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94–609PDF 2015

ENERGY REVOLUTION IN THE WESTERN

HEMISPHERE: OPPORTUNITIES AND

CHALLENGES FOR THE U.S.

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE WESTERN HEMISPHERE

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

MAY 14, 2015

Serial No. 114–44

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

TOM EMMER, Minnesota 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE

JEFF DUNCAN, South Carolina, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

MICHAEL T. MCCAUL, Texas 

MATT SALMON, Arizona 

RON DESANTIS, Florida 

TED S. YOHO, Florida 

TOM EMMER, Minnesota 

ALBIO SIRES, New Jersey 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

GREGORY W. MEEKS, New York 

ALAN GRAYSON, Florida 

ALAN S. LOWENTHAL, California 

(III)

C O N T E N T S 

Page

WITNESSES 

James H. Knapp, Ph.D., professor, Department of Earth and Ocean Sciences, 

University of South Carolina .............................................................................. 5

Mr. Kevin Book, managing director, Clearview Energy Partners ....................... 16

Mr. Jamie Webster, senior director, IHS Energy .................................................. 23

Mr. Jeremy Martin, director, Energy Program, Institute of the Americas ......... 32

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

James H. Knapp, Ph.D.: Prepared statement ....................................................... 8

Mr. Kevin Book: Prepared statement .................................................................... 19

Mr. Jamie Webster: Prepared statement ............................................................... 26

Mr. Jeremy Martin: Prepared statement ............................................................... 36

APPENDIX 

Hearing notice .......................................................................................................... 62

Hearing minutes ...................................................................................................... 63

(1)

ENERGY REVOLUTION IN THE WESTERN 

HEMISPHERE: OPPORTUNITIES AND 

CHALLENGES FOR THE U.S. 

THURSDAY, MAY 14, 2015

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE WESTERN HEMISPHERE,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 2 o’clock p.m., in room 

2200 Rayburn House Office Building, Hon. Jeff Duncan (chairman 

of the subcommittee) presiding. 

Mr. DUNCAN. A quorum being present, the subcommittee will 

come to order. I would now like to recognize myself for an opening 

statement. 

The Western Hemisphere is home to an abundance of natural resources, including nearly a third of the world’s oil reserves. With 

their own U.S. supplies of oil, natural gas and shale gas resources, 

the capacity to export liquified and compressed natural gas and the 

option of offshore drilling in the Atlantic, we have many reasons 

to deepen our energy engagement in the region. 

Such action would spur economic growth and energy security 

while reducing energy costs, which will go a long ways toward 

building a more stable and prosperous hemisphere. Currently, our 

top crude oil imports come from Canada and Mexico. 

Yet, the Obama administration’s policies, while seeking to appease dictators in Cuba, have refused to take common sense approaches with Canada and Mexico. 

The Keystone Pipeline decision remains mired in White House 

delaying tactics and State Department bureaucracy while the U.S. 

continues to unfairly prohibit crude oil exports to Mexico, and it is 

unlike our treatment toward Canada. 

So earlier this year, President Obama used just the third veto of 

his presidency to stop House- and Senate-passed authorizing legislation to finally begin construction of the pipeline, even saying at 

the time that the pipeline wouldn’t actually create that many jobs 

for the U.S. 

Approval of the Keystone XL Pipeline would not only inject over $7 billion in private investment into our economy, it would also create thousands of good-paying jobs for the American people. Energy 

security is a segue to job creation. 

Keystone XL also represents an important piece of ensuring our 

national security interest. Reducing our dependence on energy from 

2

unstable parts of the world and from regimes hostile to the U.S. 

interests has long been a crucial element in protecting our broader 

national security interests. 

Canada and the United States enjoy a very close bilateral relationship with robust commercial ties. Our two countries enjoy the 

world’s largest bilateral trade relationship, translating into over $1 

billion crossing our shared northern border each day. 

Moreover, Canada is the world’s fifth largest petroleum producer 

and its reserves are believed to be third largest in the world only 

after those of Saudi Arabia and Venezuela. 

Canada is already the United States’ largest supplier of energy, 

and approval of the Keystone Pipeline from Canada to refineries in 

the Midwest and the Gulf Coast would translate into approximately 1 million additional barrels of oil per day, along with tens 

of thousands of high quality good-paying U.S. jobs. 

It is telling when you remember that President Obama managed 

to force Obamacare onto the America people in just over 400 days, 

yet it has been over 2,000 days since the application for Keystone 

XL Pipeline from Canada was submitted to the State Department, 

and the administration continues to stall on approving or disapproving the project. 

On this question I believe our treatment of our neighbor to the 

north, one of our best and largest trading partners and on so many 

other issues, is shameful. 

So because of this, as chairman of the Subcommittee on the 

Western Hemisphere of the House Foreign Affairs Committee, I 

convened the first meeting of this panel earlier this year to host 

senior leaders from several Caribbean countries in conjunction with 

the administration’s Caribbean Energy Security Summit. 

These CARICOM countries suffer from some of the most expensive energy prices in the world, hampering the growth of their island economies. 

Isn’t it time that we figure out innovative and cost-effective ways 

to export our recently discovered energy abundance to help these 

small countries once and for all get off their dependence on subsidized energy from Venezuela? 

Not only does this make economic sense, but it also might actually help the U.S. geopolitically when the votes are cast at the U.N. 

and the OAS. 

Today, the Western Hemisphere has some amazing opportunities 

for deeper U.S. engagement with Mexico’s energy sector reforms, 

energy revolutions in Argentina, Brazil, Colombia, Peru, offshore 

exploration activities by Caribbean countries, and potentially new 

resources in the Arctic. 

In Mexico, the promise of opening Pemex to foreign investment 

will not only potentially benefit U.S. companies but will go a long 

way in improving the efficiency of Pemex while stabilizing, indeed, 

increasing Mexico’s stalled oil production. 

This will lead to a more prosperous Mexico and that, unquestionably, is in the national interest of the United States. 

The imminent approval of the United States Commerce Department to allow Mexico to swap up to 100,000 barrels of heavy crude 

for similar amounts of lighter U.S. oil could yet be a milestone toVerDate 0ct 09 2002 09:28 Jul 08, 2015 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\WORK\_WH\051415\94609 SHIRL
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ward eventual loosening of the four-decade-old ban on U.S. oil exports. This is truly a win-win. 

In South America, despite simmering domestic political challenges with the vast offshore pre-salt oil reserves in Brazil and 

with Argentina sitting on the world’s second largest shale gas reserves in the Vaca Meurta, opportunities for U.S. engagement 

abound. 

The discoveries made in the pre-salt are among the world’s most 

important in the past decade as the pre-salt province comprises 

large accumulations of excellent quality high commercial value 

light oil. 

With elections set for this fall, it remains to be seen what the investment climate will look like in a post-Kirchner regime in Argentina. The world will be watching. 

This hearing will explore how we can grow and enhance our existing partnerships with countries in this hemisphere, and preserve 

U.S. energy security, increase investment opportunities for U.S. 

companies and high-paying jobs for the American people. 

Challenges for U.S. business investment remain in the region, 

but it is my hope that through hearings like this we will determine 

ways in which the U.S. can better engage on energy issues with 

our neighbors in the hemisphere. 

Just returning from the Summit of the Americas, I really started 

thinking about hemispheric energy independence. If we think about 

some of the things I have talked about, whether it is Keystone 

Pipeline oil to U.S. refineries, whether it is the abundance of natural gas that we are finding in the United States, whether it is 

shale oil in the Bakken and our ability to extract that, possible energy exports of oil to the Caribbean nations limiting or effectively 

ending Petrocaribe’s influence in the region, natural gas exports to 

Mexico, natural gas LNG and CNG through Central America and 

all throughout the hemisphere, working with our partners in Colombia and allies in Colombia and Brazil, expansions of possibly 

energy in Argentina, and what Peru and Chile are wanting to do, 

just so many different things that could happen, especially if political winds shift in Venezuela and that Venezuelan oil becomes 

more productive—oil fields become more productive and opportunity to utilize that oil in this hemisphere. 

If you take every piece of that equation that I talked about—and 

there are others, I am sure, that we will hear from the panelists 

today—if you factor all those in to the Western Hemisphere and 

think about it in terms of hemispheric energy independence, then 

we negate a lot of the geopolitical concerns that are happening in 

other parts of the world. 

So I look forward to today’s hearing as we delve into this and I 

now turn to Ranking Member Sires for his opening statement. 

Mr. SIRES. Thank you, Mr. Chairman, and thank you to our witnesses for being here this afternoon. 

Today’s hearing looks at both the opportunities and challenges 

enhancing our energy cooperation within the Western Hemisphere. 

I believe integrating our energy interests in the region have been 

ignored for far too long. That is why I am encouraged to see the 

administration’s recent efforts to deepen energy cooperation within 

the hemisphere. 

4

The administration hosted the White House Caribbean Energy 

Security Summit in January and launched the Caribbean Energy 

Security Initiative to facilitate an energy transition for the islands 

that have been far too dependent on Venezuela’s shaky energy sector for their needs. 

While we continue to focus energy policy on the Middle East, taking a look at our own back yard shows the opportunity that exists 

right next door. 

We get about half of our oil and petroleum from the Western 

Hemisphere, half of which is from Canada. Canada is the single 

largest foreign supplier of petroleum and natural gas to the United 

States, and after Saudi Arabia, Mexico is the United States’ third 

largest supplier of petroleum. 

Venezuela is home to 88 percent of the region’s proven oil reserves. In regards to nontraditional sources of energy, Brazil is the 

world’s second larger producer of ethanol after the United States. 

In countries like Venezuela, Bolivia, Ecuador and Argentina, the 

troubling trends of the nationalization of private industry has become the norm rather than the exception. 

Moreover, the region’s trade relationships and increasing presence of anti-democratic actors such as Russia, Iran and particularly 

China, whose self-interests are counter to the strategic concerns of 

the United States, should not be taken lightly. In January, China pledged $250 billion in investments in Latin 

America over the next 10 years, seeking to boost their influence in 

the resource-rich region. 

The United States cannot fall behind, as the Western Hemisphere plays a critical role in our energy security. Specifically, it 

is clear that maintaining and strengthening our energy relationship with Canada and Mexico is in the national interests of the 

United States. 

That is why I believe the proposed Keystone XL Pipeline and the 

Transboundary Hydrocarbon Agreement with Mexico are in the national interests of the United States. I am sensitive to the environment and the concerns associated with the development of the Keystone Pipeline project. 

But the conversation has stagnated. The concerned parties need 

to avoid further delays of a constructive dialogue and chart a path 

forward. 

This is true especially in light of declining foreign oil supplies 

from Mexico and Venezuela. Our national security requires that energy policy be a central component of our foreign policy. 

Furthermore, we should build upon and expand our energy diplomacy efforts and mitigate the Caribbean’s dependence on subsidized Venezuela oil and support the economic growth of the region in ways that are both relevant and practical to the needs of 

everyday people. 

No one single project or initiative is a cure-all for energy security 

needs, and no proposal will satisfy everyone’s needs or alleviate 

every doubt. But we must continue to work with our neighbors to 

develop a beneficial energy policy for the region. 

I look forward to the hearing—to hearing from our panelists on 

how we can address these critical issues. 

Thank you. 

5

Mr. DUNCAN. I thank the ranking member, and other members 

are reminded they can provide written testimony for the record. In 

the essence of time, we are going to move on to the witnesses. They 

are thinking about calling votes around 2:30, possibly 3 o’clock. 

We may get through all that. Before I recognize each of you, I 

want to explain the lighting system, and I don’t know where the 

lights are right near the——

Mr. SIRES. One minute, 2 minutes, 3 minutes. 

Mr. DUNCAN. One minute. Yes, that is right. So 5, 1—5 minutes 

we are going to start, 1 minute it will give you a warning. 

At the end of that 5 minutes I am going to need to cut you off. 

I will give a little leeway but and before I recognize the witnesses 

we have got their bios in the books. So I am not going to recognize 

each of you but I do want to recognize Dr. Knapp, who is from 

South Carolina. 

He has testified on the Hill a couple times for me in this committee and in Natural Resources as well. At the University of 

South Carolina, he is a professor training the new minds on geophysical and seismic and all the things that we are going to need 

to take advantage of energy security in the future and I appreciate 

him being here. 

So Dr. Knapp, I am going to go ahead and recognize you for 5 

minutes. 

STATEMENT OF JAMES H. KNAPP, PH.D., PROFESSOR, DEPARTMENT OF EARTH AND OCEAN SCIENCES, UNIVERSITY 

OF SOUTH CAROLINA 

Mr. KNAPP. Good afternoon, Chairman Duncan, Ranking Member 

Sires and esteemed member of the House Foreign Affairs’ Subcommittee on the Western Hemisphere. 

It is my great pleasure and high honor to be here today and I 

thank each of you both for your continued dedicated service as 

Members of Congress and for the opportunity to appear before you 

today. 

For the record, I am James H. Knapp, professor in the Department of Earth and Ocean Sciences in the School of the Earth, 

Ocean and Environment at the University of South Carolina, and 

I currently serve as chair of the faculty senate at the University 

of South Carolina, Columbia campus. I will be summarizing my 

written testimony in these opening comments. 

I am also taking the liberty to introduce some graphics here 

which, hopefully, will supplement the comments I will make. 

By way of background, I was born and raised in California and 

have lived in six and travelled to 49 states and through my profession as an earth scientist have worked in or visited more than 40 

countries, many of those in the Western Hemisphere. 

I hold a Bachelor of Science degree with distinction in geological 

sciences from Stanford University and a Ph.D. in geology from the 

Massachusetts Institute of Technology, and from 1988 to 1991 I 

worked with Shell Oil where I participated directly in oil and gas 

exploration in the Gulf of Mexico. 

For more than 20 years since then, my research team and I have 

carried out both fundamental and applied research in earth 

sciences including the design, acquisition, processing and interpreVerDate 0ct 09 2002 09:28 Jul 08, 2015 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\WORK\_WH\051415\94609 SHIRL
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tation of seismic surveys both onshore and offshore and many of 

my former students are now gainfully employed in the energy industry. 

Access to energy is and will for future generations continue to be 

an essential foundation upon which modern society operates. 

On a personal level, one need only experience a prolonged power 

outage to be poignantly reminded of the ways in which we on a 

daily basis depend on energy to illuminate, heat and cool our 

homes and businesses, preserve and prepare our food, and of critical importance in this digital age, power our numerous IT devices. 

As many have come to appreciate in recent years, we simply cannot turn off the power switch overnight regardless of the perceived 

societal imperatives. 

Safe, efficient and environmentally responsible development of 

energy resources is critical for the long-term energy security of this 

country and the Western Hemisphere. 

In all of the above energy strategy, which includes continued exploration for and development of conventional and unconventional 

hydrocarbon resources, as we develop economically viable technologies for alternative and renewable energy resources is clearly 

the best path forward. Much of the future promise of renewable 

and alternative energy sources awaits the capacity for efficient 

storage through research and development. 

The title of this hearing is most appropriate. As many will know, 

for the better part of the last decade we have witnessed a global 

energy revolution led by the United States, which few if any could 

have predicted. 

Harnessing the oil and gas potential of shale reservoirs through 

American technological innovation has practically doubled the estimated volume of undiscovered technically recoverable oil resources 

in the United States. 

The most recent estimates from the energy information administration for proven crude oil reserves in the Western Hemisphere 

amount to approximately 550 billion barrels of oil equivalent with 

well more than half of those in Venezuela. 

The countries of the Western Hemisphere combined represent 

approximately one-third of the proven global reserves. Clearly, the 

major players in terms of conventional production have been and 

will continue to be the United States and Canada with growing 

contributions from Brazil, Mexico and Argentina. 

As seen in the figure on the screen, shale oil and shale gas potential is abundant throughout the Western Hemisphere from the 

North Slope of Alaska to the tip of Tierra del Fuego, and the offshore potential of such unconventional resources is yet to be evaluated in any significant way. Note that these are all onshore shale 

gas and shale oil plays. 

The presence of this resource potential represents an opportunity 

to engage our hemispheric neighbors through both the public and 

the private sector. 

Methane hydrates, or deposits of natural gas frozen into sedimentary deposits, represent a significant future resource potential. 

Recent estimates from the Bureau of Ocean Energy Management 

suggest that more than 20,000 trillion cubic feet of gas, or as much 

as 35 times the inventory of conventional gas resources on the enVerDate 0ct 09 2002 09:28 Jul 08, 2015 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\WORK\_WH\051415\94609 SHIRL
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tire U.S. outer continental shelf, are present on the Atlantic margin alone, as shown in this figure. 

A similar reserve potential has been estimated for the U.S. waters of the Gulf of Mexico. We need look no further than the Atlantic shelf of the U.S. for other energy opportunities. 

The Bureau of Energy—Ocean Energy Management is charged 

with periodic evaluation of the energy and mineral resource potential of the outer continental shelf. 

Their most recent estimate in 2011 of undiscovered technically 

recoverable resources for the Atlantic OCS was 8.87 billion barrels 

of oil equivalent revised only a year ago up to 11.4 billion barrels 

of oil equivalent without any new data. 

This is simply reevaluation of the existing data. Too often such 

reserve estimates are dismissed as unworthy of the investment required to produce them or the anticipated environmental disruption involved. 

However, such volumes represent as much as a tenth of the combined estimated petroleum resource base of the United States. 

In addition, as much as 80 percent of the Atlantic OCS territory 

currently under consideration in the draft proposed plan of the Bureau of Ocean Energy Management has never been evaluated with 

commercial seismic surveys. Only the shelf portions of the area 

under consideration have ever been surveyed. 

So if we compare this with the entire remainder of the Atlantic 

Basin, essentially the entire Atlantic Basin is currently under exploration for oil and gas in offshore areas with the conspicuous exception of the Atlantic Margin and the eastern Gulf of Mexico of 

the United States. 

In conclusion, I believe the U.S. can and must play a leading role 

in promoting energy security for our own citizens and for the hemisphere at large. In most cases, the biggest opportunities appear to 

be here close to home. 

New opportunities exist to bring U.S. deepwater technology and 

experience to Mexico and the Gulf of Mexico. Additional steps 

should be taken to deepen our engagement with Canada by completing the Keystone XL Pipeline, bringing crude petroleum to excess refining capacity in the Gulf Coast region and removing the 

ban on crude oil exports from the U.S. helping to bring reliable energy to our neighbors from a stable economic and political base. 

I yield the rest of my time. Thank you. 

[The prepared statement of Mr. Knapp follows:]

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Mr. DUNCAN. Dr. Knapp, thank you, and I felt like I was in a 

classroom there with a slide presentation. But very informative. 

Mr. Book. 

STATEMENT OF MR. KEVIN BOOK, MANAGING DIRECTOR, 

CLEARVIEW ENERGY PARTNERS 

Mr. BOOK. Thank you, Chairman Duncan, Ranking Member 

Sires and distinguished members of this committee. 

Good afternoon, and I appreciate the invitation to participate in 

this important discussion about energy revolutions in the Western 

Hemisphere. 

My name is Kevin Book. I head the research team at Clearview 

Energy Partners, LLC, a Washington, DC-based independent research firm. We serve financial investors and corporate strategists, 

and we look at macro energy trends. 

Here is a trend. It is hard to miss the dramatic shift in U.S. energy security during the last decade. In May 2005, net petroleum 

imports accounted for 59 percent of our consumption, according to 

EIA data. 

This fact linked our economic fate to the sometimes unstable political circumstances of foreign producers and the insatiable energy 

appetites of emerging economies. As of February 2015, the most recent month for which robust EIA data are available, net imports 

represented only about 26 percent of our petroleum consumption. 

Much of this can be explained by the incremental production 

from shale and other type formations. We also reduced petroleum 

consumption by about 1.7 million barrels per day, or 8.1 percent. 

According to International Energy Agency data, Canadian crude 

oil and natural gas liquids production grew by 47 percent between 

the first quarter of 2005 and the first quarter of 2015, which was 

from about 3 million barrels per day to 4.3 million barrels per day. 

Last June, the Canadian Association of Petroleum Producers projected that production will rise to 6.4 million barrels per day by 

2030. Although to be fair, that forecast preceded the recent price 

collapse. 

In Mexico, where the last decade brought a bruising 29 percent 

production decline, constitutional reforms have ended the state oil 

company’s 75-year monopoly. Pemex will retain 83 percent of Mexico’s probable and possible reserves and 21 percent of prospective 

reserves. 

But Mexico opened its first round of bidding for the remainder 

in December 2014. This week, bidding opened for the third of five 

first round tenders and the first onshore offering. 

Brazil opened its oil and gas sector to foreign competition in 

1997. In October 2006, a joint venture between Petrobras and private operators discovered Tupi, which is now called Lula, the first 

of Brazil’s many promising pre-salt offshore finds. 

In June 2010, Brazil amended its regulatory framework. The new 

regime gives state entities substantially greater control over the 

pre-salt fields. The first competitive auction in October 2013 attracted only one bid. 

It remains to be seen whether, and to what extent, Brazil’s tighter grip on the pre-salt might deter further foreign investment. 

17

As the U.S. transitions out of an era of energy scarcity into an 

age of adequacy and, hopefully, abundance, we are likely to encounter new opportunities to contribute to the energy security of our regional neighbors. 

For example, financial pressures forced Venezuela to pare back 

subsidized crude oil and products exports to Petrocaribe signatories. 

The U.S. became a net petroleum products exporter in July 2011, 

which is if you look backwards 12 months an average as analysts 

are prone to do. Since then, average products exports to Petrocaribe 

member countries rose about 14 percent from 194,000 barrels per 

day in July 2011 to 221,000 barrels per day in February 2015. 

U.S. exporters aren’t likely to offer the same financing terms that 

Venezuela does. But U.S.-refined products can provide Caribbean 

importers with volumes to cover supply shortfalls. 

Two U.S. policy changes—liberalizing crude oil exports and approving the Keystone XL Pipeline and any other southbound conduit out of the oil sands could contribute so similar cover for 

Petrocaribe’s crude importers. U.S. natural gas provides another 

opportunity. 

EIA’s reference case for natural gas in this year’s annual energy 

outlook projects net exports of a little less than half of 1 billion 

cubic feet per day in 2017, rising to almost 6 billion cubic feet per 

day by 2040. 

Pipeline exports to Mexico appear likely to continue growing and 

LNG exports from the lower 48 have potential to enhance energy 

security throughout the Western Hemisphere. Liquefied gas has to 

be regasified to be used and the high total costs of onshore facilities 

may be out of reach for many nations, especially in the Caribbean. 

Floating storage and regasification units provide a possible alternative at lower capital cost and with faster construction times, albeit with higher operating costs. 

Completion of an offshore facility in Colombia will bring Latin 

American floating regas capacity to more than 2.8 BCF a day, most 

of it in Brazil. 

Finally, Latin American electrification provides another opportunity. The IEA estimated that approximately 23 million people in 

Latin America lacked access to electricity in 2012. 

My written testimony suggests that countries that cannot harness endogenous hydroelectric resources may short of fossil fuel 

baseload generation. Many of these countries do not rely primarily 

on natural gas generation. 

With outside financing including facilities outlined in a bill that 

was passed by the House last year—the Electrify Africa Act of 

2014—a number of them could theoretically operate new gas-fired 

turbines fueled by water-borne LNG imports. 

The data on Latin America point to energy transportation challenges, in addition to generation capacity deficits. Simply put, the 

region needs pipelines and transmission lines, too. 

That said, Latin America gets plenty of sunlight, creating an opportunity for distributive solar photovoltaic generation to supplement regions where economic development, population density, 

and/or topography might make the build-out of pipes and wires impractical or unfeasible. 

18

Mr. Chairman, this concludes my prepared testimony. I will look 

forward to responding to any questions you might have at the appropriate time. 

[The prepared statement of Mr. Book follows:]

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Mr. DUNCAN. Thank you, Mr. Book, and the Chair will recognize 

Mr. Webster for 5 minutes. 

STATEMENT OF MR. JAMIE WEBSTER, SENIOR DIRECTOR, IHS 

ENERGY 

Mr. WEBSTER. Thank you very much, Chairman Duncan, Ranking Member Sires and distinguished members of the committee. 

I appreciate the opportunity to testify before you today on the 

immense changes in the energy market, its landscape, its impacts 

on the Western Hemisphere and the importance of crude exports 

in continuing this change. 

I am Jamie Webster and I appear before you today in my capacity as senior director at IHS where I lead the company’s oil markets practice. 

In that role, I travel regularly, not just nationally in the United 

States but also internationally. I also attend the OPEC meetings 

and was at the OPEC meeting on Thanksgiving when OPEC took 

the historic role—the historic stance of deciding to stand down in 

the face of growing U.S. production. This provides me a unique 

view in terms of what is going on not just in energy today but 

where it may go in the future. 

Today, I want to address a few issues. One, the recent changes 

that we have seen in the global oil market, North America’s critical 

place in it and what it means for both energy security and energy 

independence. 

I will address the crude export issue and market-related issues 

as they relate to Keystone XL, and given I am just returning from 

Mexico last night, a brief update on where I see the energy reforms 

there. 

The catalyst for the oil price decline that began in June of last 

year was the restart of Libya production. But what really supported it underneath that was the huge growth that we saw in U.S. 

production from 5.6 million barrels a day to 9.2 million barrels a 

day here in the United States. 

OPEC’s decision on Thanksgiving was really about its recognition 

that it could not compete in terms of these volumes that were coming online incessantly, and its decision was really one to focus on 

volume since it could no longer focus on price. 

This underscores a serious shift that you are seeing in the market that we have not seen since the beginning of the 1970s when 

we shifted from the power of the Texas Railroad Commission to 

OPEC. 

The market balancer, as us market analysts call it, is that entity 

that is able to bring production on and offline relatively quickly to 

handle changes in demand. 

The boom in U.S. production actually has the potential to, again, 

allow a shift in this market balancer, and it is not just about the 

volumes but it is about the character of those volumes and the 

scope of those volumes. 

One, it is the time scale. U.S. production can come online in 4 

months versus conventional production that can take years to be 

planned, financed, and allowed online. The other is the decline 

rates. 

24

U.S. production brings oil out of the ground so quickly that it actually brings the decline rate down very, very fast, which essentially has the impact of being able to slow U.S. production by slowing down on investment. 

This shift from OPEC to the potential for the first time, perhaps, 

to a market-driven oil-based economy by shale is far from certain 

and it is far from complete. One of the key policy changes that 

would actually help to continue this drive is actually allowing U.S. 

exports. 

Energy flows out of the United States and the growth in U.S. 

production on oil has already shifted the world dramatically. Nigeria used to export 1.1 million barrels a day to the United States. 

It is now essentially zero and we are providing large portions of 

their refined products. 

Additionally, Mexico is taking increasing amounts of natural gas 

from the United States in order to support its economy both on the 

industrial side and electric side. 

LNG soon will be allowing our natural gas to reach parts around 

the world and we have also go an increased tie with Canada. While 

we are continue to receive increased volumes from Canada, we are 

now exporting about 490,000 barrels a day up to Canada. This is 

up from 30,000 barrels a day in 2010. 

This tight interconnection between the countries extends from 

power lines to rail lines to pipelines. The Keystone Pipeline can 

help to economically move oil from Canada down to refiners that 

are ready to take it. 

Our view is very much that this is a useful and helpful pipeline. 

While the slowdown in oil prices has impacted Canada, over the 

next several years it is going to be bringing on another 800,000 

barrels a day of new production. The obvious home for this is in 

the United States Gulf system. 

The decision on Keystone is really a decision between importing 

oil from our near neighbor, Canada—our largest trading—or Venezuela, whose hostility to the United States is manifest. 

The competitive oils between these two countries has about the 

same carbon footprint. But that is about the only thing that is 

similar between Canada and Venezuela. 

The U.S. liberal trade policy on natural gas, coal, refined products, and processed condensate also needs to extend to oil. 

Eliminating this is even more important when prices are low, as 

producers are in a much more difficult position in order to continue 

this production going forward. Additionally, removing this ban 

would actually help to bring down gasoline prices in the United 

States because the gasoline price in the United States is largely set 

by the global marker Brent, and so by pushing more volumes into 

the global market we will actually bring prices down on—leaving 

everything equal. 

This brings me to Mexico. This country is eager to extend its imports of U.S. natural gas to also include oil. While there have been 

discussions about being able to execute oil swaps with Mexico, in 

reality there are a number of commercial hurdles that must be surmounted in order for this to occur. 

The easier thing would be to allow crude oil exports so that this 

can be done on a single transaction rather than having to get at 

25

complex transactions to get around the current and outdated policy 

that currently exists. 

Right now, Mexico, as Kevin mentioned, is undergoing a huge 

renaissance and a huge change in its energy reform, which is allowing a lot of opportunities for U.S. companies to participate, and 

I know they look forward to increased working with U.S. companies 

in the future. 

Thank you very much for being here. 

[The prepared statement of Mr. Webster follows:]

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Mr. DUNCAN. I want to thank the gentleman. Great comments. 

We are going to come back to some of that. 

Mr. Martin, whose parents are from South Carolina, a Citadel 

graduate, recognized for 5 minutes. 

STATEMENT OF MR. JEREMY MARTIN, DIRECTOR, ENERGY 

PROGRAM, INSTITUTE OF THE AMERICAS 

Mr. MARTIN. Oh, boy. Thank you, Mr. Chairman. Good afternoon. 

Chairman Duncan, Ranking Member Sires, it is a delight and 

pleasure to be here. Flew in on a red-eye so I may be overcaffeinated, so bear with me if I blow through this too quickly. 

Mr. SIRES. We want to thank you, all of you. 

Mr. MARTIN. Thank you so much, Ranking Member. 

Thank you all to the subcommittee. This hearing, obviously, all 

my colleagues here at the table have underscored how much the 

topic of energy is of relevance to the United States, but to our 

hemisphere. 

And yes, my name is Jeremy Martin. I am the director of the energy program at the Institute of the Americas. We are based at the 

University of California San Diego out in La Jolla. 

So second time I have been before this subcommittee, so it is a 

pleasure. I am going to summarize my written testimony and in 

doing so I would like to offer some insights on several of the most 

important energy-producing nations in the region, their production 

outlook, geopolitics and challenges and opportunities for the United 

States. 

And in order to do so, I would like to discuss three main points. 

First, not all countries are the same, and it is important to distinguish between above ground and below ground issues. 

Secondly, the lessons learned from the energy boom in the 

United States, particularly in terms of unconventionals, provide a 

major opportunity to export knowledge, technology goods, and services as well as energy to the region, as several of my colleagues 

have underscored. 

Thirdly, Latin America offers important investment and energy 

diplomacy opportunities for the United States. So not all countries 

are the same. 

In discussing major energy-producing nations in Latin America, 

a country’s oil and gas potential, its resources in the ground, as Dr. 

Knapp put up on the screen, may be actually less important than 

what is occurring in Congress, the halls of government and in the 

geopolitics of the day, or, as I like to say, not all countries are the 

same. 

From Canada to Argentina, as the chairman and ranking member underscored, our region has a formidable natural resource endowment. 

But beyond the resource potential below ground, the above 

ground, or nontechnical risks such as political, financial, social, and 

environmental issues, are often just as critical to a project’s success. 

So how government, industry, NGOs, and communities engage 

and interact warrants increased attention by companies and policy 

makers alike. And, of course, as we have talked a little bit about 

already, volatility in international oil markets that we have seen 

33

since last June and today’s lower price environment demands even 

closer attention to these above ground ramifications. 

So in a way of trying to talk about some of the above grounds, 

I wanted to talk about three countries in the region. I would like 

to start with Argentina. 

And after a rocky decade for the Argentine economy and energy 

industry, the nation is now faced with the onerous task of restoring 

investor confidence damaged by years of political and institutional 

instability. 

Many are hopeful, as the chairman mentioned, that the October 

Presidential elections will usher in a more business-friendly administration. The potential reversal of the nation’s fortunes is rooted 

in its vast unconventional oil and gas potential. 

Argentina holds the world’s second largest shale gas resources 

and fourth largest shale oil. And Argentina, it should be noted, is 

one of just four nations to produce commercial quantities of shale 

oil or gas, along with U.S., Canada, and Mexico—excuse me, China. 

I want to move on to Mexico. We have talked about Mexico. Mexico has entered a new energy era. In the years since the nation 

passed a constitutional amendment and major energy reform legislation, progress has been remarkable. 

Round One, launched last December, is considered the first real 

opportunity in Mexico’s new energy landscape. This year, the government will auction 169 blocks for exploration and production 

across a range of oil and gas prospects from mature fields to shale 

to deepwater. 

The outcome of the Round One oil and gas auction as well as the 

creation of a wholesale electric market in Mexico by the end of this 

year will have a significant impact on determining the reform’s durability and eventual success. 

Venezuela, for my last country to talk about—Venezuela’s woes 

are very, very well documented. We all have read the headlines 

and the stories. But, unfortunately, these woes have occurred during the largest oil-derived windfall in the history of the country. 

Oil production has declined by more than 350,000 barrels a day 

since 2008 and more than 800,000 barrels a day since its peak level 

in 1998. At the same time, oil exports from Venezuela declined approximately 28 percent between 1999 and 2013. 

But, again, talking about the below ground potential, despite this 

grim news, Venezuela has unbelievable energy potential. It has the 

hemisphere’s second largest gas and natural gas resources, after 

the United States, and in terms of oil, holds 298 billion barrels of 

proven reserves, and Venezuela’s famous Orinoco Belt contains one 

of the world’s largest oil accumulations. 

The next main point I want to talk about is exporting the lessons 

learned from the U.S. energy boom. Latin America has much to 

learn from the shale revolution in the United States but policy 

makers in the region must also understand the critical factors that 

drove this success and I want to highlight four of them—natural 

resource ownership, finance, technology, and infrastructure. 

That is to say, who owns the right to the subsoil, the hydrocarbons in the ground, the ease in access to finance and risk capital 

and cutting-edge technology and the ability to use infrastructure to 

move the product to market. 

34

A key hurdle for the region is to adapt innovative techniques developed in the United States to local conditions both above ground 

and below. Argentina is doing so to a certain degree. 

For example, it is using technology to almost have unconventional well costs in the last 5 years. Firms, hopefully, will also have 

a similar opportunity in Mexico when they tender unconventional 

blocks as part of the Round Process perhaps later this year. 

My third—my third and final main point—Latin America’s investment in energy diplomacy opportunities, and let us start with 

U.S. energy exports. 

The U.S. energy revolution in the United States has created an 

unprecedented opportunity for natural gas and crude exports to the 

region. Natural gas exports by pipeline to Mexico have more than 

doubled in the last 5 years. 

At the same time, several liquefied natural gas projects along the 

coastal United States are nearing completion and will firmly plug 

the U.S. into the global gas market. 

Countries from Central America and the Caribbean to Chile 

stand to benefit from greater access to the cleaner-burning fuel. 

In the debate over exporting crude oil, it is important to appreciate how the boom in U.S. production has affected oil trade flows. 

Oil that once flowed east to west is now flowing from west to 

east, and the shift in oil trade flows underscore how important it 

is to address this topic of the U.S. export ban, and I would suggest 

starting with Mexico and Pemex’s request for an exemption. 

However, the proposed oil swap is not just about the relationship 

between the U.S. and Mexico. It is also about North American energy integration. And another point I would make is that joint development of unconventional resources in North America and 

greater electric integration bring economic, environmental and political benefits to all three countries of North America. 

Briefly, Central America and the Caribbean—for nations of Central America and the Caribbean, the possible arrival of an era of 

abundant and cheap natural gas propelled by the shale boom in the 

United States has greatly advanced the case for a natural gas market in those regions. 

U.S. leadership and commitment to energy security in the Caribbean, as the ranking member talked about, has been extremely encouraging. The summit by the White House in January—the Caribbean Energy Security Initiative—are extremely important initiatives, trade finance initiatives. 

But I would suggest they are only the beginning of what must 

be a continued, consistent and concentrated effort to provide an alternative to Venezuela’s Petrocaribe. 

Finally, very briefly, the role of China—the world’s largest energy consumer, China has devised a strategy to deal with spiking 

energy demand and insufficient domestic production, and some 

have called that checkbook diplomacy. 

And the point is that Chinese, state-owned enterprises have 

fanned out across the hemisphere with the support of Beijing to secure access to resources, to secure access to Latin America’s oil 

patch. 

35

Venezuela has been the largest beneficiary, but they have also 

made loans and invested in Argentina, Ecuador, Brazil, and the 

Caribbean. 

So in conclusion, Latin America’s importance to the United 

States makes it critical that we continue to engage, particularly 

with the largest oil- and gas-producing nations. 

Without question, Latin America’s outlook and opportunities are 

complex and at times challenging. But given the region’s potential, 

the energy glass is at least half full over the long term. 

Thanks so much for allowing me to testify. I look forward to the 

conversation. 

[The prepared statement of Mr. Martin follows:]

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Mr. DUNCAN. Thank you so much. 

Great testimony, and I just want to reiterate a statistic that I 

think Mr. Webster threw out there. Twenty-three million people in 

Latin America lack access to energy or electricity. Is that the number you threw out there? 

Mr. WEBSTER. It was a different number, Chairman. 

Mr. DUNCAN. Twenty-three million? 

Mr. WEBSTER. But that is—that is an accurate number, yes. 

Mr. DUNCAN. It is pretty—I am all about improving the quality 

of life. I think electricity does that for so many people around the 

world. If there is a way we can electrify Africa or electrify more in 

Latin America, you improve quality of life. 

If people are cooking over charcoal or other things, air quality 

issues, lack of education ability, having to stop reading or hurting 

your eyes reading by candlelight, or other things, there are just so 

many different ways. So I appreciate you bringing that up. 

Question for Mr. Webster—there are two different types of oil, 

really—heavy and light crude—and I am generalizing, of course. 

We have talked a lot about Keystone Pipeline today. 

What kind of oil is coming out of the ground in Canada? Isn’t it 

the more heavy type? 

Mr. WEBSTER. Thanks for your question, Chairman. 

Absolutely. It is quite heavy oil and this is important because the 

U.S. refining in the Gulf Coast is what we call a world class refining system and when we say it is world class, that means it can 

take some of the toughest oils to refine, which include Canadian 

oil. 

Mr. DUNCAN. We are set up—our refineries are set up? 

Mr. WEBSTER. We are set up. 

Mr. DUNCAN. Because it is very similar to the oil we are importing from Saudi Arabia. 

Mr. WEBSTER. Actually, it is even heavier than what we get from 

Saudi Arabia, yes. 

Mr. DUNCAN. And so the oil we are bringing out the ground, say, 

in the Bakken is a lighter, sweeter oil is my understanding. 

Mr. WEBSTER. That is absolutely correct. 

Mr. DUNCAN. So in order to refine that oil it takes retooling or 

actually new refineries or heavy investment in U.S. refineries to refine that end of the—all the hydrocarbon products? 

Mr. WEBSTER. That is correct. That is correct, yes. 

Mr. DUNCAN. That is missed in a lot of the debate on why bringing the Keystone Pipeline and bringing that Canadian oil down. 

Our refineries are set up to handle it without a lot of significant 

investment on behalf of U.S. companies. So that is why it makes 

sense. 

One thing that came to mind while one of you was speaking is 

some of the understandings that we have in talking with people in 

Peru and other South American countries is just private property 

rights, who owns the resources—a little different than the U.S. 

where we own air rights and mineral rights of a piece of property. 

Down there you don’t and, generally, ownership and surveys and 

deeded property and all that is not applicable in the jungles of 

Peru or a lot of indigenous people live in villages. The head of the 

47

village knows well, that property belongs to that family, but there 

is no deeded record of that. 

So you run into a lot of problems with energy exploration and 

leases. So we have learned a lot about that in the last year travelling down there and talking with folks. 

I think that is going to provide an impediment in a lot of ways—

and I think Mr. Martin was talking kind of along those lines—as 

energy companies continue to try to explore and produce in South 

America and possibly in Central America. But I think that is an 

issue that they need to address, and I will just raise that. So with 

falling oil prices in the world, who gets hurt the most in this hemisphere? Mr. Book. 

Mr. BOOK. Well, the—you know, the problem with saying who 

gets hurt is that there is two groups of the United States that you 

want to think about. 

The U.S. consumer is helped. The U.S. producer is hurt. And, arguably, the U.S. producer in some cases is being hurt very badly. 

In the Western Hemisphere, though, the greatest pain probably belongs to Venezuela. 

Ultimately, their dependence on oil to fund their economy, the 

high breakeven price they need for all of their fiscal obligations and 

their lack of sourcing capital to produce that oil means that a low 

price really squeezes them hard. 

Mr. DUNCAN. Do you think Pemex is hurt a little bit with U.S. 

and global investors looking to help them change their infrastructure and update and modernize? 

Mr. BOOK. Well, it is a bad time to be selling. You don’t want 

to auction off blocks at the bottom of the market, and I think 

Pemex isn’t necessarily going to have as much competition as it 

might have had if we had been at $100 a barrel. 

On the other hand, it seems like the petroleum industry in Mexico is rationalizing their auctions and trying to time for maybe 

right sizing it and timing it to not get totally burned. 

Mr. DUNCAN. Right. 

Mr. MARTIN. Mr. Chairman, if you don’t mind, just a—there was 

an important deal about a month ago that I think also offers an 

alternative that Pemex, now more than ever, needs to partner with 

outside foreign private capital and there was a deal that First Reserve and Black Rock did about $900 million on the natural gas 

pipeline that some people considered the tip of the iceberg in potential partnerships. So I think that is one thing to talk about the 

block, talk about the government auctions. 

But I think under the new restructure of Pemex, their ability to 

partner in that First Reserve/Black Rock deal could be important 

to watch. 

Mr. DUNCAN. I think it is not unfortunate. The American consumer is definitely benefiting and, you know, we are going to see 

that trickle down in consumer goods and a lot of different things 

because transportation fuels are cheaper now. 

But when Pemex is going through the reforms that I applaud, 

and I have made a lot of assumptions on what falling oil prices 

would have—the impact they would have on energy reforms in 

Mexico but offshore development not only here in the U.S. because 

we see a lot of production starting to fall off but also investment 

48

in other countries—that probably may have taken place had energy 

prices, barrels of oil been a little bit higher. 

So let me ask this, Dr. Knapp. Arctic drilling—in your opinion, 

what is the energy potential in the Arctic? 

Mr. KNAPP. Thank you for your question, Chairman. 

I think for a long time we have known that there is a very high 

potential of petroleum exploration in the Arctic and I was heartened to see the move by the administration earlier this week to approve the project that Shell has been pursuing in the Arctic of 

Alaska. 

There, again, we really won’t know for sure until we go up there 

and collect the data—the basic data that tell us what the geological 

conditions are. 

But we can certainly speculate that it has got the right conditions for formation of oil. We tend to think of the Arctic as a frozen 

wasteland, but it actually has only been that for relatively recent 

geologic time and the time when the conditions would have been 

right for generating petroleum would have existed in the geologic 

past. So I think it is quite a perspective. 

Mr. DUNCAN. That is an interesting map you’ve got up there 

where seismic work has happened all around the Atlantic, with the 

exception of a big gap there alone the Atlantic coast of the U.S. 

Mr. KNAPP. Well, this reflects current activities, right, not even 

just historic ones but current ones. So yes, that is why I wanted 

to leave it up there so we got a good look at it. 

Mr. DUNCAN. That is current drilling? 

Mr. KNAPP. Well, yes, exploration, which would include both seismic and drilling of well, yes. 

Mr. DUNCAN. Okay. 

Mr. KNAPP. That is courtesy of a colleague from Shell Oil. 

Mr. DUNCAN. I see a big gap off the coast of South Carolina 

where there are no production or activities happening. We would 

love to see that. 

Mr. KNAPP. It is interesting that the area off of Florida that is 

actually being done by the Bahamas, Cuba, all the Caribbean nations are actively exploring. 

Mr. DUNCAN. That is right. U.S. LNG exports—the Department 

of Energy approval process authorized that, has repeatedly got criticism by industry, experiencing lengthy delays. I think on May 7th 

the DOE granted final approval to a facility in Maryland. I am very 

bullish on exporting LNG. 

I am talking with the folks in Latin America. They would love 

to see more U.S. exports of LNG. I think it is a win for the Caribbean nations that are struggling for cheap or affordable energy 

sources. 

So what impact do you think would have—this would have on 

U.S. ability to export LNG, Mr. Book? 

Mr. BOOK. The question, Mr. Chairman, is what ability would 

the DOE approvals have? What—I mean, there is really—the DOE 

is turning around their approvals pretty quickly right now, which 

is good. 

What they did is they have essentially now taken a bunch of 

brownfields projects, which are relatively good bets, given the cost 

49

of building one of these facilities, and they have said—they have 

given final approval to them. 

This week they gave final approval to the first greenfields 

project, the Corpus Christi project. And now the question starts to 

become whether or not the investment decisions will get taken on 

some of these incremental projects. 

But we are going to probably have—we have final investment decisions. We are under construction already, about 62⁄3 billion cubic 

feet per day of LNG export capacity. We might end up having ten 

to 15 built. 

Mr. DUNCAN. Right. You know, Mexico is looking to Eagle Ford 

in Texas to look for some pipelines that are in the works to bring 

natural gas into Mexico to assist them. 

But in talking with the Panamanians, they would love to be that 

sort of natural hub for Central America. You know, ships are coming through the canal anyway—why not offload some LNG and 

allow that to be regasified and distributed by pipeline throughout 

some of the Central American countries? I think it is a win for the 

region. 

I think there is a lot of opportunity not only for Panama but also 

for American energy companies. And so I have got a lot of questions, but my time is up, so in the essence of time I am going to 

yield to the ranking member. 

Mr. SIRES. Thank you, Mr. Chairman. 

You know, I listened carefully with the—all these unprecedented 

opportunities that we have, and I am always concerned about 

Petrocaribe—you know, Venezuela—because basically Petrocaribe 

has everybody by the throat in the Caribbean. 

What percentage do you think of the LNG that the Caribbean 

needs that we can supply by us now opening up to export since last 

year, you said—last July, somebody mentioned here? 

Mr. BOOK. I think—if you are referring to my testimony I was 

talking about July 2011 we started exporting refined products, not 

LNG, and——

Mr. SIRES. I thought energy and, you know, I am trying to get 

rid of this stranglehold that Venezuela has on these islands. So 

with the energy that we have, what do you think is the possibility 

of us basically getting rid of that, that Petro—the stranglehold that 

Petrocaribe has on these islands? 

Mr. BOOK. Well, thank you for the question. It is a great question, because we are doing it right now. 

We are actually already now supplying slightly more than 

Petrocaribe is to the destination countries—that Venezuela is to 

the destination countries, and part of that is because our refineries 

are, as Jamie mentioned, world class. 

We have low feedstock costs, low energy costs. We are getting out 

there in the world. There is more we can do, though. Some of those 

countries are buying crude as well, and if we opened up our crude 

exports that could be a solution also. 

Mr. SIRES. You know what? For example, I look at Dominican 

Republic. They are totally basically dependent on Venezuela for 

their energy. I was just wondering if you can answer that, Mr. 

Martin. 

50

Mr. MARTIN. The good news is Venezuela paid off their debt to—

excuse me, the Dominican Republic paid off their debt to Venezuela 

and Petrocaribe early part of this year. 

So they don’t have—and I agree with my colleague, this stranglehold is not a stranglehold anymore. It is a very loose grip at best. 

The Dominican Republic is bringing gas from Trinidad but what we 

could do is send some gas from the United States. 

There are a lot of hurdles. In my full written testimony I have 

talked about some of the financial issues, the credit issues that 

smaller markets deal with when they need to import the scale of 

natural gas via LNG or CNG. 

But the fact of the matter is via the fine product exports as well 

as Venezuela just destroying themselves in terms of their incapacity to export product we are loosening if not have completely 

loosened that stranglehold. 

In the case like Dominican where they have paid off their debt 

they do not owe Venezuela any money and so therefore are in a position to completely move forward. 

Mr. SIRES. And some of the islands are still dependent? 

Mr. MARTIN. Yes. Other islands—it is a different—I mean, Dominican is very unique in a situation where for about 10 years they 

have had a liquefied natural gas importation terminal that American company AES based here in Arlington built and now that has 

been able to—at a period of time it wasn’t doing so well but in the 

last several years it has been able to really move the Dominicans’ 

power supply away from a fuel oil dependency, not to a natural gas 

dependency but to a diversified matrix. 

Mr. SIRES. Thank you. 

You know, the other day in the news I saw that Tesla had a battery for houses. You know how there are battery cars. How might 

oil prices affect the development of unconventional energy throughout the hemisphere? In other words, what other alternative—how 

are prices affecting the alternative energy industry? 

Mr. WEBSTER. I will go ahead and take that. I will try that. 

Mr. SIRES. I mean, these countries don’t have the infrastructure. 

Mr. WEBSTER. Thanks. Yes. 

Mr. SIRES. Even if we send it to these countries they don’t have 

the infrastructure to get it. We are talking about these 23 million 

people that do not have energy. 

Mr. WEBSTER. Thank you very much for your question, Ranking 

Member. 

So, you know, one of the big things that people who look at either 

battery power or renewable energies is, you know, when oil prices 

are higher than it makes more sense to start looking for alternatives. 

Oil price is quite a bit lower now and you can see here in the 

United States we are starting to buy larger cars. But I think what 

is going to happen over the next couple of years is we are going 

to have quite a bit of volatility on oil prices and that volatility is 

actually going to be something that both consumers and producers 

are going to want to get away from, and so one of those ways to 

do that is this potential for battery technology. 

So while in the short term this is not exactly what I would consider positive for moving towards, you know, electric cars and 

51

things like that, longer term this up and down in prices and the 

desire to kind of escape that volatility so that you can have better 

planning for your budgets is actually going to favor other alternatives. 

Mr. SIRES. Thank you. 

And I read about a deal between Argentina and China just recently. Can you talk a little bit about the——

Mr. MARTIN. I am not sure, Mr. Ranking Member, what deal but 

there are several deals. China—I mean, a crude description of its 

checkbook diplomacy—China has financed billions and billions of 

dollars of loans to Venezuela are guaranteed by oil supplies. 

In Argentina, it has been more in the investment in some of the 

local companies. They have bought stakes in companies through 

their national companies—you know, Sinopec. 

So I am not sure exactly what deal you are referring to but there 

are—Venezuela is the number-one recipient of China’s checkbook 

diplomacy but Argentina is obviously also an important target for 

what I call China’s go out and secure access to the oil patch, in this 

case Latin America’s oil patch. 

Mr. SIRES. I really believe that one of the reasons that we are 

refocusing on this region is because China now is stepping into this 

region, and we just don’t want to give this region to China. 

I mean, I was in Colombia a few years ago, and I had dinner 

with one of the presidents of the colleges or the colleges there, and 

he told me that the second most studied language in Colombia 

today is Mandarin, after English. 

So, you know, the wave is coming, and I think we finally realized 

here in this country that we just cannot surrender this region to 

China. So I think that is one of the reasons we are focusing more 

on these places. 

Mr. MARTIN. Mr. Ranking Member, in terms of Argentina I think 

it is the perfect example. When I talked about exporting technology, goods and services, know-how, and the lessons we have 

learned from the unconventional revolution in the United States, 

there is no way China is going to do that in Argentina. 

The United States is going to do that, is already doing that. We 

have helped them halve the cost of an unconventional well in Argentina through partnerships with Dow Chemical, Chevron. 

There is a lot of other U.S. companies that are very interested 

in exporting all of those lessons and technology business services 

to really move Argentina from a 40,000 barrel a day of unconventional production to a real player. 

Mr. SIRES. How does this scandal in Venezuela affect in the industry? Does anybody know? This energy scandal where the President is involved. There is a big scandal. Not Venezuela, excuse me. 

Brazil. In Brazil. 

Mr. BOOK. I think——

Mr. SIRES. We visited—this committee, with Matt Salmon, the 

chairman, we visited Brazil. We visited that whole complex that 

they have, and all their plants that they have for, you know, working with us in terms of trying to get oil from the ocean, you know, 

and everything. But, you know, this scandal has paralysed, I think, 

Brazil. 

Mr. BOOK. Thank you for the question, Mr. Ranking Member. 

52

I think the answer is it is bad news not just for Brazil but for 

the world. 

The pre-salt resources, as I mentioned, are—it is a way to think 

about—it is the oil the world needs in the next decade. What is not 

being invested in now is going to matter much more to us later. 

We have seen a big surge in shale. That is great. But the world 

is declining at 4 to 5 percent a year that has to be replaced. This 

is that replacement. It is an amazing resource. It requires world 

class companies making hundreds of millions to billions of dollars 

of investment in each of the producing assets they put to work. 

And so for two things that have gone wrong, one is that they 

have changed rules, and that may have had an effect of dulling 

some of the investment enthusiasm. 

And the second thing is that the corruption scandal is going to 

result in significant delays, in all likelihood, and therefore under 

investment. So bad news, I think, not just for Brazil but for the 

world. 

Mr. SIRES. And my last comment—this is a basic problem with 

these countries. You go there and invest and then they change the 

rules. 

I mean, I don’t get it where they think a company is going to 

spend hundreds of millions of dollars and then they say well, I 

don’t think—the percentage you charge is too high—we are not 

going to pay you. 

I think that is why they don’t get any—you know, any real investment in some of these places. And that was the case in Argentina. They didn’t want to pay. 

So, you know, to me, making a large investment in energy and 

to have a country say, well, we don’t want to do it anymore, and 

mark my words, this is going to happen in Cuba when people make 

investments there. 

They will wake up one day and say, well, I don’t think this deal 

is that good—we are going to take this back. And I don’t know any 

company that is willing to take that risk. 

I am sorry, Chairman. I didn’t want to——

Mr. DUNCAN. It has happened before, and there are a lot of companies and individuals that have lost ownership. I think the ranking member is right about engagement in this hemisphere. 

We have neglected, I think, as a nation and maybe even just 

Congress have neglected countries in this hemisphere way too long 

and we allow China or Russia to get a foothold. 

But one thing that we are trying to do with this subcommittee 

is get re-engaged from the United States Congress with countries 

in the hemisphere and I think energy as a segue toward that reengagement because I think energy is a win-win for everybody. 

It improves quality of life. It helps electrify. It also helps U.S. 

businesses be able to export or to go down and invest in infrastructure. I just think it is a win-win. So we are going to continue with 

these type hearings about U.S. engagement in the hemisphere. Energy, I think, is the primary one right now. 

I will turn to the gentleman from Florida, Mr. Yoho, for 5 minutes. 

Mr. YOHO. Thank you, Mr. Chairman. 

53

I appreciate you all being here and I share the chairman and 

ranking member’s goal and my vision is to make North America 

energy secure, energy independent in this region in the Western 

Hemisphere, to bring stability to the fuel prices. 

You know, we have seen the volatility and we saw a lot in the 2004–2008 area when it was just going up and I was paying $5 a 

gallon for diesel for my Ford Excursion. Luckily, it got 22 miles to 

the gallon. 

But we saw that fluctuation, and when the fluctuation was there 

it was just—you know, it disrupts the economy, from the guy out 

there planting corn to the, you know, the cosmetics on the aisle 

that people buy. It affected everything—pharmaceuticals. And so 

there is no reason, with our natural resources—correct me if I am 

wrong—that we should be importing oil from anybody outside of 

the Western Hemisphere. 

Would you agree with that? Is there a need to with the natural 

resources here? 

Mr. BOOK. I would—Congressman, I think the good news is that 

we have everything we need in the Western Hemisphere. The bad 

news is that if you don’t allow the world to compete the price might 

be too high. 

Let me give an example. The Keystone Pipeline would bring Canadian oil down to the Gulf of Mexico. Right now, Venezuela and 

Mexico sell most of the crude that goes into those refineries from 

overseas, and Canada would democratize that market ever so 

slightly. 

I think we might find that we get most of our energy from the 

Western Hemisphere, but we would always want to have somebody 

out there bidding against them just to keep the prices fair. 

Mr. YOHO. No, I agree with that. But if we had enough production here—I don’t want to control the oil market. It would be nice 

to stabilize it, you know, and if we stabilize it prices wouldn’t show 

the volatility that they have, and I think if we work together as 

the Western Hemisphere we could accomplish that. 

Let the Middle East, or whoever else wants to produce energy, 

do that but not to where it affects our market. And, you know, the 

competition is always good because it keeps the price down and the 

stable supply will stabilize, you know, the prices. 

So with what we have in this hemisphere, I don’t see why we are 

not doing that. And Mr. Sires brought up a perfect example of the 

geopolitical landscape. 

When you have an unstable government or a government that 

doesn’t follow the rule of law or civil society or property rights or 

they are corrupt you get what we see in a lot of the Latin American 

countries. 

And if I was an oil company I would be hard pressed to invest 

there when I look at that map and I see what is in North America, 

and certainly there is a lot of resources off the coasts. 

But with what is on the interior is there really a need to do deepwater exploration, deepwater drilling with the risks of that when 

we have so much on the interior. What are your thoughts on that? 

Get the low laying fruit? 

Mr. KNAPP. I will take a shot at that. We currently produce more 

than a quarter of our domestic production offshore and one of the 

54

issues about the offshore is that these are more complex longerterm projects. 

So if we wanted to be developing that resource we are looking 

at a 10- to 15-year time frame from the time we start on that to 

before we could ever be producing the product. 

The reality is that other than the unconventional play, which has 

really energized the market in the last few years, the conventional 

plays onshore are, largely, highly explored in North America and 

the only place where we are likely to find major new resources is 

the 87 percent of the outer continental shelf that we have never explored in. 

So I think that still remains the big opportunity here in North 

America for new reserves that we might discover. 

Mr. YOHO. Okay. On the Keystone Pipeline we get a lot of questions where people say well, it is not going to benefit America at 

all—all that product is going to be exported. 

What are your thoughts on that? How much of that oil would be 

exported? How much would stay here? How much would be used 

domestically? 

Mr. WEBSTER. So IHS actually conducted a study on this to try 

to better examine this and our view is very much that 70 percent 

of both the crude and refined products would be kept here in the 

United States. 

The remainder of it would actually tend to back out to that Venezuelan oil and, again, it goes back to what the chairman’s point 

was earlier, which is that the Gulf Coast refinery is perfectly suited 

to this oil. 

So it actually doesn’t make a whole lot of sense to bring that oil 

down to the perfect market for it and then say you are going to export it to someplace else. There is no better place for it. 

Mr. YOHO. So 70 percent of that oil would stay here domestically 

and, you know, it is funny how many different things are out there. 

When people say it is all going to be exported, it won’t benefit 

America at all and, you know, you try to explain facts and people 

don’t want to listen to that. 

What would you recommend about removing our export bans on 

all petroleum or energy products? I mean, it sounds like you are 

all in agreement with that, right? 

That would help our producers. It would lower prices. It would 

stabilize the region, and especially if we focus on the Caribbean 

and our allies with Mexico and any other country in the Western 

Hemisphere that wanted to be our friends. 

I think it would just be a win-win situation and I don’t see any 

reason not to do that. When you look at that possibility and you 

look at this body, Congress, what do you see as the biggest stumbling block? Is it just the political will? You are amongst friends. 

Mr. WEBSTER. Yes, I will go ahead and try it. One, I would agree 

with you that crude oil exports is, to me—it is very difficult for me 

to come up with—as an analyst to come up with an intellectually 

credible argument on why you would not allow crude oil exports 

when petroleum products are okay, natural gas is okay, coal is 

okay, electricity is okay but crude oil is not. 

Mr. YOHO. But not crude. Don’t do—that is dirty oil. 

55

Mr. WEBSTER. Yes. I would—my estimate would be that the reason why is because of a concern is that when people see the price 

on television they look at the oil price and so they often link oil 

price with gasoline price, not recognizing that actually exporting oil 

is actually going to increase the supply around the world and as 

I often say a free barrel of oil anywhere actually increases energy 

security everywhere. And so that actually would bring down gasoline prices. 

Mr. BOOK. If I might add to that. 

Mr. YOHO. Yes, sir. 

Mr. BOOK. I have some sympathy for you and your colleagues 

who are addressing this challenge. You pay your utility bill usually 

about once a month. You fill up your tank 40 or 50 times a year, 

which is 40 or 50 times you are reminded how much you are spending. That makes it a much more emotional and politically volatile 

issue. 

The American public on average is spending 6 to 7 percent of disposable income on energy writ large. Two-thirds of that is gasoline. 

If you think about who it hurts when gasoline prices go up, it 

hurts the poorest the most, the people who drive longest distances 

inflexibly. 

Mr. YOHO. Right. 

Mr. BOOK. The problem then is that there is a perception risk. 

Right now, if you go back to January ’14, gasoline prices are now 

down about 66 cents or so per gallon. On the other hand, they are 

up 62 cents per gallon from where they were January of ’15. 

So if—you know, if this is something that you and some of your 

colleagues are worried about in terms of the perceptions, the sweet 

spot is behind us right now. It shouldn’t be there. 

I think Jamie is absolutely right. What people need to be focused 

on is the broader economic picture. But I certainly understand 

what the concerns are getting to that focus. 

Mr. YOHO. Mr. Chairman, can I add one more thing? When you—

when you and I were in South America and we were sitting—I 

think it was in Colombia and the oil executives were there, they 

were talking about the world asset tax they had to pay. Have you 

heard of that? Good. Do you remember that comment? 

I haven’t been able to find it and I am, like, what is that, and 

I haven’t been able to find it. So that is good that you don’t know 

about it. Thank you. 

Mr. DUNCAN. I will yield a little bit of time to the ranking member. 

Mr. SIRES. Dr. Knapp, you know, I see this map and I see all 

these areas of exploration, and I remember a few years ago we had 

this big hoopla that Cuba was sitting on I don’t know how many 

barrels of oil and everything else and there was, you know, Spain 

went in there and invested. 

I think Italy went in there and invested. They didn’t find a drop 

of oil. So where is all this oil that I see this line going through 

there? 

Mr. KNAPP. Thank you for a question that I feel qualified to answer, Mr. Ranking Member. So much of this ultimately gets back 

to the geology and that is do you have the right geologic conditions, 

56

first of all, to form the oil or gas and, second of all, to trap it in 

some geologic formation where you can then go and recover it. 

And when we are in areas like the Atlantic margin, which is 

right out our door here, where we have basically what is called the 

passive margin, we have got areas where there is lots of marine 

sedimentation that takes place and we get sediments deposited on 

top of that that then mature into oil, and it is subsequently not disturbed in some significant way by geological processes then the oil 

is going to be preserved. 

Cuba, on the other hand, sits on a plate boundary. It is the collision of the Caribbean Plate with the North American Plate and it 

has got faults all through it and it is highly deformed, and if the 

conditions ever were right for the oil to form there, chances are it 

has long since been released through geologic time. 

So it doesn’t surprise me. As geologists, we can have a fairly 

great insight in where we are likely to find oil and gas reserves 

and where we are not. 

Mr. SIRES. People were talking about the rigs and the oil, if there 

was an accident it would go on the beaches in Florida. I mean, it 

went beyond. 

Mr. KNAPP. Well, they are still doing that now in—down where 

we live. 

Mr. SIRES. Thank you. 

Mr. MARTIN. Ranking Member, if I could just add, I think there 

is three reasons why Cuba doesn’t even need to worry about it 

right now. 

Number one is the price of oil. Number two is the number of dry 

holes that—you could down the list of who has drilled a dry hole 

in Cuba. And number three is we talk about Mexico. 

The enormous opportunity that Mexico provides I think makes 

anyone who might think Cuba is another opportunity to take a little back. 

Mr. SIRES. But people will want to invest there because at the 

moment——

Mr. MARTIN. I think there’s three reasons I can think of off the 

top of my head why it doesn’t make a whole lot of sense in 2015. 

Mr. SIRES. That’s terrible. 

Mr. DUNCAN. Why are—why did gas prices come down? 

Mr. BOOK. Gasoline prices are mostly linked to crude oil prices. 

There is local—if you look at California recently you can see that 

when the refineries went out and just in general because they have 

a special blend of California gasoline the prices tends to be a bit 

higher. 

It doesn’t move necessarily the same direction all the time. But 

by and large, it was the collapse in oil prices that brought down 

gasoline prices. 

Mr. DUNCAN. Okay. So why did—why did global oil—crude oil 

prices come down? 

Mr. BOOK. Well, there is three easy explanations. Demand was 

weak, supply was long and OPEC decided that they wouldn’t cut. 

Those are—each of those requires a Master’s thesis to give you all 

the details. 

The first one was the one that I think a lot of people didn’t expect. We have seen effectively a low-energy recovery from the Great 

57

Recession. Whether it is structural or whether it is just a slow recovery of consumer patterns is yet to be seen. 

Mr. DUNCAN. Well, global—slow recovery globally, right? 

Mr. BOOK. Basically, yes. 

Mr. DUNCAN. So global demand was down. Supply was up. 

Mr. BOOK. Supply was up and——

Mr. DUNCAN. You had the Bakken onlining, but you also had the 

Saudis and OPEC keeping production levels up? 

Mr. BOOK. And the thing that broke the camel’s back, Jamie 

mentioned, was Libya. Libya had been blinking on and off like a 

bad light bulb for a while at 300,000, 400,000 barrels a day. It suddenly shot up to 800,000, 900,000 barrels per day and shocked the 

market. 

When you look down after you have run off the edge of the cliff 

in the Roadrunner cartoons there is a moment before you fall. That 

was the moment. When they looked down, that was when the market moved. 

Mr. DUNCAN. Right. So just to simplify things, demand was 

down, supply was up. That affects prices. If the U.S. was able to 

export our crude oil on the global market then it would increase 

global supply to meet maybe a stagnant global demand, even decreasing—increasing global demand. But if you got more supply, 

then you are going to keep prices relatively stable or inexpensive. 

Mr. BOOK. Well, there is good news out there, which is that if 

you put oil out there cheap enough for long enough, demands 

wakes back up and that is a good thing because with it brings economic opportunity. 

What you have is most of the growth in oil demand right now 

is not coming from the OECD. The OECD is pretty stagnant, as 

you say, and very efficient. There’s wing tips in all our planes. We 

are all buying new cars. 

So when the price drops, it doesn’t unlock a lot of new demand. 

Where does that demand come from? It comes from GDP growth 

in the non-OECD and that is where the flagging economic fortunes 

of the world have been a problem. 

But if you see that oil price low enough for long enough, the investment that comes with it brings demand back, and I think we 

are starting to see that. 

Mr. DUNCAN. Do you think there is demand in the Western 

Hemisphere for energy resources? 

Mr. BOOK. Writ large, absolutely. Just the electrification issue I 

mentioned in my testimony that is a lot of—that is a big energy 

gap right there. But let us not kid ourselves. There is—even if we 

are driving cars less we want to fly planes and move trucks. There 

is freight and commerce to be done. 

Mr. DUNCAN. Right. Exactly. 

So talk about Colombia just for a minute. We were down there 

in November. Wasn’t it November we were down? And FARC had 

just blown up a natural gas pipeline and it is a pipeline that they 

have attacked numerous times. 

There is a lot of work on the Colombians’ part just to keep that 

safe. Then you throw in the reduction in the price of oil. Colombia 

pulled back from its offshore development somewhat. 

58

So I am not talking about global prices but just safety and security in the region is very, very important, I would think. I mean, 

I have—people contact my office that do business down in Latin 

America that are needing security and caravans just to go out and 

do exploration or even the hydroelectric projects that they are 

working on to replace turbines or work on turbines they have got 

to have a security team with them just for safety and security. 

How do you—how does that factor into what we are talking 

about today, and that is energy in this hemisphere when you factor 

in a security threat like FARC or any others? Can you all talk to 

that? 

Mr. WEBSTER. Well, one, it—you know, a lot of the companies 

that are looking at this in terms of energy they look at the risk profile for each of these countries, and one of the benefits of both the 

United States being a bigger producer of oil and gas is it gives 

them another safer opportunity that is certainly present within 

Canada and increasingly within Mexico. 

What ends up happening is for these countries is they essentially, you know, either price themselves out of the market, so to 

speak, which then reduces the opportunity that the world has for 

those energy—additional energy supplies from those regions. 

Mr. DUNCAN. So it is not—it is an impediment but it is not going 

to—that can’t be overcome, I guess, is what I am hearing from you? 

Mr. WEBSTER. That is correct. 

Mr. MARTIN. Mr. Chairman, yes, I think that is exactly what I 

was trying to get at with my above ground—the concept of being 

sure you understand the above ground, the nontechnical risk, the 

political, the security. 

Those things can all, as Jamie said, be mitigated or figured into 

the project life cycle—how do deal with them, community engagement. All of these things, all these nontechnical issues, have certain components and ways to deal with them. 

The problem is you have to be aware, and you have to really understand where you are operating and where you are going into. 

And I would just say a final point about Colombia. 

We talked about—I think the question from the ranking member 

which country is the hardest hit in our hemisphere by lower oil 

prices and Venezuela is, you know, surely a winner. But Colombia 

has been really hard hit by low oil prices as well. 

Colombia was a wonderful story for 5 or 6 years in terms of rewriting their oil and gas investment framework, launching bid 

rounds year upon year, attracting billions of dollars of investment. 

That has been paralysed, in part, because of some of the security 

issues, but the low price of oil has really impacted Colombia as 

well. 

Mr. DUNCAN. Well, the last thing—they are going to call votes in 

just a second. It has been a great hearing. The last thing I want 

to—we have talked about the Caribbean and how we can lessen the 

influence of Venezuela in Petrocaribe by U.S. engagement in the 

Caribbean with the, you know, crude oil, with electrification and all 

that. 

So the questions is, for each of you, how can countries in the 

Western Hemisphere work more closely together to achieve WestVerDate 0ct 09 2002 09:28 Jul 08, 2015 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 F:\WORK\_WH\051415\94609 SHIRL
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ern Hemisphere energy independence and wean ourselves off the 

resources from the Middle East and Africa? 

If you had to put your hand on one thing that we could do as 

a hemisphere, what would that be? How can we work together? 

And I will start at Dr. Knapp and work across. 

Mr. KNAPP. Thank you for that question, Mr. Chairman, and I 

would say first and foremost the thing that we need to do is develop the resources that we have such that they are on the table 

for those partnerships with those other companies and to the extent that we have identified significant resources here in our own 

country that is where we need to begin. 

Mr. DUNCAN. That is all countries need to develop the resources? 

Mr. KNAPP. Sure. 

Mr. DUNCAN. Yes. Mr. Book? 

Mr. BOOK. Well, since Dr. Knapp has already picked the drill it, 

I am going to pick the ship it. The next—the next thing you might 

want to put on your list is removing the barriers to trade that we 

control. 

We are the ones who have decided not to export our oil. There 

are other barriers we don’t control, but this one is ours. 

Mr. WEBSTER. Thank you for the question, Chairman. Since drill 

it and ship it have been taken, I will take share it, which is actually—and Senator Murkowski has put out some language on this—

which is that you actually need to continue to increase the integration of both data, both—just in terms of flows and trade, but also 

in terms of technical data between these different countries to understand what those resources are so that you can then drill it and 

ship it. 

Mr. MARTIN. I don’t know if that leaves me to flip it or what 

here, but maybe we could say flip it in terms of the switch or what 

Petrocaribe is doing. But look, full liberalization of energy trade 

and everything that that statement encompasses is what I would 

say. 

Energy diplomacy—the Caribbean Energy Security Initiative is a 

great start. It is a small piece. We need to do more. We need to 

export more and that is the way we have always, as the United 

States, been able to champion engagement, in this case, in energy 

diplomacy. 

Mr. DUNCAN. Well, I want to thank the ranking member. I want 

to thank the members of the committee. I want to thank you for 

your great testimony and answering the questions. 

We are just scratching the surface, really, of what we need to be 

doing about energy engagement and engagement all across the 

board on a lot of different fronts whether it is agriculture or other 

things in this hemisphere. 

I am excited about the future. I think there is opportunity and 

I use that word in all caps. There is opportunity for American businesses. There is an opportunity for America and safety and security, national security, energy security. 

But this is our neighborhood. It is not our back yard. I hate when 

people say well, that country is in our back yard. No, they are 

neighbors in this hemisphere. This is a Neighborhood. 

We need to work with our neighbors in the Western Hemisphere 

to help everybody. I mean, a rising tide floats all boats and I think 

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energy is a segue to rise the quality of living and standards and 

other things in this hemisphere and it is a way for the U.S. to get 

engaged once again to thwart any efforts by China or Russia or 

Iran or others that may be sticking a toe in the water here in our 

neighborhood. 

So I look forward to continuing engagement with you, and with 

nothing further, I will stand adjourned. 

[Whereupon, at 3:24 p.m., the committee was adjourned.] 

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