

a letter from Mr. Loebsack to the committee to be included. 

Mr. WHITFIELD. Without objection. 

[The information follows:] 

183 

184 

Mr. MCNERNEY. Well, I want to thank the witnesses. I think it 

was a good set of testimony. Well, one side of the aisle wants to 

move forward with production, produce, produce, produce, and the 

other side says, well, you know, what about safety, what about the 

environment? So it is important to have a balance between these 

two, and I think that is what we ought to be aiming for. 

My first question goes to Mr. Logan. I appreciate your comments 

about flaring. The question I have is kind of political. How much 

resistance do you think industry would put up to regulating down 

the flaring levels? 

Mr. LOGAN. Well, I think if you asked me the question a year 

ago, I would have said a whole lot. I think we have seen so much 

negative attention on the flaring problem over the last year, and 

also the fact that, you know, the data show that the problem does 

continue to get worse, so I think there is a growing recognition 

from industry, as well as from other stakeholders, that voluntary 

action to date has not gotten the job done. 

Well, there are companies that are taking kind of leadership 

steps to reduce their own flaring, and now see that the actions of 

some of their peers who aren’t doing the right thing sort of drags 

the whole industry down. 

Mr. MCNERNEY. So companies are saying, hey, it is probably in 

our interest to move forward with a reduction of flaring? 

Mr. LOGAN. That is right. I think the question is how far, and 

kind of what the levers—— 

Mr. MCNERNEY. Thank you. 

Mr. LOGAN [continuing]. To make that happen are. 

Mr. MCNERNEY. Mr. Whittington, I appreciate your comments 

about the reduction in obstacles to the Federal hours of service regulations, and I look forward to working with you on that. I don’t 

really have a question, but I appreciate your comments on that. 

Mr. WHITTINGTON. Be delighted to work with you. 

Mr. MCNERNEY. OK. Mr. Obeiter, 3-year payback is possible on 

reducing fugitive emissions, equipment to reduce fugitive emissions? 

Mr. OBEITER. Yes. There have been a number of case studies 

through the EPA Natural Gas Star program, as well as other programs, that have demonstrated that the vast majority of emissions 

control technologies pay for themselves in 3 years or less. 

Mr. MCNERNEY. So how serious is the problem of methane leaks 

from our natural gas infrastructure? 

Mr. OBEITER. It is impossible to say with precision, but we know 

that it is a significant problem. We know that recent numbers from 

the EPA inventory, and a survey by industry of fugitive methane 

emissions likely understates the case. You know, methane is the 

second most important greenhouse gas after carbon—— 

Mr. MCNERNEY. So is there good technology out there in existence to help us detect leakage in pipelines and in fracking wells? 

Mr. OBEITER. There is. There is technology that can detect leaks, 

and there is technology to go in and fix those leaks wherever they 

may be. 

Mr. MCNERNEY. And is that being implemented, or is there resistance to implementing that? 

185 

Mr. OBEITER. It is being implemented on a voluntary basis in 

some places, but there has been some resistance simply because, in 

a lot of cases, a 3-year payback, which sounds great to me, does not 

compare favorably with a lot of the investments made by these natural gas companies. 

Mr. MCNERNEY. And one last question for Mr. Hamberger. How 

compliant are your members to the voluntary actions that you discussed? I mean, you must have a variety of responses to those—— 

Mr. HAMBERGER. Well, all class one railroads have subscribed to 

it, and many of our short line members are as well. 

Mr. MCNERNEY. So when you say subscribe to it, you mean they 

are—— 

Mr. HAMBERGER. They have committed publicly, signed by the 

CEO or the Chief Operating Officer on a piece of paper with the 

Secretary of Transportation that they are committed to adhering to 

these voluntary items. The administrator of the Federal Railroad 

Administration has testified that he will direct his inspectors, even 

though they are voluntary, to treat them as though they were regulatory mandates, and would make public any, you know, this is a 

commitment that we made in 35 days. 

Mr. MCNERNEY. Well, I want to wrap so others can question, but 

the voluntary measures you identified sounded pretty good—— 

Mr. HAMBERGER. Thank you, sir. 

Mr. MCNERNEY [continuing]. So let us see those implemented. 

Mr. HAMBERGER. Yes, sir. 

Mr. WHITFIELD. Thank you. At this time recognize the gentleman 

from Louisiana, Mr. Scalise, for 5 minutes. 

Mr. SCALISE. Want to thank the chairman for having this hearing, and want to thank all of our panelists for the information you 

have been providing. 

Want to first ask you, Mr. Black, in your testimony, and in, you 

know, you all are heavily involved in all the pipeline infrastructure 

throughout our country. There is a heated debate in this town 

about the Keystone XL pipeline. I know you referenced it in your 

testimony. Legislation has been passed in the House to approve the 

Keystone XL pipeline, very large bipartisan majorities. Obviously, 

right now, that rests with the President. The President likes talking about using a pen to change laws, especially as it relates to his 

healthcare law, but one thing the President could do today is actually use a pen to approve the Keystone XL pipeline, and create 

thousands of good jobs, increased energy security, and a trading 

partner with Canada. And, again, you mentioned the pipeline infrastructure between the United States and Canada in your testimony. 

There has been some debate about the types of job creation that 

would come with Keystone XL. And there is some very good reports 

out there, talking about not only billions of dollars of private investment that would come in, but tens of thousands, over 20,000 

jobs that would be created. The President often trivializes that, and 

tries to diminish the job impact. Can you talk to the jobs that 

would be created, and the energy security that would be created, 

by approving and developing that pipeline relationship with Canada for Keystone XL? 

186 

Mr. BLACK. Sure. Thank you, Congressman. The State Department’s final environmental impact statement shows that more than 

20,000 jobs would be created Keystone XL. Those are real, good 

paying jobs. And you are right, the President has the opportunity 

to sign that permit. And while Congress has acted, and we support 

the interest of Congress in Keystone XL, the quickest way to do 

this is just for the State Department to grant a presidential permit. 

Tomorrow is the final day of comments on the national interest determination, and we hope that soon after that there will be a recognition that this has support not just from a majority of the House 

and of the Senate, but also of the American people of all parties. 

Mr. SCALISE. Well, let me ask you about the jobs, because we still 

have a very struggling economy. I think if you look at a lot of the 

policies coming out of this administration, many of those policies, 

in fact, are the reason that you have such a sluggish economy, 

when you talk to families who are struggling, people that just got 

reduced to 28 hours that used to be working 40 hours because of 

the President’s laws and policies. But let us talk about the Keystone jobs, because, again, the President does diminish this. I don’t 

know if you all have done your own study, I have seen studies. 

What is the impact that you have seen on what kind of jobs would 

be created in America? 

Mr. BLACK. Well, I would refer you to the tremendous support 

that the project has from the labor community. And when I have 

been in Nebraska, I have found that the union jobs there that will 

be supported are tremendous. They are some of the best advocates 

for this project. There will be manufacturing jobs making pipe, 

making steel. There are also ancillary jobs in finance and in insurance. A lot of these jobs are going to be outside of the pipeline 

route. There has been one study that 80 percent of the jobs will be 

throughout the nation. So it has many positive benefits on—— 

Mr. SCALISE. Any ideas on numbers, on how many jobs you are 

talking about? 

Mr. BLACK. I don’t have those in front of me. I will be happy—— 

Mr. SCALISE. Because I have seen upwards of 20,000 jobs. And, 

again, the President trivializes this, and acts as if, you know, those 

aren’t good jobs anyway. You know, maybe we ought to send a copy 

of this testimony to the President, and maybe he reconsiders a decision. I don’t know if he is out of ink on his pen. I will lend him 

my pen to sign the Keystone pipeline if he wants to. But, you 

know, it is just something that people are frustrated with. When 

they are struggling, they are looking at an economy that is struggling, they want to work. They just want to go back to work. 

And you have got 20,000 jobs or more that, as you say, are good 

high paying jobs that would be helping not only create energy security for this country, but also put food on the tables for those families, and the President continues to say no, and then try to 

trivialize what, to them, would be an important improvement in 

their life, and their quality of life. So I just hope, you know, we continue this conversation. We are going to continue pushing it, but 

I appreciate the testimony you gave on it, because—— 

Mr. BLACK. Be happy to get you some information about—— 

187 

Mr. SCALISE [continuing]. To underscore. Anything else you can 

get us, please let us know, and we will even pass it on to the White 

House, and maybe they will read it. 

Mr. Hamberger, I want to ask you about some of the comments 

you made about the enormous growth in crude oil—— 

Mr. HAMBERGER. Yes, sir. 

Mr. SCALISE [continuing]. Specifically that has been moved 

through rail through 2008. Can you expand on that and tell us 

what you are seeing? 

Mr. HAMBERGER. Yes, sir. In 2008, 9,500 car loads. In 2013, over 

400,000 car loads. To put that in perspective, that is only about 

1 1⁄2 percent. We move about 30 million car loads a year. So while 

that is incredibly rapid growth, it is something that we think we 

can accommodate. As I mentioned, our coal franchise is down 23 

percent from the height in 2008. But it is traffic patterns in perhaps new areas, and so that is why this year we are investing $26 

billion in capex and maintenance to try to expand the infrastructure, and be able to handle it. We expect it will continue to grow 

at those rates, and we will exceed another couple hundred thousand barrels, 10 car loads, this year. I am being given the—— 

Mr. SCALISE. Appreciate your answers, and the job creation that 

you are bringing along with that investment. 

Mr. HAMBERGER. Yes. 

Mr. SCALISE. Yield back the balance of my time. Thank you. 

Mr. WHITFIELD. OK. Ms. Christensen, we will try to get you—— 

Ms. CHRISTENSEN. Right. I will try to—— 

Mr. WHITFIELD [continuing]. Before we go out. 

Ms. CHRISTENSEN [continuing]. Be quick. Thank you. 

Mr. WHITFIELD. You are recognized for 5—— 

Ms. CHRISTENSEN. I appreciate that, Mr. Chairman, and thank 

you for this hearing. You know, the testimony that we have received this morning is of particular interest to me, as our utility 

in the U.S. Virgin Islands undergoes a major transition from diesel 

as our sole generation source to propane, and then eventually to 

natural gas, which is projected to lower our rates by at least 30 

percent. So we were particularly concerned when we saw the dramatic shifts in the propane market, as we wondered how that 

would affect our future. 

So, Mr. Roldan, while I do understand that this is part of your 

share, due to rapid abundance, and then a series of demands and 

pressures, including the polar vortex, still, as we go forward, this 

is something we have to consider. Could you share for the record 

what your perspectives are, and what needs to happen to ensure 

price stability in the propane market, should this perfect storm 

happen again? 

Mr. ROLDAN. Yes. Thank you for the question. It is a very good 

question, actually. Because we feel under pressure as transportation and storage assets are being taken out of service, the best 

thing that we could do, as an industry, is build year-round demand. 

There is no greater incentive for an expanding infrastructure than 

if you were to take a season industry and build year-round demand, but that is something that takes place over time. 

We think that the system could use a big dose of transparency, 

OK? So we are studying this right now. We have formed an indusVerDate Mar 15 2010 08:51 Sep 10, 2014 Jkt 037690 PO 00000 Frm 00191 Fmt 6633 Sfmt 6633 F:\113-124 EA - FUEL SUPPLY BLBK EDITS\113-124 EA - FUEL SUPPLY PENDING WAY
188 

try task force, and, in a very short period of time, we will come 

back with concrete policies and recommendations, but we think 

that the system could use a whole lot more transparency. And let 

me tell you what I mean by that. We hit a period in the Midwest 

in late January where essentially, the wholesale price tripled. 

Now, to be honest with you, I don’t know what happened in that 

10 day period, and I can’t explain it. I have been associated with 

this industry for 20 years, and I can’t explain it. And so we have 

joined with Senator Charles Grassley, and other members of Congress, to ask the Federal Trade Commission to look into the transactions that led to that. Because the six million households that depend on our product to heat their homes—— 

Ms. CHRISTENSEN. Um-hum. 

Mr. ROLDAN [continuing]. Are asking us to prove that things are 

on the up and up. And not only do our customers want to know, 

but our retail marketers want to know that our markets are performing properly. I have a whole series of recommendations on new 

data sets that would help our industry, and I will give you a quick 

example. 

Ms. CHRISTENSEN. OK. 

Mr. ROLDAN. We believe that markets function more efficiently 

when transparency is there. When you lack transparency, they perform less efficiently. And, just to give you an example, the EIA 

does a wonderful job reporting inventory data, OK? But if we are 

exporting one out of every five gallons, and major foreign purchasers are signing long term contracts, if we don’t know what percentage of our inventories at Mont Belvieu and Conway are committed by contract, then we don’t know what our available inventories are in this country. That is the type of transparency policies 

we are going to promote. 

Ms. CHRISTENSEN. Thank you. Let me try to get in another question. The testimony has focused primarily today on how we can improve, yes, oil and gas transportation infrastructure. But any 

meaningful discussion of investing in new energy infrastructure 

has to consider how the energy choices we are making today will 

have long term impacts for our climate. 

Mr. Obeiter, in your written testimony you state that the infrastructure choices we make today will reverberate for the next 40 

to 50 years. Ignoring the climate when making these decisions 

risks stranding valuable assets. Can you expand what you mean? 

How can ignoring the risks posed by climate change pose an economic risk to a company? 

Mr. OBEITER. Sure, thank you for the question. If you believe, as 

I do, that we need to make significant reductions in greenhouse gas 

emissions in order to stabilize the climate, and avoid the worst impacts of climate change, then we need to be thinking long term 

when making energy infrastructure decisions. The infrastructure is 

very long lived, and we risk either stranding these assets, as we 

move away from high carbon fuels to low carbon, or zero carbon, 

electricity, or we risk locking in, essentially, catastrophic climate 

change, one or the other. And so this is why I believe it is important to think extremely long term when thinking about the energy 

infrastructure decisions we are making today. 

189 

Ms. CHRISTENSEN. And what measures are some companies taking, or are they taking, to incorporate climate change into their investment decisions? 

Mr. OBEITER. A number of companies are incorporating a shadow 

price of carbon into their internal decision-making processes. These 

are not just the companies you would think of, but they include 

massive multi-nationals, like Walmart, and even Exxon-Mobil, 

which has disclosed that it is incorporating a $60 price per ton on 

carbon into its internal decision-making. 

Ms. CHRISTENSEN. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Thank you. I want to apologize to you all, we 

have a series of votes on the floor. We were trying to get through 

as quickly as possible. I think Mr. Hamberger has a previous appointment. I think Mr. Sieminski does as well. But for the others, 

I know some of the members have some additional questions, and 

if you all would have time, you know, we have two of the best restaurants in America over at the Longworth cafeteria and Rayburn 

cafeteria, so if you want to go over there and have something, and 

we will be back here within 1 hour. So thank you, and I do apologize, but we will reconvene in 1 hour. Thank you. 

[Whereupon, at 10:12 a.m., the subcommittee recessed, to reconvene at 11:14 a.m. the same day.] 

Mr. WHITFIELD. Once again, I will apologize to you all for the 

delay. And this time I am going to recognize the gentleman from 

West Virginia, Mr. McKinley, for 5 minutes of questions and/or 

comments. He ran all the way over here, but he is so physically fit, 

he won’t have to have any time to recuperate at all. 

Mr. MCKINLEY. Thank you, Mr. Chairman, and thank you for 

your presentation. There were a couple questions that I wanted to 

ask before we broke earlier on the oil pipeline, it was 99.9998 percent efficiency, railroads were 99.98. But I heard some of the discussion earlier about the fugitive gas emissions, and it looks like 

the amount of gas that we are transmitting, maybe we are losing, 

is it right, maybe 1.4 percent, something like that, or is it better? 

Mr. OBEITER. The EPA inventory, the most recent version, has 

approximately 1.4 percent leakage rate. But more recent studies 

that take direct measurement suggest that it could be much, much 

higher than that. 

Mr. MCKINLEY. How about someone else in the industry that 

might be able to comment? 

Mr. SANTA. Mr. Obeiter is correct that the latest EPA inventory 

number is 1.4 percent. There are a variety of other studies going 

on. As a matter of fact, as Mr. Obeiter pointed out in his written 

statement, there is a lot of work going on involving not only EPA, 

but industry, environmental groups, and academia looking at this 

to get a better handle on it. And I think, really, we are best to 

await the results of that to form the basis—— 

Mr. MCKINLEY. OK. 

Mr. SANTA [continuing]. Of making policy. 

Mr. MCKINLEY. And I just need to have a little bit more confirmation, because sometimes we chase the wrong rabbit sometimes 

in trying to improve on efficiency of 99.98, or 99.9998. How much 

more money should we invest to try to perfect that? 

190 

We have heard the comments earlier about climate change. We 

have heard in previous testimony and other hearings about the 

dangers of climate change, and use of fossil fuels, be they coal, oil, 

or gas, that it is causing premature deaths, it is causing asthma, 

sicknesses. Do you agree that the product that you are shipping is 

causing climate change problems around the world? Let us start 

with you. 

Mr. SANTA. I will take the first stab at that answer, and, yes, the 

point that I would make is that, you know, we have seen reductions in U.S. greenhouse gas emissions, and one of the factors that 

has been cited as a contributor to that is the increase utilization 

of natural gas to generate electricity in displacing other more carbon intensive fuels. Clearly there are GHG emissions associated 

with natural gas, but cleaner than other fuels, and also I think, 

you know, we can focus on ways to reduce those emissions. But I 

think overall the net contribution, both to reduce GHG emissions, 

and overall cleaner air from natural gas, has been a real positive 

for the United States. 

Mr. MCKINLEY. Look, I am one of the two engineers here in 

Washington. I acknowledge that there is climate change as a result 

of all this, but I am trying to understand how much of it is manmade, and how much of it is natural and cyclical, and whether or 

not we are pursuing an agenda that is more ideologically intended, 

rather than consequential. 

So I am really interested in where we go with this, because we 

know that burning the tropical rain forest is far more dangerous 

and threatening to the ecology and the environment around the 

world than is coal fired or gas fired power plants in America. But 

yet we seem to be bent on this war on coal, and war on fossil fuels, 

and you all are participating in it by transporting our gas, oil, and 

then railroads with coal. I am curious to see if you feel that that 

is the right thing to do. Is it indeed contributing to the environmental problems with climate change? You have answered that. 

Mr. Roldan, did you have a comment? 

Mr. ROLDAN. Yes. If I could add the voice of propane to that, because people talk a lot about natural gas. 

Mr. MCKINLEY. Yes. 

Mr. ROLDAN. What is often lost is the fact that propane is used 

in the very same applications as natural gas. We reduce greenhouse gas emissions anywhere from 15 to 18 percent, to as much 

as 50 percent in some applications. So we actually think that we 

are part of the solution. And I would also draw your attention to 

comparisons between reductions in greenhouse emissions in Europe, where they have an economy-wide cap and trade program, 

and greenhouse gas emissions reductions in the United States, and 

I think the record in the United States is considerably better than 

Europe. 

Mr. MCKINLEY. OK. I am afraid we are running out of time here, 

so I apologize for the shortness of time, but thank you all for being 

here. 

Mr. WHITFIELD. At this time recognize the gentleman from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you so much. Mr. Santa, I am going to continue with you. I notice that, in your testimony, you mentioned 

191 

that the INGAA will be releasing an updated report on the need 

for new natural gas pipeline infrastructure over the next 15 years. 

You also state the report will show the need for natural gas pipeline infrastructure will be significantly higher than the 2011 report 

found. What are the reasons for demand to be significantly higher 

than in the previous estimates? 

Mr. SANTA. Thank you for the question, Mr. Griffith. Our report 

is going to be released on March 17. What we have noted, compared to when we did the report back in 2011, is the shale revolution, the fact that it is of a greater magnitude than we appreciated 

then, not only with respect to natural gas, but also gas liquids and 

oil production, and that that is driving the need for more pipeline 

infrastructure. 

Mr. GRIFFITH. I appreciate that. And you state your support for 

H.R. 1900 in your testimony. Can you please clarify why there is 

a need to address delays from agencies other than FERC that issue 

permits necessary to construct natural gas pipelines? 

Mr. SANTA. Yes. We do support H.R. 1900, and we think that the 

issue to be addressed here, and INGAA, and The INGAA Foundation have documented this, that the duration of delays for the variety of other permits that a pipeline applicant must get before it can 

proceed with construction has, in fact, gotten longer, and that this 

can be very costly, both for the pipeline sponsor, but for the market. Let me illustrate that. In many instances, when you are constructing in an environmentally sensitive area, there is a limited 

construction window during the year. So if you are delayed by two 

months, if you miss that construction window, you could be delayed 

by a year, in terms of your ability to build that infrastructure. So 

we feel that the discipline and accountability that H.R. 1900 would 

bring to the process would be a positive. 

Mr. GRIFFITH. And it seems to me that, when you have these 

issues of delays from agencies in getting new pipeline laid and out 

there, that that makes it that much more difficult to get the natural gas to the places that it is needed and wanted, and that perhaps the administration has been shortsighted in its war on coal 

by attacking our coal resources, and saying, well, we are going to 

use natural gas, at least as a transition, and that natural gas is 

the way to go, and then start holding up all kinds of other things, 

and making it difficult for natural gas to get to the market. 

Wouldn’t you agree with that, yes or no? 

Mr. SANTA. I would agree that there is a cost associated with 

delays in getting natural gas to the market, yes, sir. 

Mr. GRIFFITH. One of my arguments, and many others on this 

committee feel this way, is that the EPA, on its regulations that 

are basically attempting to put coal out of business, particularly 

when it comes to electric power generation, that the EPA is moving 

faster than the science. Other testimony comes in and says maybe 

10 years, maybe 7, but probably 10 years before the technology is 

available to meet the regulations that are out there now. 

And yet we find in the testimony today that, and I quote from 

page two of Mr. Obeiter’s testimony, that, ‘‘although natural gas 

emits only 50 to 60 percent as much CO2 as coal when burned for 

electricity generation, fugitive methane emissions throughout the 

192 

natural gas life cycle undermine the climate advantage of switching 

from coal to gas.’’ 

Now, I understand that when we get those kinks worked out, as 

Mr. Logan and Mr. Obeiter have mentioned today, and you don’t 

have methane flaring, and you don’t have as many leaks in the 

pipes, and you are not admitting it, natural gas may be better, but, 

again, it appears that our administration currently in power in DC 

over these agencies has gotten the cart in front of the horse, and 

that we need to continue to use coal for the foreseeable future, because that is actually cleaner for the environment, until we figure 

out how we can get all those pipe leaks taken care of, and we don’t 

have the flaring going on. So I think the testimony today has been 

very interesting in that regard. 

Mr. Whittington, on the propane side, you indicated that it is 

generally 50 to 100 miles for transport—— 

Mr. WHITTINGTON. Yes, sir. 

Mr. GRIFFITH [continuing]. But your testimony also indicates 

that maybe as much as 800 this last year. What was the reasoning 

for that? 

Mr. WHITTINGTON. The supply was not at the locations that we 

generally haul from because of the problems of moving the product 

into the caverns. And then what is happening in the fracking thing, 

when you look at all the fracking up in Pennsylvania, Ohio, West 

Virginia, in that area, they were planning on having product coming to the marketplace a lot quicker, and it didn’t. And, therefore, 

the pipeline that had been feeding that area for so many years 

wasn’t anticipating the need that they needed to have there, so we 

were forced in shortages. 

One example I can tell you, we were at Catlettsburg, which is 

pretty near your area, 10:30 one night to load, and the company 

we are hauling for was put on allocation. We were going to Winchester, Kentucky. The next phone call, that truck leaves there 

empty, goes to Hattiesburg, Mississippi, to come to Winchester, 

Kentucky, because that is the only place we could get the guy propane. And he had homeowners, and people that—— 

Mr. GRIFFITH. I am sure. 

Mr. WHITTINGTON [continuing]. Hog houses, chicken houses that 

were needing that kind of thing, but we had to go to where the supply was. But it was interrupted in so many places because we were 

counting on a supply, and it didn’t happen. 

Mr. GRIFFITH. All right. Appreciate it very much. My time is up. 

I yield back, Mr. Chairman. 

Mr. WHITFIELD. At this time recognize the gentleman from New 

York, Mr. Tonko, 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

Mr. Roldan, how much time, and what resources, are required to 

reverse the flow of propane in a pipeline? 

Mr. ROLDAN. Well, I will give you an example. In fact, I am probably going to have to get back to you on that question. The best 

example I have right now is that the Texas eastern pipeline, that 

flows from the Gulf Coast up into the Midwest, and serves the 

Northeastern United States, recently reversed part of that line, a 

16-inch line, to flow southward, rather than northward. And I will 

get you a specific answer to that, how long it took to do that, but 

193 

I want to make a quick point here, because this affected the Northeast, and your constituents. When you reverse a line, imagine that 

there are products, it is a mixed batch line, that flow in the 16- 

inch line, and they both go northward. If you reverse the 16-inch 

line to go south, all of those products that are shipped on that 16- 

inch line cause congestion on the 20-inch line, and that is exactly 

what we saw happening this year. 

Mr. TONKO. Um-hum. Thank you, and I appreciate anything you 

can forward—— 

Mr. ROLDAN. Certainly. 

Mr. TONKO [continuing]. To the subcommittee concerning that. 

[The information follows:] 

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195 

196 

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Mr. TONKO. Are the decisions about what product is in the pipeline, or the product’s direction of flow, subject to input or review 

by either State or Federal agencies? 

Mr. ROLDAN. Yes, it is subject to FERC review. And I realize that 

there are different statutes that govern natural gas transportation 

and petroleum products transportation, but it is our view that 

there are certain standards on the natural gas side where, if you 

are going to discontinue a service, the commission takes into consideration the impact it is going to have on end users. That doesn’t 

really happen on the petroleum products side, and we think that 

that should happen. Somewhere in that process we have to take 

into consideration the impact that those business decisions are 

going to have on the consumer. 

Mr. TONKO. Thank you. And does permitting for export facilities 

take into account the potential of United States shortages of propane that could result from the increased export—— 

Mr. ROLDAN. It does not. That is sort of a big disconnect between, 

again, natural gas and propane. If you export natural gas, you factor into that equation the effect on U.S. consumers, and whether 

it is in the best interest of the United States. No such consideration 

is given for propane exports. 

Now, I will tell you one quick point. We know that global demand is driving production to record levels. We also know that 

those very same global markets are forcing American consumers to 

compete with foreign buyers. Now, we think there is a continuum 

out there somewhere between completely unfettered exports and a 

near export ban that similarly applies to crude oil today. We think 

that somewhere between those goalposts there are some reasonable 

policy options that will allow us to continue to foster increased production, but at the same time allow us to serve our customers reliability. And those are the policy options that we are looking for 

now. 

Mr. TONKO. OK. In reference to the hours of service waivers that 

have been granted—— 

Mr. ROLDAN. Certainly. 

Mr. TONKO [continuing]. Do these waivers apply to any truck 

transport of propane, or only to delivery of propane for heating to 

shortage areas? 

Mr. ROLDAN. Any truck. 

Mr. TONKO. Any truck? And could this also apply to deliveries to 

refineries for feed stock propane, or to propane delivered for export? 

Mr. ROLDAN. I believe the answer to that question is yes, but I 

would like to confirm that for you. 

Mr. TONKO. Well, I would point out that, while these waivers are 

necessary to deal with a serious supply problem, they increase 

transportation risks. So not only are our citizens accepting environmental costs and risks associated with drilling, processing, and 

transport of these fuels, the risk we have just increased with these 

waivers. As an added cost, they have fuel shortage and high prices. 

If this is what the market has provided, it is unacceptable. We 

need a more strategic energy plan here that emphasizes something 

more than just getting the best price for large fossil fuel supplies 

in whatever market will provide it. And I think this propane situaVerDate Mar 15 2010 08:51 Sep 10, 2014 Jkt 037690 PO 00000 Frm 00201 Fmt 6633 Sfmt 6633 F:\113-124 EA - FUEL SUPPLY BLBK EDITS\113-124 EA - FUEL SUPPLY PENDING WAY
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tion illustrates clearly that increased domestic productions to not 

necessarily result in domestic energy security, and is something 

that I think we need to work on as a committee. 

Mr. ROLDAN. I think you are right, and if you want to look at 

the numbers, you will find that year over year the increase in propane production here was about 1.5 billion gallons. The increase in 

propane exports was two billion gallons. So this is the first year, 

the first season, where propane export volumes exceeded new production coming on line from shale development. And that is a bit 

troubling to us, and we are looking at policy options right now to 

propose that might alleviate that situation. 

Mr. TONKO. I thank you. And, Mr. Chair, I yield back. 

Mr. WHITFIELD. Mr. Whittington, did you want to make a comment? You seemed to—— 

Mr. WHITTINGTON. We could haul to the retailers that were moving that product and be exempt from the hours of service. Well, if 

you are going to a refinery, or you are going to an export terminal, 

we did not have an exemption from the hours of service on those 

trucks. 

Mr. WHITFIELD. All right. Thanks. Mr. Shimkus, you are recognized for 5 minutes. 

Mr. SHIMKUS. Thank you. And, I am sorry, I am bouncing back, 

and so some of this may have been asked over this discussion, but 

just to the propane issue and transportation, I know that in our 

area we had truckers who were usually doing a short haul of 100, 

150 miles driving, I am from southern Illinois, going to North Carolina. So not only do you lose the multiple runs, but, obviously, then 

you have this address. I am not a great fan of my Governor, but 

he did well in this process, and I think it was testified throughout 

that people were really trying to respond. 

And before that, it is good to see Bobby back. He has been absent 

for a while, and we are glad to have him back here. And Andy 

Black, you know, what goes on in the committee stays in the committee, so we won’t harass you too much, but it is always good to 

see you. And he helped me cut my teeth on the committee, so I appreciate seeing you. 

No one disagrees, I would assume, and we are going to find out, 

because I am going to ask it, that liquid commodity products, the 

cheapest, safest way to haul a liquid commodity product is a pipeline. Does everyone agree with that? So everyone is saying yes, except for Mr. Roldan? 

Mr. ROLDAN. Yes. I think the difference is, if you compare rail 

rates to pipeline rates, rail rates tend to be considerably higher, except when it comes to propane. 

Mr. SHIMKUS. Even though I am a big fan of the railroads, the 

question is posed in the way cheapest and safest. I mean, I think 

the basic answer is, if you are in logistics, and I kind of played in 

a little bit, moving bulk commodity products, liquid, through pipelines is the cheapest and the safest way, followed by then barge? 

This is just logistics. And then rail, and then trucks. That is pretty 

much assumed to be correct. OK. This is an infrastructure discussion, but there are places where pipelines can’t go. The waterway 

system is not there, and that is why you need the whole logistics 

tale. 

199 

But I am concerned that we are not moving fast enough because 

of these changing in commodity products in expanding our pipeline 

system. I have been dealing with a local retailer, and I am not 

going to name the companies or the pipeline, but in the e-mail 

transactions that I have dealt with a couple times, he says FERC 

allowed X pipeline to discontinue shipping ultra-low sulfur diesel 

on its blank pipelines. The pipeline testimony to FERC to remove 

one of the two pipelines from south to north service, they claimed 

that there would be no impact in their capacity or ability to ship 

refined products. FERC allowed the line to be switched to a northsouth service to ship methane from Pennsylvania to the Gulf Coast. 

This is now the X pipeline. They protested, FERC found in favor 

of the pipeline. Refined products were impacted because of discontinued ultra-low sulfur diesel shipment. 

Andy, you mentioned about it. You mentioned changing the flow 

based upon the need. They also have a responsibility to meet the 

service of the folks who are on that line. So when you repurpose 

the product, there is a risk of not servicing the people on the line. 

Does that make sense to people? What is the solution to that? Go 

ahead. Mr. Black, would you answer that, please, first, and then 

we will see if anybody else wants to chime in? 

Mr. BLACK. So you have got rail, truck, pipeline here at this 

hearing, and you could have barge, as you say. Liquid energy products can be transported on any mode, and so the transportation 

competition is intense. There is also no regulation, no obligation to 

serve customers in liquids. So the reversals that Mr. Tonko was 

asking about are a reaction of pipeline operators to developments 

in the market. Right now we had underutilized pipelines moving 

up that direction because shippers weren’t asking for that pipeline 

to be used. Pipeline operator who can lose business like that wants 

to find a better economic use of the asset. Pipeline operator finds 

customers who want to ship product in a different direction, and 

they will reverse the pipeline. 

That is the easiest way to add capacity into a market today. It 

is cheaper and quicker than building a new pipeline. So the story 

of the ATEX pipeline, which had been taking refined products 

north, and is taking—— 

Mr. SHIMKUS. You told—— 

Mr. BLACK [continuing]. Out—— 

Mr. SHIMKUS. You ratted me out. I was—— 

Mr. BLACK. Sure. No, I think it is fine to discuss that. There is 

propane capacity available today on the northbound TAPCO, and 

it is available for propane shippers to use it. And if they will use 

it throughout the year, there will be more than enough propane 

supply into those regions. I encourage you all to not think that reversals are a problem. Reversals are a way to satisfy shipper needs. 

Mr. WHITFIELD. Gentleman’s time is—— 

Mr. SHIMKUS. Mr. Chairman, if I could just say, the real solution 

is to build another pipeline too, my guess would be, because it is 

not just propane, it is other products. 

Mr. WHITFIELD. His time has expired, but, Mr. Roldan, you wanted to make a comment? 

Mr. ROLDAN. Yes. Just very quickly, I will tell you that, if you 

look at how natural gas pipelines are regulated, versus oil pipeVerDate Mar 15 2010 08:51 Sep 10, 2014 Jkt 037690 PO 00000 Frm 00203 Fmt 6633 Sfmt 6633 F:\113-124 EA - FUEL SUPPLY BLBK EDITS\113-124 EA - FUEL SUPPLY PENDING WAY
200 

lines, there is a big difference, because on the natural gas side, if 

you wanted to discontinue a service, the commission takes into consideration who is affected by that. The same doesn’t happen on oil 

pipelines. So if you look at the Midwest, and you look at the extraordinary tightness we felt this year, consider the fact that you 

have the Cochin pipeline, that goes from Alberta and serve the 

upper Midwest, 40 percent of the propane sold into Minnesota 

came into Minnesota from that pipeline. That pipeline is now out 

of service, and has been reversed. You look at the ATEX line, has 

been reversed, and those products are moving over. 

So it is having an effect, and what we are saying is we think 

somewhere in the equation FERC should be able to have the obligation to consider what the impact is of those business decisions 

on the customers that depend on those pipelines. 

Mr. WHITFIELD. Did you have a comment, Mr. Whittington? 

Mr. WHITTINGTON. Storage is really important on the pipeline. A 

very current example downstate from St. Louis area, they reversed 

a pipeline. Two loading facilities there, because of the current demand, the weather, and everything else, their storage only lasted 

for three or four days, then we are out of product. We have got to 

go 200 miles to the next facility to pick up product to come back 

in. Time of the year is the other thing. You know, it is kind of like 

here, when you have a snowstorm, send your wife to the store to 

get the milk. If you are 2 hours late, there is no milk. But 300 days 

out of the year, there is plenty of milk on that rack for everybody 

to have. 

So I think we don’t want to lose sight of some of the stuff being 

seasonal stuff, but storage will be king. That is the problem with 

all the stuff in the Northeast. They are spending all the money to 

make the plants, they are going so quick, but storage is not on 

their priority list. It will be in a couple years, and then that is 

where you get the bottlenecks, and you get people running out. 

Mr. WHITFIELD. All right, thank you. At this time I would like 

to recognize the gentleman from Illinois, Mr. Rush, for 5 minutes, 

and I would like to say, we are delighted to have you back, Mr. 

Rush, and look forward to working with you as we move forward. 

Mr. RUSH. Thank you, Mr. Chairman, and it is a delight to be 

back again with this subcommittee, and the entire Congress. And 

we have continued to work, and I missed spending every Monday, 

Wednesday, and Friday of my life here in a subcommittee hearing, 

so I am glad to be back in the saddle again. 

My question is directed to Mr. Roldan. Mr. Roldan, we have 

heard that the propane shortage in the Midwest was caused by a 

sort of ‘‘perfect storm’’ of contributing factors all converging at the 

same time, turned out to be a lot of distress and a lot of heartache 

for many of our constituents. And here on Capitol Hill, there were 

a variety of letters going out to everyone that you can think of, 

from President Obama, to the Department of Transportation, calling for a wide range of remedies, including relaxing weight requirements on the roads and highways, to lifting DOT’s hours of service 

limitations for motor carriers, as well as a host of other potential 

solutions. 

And the question that I have for you today, are there any legislative actions that you could recommend that we can take to prevent 

201 

these types of shortages from happening in the future, or do the 

various agencies and entities that work in this propane market 

have the tools necessary to prevent this issue from happening 

again next year, or somewhere down the line? Similarly, I would 

ask if you could comment on the impact that exporting propane 

gas, which, by the way, increased eightfold from 2005 to 2013— 

what impact does our exporting propane gas have on the supply 

that is needed in the Midwest and across the nation? 

Mr. ROLDAN. Thank you, Congressman. That is a very long question, so I am going to try to dissect it. We believe it is incumbent 

upon our industry to, first of all, understand the root causes and 

contributing factors of what took place this year, and then educate 

our members so that we never find ourselves in this situation 

again. 

Now, I would like to point out that, of our 3,000 retail distributors, the vast majority worked very hard, and did a really good job 

reliably serving their customers. But we know that we are going 

to come forward after our task force, an industry task force that 

was put together, examines the situation, we are going to come 

back with some concrete policy proposals, and I can tell you they 

are going to come down in a couple of areas. We want to increase 

transparency, so that we know that our markets are functioning 

lawfully and transparently. We want to put in place in statute, and 

in regulation, consumer protections so that when changes are 

made, and storage and transportation assets are taken out of service, somebody asks the question, how are these affecting consumers 

that rely on these products? 

We are going to take a look at export policy, because, as I said 

just a moment ago, there is a range of options that we think responsibly could let us continue to increase production, but at the 

same time strengthen our ability to reliably serve our customer. 

And then, finally, the areas of transportation efficiency and storage, I want to talk just a brief second about storage. I know you 

are time limited here. Give you a good example, I am sorry Mr. 

Tonko left, because this affects the State of New York. We talk 

about public storage, private storage. We have a company that is 

in the process right now of trying to put in 88 million gallons of 

storage, underground storage, in the Finger Lakes region of New 

York. That has been ready to go. It is fuel—— 

Mr. RUSH. Mr. Roldan, excuse me for interrupting you—— 

Mr. ROLDAN. Please. 

Mr. RUSH [continuing]. But I do have another question that I 

really want to get to, so I want to get to my second question. 

Mr. ROLDAN. That is good. And if I can follow up for the record? 

[The information follows:] 

202 

203 

204 

Mr. RUSH. Mr. Santa, I have been working with the Department 

of Energy and various industry stakeholders to increase minority 

participation and engagement in all sections of the energy field, including gas and oil, renewables, coal, nuclear, and pipeline. And I 

want to work with your association as well to find out how we can 

increase the visibility of the natural gas industry in minority communities. And I wanted just to let you know that I look forward 

to working with you in the future. But can you kind of summarize 

what you think the status of your agency’s, or your association’s, 

participation with minorities, and women-owned businesses? 

Mr. SANTA. Mr. Rush, I don’t know what the numbers are with 

regard to the interstate natural gas pipeline industry and INGAA’s 

members. That is certainly something that we can inquire about. 

I do know that, you know, our members are very active in trying 

to promote employment opportunities across the board, and also 

that, you know, overall I think the energy revival we have had in 

the United States has created tremendous job opportunities across 

the board, ranging from information technology to a lot of blue collar jobs that are very high paying. But with regard to specifically... 

Mr. RUSH. Are there any minority members—— 

Mr. SANTA. Yes. 

Mr. RUSH [continuing]. Who are part of your association? 

Mr. SANTA. Excuse me? 

Mr. RUSH. Are there any minority members who are part of your 

association? Minorities, women. 

Mr. SANTA. Our membership is made up of the owners of interstate natural gas pipeline companies, so they are large corporations, as opposed to small businesses that might be woman or minority owned. 

Mr. WHITFIELD. You might want to follow up by request. At this 

time I would like to recognize the gentleman from Nebraska, Mr. 

Terry, for 5 minutes. 

Mr. TERRY. Thank you, and I appreciate this opportunity to ask 

a fundamental question that has kind of been hinted at, at least 

in the State of Nebraska, from those that rely on propane, so I 

want to ask the question directly. By the way, Jeff Fortenberry and 

I were both discussing this, so I will say I will ask it on his behalf 

as well as mine. 

And I wanted to start with Mr. Santa, and go down the line. Are 

you aware of any allegations of fraud or manipulation to increase 

the price of propane during what would be, on the surface, a 

unique confluence of events? Is there fraud or manipulation in the 

background? Mr. Santa? 

Mr. SANTA. Mr. Terry, given that INGAA represents the interstate natural gas pipelines, we have not followed the propane situation closely, other than to note its coverage in the trade press and 

the media. Based on what I have seen there, I cannot say that I 

have seen anything that would alert me to such allegations. 

Mr. TERRY. Thank you. 

Mr. ROLDAN. I am not aware of any specific allegations of manipulation, but I can tell you this. I can’t explain the price anomaly 

that took place at Conway, Kansas over a 10 day period. We represent a lot of Midwestern retail marketers, and their customers, 

and they are all asking the same question, which is, how can this 

205 

happen? I understand that volatility is associated with markets, 

but we think our customers demand the assurance that our markets are functioning properly and lawfully, and so do our members. 

And that is why we have taken the position to support Senator 

Grassley and other Members of Congress—— 

Mr. TERRY. Is that a yes or no? Because I only have—— 

Mr. ROLDAN. Yes. 

Mr. TERRY [continuing]. 13—— 

Mr. ROLDAN. I am asking—— 

Mr. TERRY [continuing]. 3 minutes. 

Mr. ROLDAN. I am urging the FTC to examine the transactions 

related to that run-up in price to—— 

Mr. TERRY. All right. That was actually a follow-up question to 

you, so you might as well keep going. 

Mr. ROLDAN. OK. Well, all right. 

Mr. TERRY. Why do you think the FTC needs to do an investigation? 

Mr. ROLDAN. Really, because I think that our customers saw that 

price increase, and they are looking at us, saying, is everything on 

the up and up? And we need to give them the assurance that our 

markets are functioning properly. And the FTC is the only agency 

that can do that. 

Mr. TERRY. All right. Mr. Logan? 

Mr. LOGAN. I have no perspective on that. 

Mr. TERRY. You haven’t heard anything? All right. Mr. 

Whittington? 

Mr. WHITTINGTON. I can tell you that we have customers that the 

freight this year was almost a dollar difference between where they 

generally get their propane and where we had to pick it up. $1 in 

freight. Didn’t make any difference what the—— 

Mr. TERRY. So you are saying the freight charges spiked? 

Mr. WHITTINGTON. Well, it takes a lot of money to go 800 miles 

instead of 16 miles. And so what happens there, that, you know, 

the product wasn’t where it needed to be, and we had to go get it. 

And I can also tell you that if we hadn’t been able to enjoy the 

hours of service exemption, we would have had to have twice as 

many trucks, and the expense would have been much greater than 

that to supply the demand. 

Mr. TERRY. Mr. Obeiter, anything? 

Mr. OBEITER. This is not an issue I follow closely. 

Mr. TERRY. Mr. Black? 

Mr. BLACK. From the perspective of a transporter that doesn’t 

own the products being shipped—— 

Mr. TERRY. Yes. 

Mr. BLACK [continuing]. Short answer, no. 

Mr. TERRY. All right. This is a question that Mr. Sieminski was 

probably best apt to answer, and I am disappointed that he wasn’t 

able to stay, but I will submit a written question to him, Mr. Chairman. So at this point, that answered my question. I wanted to follow up with the FTC question, and you answered that in the first 

part, so I will yield back my time. 

Mr. WHITFIELD. Gentleman yields back. At this time I recognize 

the gentleman from California, Mr. Waxman, for 5 minutes. 

206 

Mr. WAXMAN. Thank you very much, Mr. Chairman. In North 

Dakota and Texas, crude oil production from shale formations has 

expanded very quickly. In these areas, oil wells often don’t just 

produce oil. They produce natural gas, propane, butane, and other 

fuels as well. As oil production has boomed, so has the amount of 

natural gas and other fuels produced. That should be good news to 

the producers. The companies could capture this gas and sell it, but 

far too often the oil companies simply flare the natural gas. They 

treat it as little more than waste. In 2012, 32 percent of the natural gas produced in North Dakota was flared, burning gas valued 

at $560 million. 

But more than potential profits are disappearing into the air. 

This flaring creates carbon dioxide and smog forming pollutants as 

well. The flaring of a valuable and finite natural resource is nothing less than a market failure. Something is going wrong here. Mr. 

Logan, is it economic to capture the natural gas, rather than to 

flare it? 

Mr. LOGAN. Certainly in North Dakota it is. I mean, I think we 

have heard from the North Dakota industrial commission, as well 

as from some of the industry itself, that, you know, because of the 

unique nature of the gas being produced in North Dakota, it is not 

a dry gas. It is not just methane that you would get, you know, say, 

in the Marcellus, but it is very rich in liquids like propane and butane. So the economics of capturing it are actually quite good. 

Mr. WAXMAN. Well, if it is profitable to capture the natural gas, 

rather than flare it, why aren’t more companies doing it? 

Mr. LOGAN. Well, it is really all about the relative economics, and 

also the state of regulation in places like North Dakota. So while 

it is profitable to capture the gas, it is more profitable to drill the 

next oil well. So if you are an oil company with a limited amount 

of money to spend, as they all are, you know, it is a somewhat rational short term choice to say, well, look, if I don’t have the capture the gas, I would rather spend that money to drill another well. 

When you think of the long term, that is very short-sighted, actual 

wasted value of the resource, but you can kind of see, you know, 

why the market is pushing companies in that direction. 

Mr. WAXMAN. Tell me the role of regulations on flaring in North 

Dakota and other States. Does it perpetuate the problem because 

the regulations are too lax? And what kind of regulations would 

move them in the right direction, if—— 

Mr. LOGAN. Yes. I mean, I think if you—— 

Mr. WAXMAN [continuing]. Profit motive is not enough? 

Mr. LOGAN. I think all you have to do is look at the difference 

in flare rates between a North Dakota and a place like an Alaska, 

or a Texas. You know, in Alaska, flaring is basically non-existent 

because the State has mandated that you are not allowed to flare. 

In Texas, the flaring rate is less than one percent, compared to, 

you know, 36 percent in North Dakota, and that is because, you 

know, for all the issues in Texas, and flaring is a problem there, 

the regulatory presumption is not to allow flaring, and to do so 

only in limited and very time limited circumstances. 

In North Dakota, you have a situation where, while the regulations on the books are not necessarily bad, the way that they are 

enforced, and the high degree of exemptions that are granted, 

207 

mean that, essentially, you know, industry has carte blanche to 

flare certainly for up to a year, and often beyond that. So I think, 

you know, the fact that flaring is cheap, and free, and easy, certainly means you are going to get a lot more of it. 

Mr. WAXMAN. So instead of investing in infrastructure that 

would be necessary to capture the gas, companies choose to flare 

it off, where regulations allow them to do so? 

Mr. LOGAN. That is right. And it is a billion-dollar-a-year opportunity in somewhere like North Dakota, once you factor in the 

value of the liquids. And, you know, as I mentioned in my opening 

remarks, there is a lot of innovation going on in North Dakota. I 

mean, companies from, you know, small start-ups, to big companies 

like GE, coming up with new technologies to capture the gas, to liquefy it, to move it without pipelines. But without the right signals 

going to the market in the form of regulation, you know, none of 

that really gets off the ground. 

Mr. WAXMAN. Now, Mr. Roldan, the upper Midwest has experienced significant shortages of propane this winter. Do you think it 

makes sense for oil companies to be flaring off natural gas liquids, 

like propane, that Americans need to heat their homes and farms, 

to dry their crops? 

Mr. ROLDAN. Actually, that is a really good point. Consider the 

irony here. You are a North Dakota propane marketer, you are 

having trouble getting supply. You are driving all the way to the 

Texas Gulf Coast to pick up a load of product, and you are driving 

through fields as the sky is lit up with flaring. It doesn’t make a 

lot of sense. 

Mr. WAXMAN. Does anybody on the panel think this makes sense, 

to allow this kind of flaring? My time is up, almost, I have a few 

seconds left, but, Mr. Chairman, the wasteful and unnecessary flaring of natural gas is a serious problem. It has no place in a modern 

energy infrastructure. Mr. Rush, Ms. DeGette and I have previously requested that we hold a hearing on this specific issue. 

I still believe the subcommittee should hold a hearing to get the 

facts regarding flaring, and to develop real solutions to the problem. So I want to reiterate that point to you. And it just seems to 

me there is a market failure, because even though they can make 

a lot of money, they are making more, or they are making enough, 

and not doing what they should be doing. And if the market is not 

working, that is when regulations step in. Yield back my time. 

Mr. WHITFIELD. Thank you, Mr. Waxman, and thank you all for 

raising this issue in the hearing today. And at this time I would 

recognize the gentleman from Ohio, Mr. Latta, for 5—— 

Mr. LATTA. Well, thank you very much, Mr. Chairman, and 

thanks very much for our witnesses for being here with us. This 

is a really important issue because, in my district, we have had a 

real issue with propane this winter. Had a lot of meetings, a lot 

of discussions, and also here in Washington with letters for the 

hours of service for folks, and also we sent letters out on the issue 

of how much weight a truck could be hauling at that time. 

This week we also had a bill on the floor from Chairman Shuster 

from the Transportation and Infrastructure Committee that I was 

on the floor with, again, that, you know, it is a real issue. I mean, 

looking at the Midwest, and we have had a very, very cold winter. 

208 

If I could start with Mr. Whittington, you know, you were talking 

about some of the barriers out there for increasing storage for capacity out there. You know, what could overcome that problem that 

we are having for storage? 

Mr. WHITTINGTON. From my understanding, there is some storage that is available. It has been checked, but there are some regulatory things that are real fine line that is not letting that storage 

come into play. So there are some regulations that may be overregulating some of that kind of stuff. The other thing is, and I appreciate the comments from Congressman Waxman there, we need 

to look at the infrastructure that is going to be coming out of the 

Pennsylvania/Ohio/West Virginia stuff that is going to be able to 

take care of the Midwest. We are just not there yet. It is 2 or 3 

years away before we are going to be able to take care of that product. 

The indication that we are getting, the industry has been looking 

at that, and once that is up and going, you are going to have an 

oversupply in the Midwest. This is all new. It has never been here 

before. And that is what has really causing a lot of problems. 

Mr. LATTA. Mr. Roldan, you know, if I can go back to you, I know 

that the gentleman from Illinois was asking this question to you 

about the Finger Lakes, and the storage potential up there. Can 

you talk about how this proposed facility would help, and what has 

been the delay in getting it done? 

Mr. ROLDAN. Yes. It is private investment, private capex, 88 million gallons of storage in the Finger Lakes region. It is ready to go 

right now. We have been waiting on the decision from the Governor 

for quite a long period of time. I am not here to be critical, but I 

just want to emphasize how different the situation would have 

been this year if we had that 88 million gallons of storage. Because 

what the forced people to do without it, in the Northeast, is to travel to western supply hubs, like Sarnia, Ontario, which also supplies 

the Midwest, and compete with Midwestern marketers for product 

in Sarnia. It also required Northeastern marketers to go south, and 

compete with Southeastern marketers for product off the Dixie 

pipeline. 

So you are talking about storage that could have helped alleviate 

the situation not just in the Northeast, but in the Midwest and the 

Southeast as well. 

Mr. LATTA. Thank you. And also, Mr. Santa, I figured I would 

ask this question. You know, we are talking about where it is in 

the country you see the greatest demand for new pipeline development, it was just brought up by Mr. Whittington, especially in 

Ohio, with the Utica Shale, and over in Pennsylvania, with the 

Marcellus. Where do you see in the next 10 years that we are going 

to have to have a lot of pipeline development in this country to 

really move that product where it needs to be? 

Mr. SANTA. That is a very good question, and it is one of the 

things that will be addressed by the INGAA Foundation study that 

is going to be released on March 17. However, looking in the nearer 

term, I note that I saw a recent financial analyst report that noted 

that within the next 3 years there was going to be nine billion 

cubic feet of proposed new pipeline capacity that could enter service 

to transport Marcellus Shale natural gas. 

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Some of that will be transporting the gas to markets in the 

Northeast and the Mid- Atlantic, but a lot of it will be taking that 

supply to the Southeast and the Gulf Coast, because the Marcellus 

production is literally overwhelming the demand in the Mid-Atlantic and Northeast markets. The demand is largely industrial, some 

electric generation, but also some anticipation of LNG exports. 

Mr. LATTA. Thank you. And, Mr. Black, also in your testimony 

you stated that the country would benefit from more pipeline capacity. What do you see that needs to be done to get that capacity? 

Mr. BLACK. Well, just like Don Santa said for natural gas pipelines, there is a need for new liquids pipelines for increased crude 

oil production. That is North Dakota, the Utica, hopefully, and 

Texas. Similarly, natural gas liquids. The phenomenon he is talking about, and Mr. Whittington talked about, about the Marcellus 

Shale, and the overwhelming production there, means there is a 

need to move more natural gas liquid products to where industrial 

workers can add value to them. 

So throughout a lot of the country, because of our energy revolution that we are having, there is more that needs to be built. Oil 

and Gas Journal estimated last year $23 billion on liquids pipeline 

projects, and when I talked to execs, we find that that is probably 

low. There are thousands of miles of pipeline projects that are on 

the books today. We would be delighted to build some more capacity for propane shippers who want to sign up for long term service 

as well. 

Mr. LATTA. Thank you very much. Mr. Chairman, I see my time 

has expired, and I yield back. 

Mr. WHITFIELD. Well, thanks very much. Mr. Roldan, I just want 

to follow up with one question. I am not an expert in this area, but 

I have been told that in Texas the natural gas is wet natural gas, 

and that up in the Dakotas it is more of a dry natural gas, and 

therefore there is more propane in the wet natural gas. Can you 

elaborate on that, or am I—— 

Mr. ROLDAN. Actually, that is not my understanding, Mr. Chairman. I think the natural gas in all the northern formations is pretty wet. 

Mr. WHITFIELD. In the northern formations it is—— 

Mr. ROLDAN. That is correct. In fact, when you look at the commodity price of natural gas which is down here, it is actually the 

value of the gas liquids, the propane, I think, that is driving production. 

Mr. WHITFIELD. OK. Holding the value that is—— 

Mr. ROLDAN. Value of the gas liquids. 

Mr. WHITFIELD. OK. All right. Well, I think that concludes today’s hearing. Once again, I want to thank you all for your patience, and it has really been enjoyable being with you the last 3 1⁄2

hours here. And we look forward to working with all of you as we 

move forward on this very important subject matter. And, with 

that, the hearing record will remain open for 10 days, and if we 

have any additional questions, we will get them to you, and would 

appreciate your response. So that concludes today’s hearing. Thank 

you very much. 

[Whereupon, at 12:03 p.m., the subcommittee was adjourned.] 

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