U.S. GOVERNMENT PUBLISHING OFFICE

26–867 WASHINGTON : 2018

S. HRG. 115–353 

THE STATUS AND OUTLOOK FOR U.S. AND NORTH 

AMERICAN ENERGY AND RESOURCE SECURITY 

HEARING 

BEFORE THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JULY 18, 2017 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://www.govinfo.gov 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

CORY GARDNER, Colorado 

LAMAR ALEXANDER, Tennessee 

JOHN HOEVEN, North Dakota 

BILL CASSIDY, Louisiana 

ROB PORTMAN, Ohio 

LUTHER STRANGE, Alabama 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

TAMMY DUCKWORTH, Illinois 

CATHERINE CORTEZ MASTO, Nevada 

COLIN HAYES, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

BRIANNE MILLER, Senior Professional Staff Member and Energy Policy Advisor 

SEVERIN WIGGENHORN, Senior Counsel 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SCOTT MCKEE, Democratic Professional Staff Member 
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C O N T E N T S 

OPENING STATEMENTS 

Page 

Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska ................... 1 

Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from Washington .................................................................................................................... 2 

WITNESSES 

Webster, Jamie, Senior Director, Center for Energy Impact, Boston Consulting Group ........................................................................................................ 11 

Mills, Mark P., Senior Fellow, Manhattan Institute ............................................ 17 

Cheney, Stephen A., Brigadier General USMC (Ret.), Chief Executive Officer, 

American Security Project ................................................................................... 25 

Coward, Robert, President, American Nuclear Society ........................................ 34 

McGroarty, Daniel, Principal, Carmot Strategic Group Inc. ................................ 40 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Birol, Dr. Fatih: 

Written Statement ............................................................................................ 5 

Responses to Questions for the Record ........................................................... 93 

Cantwell, Hon. Maria: 

Opening Statement ........................................................................................... 2 

Cheney, Brigadier General Stephen A.: 

Opening Statement ........................................................................................... 25 

Written Testimony ............................................................................................ 27 

Responses to Questions for the Record ........................................................... 74 

Coward, Robert: 

Opening Statement ........................................................................................... 34 

Written Testimony ............................................................................................ 36 

Responses to Questions for the Record ........................................................... 79 

McGroarty, Daniel: 

Opening Statement ........................................................................................... 40 

Written Testimony ............................................................................................ 42 

Responses to Questions for the Record ........................................................... 81 

Mills, Mark P.: 

Opening Statement ........................................................................................... 17 

Written Testimony ............................................................................................ 20 

Responses to Questions for the Record ........................................................... 71 

Murkowski, Hon. Lisa: 

Opening Statement ........................................................................................... 1 

Webster, Jamie: 

Opening Statement ........................................................................................... 11 

Written Testimony ............................................................................................ 13 

Responses to Questions for the Record ........................................................... 68 

(1) 

THE STATUS AND OUTLOOK FOR U.S. AND 

NORTH AMERICAN ENERGY AND RESOURCE 

SECURITY 

TUESDAY, JULY 18, 2017 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:35 a.m. in Room 

SD–366, Dirksen Senate Office Building, Hon. Lisa Murkowski, 

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI, 

U.S. SENATOR FROM ALASKA 

The CHAIRMAN. Good morning. The Committee will come to 

order. 

We are here today to consider the status of U.S. and North 

American energy and resource security, to review our production, 

our imports and our exports and where we are as a country, as a 

continent, in light of them. 

The good news, I think, is that we are in a much better place 

today than even a few short years ago. It was not long ago that 

peak oil and the need for LNG exports dominated policy discussions here on Capitol Hill. Prices were high, our production levels 

were low and our energy security was at risk as a result of outside 

decisions and disruptions, particularly those in the Middle East. 

But I think we have seen that times have changed, and I would 

say for the better, due to tremendous innovation and technological 

advances, our nation has moved away from energy scarcity and isolation. We are in the midst of a significant surge in oil and natural 

gas production with renewables making a noteworthy contribution. 

We have also taken steps to open up our markets, especially by 

lifting the ban on export of domestic crude oil which by all accounts 

stands as a smart, timely and beneficial move. 

Today we are far more energy secure than at any point in recent 

memory, and we have reached a point where energy dominance, to 

borrow the Administration’s phrase, has become a real and legitimate policy goal. 

We are in a position to export energy to our allies, lessening 

their dependence on unfriendly and unpredictable regimes around 

the world. That will allow us to create new jobs, generate new revenues and improve our balance of trade, while also providing affordable and reliable energy supplies to countries around the world. 
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OPEC no longer holds all of the cards when it comes to the price 

of oil. Our friends in Europe and Asia have an excellent new option 

to reduce their dependence on natural gas from Russia. This Administration, I think, deserves support for its efforts to increase access to keep these good trends going. 

Alaska is certainly ready to help strengthen our energy security. 

We are the most resource rich state in the nation. We currently account for six percent of the total energy production in the United 

States, but we have the opportunity to do a lot more. 

Given recent discoveries both onshore and offshore in Alaska, 

along with our long-standing efforts to produce in our national petroleum reserve, the non-wilderness portion of ANWR and our offshore Arctic, we can and should celebrate this 40th anniversary of 

the Trans-Alaska Pipeline System by agreeing to refill it. Doing so 

would help our economy, our budget and our energy security while 

at the same time making sure that we protect the environment. 

Of course, oil and gas are just a part of the energy security picture. We have abundant coal reserves, significant growth in renewable generation, a large nuclear fleet and a reliable electric grid. 

Yet, we should also recognize that some developments, especially 

those in nuclear energy, are not as positive and threaten our longstanding, global leadership in key fields. 

We cannot forget about our mineral security either. It is routinely ignored but increasingly critical to our future. We are becoming more and more reliant on minerals for everything from 

smartphones and solar panels to advanced defense systems, but 

our mineral security has fallen dramatically year after year. I believe that we have to pay greater attention to this, and we have 

to take steps to resolve it. 

This morning’s hearing is also an opportunity to recognize our 

close ties with our neighbors, Canada and Mexico, which also have 

dynamic energy sectors. We have long had robust energy trade 

with both nations through both electric grids and pipeline systems. 

As we look to what the future will hold, we should consider not 

only our national security but also our continental security and the 

significant benefits that will provide to us. 

I want to welcome our distinguished panel who will help us understand what is happening in global markets and with geopolitics, 

from domestic production and export policies to potential sanctions 

on other nations. There is a lot to consider, to understand and to 

work through right now. 

I thank you all for being here to share your expertise with us, 

and I look forward to your testimony. 

At this time, I will turn to Ranking Member Cantwell for her 

comments. 

STATEMENT OF HON. MARIA CANTWELL, 

U.S. SENATOR FROM WASHINGTON 

Senator CANTWELL. Thank you, Madam Chair. Thanks for scheduling today’s hearing on energy and resource security. 

As we all know from the Quadrennial Energy Review that was 

done in the last Administration about the energy needs of our 

country moving forward, enhancements to our electricity grid for 

more renewable energy sources and the complexity of dealing with 
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aged infrastructure and what I would call, probably, robust commodity competition on our rail lines and the structure of where energy is developed and moved to, has created new challenges. 

The Quadrennial Energy Review also pointed out the very important need to protect critical energy infrastructure from both physical and cybersecurity threats. I believe we must take this action 

very seriously in protecting our energy infrastructure from cybersecurity threats to ensure America’s energy security of the future. 

As was just reported last week by the Washington Post, it is 

clear now that there were Russian government hackers who tried 

to infiltrate a U.S. nuclear power plant. I believe we need to act 

and we need to act now. 

Our grid and energy networks are under constant cyberattack. 

From 2012 to 2016, reported cyber incidents against U.S. critical 

infrastructure more than doubled. In December 2015, suspected 

Russian hackers infiltrated three Ukrainian utilities knocking out 

power to more than 225,000 customers and they did it again to a 

utility north of Kiev earlier this year. Recently, the U.S. Department of Energy described the incident in Ukraine as ‘‘step change 

in sophistication and intent of hackers.’’ 

My colleagues and I have repeatedly pressed the President and 

Secretary of Energy to take more aggressive cybersecurity action 

now. I would also say that our House colleagues need to get more 

serious about cybersecurity. As the Washington Post noted, ‘‘Russian government hackers have already shown their interest in targeting U.S. energy and other utility systems.’’ In fact, the Russians 

have more than just a passing interest in infiltrating our grid. Just 

10 days ago the Post reported that, ‘‘Russian government hackers 

were behind cyber intrusive attacks into the business systems of 

U.S. nuclear power plants and other energy companies in what appears to be an effort to assess their networks.’’ This should set off 

alarm bells across our government and energy sector and the general public, and I have requested a secure briefing on exactly what 

has transpired in this matter. 

In addition, the Christian Science Monitor has reported, ‘‘Cyber 

spies linked to China’s military targeted nearly two dozen U.S. natural gas pipeline operators stealing information that could be used 

to sabotage U.S. gas pipelines.’’ 

Although we have mandatory cybersecurity standards for electric 

utilities, natural gas and pipelines are merely subject to voluntary 

agreements issued by the Transportation Security Administration, 

which has a small staff to oversee millions of miles of pipelines 

that transverse the country. 

The security of our pipelines is not only important to prevent attacks, but also to protect the public. DOE’s most recent Quadrennial Energy Review suggested it is important that we consider 

whether additional or mandatory cybersecurity guidelines are necessary for natural gas pipelines given their increased dependence 

between the electric and natural gas sectors. 

Now that we see these vulnerabilities that the Russians have exposed to hacking our grid and the cybersecurity threat, we need to 

take additional actions. So I want to make sure that we are pushing the Administration in helping plan for the future. 
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Today, I am sending a letter to the Government Accountability 

Office to ask them to conduct an assessment that the United States 

must prioritize protection of our critical energy infrastructure and 

we cannot afford to wait before we have a large-scale attack. I hope 

to get an answer on where we are with our abilities on pipelines 

and making sure that our pipelines are secure for the future. 

Madam Chair, we also, obviously, learned from the Quadrennial 

Energy Review that we need to continue to diversify our energy 

mix and the consequence of climate change that threatens the wellbeing and increases geopolitical issues around the globe. In the G7, 

they noted the importance of ‘‘reducing greenhouse gas emissions 

and accelerating the transition to a low carbon economy as a key 

contributor to enduring energy security.’’ So I couldn’t agree more. 

There is alot to do, and lots of changes have happened in the energy sector. We must prioritize those things that are going to help 

us be secure for the future. 

I look forward to hearing from the witnesses today. 

The CHAIRMAN. Thank you, Senator Cantwell. 

We will now begin with our panel. 

I would mention to colleagues that we had invited Dr. Fatih 

Birol, who is the Executive Director for the International Energy 

Agency. He has appeared before this Committee many times and 

up until yesterday we believed that we had been able to work a 

schedule. But he has not been able to work within the limitations 

that we had and not without great effort on his part as well. 

I appreciate his willingness to testify. Even though he is not with 

us, we do have his written testimony which will be included as part 

of the record. 

[The information referred to follows:] 
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The CHAIRMAN. We have a very distinguished panel today. 

We will begin with Mr. Jamie Webster. Mr. Webster is the Senior Director for the Center for Energy Impact at Boston Consulting 

Group. 

Mr. Mark Mills has also been before the Committee. He is a Senior Fellow at the Manhattan Institute. 

We have Brigadier General Stephen Cheney, who is the Chief 

Executive Officer for the American Security Project (ASP); and Mr. 

Robert Coward, who is the President of the American Nuclear Society. We welcome you to the Committee. 

Mr. Dan McGroarty will wrap the panel up. He is the Principal 

of Carmot Strategic Group. 

We would ask you to try to keep your comments to five minutes. 

Your full statements will be incorporated as part of the record. 

Mr. Webster, if you would like to lead us off? 

STATEMENT OF JAMIE WEBSTER, SENIOR DIRECTOR, CENTER 

FOR ENERGY IMPACT, BOSTON CONSULTING GROUP 

Mr. WEBSTER. Thank you very much, Chairman Murkowski, 

Ranking Member Cantwell and members of the Committee. I appreciate the opportunity to testify before you today on the current 

status and outlook of the U.S. North American energy security. I 

appear before you in my role as a Senior Director at the Boston 

Consulting Group’s Center for Energy Impact and also a non-resident Fellow at Columbia University. 

The United States is undergoing an energy revolution that is expanding U.S. oil and gas capabilities in all ways, from production, 

to pipelines, refineries, storage facilities and export terminals. This 

has impacted the global supply balance, changed trade relationships and lowered prices for consumers. This increased energy security has allowed the United States to take a leading role as a 

global energy supplier. 

The U.S. Energy Information Administration has noted that the 

U.S. has now, for the fifth year in a row, the largest natural gas 

and oil producers in the world. For U.S. natural gas that production rise began in 2006 and has expanded more than one-third 

since that time. In light of this, U.S. energy security, as it relates 

to natural gas and the concerns about a lack of natural gas and the 

need for imports quickly vanished as Henry Hub dipped below 

$5.00 in 2008 and have not risen above that level, sustainably, 

since that point. 

Since that, since the price decline, the resilience of U.S. producers has been aided by finding new markets, with U.S. LNG now 

being offered for sale on a global basis. Far from imperiling U.S. 

energy security, these rising exports are actually increasing energy 

security for both the U.S. and the world. The ready export outlet 

will allow producers to keep natural gas flowing into homes and 

power plants at less cost, and exports of LNG are providing consumer countries with another choice of energy supplier, allowing 

them to negotiate better pricing and increasing market responsiveness. 

The U.S. is now expected to be one of the top three natural gas 

exporters in the world by 2020. To meet this there are expectations 

of export terminals on all three coasts. Along with that is a growth 
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in natural gas storage which has expanded more than a trillion 

cubic feet in the past 10 years with more than 20 new fields added. 

Oil from the shale region started to grow after production in natural gas was hit by the lower prices and arguably had its first significant impact in 2011 when U.S. light, sweet crude began to replace imported barrels from OPEC’s Nigeria. This was an important energy security turning point as it blunted the risk of production outages from this country. A reminder that Nigerian production outages caused by strife in the Nigerian Delta region were a 

key factor in raising global oil prices above $100 in 2008, that summer U.S. drivers paid as much as $4.72 per gallon for gasoline. 

This past Fourth of July weekend, 20 percent of consumers were 

able to get natural gas—gasoline for less than $2.00. 

There are concerns about the longer-term durability of North 

American energy security, particularly as it relates to oil. Those 

risks include: high decline rates; oil production in the shale regions 

decline by as much as 300,000 barrels a day, requiring substantial 

activity to keep going; drilled but uncompleted wells which are up 

by over 1,000 wells in the last year—the lack of being able to actually complete those is slowing down production growth; and a dependence on the Permian where most, 60 percent of production 

growth in the last year has actually come out of the Permian 

versus other places. 

Now there has been substantial growth in terms of rig productivity. A rig brought on today delivers 2.5 times as much productivity as a rig that was brought on in 2014, a credit to what the 

United States energy industry is able to do. 

The longer-term concern is the sufficiency in the global context 

that the U.S. oil is actually still a fairly small part of the system 

and a longer-term concern that there won’t be enough investment 

to keep prices down in the three- to five-year timeframe. 

We’ve also had extremely strong growth in refined product and 

being able to store oil over 100 million barrels a day. One hundred 

million barrels has now been put into capacity over the last several 

years, expanded storage capacity has also supported the operational needs for refineries, with refineries now producing or being 

able to produce 18.1 million barrels a day of capacity. This is the 

fifth year in a row that they’ve grown. 

The advantage to increased production, pipeline refinery and 

storage capacity in the United States is an expansion of not just 

our own energy security, but the ability to extend that to other 

countries. Add to this impressive mix that the fact that the United 

States has the most transparent, frequent and capable energy data 

system in the world in the guise of the Energy Information Administration, and this allows the benefits of the U.S. to be known and 

transmitted to all market participants benefiting and increasing 

energy security in the U.S. but also globally. 

Thank you very much. 

[The prepared statement of Mr. Webster follows:] 
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The CHAIRMAN. Thank you, Mr. Webster. 

Mr. Mills, welcome. 

STATEMENT OF MARK P. MILLS, SENIOR FELLOW, 

MANHATTAN INSTITUTE 

Mr. MILLS. Good morning. Thank you, Madam Chairman and 

thank you, Senators, for the opportunity to testify. 

I’d like to begin—I’m going to focus on geopolitics and security 

as well. I’d like to begin with, sort of, a mea culpa. 

It was about five years ago I published a paper titled, 

‘‘Unleashing a North American Energy Colossus.’’ And in the introduction of that paper I suggested that it was time that we begin 

to think in different terms and stop talking about energy independence and think in more of terms of energy influence and even, I 

wrote, ‘‘energy dominance.’’ 

Setting aside the fact that that word has gained political salience, I’d like to say that it is, in fact, obvious that the reality is 

America is already dominating global energy markets. No one in 

Moscow or Reade doubts that the global price collapse in gas and 

oil happened for any reason other than the fact of this astonishing 

revolution in the American shale fields. They’re worried not about 

what has already happened, but what could yet happen. 

Henry Kissinger, who all of us know, is a great statesman and 

sometimes the greatness expands with the passage of time which 

is a wonderful thing for statesmen. He wrote something that was, 

I thought, very insightful in 1999 in his book. He said, and I quote 

that, ‘‘Statecraft is the ability to recognize the real relationship of 

forces.’’ Let me very briefly summarize some real forces, three real 

forces of geopolitics. 

The first reality is that oil petroleum is more important to the 

global security and to the United States today than it was at the 

time of the Epoch setting 1973 oil embargo. The world consumes 

150 percent more oil today than it did then. Oil is the world’s largest traded commodity and the largest single source of energy supply in civilization today. In fact, 95 percent of all transportation, 

over 95 percent, is powered by fuel-burning engines. And 60 percent of all oil is now used to—for transportation. That share in 

1973 was just one-third. 

The second reality is that every credible forecast says that petroleum, and especially these days its hydrocarbon cousin, natural 

gas, will be more, not less important in the coming two decades. 

This is true, notwithstanding what I would call a universal affection for alternative energy, political, universal affection and literally hundreds of billions of dollars spent over the last four decades trying to replace oil and natural gas as primary sources of the 

world’s energy. There are simply no prospects for reducing today’s 

already enormous consumption of global gas and global oil, never 

mind reducing the increase that will come as the world’s economies 

expand. Really the only debate today, at the fundamental level, is 

how big the increase will be, not whether or not there will be an 

increase in global consumption of oil and natural gas. 

The third reality is, of course, the wild card that no one expected 

a decade ago or, in fact, I’d even say, expected five years ago, which 

is the emergence of the technology that we now call the shale revo-
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lution. The United States is now not just a major player, but also 

a major exporter and a growing exporter in world markets for both 

oil and natural gas. I think the magnitude of that revolution is still 

underappreciated. As much as we talk about it and hear about it, 

it’s still fundamentally unappreciated. 

Let me put it in this context. The quantity of energy and the velocity with which the amount of energy produced by the shale fields 

of America that secured in the past decade is the largest, single increase of energy supply to the world that has ever occurred in history, period. 

I’ll put it in domestic terms. The increase in domestic energy production, the shale fields of the United States over the last 10 years 

is 2,000 percent greater than the subsidized increase of combined 

increase of wind and solar in the United States. This is an astonishing transformation of energy markets which is still, I think, profoundly underappreciated. 

And the world has been doubly impacted by the shale revolution. 

It’s not just that the United States can export fuels; it’s that we 

have taken hundreds of billions of dollars of purchases off of global 

markets. This has deprived oil exporting nations of literally trillions of dollars and most of that depravation has been borne by 

OPEC nations and by Russia. 

Now as cheap domestic gas has also triggered a profound increase in domestic and foreign direct investment in manufacturing 

in the United States. Over the next several years we’ll see the effect of that as something on the order of $160 billion in private capital and foreign capital has been put into over 200 chemical manufacturing plants in the United States that are slated to come online 

over the next few years. This will have profound economic and geopolitical implications. 

What comes next? Let me, again, context what comes next briefly 

in two ways. 

First, the EIA and the IEA, but in particular, the Energy Information Administration’s two-decade forecast still sees the shale 

fields supplying 600 percent more net new energy to America than 

wind and solar combined. And that forecast from EIA assumes that 

over the next two decades the shale industry can only do as much 

as it did in the past single decade. I’d like to go on record here saying that that is almost certainly going to be an underestimate. 

Shale will do more. The reason it will do more is because of the 

information revolution that’s now underway. 

There’s a lot of discussion about how old industries of all kinds 

from groceries and transportation and car rental, hotels, are being 

impacted by analytics and big data and machine learning, Internet 

of Things. The 80 percent of our economy is tied up in the old part 

of our economic infrastructure which is being unleashed and revitalized by the new information revolution. 

Why would it not be the case that algorithms, if you like, won’t 

unleash more productivity of the shale fields? I will tell you that 

not only are they likely to, they’re already beginning to and in fact, 

one can argue they’ll have a bigger impact there for the very simple reason that the shale industry has so far, to use an awkward 

phrase, is a least digitalized of our old economy. 
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So the—let me conclude by quoting from Dr. Birol, who recently 

said in an interview that we are now witnessing the second 

unleashing of the shale expansion of the United States in shale 

production. And he said then it was price that would determine 

how fast that new production would grow. 

I’d like to respectfully disagree with half of what he said. The 

data are already in. The shale industry is in big resurrection mode 

from new technologies and from what Jamie has just said about 

the improvement in productivity, but we have just begun to see 

what will happen is information technology unleashes the second 

shale revolution, what I’ve called Shale 2.0. 

I think the only question is not so much what the price will be, 

is the extent to which policy helps or impedes the unleashing of the 

second shale revolution. 

Thank you very much. 

[The prepared statement of Mr. Mills follows:] 
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The CHAIRMAN. Thank you, Mr. Mills. 

Brigadier General Cheney? 

STATEMENT OF STEPHEN A. CHENEY, BRIGADIER GENERAL 

USMC (RET.), CHIEF EXECUTIVE OFFICER, AMERICAN SECURITY PROJECT 

General CHENEY. Thank you, Chairperson Murkowski and Ranking Member Cantwell and members of the Committee for inviting 

me to testify at today’s hearing. 

The American Security Project was founded in 2005 as a bipartisan initiative to tackle long-term challenges from a national security perspective, not encumbered by political bias. Our founders, 

Senators Kerry, Hagel, Hart and Rudman, asked to host the retired 

general and admirals to join ASP because their only interest was 

the security of our country. 

Our Chairperson, former New Jersey Governor, Christine Todd 

Whitman, and our entire board share a strong belief that energy 

security for the United States and how we produce energy is a national security issue of preeminent importance. 

My role in today’s hearing will be to offer a perspective of a national security professional. Having spent over 30 years as a Marine I know that, for the military, assured access to energy is a prerequisite to any operation. In the last 15 years the military has 

learned the hard way that energy should not be taken for granted. 

Our supply lines in Iraq and Afghanistan were a constant target 

for insurgents. In response, all four services have taken significant 

steps to both increase energy efficiency and reduce their single 

source dependence on petroleum fuels. Our country can learn a lot 

from our military’s experience. 

Before we can discuss where we are in energy security, we have 

to understand what we are asking. Energy security is generally defined as the ability to have uninterrupted access to energy resources at an affordable price. That’s a start, but I don’t think it’s 

enough because of the indelible link with global affairs. 

Our nation’s concept of energy security was defined in the American mind by the two oil crises of the 1970s. To ensure that nothing 

like that ever happens again should be our goal in building energy 

security; therefore, I would propose that we define energy security 

as the ability of a country to define its interest overseas independently from how it uses energy domestically. 

More importantly, energy security must not mean energy independence in the sense that all energy used in the United States 

comes from within its borders without international trade. In today’s globalized world, this is neither attainable nor desirable. 

Even domestically-produced energy sources are subject to fluctuation in global commodity markets. We must see energy security in 

today’s world as where countries, businesses and people share and 

compete in the global marketplace. In today’s globalized world, if 

one country doesn’t have security, their neighbors and allies don’t 

have security either. 

Finally, I will argue that we must see energy security as a longterm process, not as a moment frozen in time. Some policies and 

actions could build security today while harming our future security. Climate change is already affecting security both at home and 
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around the world, so we must make sure that we take the greenhouse gas emissions from energy into account less we trade increased energy security today for a warmer, more unstable world 

in the future. 

Thinking long-term, this way also means that we must invest 

now in scientific research and development into the next generation of energy technology. Factoring together each of these variables, my message to you Senators is that the current status of 

North American energy and resource security is good, but the outlook is hazy. 

There are few threats to America today that could stop our access to global energy markets, but I am concerned that there are 

emergent threats that could undermine our future security, if not 

addressed soon. Moreover, we must guard against bad policy that 

could undermine our future security. 

Our amazing increase in the production of oil and gas has given 

us some breathing room and the opportunity to invest in other 

long-term sources of energy. We cannot sit back and revel in our 

success with fossil fuels. We should not let our expertise in nuclear 

energy atrophy and ought to be pursuing small modular reactors. 

We ought to be continuing to support the rapid proliferation of renewables of all kinds to include wind, solar and biofuels. We ought 

to take advantage of this remarkable progress made in metallurgy 

and science to pursue fusion energy. We have seen far too many 

countries rely on a sole source of energy and look what has befallen 

many of them, not the least of which, perhaps, are Venezuela and 

Nigeria. 

We have a golden opportunity in front of us right now and we 

need to capitalize on it. 

Thank you. 

[The prepared statement of General Cheney follows:] 
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The CHAIRMAN. Thank you. 

Mr. Coward, welcome. 

STATEMENT OF ROBERT COWARD, PRESIDENT, 

AMERICAN NUCLEAR SOCIETY 

Mr. COWARD. Chairman Murkowski, Ranking Member Cantwell, 

members of the Committee, thank you very much for the opportunity to testify today. 

I am here in my role as President of the American Nuclear Society. Our society is dedicated to the peaceful use of nuclear science 

and technology. Our 11,000 members come from all sectors of the 

nuclear energy community: utilities, suppliers, national labs, universities, government agencies. 

We commend the Committee on its bipartisan work to modernize 

U.S. energy research and development and production policies. 

The focus for today is energy security, and by energy security I’m 

going to agree with Brigadier General Cheney, what we really 

mean is resiliency. I’m going to focus on the electricity and the electricity grid since that’s my main area of experience. And for the 

grid, energy resiliency is a simple concept. Independent of whether 

the sun is shining, the wind is blowing, the coal pile is stocked or 

the natural gas pipeline is flowing, we have confidence in our ability to deliver electricity to the grid. 

If you think about the Polar Vortex in 2014 in the Northeast, 

coal piles froze, natural gas pipelines were choked. Without the nuclear plants that remained online, we very likely would have faced 

widespread blackouts. 

Nuclear power plants refuel every 18 to 24 months, so they don’t 

rely on just-in-time fuel delivery or specific weather to operate at 

full power. Over the past 15 plus years, U.S. nuclear plants have 

operated over 90 percent of the time. Typically shutting down only 

for long-planned refueling. This is truly the definition of resilient. 

Resiliency also extends to stability and predictability of pricing 

and cost. A nuclear power plant can accurately predict the cost of 

the power it will produce for every day of the coming year and, 

often, for multiple years. 

Nuclear power plants also help anchor the electricity grid in the 

U.S. Grid operators rely on nuclear’s roughly 20 percent share of 

power production to maintain stability as electricity demands rise 

and fall throughout the day. A crucial attribute as intermittent 

sources become a larger percentage of our generation portfolio. 

Energy security also demands that we generate power in ways 

that preserve our resources and protect our environment. This is 

where nuclear power begins to truly stand out. 

Nuclear power accounts for about 60 percent of all U.S. non-emitting electricity generation, emitting essentially no greenhouse 

gases or pollutants. Yes, nuclear power generates used fuel and 

other waste, however, those are small in volume, contained in 

space and can be handled and disposed of with safe, non-hazardous 

methods. 

Nuclear power plants also have a high energy density, very 

small, physical footprint. For example, the electricity generated 

from a 1,000-megawatt power reactor which typically sits on about 
35 

1.5 square miles would require about 50 square miles of solar panels or a wind farm over about 300 square miles of wind turbines. 

Finally, the U.S. nuclear power sector contributes to our national 

security, a factor sometimes as misunderstood as it is important. 

Almost all nuclear power programs around the world trace their 

technology back to U.S. origins. For decades, our role as the worldwide leader in nuclear technology has enabled us to positively influence the nuclear safety and non-proliferation norms of the world. 

Right now, dozens of nations are building nuclear power plants 

or actively considering adding nuclear to their portfolio for all the 

same reasons I described for us. These countries are going to proceed whether we participate or not. If U.S. suppliers cannot compete in this geopolitically significant marketplace, our competitors 

in Russia and China will and they will win. And it is unrealistic 

to think that U.S. suppliers can compete in world markets without 

a healthy nuclear power program here at home. 

Nuclear power is the ultimate, strategic, long-term asset; however, we increasingly find ourselves in a tactical, short attention 

span, ‘‘what have you done for me yesterday’’ world. As leaders and 

policymakers, we cannot allow our long-term energy and national 

security interests to be determined by how much electricity costs 

on a spot market at two a.m. on a Monday morning. 

Resilient, reliable, non-emitting and clean power plants are shutting down. We must be strategic. 

With that goal in mind, we recommend Congress consider the following strategic directions: support the current U.S. nuclear fleet— 

they are vital U.S. assets; equalize the level of subsidies, tax credits and regulatory costs for all non-emitting sources and fund continued R&D to extend the life of these valuable facilities; continue 

and expand support for the development of small modular and advanced reactor systems; continue to invest in the development of 

the next generation workforce and the research and development 

infrastructure at our national labs and universities; demonstrate 

forward progress on fixing our broken nuclear waste policy; and 

last, improve our nuclear export regulations and financing opportunities to ensure that U.S. nuclear manufacturers and suppliers can 

be competitive in the international markets. It’s important. 

I thank you again for the opportunity to speak today, commend 

the Committee for its leadership in nuclear technology policy and 

I look forward to answering any questions. 

[The prepared statement of Mr. Coward follows:] 
36 
37 
38 
39 
40 

The CHAIRMAN. Thank you, Mr. Coward. 

Mr. McGroarty, welcome. 

STATEMENT OF DANIEL McGROARTY, PRINCIPAL, 

CARMOT STRATEGIC GROUP INC. 

Mr. MCGROARTY. Thank you. 

My thanks to Senator Murkowski, Ranking Member Cantwell 

and members of the Committee for the opportunity to take part in 

the hearing this morning. 

I am Principal of Carmot Strategic Group, an issues-management firm based here in Washington, DC, and strategic resource 

issues are a core element in my practice. 

By way of disclosure, I advise Texas Mineral Resources, Graphite 

One, American Manganese and Rio Tinto, companies that are 

working to develop new sources of metals and minerals ranging 

from copper and graphite to cobalt, manganese and rare earths. 

I also run the American Resources Policy Network, a virtual 

think tank that focuses on all aspects of domestic non-fuel resource 

production, and I consult to the Institute for Defense Analyses, 

which supports the Department of Defense on issues related to 

strategic materials and resource security. In my testimony today, 

the views I express are my own. 

The focus of today’s hearing, the outlook for U.S. and North 

American energy and resource security, offers a starkly differing 

portrait. On the energy side, as we’ve heard, the emergence of a vibrant oil and natural gas sector after generations of energy dependence, a resurgence so remarkable that we are now seeing the U.S. 

transformed into an energy exporter. On the hard-rock side of the 

resource sector, the picture is dramatically different, a deepening 

dependency on foreign supply for more and more metals and minerals. 

According to the most recent USGS Mineral Commodity Summary, the United States is now 100 percent import-dependent for 

20 metals and minerals, up from 19 a year ago. Meanwhile, there 

are now 50 metals and minerals for which we are more than 50 

percent import-dependent, compared to 43 just one year ago. That’s 

roughly half the naturally-occurring elements on the Periodic 

Table. 

As for where our metals and minerals come from, the USGS map 

shown here, the heat chart, shows which nations provide the minerals for which the U.S. is more than 50 percent dependent. Of the 

50 metals on that list, China is a significant supplier of 28. That’s 

up from 21 just one year ago. As just one indicator of our resource 

reliance on China, in the 206 pages of the current USGS report, 

the word ‘‘China’’ appears 384 times. 

Let me share with the Committee a quick snapshot of the degree 

of our dependency. We are 100 percent dependent for graphite and 

manganese, needed in the lithium-ion batteries that power our 

electric cars as well as the drones flying over Iraq, Afghanistan and 

our southern border. We’re 100 percent dependent for the rare 

earths used in wind turbines and in our F–35 Joint Strike Fighter. 

We’re 100 percent dependent for the indium that conducts heat 

from our fingertips to our touch screens and enables our special operators’ night vision goggles. We’re 99 percent dependent on 
41 

gallium needed for solar panels as well as missile defense radar. 

We’re more than 80 percent dependent on imported rhenium used 

in jet fighter turbines and more than 70 percent dependent for the 

tellurium used in solar panels and for the cobalt used in EV batteries and jet aircraft super-alloys. And this, in spite of the fact 

that the U.S. is resource rich, blessed with known resources of dozens of the critical metals and minerals that are shaping our 21st 

century. 

Without in any way diminishing the dangers of our resource dependency, I do want to note some positive developments taking 

place, largely in the area of process improvements that point to the 

ability to extract minerals from unconventional sources. I’m talking 

about reclamation programs supported by the Department of Energy and the Critical Materials Institute to extract rare earths 

from coal deposits, from waste piles left behind by prior mining and 

to advance recycling efforts to recover metals from eWaste. Add to 

that, projects backed by the Defense Logistics Agency to encourage 

domestic production of metals and minerals needed for advanced 

weapons platforms. But in a $4 trillion federal budget, spending more than $10 billion each day, every day, the collective funding for these innovative 

efforts amounts to just a few hours of federal spending at a time 

when state-backed enterprises from China and Russia are focused 

on locking up metals and mineral deposits worldwide. On a geo-political level, a resource war is underway, but for the U.S. the battle 

has not been joined. 

If we are serious about ensuring U.S. military power and reviving American manufacturing, we must reverse the deep dependency on foreign metals and minerals and treat American resource 

security with the same seriousness and one would hope, the same 

success, as our approach to American energy security. 

Thank you. 

[The prepared statement of Mr. McGroarty follows:] 
42 
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44 
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The CHAIRMAN. Mr. McGroarty, thank you. I appreciate your 

comments there just in reminding us some of the daily uses that 

we all take for granted and the vulnerability that we have. 

I would like to start off my questions this morning focused a little bit on oil, and specifically, to the oil export ban. 

It has been a couple years now, 19 months exactly, since we lifted the domestic ban on crude oil. There was a lot of discussion at 

that time about what may or may not come about were we to roll 

back that policy that had been in place for decades. 

There were some who said, nobody is going to want U.S. oil. 

There were those that predicted that the price would skyrocket if 

anybody did actually buy it. But instead what we have seen are 

prices that have been relatively moderate, even as our exports have 

now topped over a million barrels a day, just in some recent weeks. 

I guess I would direct this to you, Mr. Webster, and to you, Mr. 

Mills, in terms of where we are with the opportunities that we 

have as oil exporters and the international benefits that then come 

to it. Mr. Webster, you certainly referred to that. But again, there 

was a lot of speculation that there was going to be, not a doomsday 

scenario, but that some of the fears that have been talked about 

were going to materialize and 19 months, perhaps, is not enough 

of a test case for us. Do you see this moving forward into the out 

years in terms of stability of prices and, again, just the opportunities that come with developing these alliances with other nations 

that are eager to receive our oil? 

Mr. Webster? 

Mr. WEBSTER. Thank you, Chairman Murkowski, for that question and thank you for, I know you worked on this issue quite a 

bit when it was coming up. I remember your speech at the Brookings Institution some years ago to, kind of—— 

The CHAIRMAN. We dared to raise the issue. 

Mr. WEBSTER. Yes. 

The CHAIRMAN. And low and behold. 

Mr. WEBSTER. I will answer your question on has there been 

enough time. I think there actually has been enough time, that this 

has been fantastic for U.S. producers, U.S. consumers and the concerns that this would really hamper U.S. refiners and cause them 

to stop investing and there would be a real loss is belied by the recent EIA report that refinery capacity in the United States has actually grown again. And so, this is despite the view that, you know, 

the concern that some had at the time that we’d be exporting our 

resource and leaving us in a worse spot. 

We’re exporting, as you said, more than a million barrels a day 

at times to as many as 26 countries per the EIA. Prices and the 

differentials that are required to allow exports but still allow refineries to take on that oil have been there, so you have seen a lot 

of oil go in other places. 

The interesting thing is that it has given both domestic and 

international refiners a greater range of choice. Refineries don’t 

just use one particular type of oil, so they can now more tailor 

make their slate of oils. That’s why you’re starting to see, actually, 

an increase in crude oil imports back into the United States as 

they are blending that increased production out of the United 
46 

States, crude oil which is quite light, as you know, and blending 

it with other, sort of, material from other countries. 

This has been a benefit in that this extends U.S. production to 

other countries. And obviously, at least in my opinion, any oil that 

comes out of the United States is generally more stable than just 

about any other, sort of, oil in terms of that going forward. 

So I think it’s been extremely positive. 

The CHAIRMAN. Mr. Mills, do you care to comment? 

Mr. MILLS. Let me agree with Jamie and also thank you for your 

leadership on this. It was those of us in the community who 

thought we should export oil were, seemed to be a minority, even 

on both sides of the political aisle for quite a long time. 

I think it’s unequivocally the case that the experiment of 19 

months has demonstrated the benefits overall for consumers everywhere, not just America. We’ve helped stabilize the world. 

Let me answer the question about what could be done next, 

where could we go? I think we have untapped opportunity to do far 

more. We’re now a larger exporter of crude than five OPEC nations, four or five OPEC members. We could become one of the 

largest, by that I mean North America, one of the largest exporters 

of both crude and natural gas in the coming decades. 

This would be astonishingly impactful and very beneficial, not 

just to our security but to our economy and to the world because 

we play a role in, not only stabilizing prices, we’re now, in effect, 

half of the throttle. It used to be OPEC was the entire throttle on 

oil prices. We now, we have our hands firmly on the wheel and one 

foot on the gas pedal as well which means that oil prices are going 

to be range bound in the future by American behavior. 

We could change the game, not just by helping the shale industry 

by getting out of the way, so to speak, but there’s a lot more to be 

done yet. I mean, I’m saying the obvious to you but when you think 

of a combination of what Alaska can yet do and has not been unleashed to do, what the Gulf of Mexico is just starting to do and 

the new leases that the nation of Mexico has granted to foreign entities to begin producing from the shallow waters, the very productive shallow waters that they own. If we add to that the rest of the 

Atlantic Coast and the other conventional deep-water capacities we 

have which are getting better, this combination in the United 

States, I think, is reasonable to think in terms of, not just increasing a little bit, we could double, triple and quadruple our exports 

of oil and natural gas. This is profoundly impactful. 

And it doesn’t mean, and I’ll state for the record because when 

you, when one is bullish about oil and gas the implication is that 

one doesn’t think that we should pursue alternatives for oil and 

gas. The reason in my opening remarks I pointed out the realities 

is that realities are what they are. 

Airplanes in the world fly on oil and they will for a long time. 

Most cars, even if Elon Musk is astonishingly successful, even more 

successful than he’s already been, most cars will still burn oil 20 

years from now. The world needs lots of oil and gas. We can do 

both, and we can generate the economic foundation if we’re doing 

the alternatives by having cheap energy in the primary areas. And 

that’s where all the United States, and in particular, unleashing 
47 

that trapped oil that I’m very familiar with in Alaska that needs 

to get down in that pipeline and get into world markets. 

The CHAIRMAN. Thank you both. 

Senator Cantwell. 

Senator CANTWELL. Thank you, Madam Chair. 

Gentlemen, I think in a different decade we would be here talking about supply disruptions and challenges, but today we are here 

and the issues of supply disruption now take a new twist and turn 

and that is the issue of cybersecurity. 

Brigadier General Cheney, you mentioned this. How much do 

you think we need to think about upgrading our security of our 

critical infrastructure as it relates to these recent attacks, both 

internationally and domestically? 

General CHENEY. Well Senator, thanks for your question and 

there is no doubt cyber is a huge threat, a threat to our security, 

threat to our energy sources. 

As you well explained, there’s been multiple attacks on all of our 

grids and if we just put our head in the sand and don’t put the 

funding toward it or the research that’s needed to counter these, 

it’s going to get worse, significantly worse. If the Administration reduces funding to those opportunities that we have to counter cyber 

threats, then they’re just going to get worse. 

So this is a tremendous threat to our national security, and it’s 

worldwide. The military sees it every day, and that’s why we created Cyber Command. We put our best and brightest over there to 

counter those threats. When you see what can be done to the grids 

worldwide and can be done here, it’s a tremendous national security threat. So perhaps I’d rate it almost at the top. 

Senator CANTWELL. Okay. So, what do you think are some of the 

things that we should be doing to pursue better alignment? Some 

of the things that are being done right now are, you know, voluntary. And what do you think we should be pursuing? 

General CHENEY. Well, of course the vast majority of our utilities 

are privately owned in this country and enforcing upon them to do 

the research and then necessarily help to counter cyber threats is 

not the way to go about doing that. 

I think you need to fund that from the federal level. You need 

to do research and development on cyber. You need to have a 

healthy Cyber Command that’s looking at these threats and you 

need to assist all the utilities in the country in countering these 

threats. DHS needs to be involved. They need to be robustly funded 

to counter the threat that’s there. 

Senator CANTWELL. One of the things that Senator Murkowski 

and I were able to do is have a discussion in the Pacific Northwest 

when we were out there looking at a variety of grid issues, both 

in Alaska and Washington. The State of Washington has gone to 

a great degree in getting the National Guard to also plan on a response side so there is a response mechanism to cyberattacks. 

Do you think that is a wise—— 

General CHENEY. It’s absolutely wise. 

When you look at any catastrophic event that happens in this 

country, for instance, Superstorm Sandy, Katrina, they all become 

joint events. The Army, Navy, Air Force, Marines, Air Guard, the 

National Guard, all respond to those events. And I don’t think you 
48 

can segregate cyber from that type of catastrophic event where 

there’s something that’s going to happen. You have to have the 

Guard involved. They have to be planned. 

If all the power went out in your state, it’s going to be chaos. You 

need the Guard to help put that chaos down or assist. So, undoubtedly, they have to be involved. And I think all of the Department 

of Defense needs to be involved. 

Senator CANTWELL. Thank you. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Cantwell. 

Senator Cortez Masto is not here. 

Senator Heinrich. 

Senator HEINRICH. General Cheney, I want to follow up on the 

question that Senator Cantwell brought up and take it one step forward because, kind of, there are the challenges inherent to managing a grid today where we have cyber threats that simply were 

not at the top of our mind when we designed this architecture and 

designed it for reliability and oftentimes don’t upgrade the software 

on some of these controls because we just like it running the way 

it runs. 

I say this as somebody who was somewhat exposed to these 

things growing up in a utility household where my dad was responsible for a lot of that reliability. 

Have you thought about the next step of how changing the grid 

architecture itself moving from the 1970s, 1980s model of one-way 

generation as we get more distributed energy resources into that 

grid whether that is distributed generation, whether that is storage 

in exchange for, maybe, new transmission or new substations, et 

cetera, how that will impact the resiliency of the grid and what we 

should be thinking about as that natural evolution occurs? 

General CHENEY. You know, Senator, great question. 

I think there’s no doubt and I hear my contemporaries talking 

about oil and the future of oil, but you need to diversify your source 

of energy here. I mean, you can even look at Saudi Arabia today 

and they’re thinking long, long-term that somehow they’ve got to 

wean them off this oil economy. The same thing applies to our infrastructure. The same thing applies to bases and stations. 

When I was a Base Commander down at Paris Island, we relied 

entirely on the local grid. If that grid went out, we had an alternative backup, an oil-fired power plant that would temporarily provide us power. But if we had a long-term source of our own power, 

as is being developed in the DoD today with net zero programs in 

the Air Force and Army at a huge number of bases, Fort Bliss, 

Nellis Air Force Base, what they’re doing is going to a case where 

they would produce more power than they can consume and not 

have to depend on the local grid in case that goes down. It’s a tremendous security issue. Your base would shut down if that was the 

case. So you have to diversify and these are some of the ways you 

can do that. 

Senator HEINRICH. Right. We saw that just a few years ago with 

Kirkland Air Force Base as we saw gas come offline, natural gas 

losing pressure and having to shut down, doing millions of dollars 

of damage as we lost that source of energy. 
49 

And you mentioned Saudi Arabia. I don’t think you have to look 

to the other side of the world to realize how much things are 

changing, and a lot of it has to do with economics. 

You look at New Mexico and we have a chunk of that Permian 

Basin production. But at the same time, when you look at the electrical generation side of the scale which has seen more change than 

the transportation side, we are seeing two and three cents power 

from solar PPAs and from wind farm PPAs that are driving this 

change and driving an awful lot of economic development as a result. 

Which brings me to a question for you, Mr. Coward, because as 

you mentioned there are a lot of nuclear power plants that are currently shutting down because of economic conditions, because the 

reality is we do live in a spot market. And I don’t know how you 

make ten cents power function in a four-cent spot market. 

So what are we doing to make the U.S. nuclear fleet more economically competitive at a time when you are seeing it undercut 

by a factor of two or three from other generation sources? 

Mr. COWARD. Well, I think, if you look at the industry, got together, to use a phrase, about a year and a half ago, two years ago 

and said, we’re going to leverage the experience, the insights, the 

knowledge of all of us in the industry and work together to identify 

all the various opportunities to be more efficient, more effective, 

eliminate non-value work. That program is working right now and 

we’re seeing the costs go down some. There are still regulatory 

costs which the industry believes are higher than they need to be. 

I think the simple fact, I’ll just cut to the end, I think the simple 

fact is a nuclear power plant can put power onto the grid. A reliably, well-run plant can put power onto the grid. It goes over the 

fence at about three cents a kilowatt-hour. When you add T&D, all 

the overhead from the utility system, that’s how it gets to ten. 

It’s competing right now with natural gas plants which are somewhere in the teens and it’s competing with wind which is getting 

a little bit, which is getting about 2.3 cents a kilowatt-hour tax 

credit. 

And so, you know, you mix all that together and the reality is 

in the end, I’ll be honest, a nuclear power plant is not going to compete with—— 

Senator HEINRICH. We can all play the levelization game, but you 

also get a benefit having to do with your insurance that is substantial. And so, if levelized everybody was going to say, okay, this is 

the future. Why aren’t you attracting more investment? 

Mr. COWARD. I think we’re not attracting more investment because it is difficult for nuclear power to be the low-cost provider in 

a low-cost decision market. We don’t believe the decision should be 

made on low-cost today. We believe decisions should be made on a 

strategic, longer-term, diversity, resiliency, security basis and that, 

just like some people buy an Accord instead of a Civic, that there 

are reasons to still promote a nuclear power program, that the 

value is there overall. 

Senator HEINRICH. I think that is a tough sale to the consumer. 

Mr. COWARD. We know that. 

The CHAIRMAN. Senator Heinrich, thank you. 
50 

And my apologies, Senator King, I skipped right over you. Mea 

culpa, mea culpa. It is now to you. 

Senator KING. I will find a way to get back at you, Senator. 

[Laughter.] 

Thank you very much. No problem at all. 

I have to note that I think every single one of you have mentioned EIA somewhere in your testimony and the data that was 

provided. The current Administration budget cuts EIA. 

We have also had quite a bit of discussion about energy reliability and the grid. The budget cuts the Electric Delivery and Energy Reliability Office in the Energy Department by 40 percent. So 

I just note those data points in terms of our consideration of this 

budget. 

The Chair and I were at a conference this morning on the Arctic. 

Arctic sea ice has declined by two-thirds in about the last 15 years. 

I was in Greenland this time last year and saw what is happening 

there where the retreat of the ice sheet is accelerating in ways that 

no one imagined, even five or six years ago. There is a cost to this. 

General Cheney, I want to complement you on your testimony. 

You were balanced, and you talked about the costs and the benefits. I suggest you and Mr. Mills have lunch together and talk 

about that because the growth of the fossil fuel dependency is not 

an unalloyed good. We are going to spend a lot of money dealing 

with the consequences of climate change. We are going to be building walls. They may not be in Mexico, but they are going to be sea 

walls all up and down the coast of this country that are going to 

be incredibly expensive. 

And this is after spending most of my adult life in energy, my 

conclusion is there is no free energy lunch. Everything has a consequence. Everything has a result. Everything has a cost. I just 

think that is something we have to really focus on. 

Mr. Webster, a specific question. You mentioned about LNG and 

I understand the shale revolution, natural gas has been enormously beneficial to New England and to Maine. Here is my concern. Unrestrained LNG exports, explain to me how that doesn’t relate, result, in higher domestic prices. 

I am a country lawyer from Brunswick, Maine, but if you drastically expand the sales and the demand with the supply somewhat 

constant, although I understand it is growing, there seems to me, 

increases in prices are inevitable. 

Mr. WEBSTER. Thanks for your question, Senator. 

So there is some concern that prices might rise marginally because of exports. That was said, I think, in the first export application that was put in some years ago that I think that first one was 

that they might rise as much as six cents. 

With the rise of the Marcellus and the production growth that 

you’ve seen out of the Marcellus, you do have a lot of LNG export 

that can go elsewhere. The difference is that because of the increased cost on liquefaction, transport and then moving it to whatever market you’re talking about, that price is still fairly cheap 

back here in the United States. 

Senator KING. It is about—— 

Mr. WEBSTER. Sorry. 

Senator KING. ——between $2 and $3 a million BTU? 
51 

Mr. WEBSTER. That sounds about right. That sounds about right, 

Senator, yeah. 

Senator KING. And you think that is enough? I mean, I hope you 

are right. 

Mr. WEBSTER. Yeah. 

Senator KING. I don’t know the answer but it just concerns me 

that we are not—there have been economic studies, but we are 

reaching a point on exports where there could be a more significant 

effect. 

Do you share that concern that there is some point? 

Mr. WEBSTER. Actually, the more global concern right now, certainly over the next several years, is actually the concern that from 

a market standpoint that there’s far too much natural gas in the 

world than actually it’s looking for places on where it can actually 

find a home. 

You know, you’ve got increased exports out of the U.S., increased 

exports out of Australia. The demand that was expected in a couple 

of different countries is not quite—— 

Senator KING. Well Australia is one of the cases that worries me 

because they went into exports in a big way and their domestic 

price increased very substantially, something on the order of 100 

percent. 

You are not concerned? Do any of you want to comment on this 

problem? Is it not a problem? I don’t understand how you drastically increase the demand for a product and don’t increase the 

price and the market doesn’t increase. 

Mr. WEBSTER. I’ll pass that on to Mr. Mills because I know he 

has something on this as well. 

But certainly, we’ve also increased, again, we’ve also increased 

production more than a third just in the last few years. 

Senator KING. So—— 

Mr. WEBSTER. So you are right, you’re increasing demand. 

Senator KING. If you increase demand and increase production, 

I understand, you will end up with a similar price. 

Mr. Mills, are you worried about this at all or do you think we 

do not even have to consider the domestic effects? 

Mr. MILLS. First Senator, I want to thank you for the opportunity to have lunch with the General. It would be a pleasure. 

[Laughter.] 

I suspect we’d probably have a lot of similar views—or more 

similar than dissimilar when you speak in five-minute bytes. 

I would say the fundamental—I don’t have deep concerns about 

it, the short answer is. 

Australia did some structural things which, I would hope, we 

wouldn’t do with respect to expanding domestic use of natural gas. 

The real, the underlying question, you’re absolutely right, if you 

have a limited supply and demand rises, you end up getting price 

increases. This is, sort of, Economics 101. It’s a given. 

The real question at the, sort of, high level of extraction is how 

big is the supply? If the supply can expand faster than demand, obviously. 

Senator KING. Right. 

Mr. MILLS. Right? 
52 

So the real question is looking at global markets, to Jamie’s point 

right now, where the supply has expanded much faster than demand. This is why LNG prices and gas prices are in free fall globally, to everybody’s benefit, except Putin and Cutter. 

Our capacity to produce gas is so astonishing, I think it really 

has not been fully appreciated, not by this Committee, but in general. It is so astonishing and there’s so much natural gas capacity, 

so much untapped capacity to produce it, that, I think, this really 

changes the game, not just the way you describe worrying about 

price pressures. But I think it has not been factored into how we 

think about alternatives. 

My point about being bullish on oil and gas is not that’s what 

we should use, that’s what we are using. 

Senator KING. Right. 

Mr. MILLS. There are, just as you correctly said, that there are, 

sort of, limits to, you know, what can happen in reality, this is the 

physics of energy are what they are. 

Oil is a very dense fuel. It’s very good for flying airplanes with. 

It’s much better than a battery for a car. It will take a lot of 

money, a lot of time, to beat it. So, the reality is that low cost energy is a benefit, not an alloyed benefit, but it is an overall benefit 

because we need new technologies. 

So, I would just—— 

Senator KING. As long as we also consider the externalities of the 

costs of climate change, for example. 

Mr. MILLS. Well—— 

Senator KING. And those sea walls and other costs that we are 

going to have to bear. 

I am out of time. Can I just ask one question for the record, 

Madam Chair? 

Mr. McGroarty, a question for the record and I think you touched 

on this in your testimony which, by the way, was very good and 

very sobering. 

Do we have the minerals? Is this a case of us having to go abroad 

because they do not exist in this country? And if we do, what are 

the barriers to us being able to reduce our dependency on oversea 

sources for these critical minerals? 

If you could give a written response on that? 

Thank you. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator King. 

Know that we might actually get that on the next round, because 

I would like Mr. McGroarty to speak to that. 

We skipped over you already, Senator Cortez Masto, so now back 

to you. 

Senator CORTEZ MASTO. Thank you. I appreciate that. And I 

apologize, excuse me, I have a Banking Committee going on at the 

same time. 

I am going to ask that question because I am from Nevada and 

mining is very important in our state and we tried to—— 

[Inaudible comment from witness] 

Exactly, so listen—rare earths, as you well know, we tried to 

mine it and it was cost prohibitive. And I have watched over the 

years as China has taken the lead on this. 
53 

In Nevada, as you well know, the innovation in clean energy is 

crucial. We have Tesla there. We have drones. This new area for 

renewable energy solar, hydroelectric, geothermal, is key. 

So I was going to ask you the same question. What do we need 

to do? What are the barriers? How do we address this and is it too 

late for us to start looking at how we start investing in these metals and minerals that are going to be important for our clean energy future? 

Mr. MCGROARTY. I hope it’s not too late. 

We certainly are resource rich. Now, I’ll be careful on that and 

say, do we know that we have resources, known resources, for 

many of these metals and minerals? And the answer to that would 

be yes. 

Do we know if they’re economic or not? That’s a different question, partly because of the barriers and the complexities of funneling capital and finding that out. Right? 

Part of that is the permitting process which is, kind of, sprawled 

and is notoriously lengthy and opaque. And I would say the cost 

of that is higher for us as a country when the metals and minerals 

are critical and strategic, when there’s, you mentioned, Senator, 

Nevada, the Gigafactory, for instance, right? 

If you’re looking to build EV batteries, you’re going to need lithium. We know that from lithium-ion. The irony is lithium is the 

least in terms of volume. Why it’s named that is a good question. 

Graphite, manganese, nickel, cobalt, okay? We have deep dependencies in all of those. 

And then the question is, to the extent that they come from countries where there is political uncertainty, possibly instability, 

where they are ranked very low in terms of, you know, Freedom 

House indices of whether they’re free or not free. So, are we comfortable importing from those countries over time? The answer 

should be, if we could substitute our own, no. We should pursue the 

substituting of our own. 

Are we giving leverage to the Chinese, to the Russians and others? I cited on the heat map there this growing, rapidly growing, 

dependency on China which is mining these metals and minerals. 

So, the question is going to be we’re in the midst of this technology 

revolution. We’re going to need this stuff. 

I think we’d all like to see the United States manufacturing more 

of this, that we need, as opposed to being purchasers of it and then 

dependent for a price, dependent for, you know, geopolitical gamesmanship that could be played in the future of those kinds of things. 

We do it. We are fortunate in contrast to many other nations 

where they’re as dependent on these technology metals, but they 

do not have the resource underneath their land in order to remedy 

their dependency. 

We, I think, are in a different place. The Committee is working 

on that, particularly on critical and strategic materials to create 

more incentives. 

I mentioned a few small programs where this is happening. 

There are some very interesting things going on with some government support, you know, this idea of extracting rare earths from 

materials adjacent or associated with coal deposits is a remarkable 
54 

thing, right? And the Department of Energy is working on exploring that right now. 

The same thing with, I am not at all opposed, I’m not only for 

primary mining. I’m not opposed at all to reclamation work from, 

you know, waste piles that have been sitting around for generations or recycling, to the extent that we can efficiently and effectively, reclaim metals and minerals, half of the Periodic Table sitting in our iPhones, like micro amounts. Can we figure out a way 

to do that effectively and efficiently? 

Those are mines. Those are urban mines. And our dependency is 

so deep we have to get these materials from all of the above, new 

mines, reclamation, recycling, you name it. 

Senator CORTEZ MASTO. I know my time is up, and thank you 

for the conversation. 

Your testimony was sobering. It is an area, I think, I can hear 

from my colleagues, we would love to have further dialogue and 

discussion on how we try to ensure that we are leading the country 

in some of these, mining that is necessary for the future of our 

technology and renewable energy and where we would want to lead 

here in this country. 

So thank you. 

Mr. MCGROARTY. Thank you. 

The CHAIRMAN. There is just such a codependency between the 

future for our renewables, and not just our renewables but in all 

aspects of economic growth, and these critical minerals. So, I appreciate that. 

Senator Cassidy. 

Senator CASSIDY. Can I defer to—— 

The CHAIRMAN. I am sure that Senator Hirono would be anxious 

to accept that deferral. 

Senator Hirono. You are actually on my list ahead of Senator 

Franken, but if Senator Franken is being deferred to by Senator 

Hirono, who has been deferred to by Senator Cassidy— 

[Laughter.] 

Senator Franken, you are up. 

Senator HIRONO. I will go. 

Senator FRANKEN. You will go? 

Senator HIRONO. Yes. 

The Chairwoman recognizes me, so fine. 

I was intrigued by Mr. McGroarty, with your testimony because 

while we have all these rare minerals, it is, sort of, that we have 

gotten to a position where we have not really exploited what we 

have. Why was that? Is it because it was just so cheap to get all 

of these materials from outside of our country? What? Why did we 

allow this to happen? 

Mr. MCGROARTY. I think there is, yeah. We can blame Milton 

Friedman for that, right, I think, to some extent. 

I think what I would like to see added back into that equation 

is the potential dangers or costs associated with—that come from 

geopolitics, where, you know, it’s always nice to have something for 

the cheapest possible price, but there are certain things where, 

Senator, you referenced the fact that we were mining for a period 

of time some rare earths out of the Mountain Pass Mine in Cali-
55 

fornia. It, you know, did not make it. It went bankrupt. Again, 

we’re back at 100 percent dependencies. 

There are active efforts to remedy that and not all rare earths 

are created equal. So I wouldn’t go into all the details as to why 

that particular deposit might not have been optimal for what we 

needed because there are 17 rare earths and, you know, you need 

to be specific about which ones you’re after. 

But we, I think, a large part of it and this is something that this 

Committee knows well, but perhaps needs to be communicated far 

beyond this Committee, an understanding that our manufacturing 

might, our technology development is dependent on access to these 

things if we are going to win. You know, there’s tremendous genius 

in America and a lot of innovation and inventiveness, but we need 

the materials, the materials science, in order to make those products here and make those advances here. 

Senator HIRONO. I think that you describe an interesting scenario because for a state like Hawaii, I mean, we talk about depending on sources outside of our state for some very basic needs— 

such as in Hawaii we were the most oil-dependent state in the entire country for electricity. 

I want to ask, General Cheney, since 2006 Hawaii has cut its annual use of petroleum by 41 percent, or 20.2 million barrels, while 

renewable energy grew from 9.5 percent on the electricity side of 

the market in 2010 to 26.6 percent in 2016. 

The State of Hawaii has the most ambitious goals toward 100 

percent renewable and alternatives for our electricity. I would like 

to see a similar transition in the transportation sector. 

General Cheney, what policies do you recommend to accelerate 

the transition to electric vehicles or advanced biofuels that you referred to in your testimony? 

General CHENEY. Senator, congratulations on your progress on 

using renewables. I think it’s remarkable. 

And you’ll see tremendous progress, particularly in the Midwest, 

with the use of wind energy states that are coming now upwards 

of 40 percent of their energy provided by wind. So they certainly 

recognize the advantages of it, as you have as well. 

When I heard Mark talk a little bit about aviation and their dependence on fossil fuels for their energy, FedEx has, at one time 

or another, fueled all their airplanes with biomass developed fuels. 

The United States Department of Defense has, at one time or another, put biomass fuels into almost all their aircraft. So there are 

ways to do this using biomass instead of just using straight fossil 

fuels that were not developed through biomass. That’s one distinct 

way to encourage development on the biomass side of the house. 

The price of biomass fuels is coming down dramatically. And you 

will see this. 

The same thing applies on the hybrid and battery side of the 

house. My biggest concern when I was an Executive Officer of an 

Artillery Battalion in the desert was where’s the next gas station? 

If I had some source of renewable power or a hybrid energy which 

would get us off that tether of fossil fuels which General Mattis 

said when he was in Iraq. He said, ‘‘Please get me off this tether 

of fossil fuels’’ because the logistic trains were being attacked uni-
56 

versally. There are much better ways to get off that tether. So certainly the Senate and Congress can help us with that. 

Senator HIRONO. So, there are ways that we can move much faster in terms of the transportation sector and the reliance on renewables and alternatives in the transportation sector because we 

seem to be doing a much better job of it in producing electricity for 

consumption, electrical consumption. But on the transportation 

side—— 

General CHENEY. It’s not the same. 

Senator HIRONO. It’s not the same. If you wanted to move faster 

toward that kind of reliance on alternatives and renewables because we care about things like climate change. I would welcome 

any further ideas that you would have to incentivize to move in the 

transportation sector. 

I am running out of time; five minutes goes by awfully fast. 

Thank you. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Hirono. 

It looks like Senator Cassidy is prepared to defer to our colleague 

from Minnesota, Senator Franken. Everyone is generating good 

will this morning. 

Senator FRANKEN. Well thank you, Madam Chair and thank you 

to the Senator from Louisiana. 

I was struck just now, General Cheney, when you talked about 

this tether to fossil fuels, to diesel fuel, I think, mainly for generators. 

You know, I used to do USO tours. At that time there was both 

Walter Reed for Army and Bethesda for the Marines. You would 

go to Walter Reed and there would be guys who had lost limbs, et 

cetera, TBI, and ask them what they did and they, very often, were 

truck drivers. You go to Bethesda and those guys got shot up in 

places like Fallujah, but what it was is the supply line. I know that 

when I talked to the military, they talked about solar, trying to 

make tents out of solar so that you don’t have to rely on the more 

efficient, even more official generators could save lives. 

So when we are talking about security, I think that the first two 

gentlemen seemed to be talking mainly about domestic fuel production, but General Cheney, you have a different point of view. Can 

you elaborate on how increasing short-term energy security via increased fossil fuel production can have negative, long-term impacts 

on energy security? 

General CHENEY. Well, I think I mentioned in my testimony and 

certainly in my written comments that this increase has given us 

breathing space now so there’s obviously an advantage here, but 

long-term, I think we need to recognize we can’t continue to rely 

entirely on fossil fuels. 

The number one consumer of fossil fuels in the country and 

maybe the world is the Department of Defense, and they know this 

and they recognize it and they’re searching for alternative ways to 

source their energy. And they know that now. 

One quick comment about the soldiers who were in those logistics trains. Those young men and women got shot up too, so, I 

mean, they were in combat. They were on the front lines. 

Senator FRANKEN. I understand that. 
57 

General CHENEY. I mean, they gave their lives for us to supply 

the fossil fuels to support our troops. 

Senator FRANKEN. Yes, so much was IEDs though, yes. 

General CHENEY. Yes, precisely. 

So I mean it, long-term, overreliance on this abundance, overabundance of fossil fuels is not a good thing. The DoD needs to diversify. Any good commander needs to know he has to have alternative sources of all things, let alone fossil fuel or energy. 

You will see that in terms of, also you mentioned the tents. Forward operating bases that are supplied their communications and 

electronics are, their energy, is supplied by solar arrays instead of 

having to hike batteries up there or diesel fuel to supply the generators. So there are ways for this to be done. 

Senator FRANKEN. Well, I want to talk more about climate 

change and the Department of Defense because you are right about 

the Department of Defense using Algol fuels and other non-fossil 

jet fuels. 

This is from the report to Congress from the Department of Defense in 2015, ‘‘Climate change is an urgent and growing threat to 

our national security contributing to increased natural disasters, 

refugee flows and conflicts over basic resources such as food and 

water. These impacts are already occurring and the scope, scale 

and intensity of these impacts are projected to increase over time.’’ 

General Cheney, I know that last week you spoke about the 

threat that climate change poses to national security at a House 

Science Committee Roundtable. Can you tell this Committee how 

the Department of Defense should be preparing for climate impacts 

and more broadly, how Americans should be thinking about the 

link between energy decisions and national security? 

General CHENEY. Sure. Clearly this is a longer conversation than 

we have time for here, but I’ll try to boil this down very quickly. 

As I mentioned last week, I put it into two categories, strategic 

and tactical. And when they said it’s the number one threat, when 

you go back to Admiral Locklear in the Pacific Command, he was 

looking over his whole area of operation and he said catastrophic 

weather like Typhoon Haiyan is becoming much more common and 

he’s got to respond to those. Climate change is a contributor. He 

recognized the threat. 

Refugee crisis, Bangladesh, foot and a half rise in sea level gives 

you 30 million refugees, not coming here, but they’re going somewhere else in Asia. 

Senator FRANKEN. It is destabilizing. 

General CHENEY. Hugely destabilizing. 

That’s the strategic side of the House, the Sahel in Africa. When 

the temperatures there start to rise to 140 and 150 degrees Fahrenheit, those refugees are headed to Europe. If they think they 

have a migration problem now, just wait. So, that’s the strategic 

side. 

On the tactical side, our bases and stations that are on the coast 

are going underwater. Norfolk is the prime example, our largest 

Naval base, which gets closed dozens of times a year now because 

of flooding, both from rain and sea level rise, is really having a 

problem with that. We’re going to have to talk about relocation of 

our bases and stations that are on the coast, and I can delineate 
58 

a number of these. The DoD understands that and looks at that 

and General Mattis, and now Secretary Mattis, has looked at that 

and said he understands climate change. He recognizes that as a 

threat. It’s been written into the Quadrennial Defense Review before. Again, when you’re talking long-term, strategic threat and 

where you’re going to have instability, and in short-term, the tactical side, what bases and stations are going underwater and what 

you have to do to adapt to move those. 

Then getting to your other question about fossil fuels, the mitigation side of the House, get off your dependence on fossil fuels. Stop 

contributing CO2 to the atmosphere. Stop making the problem 

worse. 

Senator FRANKEN. Thank you. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Franken. 

Senator Cassidy. 

Senator CASSIDY. Thank you, all. 

Now, General, just to be clear, as we speak of needing not being 

tethered to fossil fuel on the front line, it is not to say that a transport truck would not be by fossil fuel, I presume you just mean the 

electricity for the tents providing the power? 

General CHENEY. Senator, not so. You could have hybrid vehicles 

for sure. 

Senator CASSIDY. Now that presumes that we continue to fight 

only in deserts. If we are in an overcast area to have, I can only 

imagine, if you have something with, I don’t know, 50 troops and 

are in an overcast environment, you would need, probably, fossil 

fuel, correct? 

General CHENEY. Well, like I said, if you had batteries that were 

recharged and they worked on a hybrid, just like Volvo stock—— 

Senator CASSIDY. It really does seem, though, a lot of ifs involved 

with that for something which absolutely needs certainty. 

Mr. Mills, I enjoyed your testimony because you point out some 

certainties that we actually, since the Arab oil embargo, have become more dependent upon fossil fuel. I will note, however, that we 

have actually decreased global greenhouse gas emissions in the 

United States as we transition from coal to natural gas. Fair statement? 

Mr. Mills, this is a little bit far afield, but I found your testimony 

very realistic if China, which gets 63 percent of its electricity from 

coal, converted to natural gas, any idea what the impact that would 

have upon global greenhouse gas emissions? 

Mr. MILLS. Well, it would be a dramatic reduction in global gas, 

carbon dioxide emissions, for very obvious reasons. 

Senator CASSIDY. As well as SOX and NOX, et cetera, right? 

Mr. MILLS. Well, the air would get a lot cleaner in China. I’ve 

been to about a dozen cities in China, its particulate emissions are 

pretty severe. 

Senator CASSIDY. I have actually seen graphs that show the SOX 

and NOX blowing from their coastal power plants falling on to Oregon, Washington and California. So not just globally, but locally, 

it would make our West Coast a little bit cleaner too. 

I just see that because you point out that for the foreseeable future petroleum and natural gas will be more, not less, important. 
59 

I also like, now I will agree, that if we absolutely, that we 

produce, if we become energy secure, less dependent upon other 

countries, perhaps we need fewer troops committed to the Middle 

East to protect sea lanes. That would be something that would save 

a lot of young people’s lives if we were not having to commit our 

troops to protect sea lanes for the sake of oil, if Israel develops Leviathan, as they appear to be, then that would, of course, insulate 

Israel from some of the shock. 

I also liked your point, Mr. Mills, the degree to which we develop 

LNG exports, this is implicit in what you were saying, and perhaps 

Israel and Azerbaijan and others develop their gas exports, Russia 

is weakened. Isn’t that a wonderful thing? That in itself might forestall some conflict. I think we can all agree upon that, right? 

Mr. MILLS. You bet. 

Senator CASSIDY. So that is a tectonic plate, as you mentioned 

that is almost amazing. 

Now, somebody, I think I was told that Senator King was concerned. Do we have, oh, here we go, enough gas to fuel this, but 

Mr. Webster and Mills, perhaps you all followed up? 

I am told we have at least 93 years of proven, technologically, we 

can get it, natural gas reserves which more than enough insulates 

us from price increases even if we continue to export. 

Fair statement, Mr. Mills? 

Mr. MILLS. I think it’s fair and it’s, in my view, an understatement of the magnitude of the resource that will be on tap through 

technology. 

Senator CASSIDY. Now, I would argue that if we are going to increase our security through that subtle power you speak of in your 

testimony, of undermining the Russians’ ability to come after us or 

to go after Europe by choking off their natural gas and if we are 

going to help China reduce their global greenhouse gas emissions 

by substituting natural gas for coal and thereby improve our West 

Coast environment as well, we actually need to do more exportation, more exploration of natural gas. Would anybody dispute 

that? 

[Panel shakes heads no.] 

I think that is, kind of, almost so self-evident. 

Mr. MILLS. Sure it is. 

Senator CASSIDY. So whatever we do with renewables which is 

laudable, the reality is we are going to have more of an impact 

upon global greenhouse gas emissions and our international domestic security by increased development of our natural gas as well as 

facilitation of that export. That is energy security. 

I yield back. Thank you. 

The CHAIRMAN. Thank you, Senator. 

Senator Manchin. 

Senator MANCHIN. Thank you, Madam Chairman. 

Thank all of you. 

I am so sorry. Sometimes our meetings run over and we are in 

different areas at different times, but I am glad to be here. 

We are introducing what we call the Appalachian Storage Hub. 

With all the newfound gas we have, with the wet gas we have especially in the Marcellus/Utica shale, now the Rogersville coming on 

and then West Virginia, Pennsylvania, Ohio and maybe even Ken-
60 

tucky too, hooking these up with a storage hub that basically would 

move some of our critical energy products that we have, which are 

now mostly located in the Southwest and giving us more opportunity and I think, more national security also because we are not 

in the path of a hurricane and we are pretty much protected by the 

mountains. So we think it would be a great opportunity. I don’t 

know if you all know anything about that or have looked into that 

and what your opinion might be on moving that forward. 

Yes, Mr. Mills? 

Mr. MILLS. Senator, you put your finger on something that’s critical for the grid and also for general domestic energy security of the 

Northeast, which is starved for storage capacity, as you well know. 

Adding a gas storage capacity, both wet and dry gas, is probably 

the single most important and simple thing that can be done to increase domestic reliability on the grid which is becoming increasingly gas centric. 

If you look at the total amount of generation growth forecast for 

the next decade in the United States and in the Northeast, gas turbines are the go to. And you don’t want to be dependent just on 

pipes, you need to have storage, 100 percent. 

Senator MANCHIN. Well, if we can get you all—can we get any 

written statements in support of that because we are working with 

the Department of Energy. I think they feel the same thing, but 

coming from the expertise that you all have would be tremendously 

helpful, sir, tremendously helpful. 

Mr. MILLS. Be happy to do that, Senator. 

Senator MANCHIN. Next, speaking on reliability, in West Virginia 

we have been blessed with everything, but we are an all-in energy 

state. Everybody thinks it is all about just coal and just fossil, but 

really, we are trying everything that we can, but the baseload. 

There is a study being done by Department of Energy on the reliability of the grid. 

And I am so sorry, I am sure you might have talked about this 

previously with other Senators, but I am very much concerned 

about that because I remember the Polar Vortex. I know we almost 

went down, especially the PGM system was very razor thin of collapsing. With more dependable, reliable, affordable coal plants coming offline, have you all looked at the critical factor that we have 

there and the jeopardy that we are putting into the grid system? 

Mr. MILLS. Well, let me make an observation that was in the 

news with respect to South Australia which echoes the direction 

that a lot of people hope the grid will go. 

As you know they have had several blackouts, one very recent. 

And the news and the Wall Street Journal said it was because we 

were exporting, they were exporting natural gas. That’s not the 

reason the blackout occurred; it’s because that part of Australia 

has 40 percent of its electricity currently coming from wind turbines. When you have wind subside, you have to have other capacity. If you can’t import it and the import capacity is limited because 

the magnitude of the drop, you do rolling blackouts. 

The answer that Elon Musk has proposed is to build a battery 

plant which is good. Batteries work. I ran a battery factory for a 

while. I know a little bit about batteries. But I would like to point 

out that in order to store half a day of no wind in South Australia, 
61 

Elon Musk would have to build 150 of the battery plants he’s planning to build and he’s building one which he says will be three 

times bigger than the world’s biggest utility battery plant. And 

South Australia, I’ll note for the record, has about one-third of the 

population of the grid of the Washington, DC, area. 

So, when you begin to think about these energy solutions, scale 

matters and that’s where storing gas and building more gas turbines actually matters. 

Senator MANCHIN. Well, uninterruptible power, I mean, and I 

have understood it for a long time and tried to and a lot of my colleagues on both sides of the aisle, but on my side of the aisle, sometimes are in disagreement, but they just don’t understand where 

the electricity, where it comes from. And it has to be 

uninterruptible. 

The only two things you have uninterruptible in the United 

States or in the world that I know of, is coal and nuclear. Everything else is interruptible. And the only third one that has surpassed or is equal to coal is natural gas, even though that is interruptible, but you are still in jeopardy. 

All of the renewables, God bless them, we like it. We like wind, 

solar, we like it all. So when people tell me they want everything 

on renewables, I say just tell me what five hours of the day you 

want your power, and I am happy to oblige you. I am happy to take 

care of you because that is what you are going to get and nothing 

more than that. 

But in some parts of the country, unless that system, that grid 

can back it up, they are in great peril and they don’t really realize 

it. 

So we are looking at how do we continue to have a dependable, 

reliable delivery system? We need people like yourself speaking out 

in common sense until—see, I believe in my heart that we are 

going to find, eventually, commercial hydrogen, which is water vapors. I keep believing that. And maybe it will happen in our children or grandchildren’s lives. 

There is going to be some magical, clean green that everybody’s 

happy with. But until you get to that day, you have to be in the 

real world. And the real world is you better have so much reliable 

power and coal is going to play a major part, 30 percent or more, 

for the next 20, 30 years. Do you all agree with that? 

Mr. MILLS. Senator, coal use globally, as you know, is going 

up—— 

Senator MANCHIN. Oh, it is not going down. 

Mr. MILLS. Let me just echo your sentiment. 

Everyone agrees it would be nice to have different forms of energy. We need them at scale in reliability. In the world I’ve worked 

in for decades, as a physicist and looking at the physics of energy, 

we used to call that the search for unobtanium. 

[Laughter.] 

Senator MANCHIN. Unobtanium. Makes sense. 

Anybody else want to comment? 

General CHENEY. If I—— 

Well, Senator, what this has done is given us breathing room to 

pursue alternative sources of power. And I know Bob would certainly agree, small modular reactors, for instance, are possible—— 
62 

Senator MANCHIN. You are talking about nuclear, nuclear reactors, right? 

General CHENEY. You can do that. 

Senator MANCHIN. Yes. 

General CHENEY. Long-term, and I know some people laugh at 

fusion energy, but when you go outside and look at the sun, it’s 

there. It can be done if you’ve got the right amount of research in 

it. And I think this is the time now to start investing long-term in 

some of those other sciences while we’ve got that ability to have an 

overabundance of oil and fossil fuels. 

Senator MANCHIN. Yes, Mr. Coward? 

Mr. COWARD. What I would add, Senator, just is, you know, obviously I have not seen the DOE study, but I think this is a very important, critical subject for our entire economy and standard of living, the continued, you know, every time you flip the switch, it 

comes on. 

What I would suggest is, as we all move forward together, my 

organization, myself, we support the classic all-of-the-above. We 

should be pursuing all energy options. But as we go forward in the 

spirit of contingency, reliability, confidence, we need to make sure 

we don’t inadvertently allow ourselves to make overly optimistic 

assumptions. 

And the one, the example I’ll give you is in the last several years 

the energy storage industry has moved forward by leaps and 

bounds. A tremendous accomplishment, it’s great for the country. 

Absolutely wonderful. 

I’m also the principal officer, I lead MPR, a leading specialty engineering company in the power industry. We were critical with our 

customer AES in delivering and building the largest battery energy 

storage facility in the world in Southern California. It went online 

in February. Its capacity is measured in tens of megawatts, tens 

of megawatt hours, alright? Which means that you take a large nuclear or coal-powered power plant and the largest battery storage, 

energy storage facility in the world, it handles minutes of capacity 

of that facility. So even though energy storage has—or an hour 

maybe. 

So even though energy storage has made great progress and I 

think it will continue to make great progress and it is a definite 

critical part of our infrastructure going forward, all of us have to 

make sure that the pace at which we assume technology development will occur is appropriate so we don’t wake up one day and 

be disappointed. 

Senator MANCHIN. Well, West Virginia is happy to continue to 

provide the power that keeps the East Coast lit up. 

[Laughter.] 

If they shut us down, they are all going down, okay? 

[Laughter.] 

And it made it very difficult for our little state to produce the 

power we produce, but we have done it cleaner and better and 

made more advancements in the last 20 years than had ever been 

done in the history of the world. We still get the living crap kicked 

out of us every day by Washington. Unbelievable. 

Mr. COWARD. Senator, I live in Virginia and I—— 
63 

Senator MANCHIN. I want to flip the switch every now and then 

and just say, hey, how did you like that? 

[Laughter.] 

Mr. COWARD. I live in Virginia and I know that Virginia is one 

of the largest energy importers in the country, and we thank West 

Virginia. 

Senator MANCHIN. Well, we are happy to do it. We like to do the 

heavy lifting, and we will continue to do it. 

Thank you, Madam Chairman, I am so sorry. 

The CHAIRMAN. Thank you, Senator Manchin. 

I just have to say, I love these conversations. 

[Laughter.] 

I truly do. 

When I think about our energy potential, when I think about 

what it is that we have and how we are able to supply it. 

Senator Manchin, I have had an opportunity to go to your little 

state and see your all-of-the-above. We recognize the great contributions that come out of Nevada when we are talking about minerals. 

I talk about Alaska all the time, but you know, when we think 

about diversity of energy supply I think it is important to recognize 

that within this country we have a diversity of supply based on our 

enormous geography and recognizing where we each can be those 

experts, those suppliers, those real drivers to our local, state and 

national economies. I think that that is quite significant to recognize. 

You know, as much as contributes from the Gulf of Mexico, they 

talk about being the energy bread basket. Okay, that is one energy 

bread basket, but I think this is important to recognize that we all 

have so much to contribute in so many different areas. And oftentimes, we are just limited by the technologies that allow us to do 

a little bit more. 

Mr. Mills, you mentioned the digitalization of energy in your testimony. Dr. Birol also mentioned that in his written testimony. I 

should note for the record, he was actually here for a few moments. 

I really appreciate him making that effort to try to join us, but his 

schedule was very, very complicated this morning. 

But you think about that, the technology that we know today is 

what we know today, but the advances that we have made in the 

past 20 years, as has been noted by many of you, has just been 

nothing short of remarkable, beyond imagination. Think where we 

are going to be 10 years from now, 20 years from now, and particularly within the space of the renewables. I think we have so much 

that we can build out given, again, advancements in technologies. 

But I come back to our hardcore reality, and that is not meant 

to be a pun on words, but so much of this is going to depend on 

these resources, these mineral resources that will be required to 

build out these technologies of the future. 

For years we have talked about our vulnerability as a nation on 

oil. We still have that vulnerability when it comes to the Department of Defense and this extraordinary reliance on that fossil fuel. 

But I don’t want us to go the same direction with our minerals as 

we used to be with our oil. So this needs to be an eyes wide open. 
64 

I have advanced my critical minerals bill. It is actually part of 

our energy bill that I am hopeful we will have an opportunity to 

advance on the Senate Floor shortly. 

But how do we do more? 

This is a question for you, Mr. McGroarty, in terms of building 

the awareness that we have this increasing dependency. It is kind 

of tough to move forward sometimes unless people recognize that 

this is a problem for us, but that we do have solutions here. I think 

federal permitting reform is one of the things that we need to be 

looking at, but how do we build a growing awareness? 

I don’t want to limit this to just Mr. McGroarty because, General 

Cheney, when we think about the implications, again, from a national security perspective, making sure that those who are part of 

this supply chain, understand that we have got to address this aspect of it as well. 

We are going to have to conclude the hearing here because we 

have a vote that is coming on, but I would like to have a little conversation about how we do more on the awareness of this as a dependency issue. 

Mr. McGroarty? 

Mr. MCGROARTY. Yup. 

Senator, it is really interesting to think, first of all, I mean, what 

we’re up against is we have, we live in this marvelous world where 

so much of the things that we rely on every day seem to be magic 

and they just, kind of, happen. You know, there’s a cloud and stuff 

goes up to the cloud and things, you know, energy moves to where 

it’s needed and so on and so forth. 

I think we forget the physicality of things. Now the physicality 

of things is rooted in material science, and it’s rooted in materials. 

So I think what this Committee does, what these kinds of programs 

do, but more of it is to remind people that we’re now using a far 

larger portion of the Periodic Table than we ever used in the history of mankind and we have to be attentive to where these materials are coming from. We’re very fortunate. We’re very blessed 

that we have these resources here. 

I would say too, in some respects, it seems to me a very simple 

thing that government can do is even just an indication that you 

can send a signal to a market that there’s a desire to source some 

of these products domestically and that that will have an effect. 

I mean, and I don’t mean to, I’m not casting dispersions on 

things done or not done, but for instance, I’m very focused on the 

Gigafactory, figuring out where they’re going to get their materials 

domestically for a variety of different reasons, jobs, national security, but also, you know, if you think about it today, we’re getting 

the bulk of our cobalt comes from DRC Congo. We can’t be comfortable about that because we’re not comfortable about that it’s 

getting refined and smelted in China, creating leverage there 

where if we need graphite we’re 100 percent dependent on graphite. We need manganese; we’re 100 percent dependent on manganese. We need lithium, a lot of that is coming from a triangle in 

South America which is prone to instability over time. 

So, figuring out how we could substitute with American-sourced 

materials is important, but the simplest way to do that is for someone to say we want American-sourced materials. We see that as a 
65 

positive and communicating that clearly is a market signal that 

would cause capital markets to look around and say, well, who 

could that be? Where would that come from? You know? 

I sit here and I see the states and I think about, you know, Senator Franken is gone, but I could mention nickel and cobalt and 

there’s Minnesota, on the upper part of Minnesota. 

The CHAIRMAN. We have graphite. 

Mr. MCGROARTY. Pardon? 

The CHAIRMAN. We have graphite. 

Mr. MCGROARTY. You have graphite. I was about to mention 

that. Thank you. 

[Laughter.] 

The CHAIRMAN. Yes. 

Mr. MCGROARTY. So we have all of these different options. Gosh, 

there’s some lithium in Nevada that could be just making a very 

short trip to the Gigafactory. 

We lived and experienced the bad and the good of where our oil 

comes from and how we needed more of it for decades and the better part, you know, and how that skews national security and military strategy. I just don’t think we’re caught up yet in terms of this 

transformation that’s happening in the rest of the Periodic Table 

and how much of it we need. And the stuff isn’t fairy dust, you 

know? 

The CHAIRMAN. Anybody else want to weigh in there? 

I appreciate that, Mr. McGroarty. 

Mr. MILLS. Senator, if I could add the elephant in the room with 

respect to mining in the United States. 

Early in my career I was, I worked for a Canadian mining company and spent time on the border of Alaska, the Northwest Territories. 

Canada mines a lot of its minerals. It’s easier to open a mine in 

Canada than it is in the United States. That shouldn’t be the case. 

So the elephant in the room is EPA and how we regulate. It’s typically not the states, but it can be. 

Until we make an affirmative decision that we care about having 

mining here, I know if you talk to capital markets people would invest in mining. They’ll tell you unequivocally, hold a hearing on it, 

and I think you will hear every one of them tell you the same 

thing. The capital risks are high because of the regulatory delays 

and uncertainty. As long as we keep that in play we’ll continue to 

source rare earths and everything else from other nations. 

We provided 70 percent of the world’s rare earths 20 years ago. 

As my colleague has just said, we now do zero. It’s not because we 

ran out of rare earths. It’s not because we don’t have the technology to do it. We have some of the best miners on the planet and 

the best technology and the safest. But we’ve made an affirmative 

decision not to do it. I think that’s a mistake. 

The CHAIRMAN. Well, I agree, and it is a concern. 

I think the statistic was that the United States ranks dead last 

or we are tied with Papua, New Guinea, in terms of the length of 

time it takes to permit a mine in this country. I think you are 

right. There has been a policy directive direction that has taken us 

on that path. 
66 

But I think it is something that we need to critically look at and 

evaluate because our situation is such that more and more we expect, without question, that these resources are going to be made 

available to us. And it seems that more and more these resources 

are coming from places that would not think twice about perhaps 

squeezing us a little bit. Recognizing that vulnerability is something that, I think, we must address and we must consider from 

a broader policy perspective. 

Senator Cortez Masto, we have a vote going on, but thank you 

for staying throughout this very important hearing. 

I know that many of my colleagues, not only some of those that 

were coming in and out, we have had a little bit of preoccupation 

with another subject matter this morning, so I apologize for that. 

But know that you all have cleared my head and given me focus 

in the energy space, and I greatly appreciate that. 

Thank you for your participation this morning and for your ongoing leadership in these important areas. 

We stand adjourned. 

[Whereupon, at 12:22 p.m. the hearing was adjourned.] 
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