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AMERICAN ENERGY OUTLOOK: 

TECHNOLOGY, MARKET AND POLICY DRIVERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

WEDNESDAY, FEBRUARY 13, 2013 

Serial No. 113–2 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

DANA ROHRABACHER, California 

RALPH M. HALL, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

FRANK D. LUCAS, Oklahoma 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

PAUL C. BROUN, Georgia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

ANDY HARRIS, Maryland 

RANDY HULTGREN, Illinois 

LARRY BUCSHON, Indiana 

STEVE STOCKMAN, Texas 

BILL POSEY, Florida 

CYNTHIA LUMMIS, Wyoming 

DAVID SCHWEIKERT, Arizona 

THOMAS MASSIE, Kentucky 

KEVIN CRAMER, North Dakota 

JIM BRIDENSTINE, Oklahoma 

RANDY WEBER, Texas 

CHRIS STEWART, Utah 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

FREDERICA S. WILSON, Florida 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

DAN MAFFEI, New York 

ALAN GRAYSON, Florida 

JOSEPH KENNEDY III, Massachusetts 

SCOTT PETERS, California 

DEREK KILMER, Washington 

AMI BERA, California 

ELIZABETH ESTY, Connecticut 

MARC VEASEY, Texas 

JULIA BROWNLEY, California 

MARK TAKANO, California 

VACANCY 

SUBCOMMITTEE ON ENERGY

HON. CYNTHIA LUMMIS, Wyoming, Chair 

RALPH M. HALL, Texas 

FRANK D. LUCAS, Oklahoma 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

RANDY HULTGREN, Illinois 

THOMAS MASSIE, Kentucky 

KEVIN CRAMER, North Dakota 

RANDY WEBER, Texas 

LAMAR S. SMITH, Texas 

ERIC SWALWELL, California 

ALAN GRAYSON, Florida 

JOSEPH KENNEDY III, Massachusetts 

MARC VEASEY, Texas 

MARK TAKANO, California 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

Wednesday, February 13, 2013 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Cynthia Lummis, Chairwoman, Subcommittee 

on Energy, Committee on Science, Space, and Technology, U.S. House of 

Representatives .................................................................................................... 7 

Written Statement ............................................................................................ 12 

Statement by Representative Eric Swalwell, Ranking Minority Member, Subcommittee on Energy, Committee on Science, Space, and Technology, U.S. 

House of Representatives .................................................................................... 13 

Written Statement ............................................................................................ 15 

Witnesses: 

The Honorable Adam Sieminski, Administrator, Energy Information Administration (EIA), U.S. Department of Energy 

Oral Statement ................................................................................................. 17 

Written Statement ............................................................................................ 20 

Mr. Robert McNally, President, The Rapidan Group 

Oral Statement ................................................................................................. 61 

Written Statement ............................................................................................ 63 

Ms. Lisa Jacobson, President, Business Council for Sustainable Energy 

Oral Statement ................................................................................................. 68 

Written Statement ............................................................................................ 70 

Discussion ................................................................................................................. 83 

Appendix I: Answers to Post-Hearing Questions 

The Honorable Adam Sieminski, Administrator, Energy Information Administration (EIA), U.S. Department of Energy ......................................................... 102 

Mr. Robert McNally, President, The Rapidan Group ........................................... 107 

Ms. Lisa Jacobson, President, Business Council for Sustainable Energy ........... 109 

(1) 

AMERICAN ENERGY OUTLOOK: 

TECHNOLOGY, MARKET AND POLICY 

DRIVERS 

WEDNESDAY, FEBRUARY 13, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:05 a.m., in Room 

2318 of the Rayburn House Office Building, Hon. Cynthia Lummis 

[Chairwoman of the Subcommittee] presiding. 
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Chairwoman LUMMIS. Well, good morning. The Subcommittee on 

Energy will come to order. Welcome to today’s hearing. It is entitled ‘‘American Energy Outlook: Technology, Market and Policy 

Drivers.’’ 

Now, in front of you are your packets containing the written testimony, biographies, and truth-in-testimony disclosures for today’s 

witnesses on our panel. So we will start with opening statements. 

And I recognize myself for five minutes. 

And I just want to again thank the witnesses this morning for 

joining us. I also want to congratulate Representative Swalwell on 

his appointment as Ranking Member of the Energy Subcommittee, 

and I am looking forward to working with you. 

Mr. SWALWELL. Thank you, Madam Chair, and I look forward to 

working with you in this Committee. 

Chairwoman LUMMIS. Thanks. I also want to welcome all the 

Members of the Subcommittee, and I look forward to having a very 

productive Congress together. 

It is difficult to overstate the importance of energy to America’s 

success. Abundant, affordable energy is arguably the single most 

important factor to enabling our prosperity, from our health and 

wellness to our national and economic security. Technology development impacts all components of a healthy, developed energy system, including exploration and production, transportation, and consumption. By providing the private market with the tools to innovate, our energy system can add new technologies to reliably provide affordable and abundant energy. 

The jurisdiction of this Subcommittee, which includes about $8 

billion in research and development at the Department of Energy, 

provides us a unique opportunity to help share the direction and 

future of energy in America. This Congress, I hope we can work together to do just that. 

As a Congressman from Wyoming, I see the many benefits associated with energy production. Wyoming is the United States’ second leading producer of total energy. It is the top producer of coal 

and uranium, third in natural gas, eighth in oil. Wyoming is also 

a national leader in renewable energy, generating significant energy from wind and geothermal resources as well. In fact, we are 

number one in wind energy resources, many of which are yet undeveloped. 

I am a strong supporter of an all-of-the-above energy strategy. 

And now, more than ever, Congress and the President must take 

real steps to advance such a policy. 

The timing has never been better. U.S. energy is in the early 

stages of a historic period of technology-driven transformation. Advancement in horizontal drilling and hydraulic fracking has unlocked vast amounts of oil and gas, so much that the International 

Energy Agency projects that by 2020—that is just seven years from 

now—the United States will overtake Russia and Saudi Arabia to 

lead the world in oil production. The EIA also projects that coal 

will be the dominant energy source globally by 2030. While domestic use of coal declined last year, the global use of coal is increasing 

by leaps and bounds. Coal is abundant in America, and it is the 

only source of energy that can meet the scale of energy demand for 

those billions of people worldwide who have no electricity at all. 
12 

And quite frankly, it is not our call to hold those people back by 

denying them the affordable resources to bring them into the 21st 

century. 

Throughout our languishing economic recovery, expanded domestic natural gas is a bright spot in the current economy and has the 

potential to revitalize America’s economic engine. Increased production has created sorely needed jobs, stimulated local economies, and 

contributed to low unemployment in States like North Dakota and 

Wyoming. Additionally, affordable and abundant natural gas is 

poised to drive a revival in the American manufacturing sector, a 

sector we heard about a lot last night in the State of the Union 

speech. 

Perhaps less obvious, but equally significant, is the potential for 

increased energy production to help address the Nation’s spiraling 

debt. As Wyoming’s former State Treasurer, I can testify firsthand 

to the importance of mineral revenues to Wyoming’s sovereign 

wealth and ability to provide quality K–12 educations, as well as 

roads, sewers, and the infrastructure to have a vital, vibrant society. 

Last week, the Institute for Energy Research reported that increasing access to energy development would, in addition to growing GDP by $127 billion annually, increase federal revenues by $24 

billion annually for the next seven years, and $86 billion per year 

thereafter. Most of the options we have to address the budget crisis, cutting spending and increasing taxes, are difficult to achieve. 

Increasing energy production should be easy to achieve. 

Our great energy story here in the United States has not gone 

unnoticed around the world. The German Economic Minister recently expressed concern that German firms are relocating to the 

United States primarily due to lower energy prices. While President Obama often cites European energy policies as a model he 

would like to follow in the United States, statements such as these 

should provide a powerful reminder of the importance of affordable 

energy to our global economic competitiveness. 

I want to thank our distinguished panel for being here today and 

look forward to further discussions on how we can better encourage 

safe and responsible domestic energy production to make newfound 

visions of energy independence a reality. Thank you. 

And now, I would like to recognize the gentleman from California, Mr. Swalwell, for five minutes. 

[The prepared statement of Mrs. Lummis follows:] 

PREPARED STATEMENT OF CHAIRWOMAN CYNTHIA LUMMIS

I would first like to congratulate and welcome Representative Swalwell on his appointment as Ranking Member of the Energy Subcommittee. I look forward to working with you during the 113th Congress. I would also like to welcome all the Members of the Subcommittee and hope we have a productive Congress together. 

It is difficult to overstate the importance of energy to America’s success. Plentiful 

and affordable energy is arguably the single most important factor to enabling our 

prosperity—from our health and wellness to our national and economic security. 

Technology development impacts all components of a healthy, developed energy system, including exploration and production, transportation, and end-use consumption. By providing the private market with the tools and incentives to innovate, our 

energy system can continue to integrate new technologies to reliably provide affordable and abundant energy. 
13 

The jurisdiction of this Subcommittee, which includes roughly $8 billion in research and development at the Department of Energy, provides us a unique opportunity to help shape the direction and future of energy in America. This Congress, 

I hope we can work collaboratively to do just that. 

As the Representative of the State of Wyoming, I see first-hand the widespread 

benefits associated with energy production. Wyoming is the United States’ second 

leading producer of total energy. It is the top producer of coal and uranium, and 

ranks third and eighth in natural gas and crude oil production, respectively. In addition to being a major fossil fuel producer Wyoming is a national leader in renewable energy, generating significant energy from wind and geothermal sources as 

well. 

Needless to say, I am a strong supporter of an ‘‘all of the above’’ energy strategy. 

And now, more than ever, it is imperative Congress and President Obama take concrete steps to advance such a policy. 

The timing has never been better. The U.S. energy sector is in the early stages 

of an historic period of technology-driven transformation. The advancement and application of horizontal drilling and hydraulic fracturing technologies has unlocked 

vast amounts of oil and gas resources to economic production. So much that the 

International Energy Agency projects that by 2020—just seven years from now—the 

U.S. will overtake Russia and Saudi Arabia to lead the world in oil production. The 

IEA also projects that coal will be the dominant energy source globally by 2030. 

While domestic use of coal declined last year, the global use of coal is increasing 

by leaps and bounds. Coal is abundant in America, and it is the only source of energy that can meet the scale of energy demand for the billion people worldwide who 

live with no electricity at all. 

Throughout the languishing economic recovery, expanded domestic energy production and low natural gas prices are two of the few bright spots in the current economy and have the potential to revitalize America’s economic engine. Increased production has created sorely needed jobs, stimulated local economies, and contributed 

to low unemployment in states like Wyoming. Additionally, affordable and abundant 

natural gas is poised to drive a revival in the American manufacturing sector. 

Perhaps less obvious but equally significant is the potential for increased energy 

production to help address the nation’s spiraling debt. Last week, the Institute for 

Energy Research reported that increasing access to energy development would—in 

addition to growing GDP by $127 billion annually—increase Federal revenues by 

$24 billion annually for the next seven years, and $86 billion per year thereafter. 

Most of the options we have to address the budget crisis—namely, cutting spending 

and increasing taxes—are politically controversial and difficult to achieve. Increasing energy production shouldn’t be. 

Our great energy story here in the U.S. has not gone unnoticed around the world. 

The German economic minister recently expressed concern that German firms are 

relocating to the U.S. primarily due to lower energy prices. While President Obama 

often cites European energy policies as a model he would like the U.S. to follow, 

statements such as these should provide a powerful reminder of the importance of 

affordable energy to our global economic competitiveness. 

I thank our distinguished panel for being here today, and look forward to further 

discussion on how we can better encourage safe and responsible domestic energy 

production to make newfound visions of energy independence a reality. 

Thank you and I now recognize the gentleman from California, Mr. Swalwell, for 

five minutes. 

Mr. SWALWELL. Thank you, Madam Chair. I appreciate you holding this hearing today and I look forward to working with you on 

energy issues on this Subcommittee. And I also want to thank our 

panel for appearing today and I look forward to hearing each of 

your testimony. 

Appropriately, this hearing will serve as a stage-setter, an opportunity to get a snapshot of the current energy landscape in the 

United States and abroad. And we heard a little bit of that last 

night from our President. And I was encouraged as he talked about 

how our country in the last four years has started to bend the 

curve and the trend of other countries dominating in the clean energy industry. And I look forward to continuing to support that and 

U.S. innovation from this Committee. 
14 

Today, we will hear more about the shipping dynamics in the energy marketplace. Far from being stagnant and hopeless, we are 

now seeing an unprecedented pace of change that was unpredictable even a few years ago. For instance, renewables are penetrating at a remarkable rate with growth in wind, as the President 

mentioned last night, alone outpacing natural gas in 2012. 

Our responsibility is to ensure that this country is prepared for 

whatever changes that the markets may experience. Overreliance 

on a limited range of technologies and finite resources is 

unsustainable and unreasonable. We know that the U.S. uses 20 

percent of the world’s oil but that we only have two percent of the 

world’s oil reserves. Our strength will lay in our ability to transition to new, cleaner, more sustainable resources. Simply, we cannot 

drill our way out of this problem. However, we can innovate our 

way out of this problem and we can work to make our country 

more energy secure and help make a thriving economy. 

We must be competitive and not let ourselves get behind. As 

Washington bickers, our competitors are pulling out all of the stops 

to capitalize on the booming clean energy economy. It is time for 

us to get serious about creating a coherent green energy policy, a 

national policy to enable us to compete more so globally. We should 

be leading the world in a search for a better, safer, more affordable 

energy. 

The Pew Charitable Trusts estimate that between now and 2018, 

annual revenue from clean energy installations will grow by about 

eight percent globally and by about 14 percent here in the United 

States. These profits, if we can make sure they are generated here 

in the United States—that the innovation is designed and manufactured here in the United States—will create new, good, well-paying, middle-class jobs for all Americans. 

Finally, we must recognize the impact that our energy choices 

have on public health and the global environment now and into the 

future. Addressing climate change—and I am glad the President 

talked about this also last night and in his inaugural remarks—is 

about global security. The ecosystems that feed us are public 

health and safety and our future economic well-being. 

From the outside I will say that I believe there is no one-sizefits-all prescription or standardized test for the appropriate role of 

government in securing our energy future. In a field as complex as 

energy, we must be flexible and efficient when deploying taxpayer 

resources and rely on a mix of scientific expertise, market forces, 

common sense, and ways that we can identify gaps to inform our 

policy decisions. 

The President also talked last night about working to have businesses in homes. He challenged us to reduce energy consumption 

that we have in our businesses and homes. And I will—I believe 

there is an opportunity for us to work with the business community 

especially and residents to bring down their own energy consumption and work with the utility companies as well to find ways that 

we can do that and provide incentives because that also will bring 

down the amount of energy we consume and also create, I believe, 

new jobs for clean energy providers. 

Finally, we should engage our world-class scientific enterprise 

from universities to national laboratories to overcome fundamental 
15 

scientific and technical challenges. Two national labs in particular, 

Lawrence Livermore National Laboratory and Sandia National 

Laboratory, are located in my Congressional District, and they are 

hard at work taking on the energy challenges of the future. 

Federal programs have a role to play in giving innovators, investors, and companies space to collaborate. We should do more to replicate public-private partnerships like IGATE—Innovation and 

Green Advanced Transportation Excellence—that harness the creativity of our best and brightest in science and business and then 

transfer their technologies out to the private markets. 

We should also leverage equitable and innovative financing 

mechanisms where the market is not well structured to take on the 

often high technical and financial risks. Finally, where there is no 

tool to match the problem, we should have the courage to reinvent 

the way government does business. Programs like Advanced Research Projects Agency—Energy, ARPA–E and the Hubs showed us 

that this can be done. 

With scientific research, nothing is guaranteed and so we need 

to be willing to take risks. I come from the Bay area, which includes Silicon Valley, where risk-taking is critical to the region’s 

economy. Taking risks means sometimes you will not succeed, but 

scientific progress in our country and internationally has never 

been a straight line. Only by taking risks and charging forward can 

we ever hope to reach goals which today may seem out of reach. 

The big energy challenges we face require big lead times to solve. 

We thus can’t let bureaucratic inertia and partisan politics delay 

or get in the way of us making investments and encourage research, innovation, and competition. If the United States is to be 

the world leader in all aspects of energy, we must be willing to 

work together, compromise, and embrace innovation. 

Again, I want to thank Chairman Lummis for holding this hearing. I look forward to engaging in a discussion of these critical energy issues facing our country. I look forward to hearing from our 

witnesses. 

And with that, I yield back the balance of my time. 

[The prepared statement of Mr. Swalwell follows:] 

PREPARED STATEMENT OF RANKING MINORITY MEMBER ERIC SWALWELL

Thank you, Madam Chair. I appreciate you holding this hearing today, and I look 

forward to working with you on energy issues on the subcommittee. 

I also would like to thank our panel for appearing today. I look forward to your 

testimony. 

Appropriately, this hearing will serve as a stage-setter, an opportunity to get a 

snapshot of the current energy landscape in the U.S. and abroad. 

Today we will hear more about the shifting dynamics in the energy marketplace. 

Far from being stagnant and hopeless, we now are seeing an unprecedented pace 

of change that was unpredictable even a few years ago. For instance, renewables 

are penetrating at a remarkable rate, with growth in wind energy alone outpacing 

natural gas in 2012. 

Our responsibility is to ensure that this country is prepared for whatever changes 

the markets may experience. Overreliance on a limited range of technologies and 

finite resources is unreasonable. We know that the U.S. uses 20 percent of the 

world’s oil but has only two percent of world’s oil reserves. Our strength will lay 

in our ability to transition to new, cleaner, more sustainable resources. We cannot 

drill our way to energy security and a thriving economy—we need to unleash the 

creativity of our scientists, engineers, and entrepreneurs to unlock our energy potential. 
16 

We must be competitive and not let ourselves get left behind. As Washington bickers, our competitors are pulling out all of the stops to capitalize on the booming 

clean energy economy. It is time for us to get serious about creating a coherent 

green energy policy to enable us to compete globally. We should be leading the world 

in the search for better, safer, more affordable energy. 

The Pew Charitable Trusts estimates that, between now and 2018, annual revenue from clean energy installations will grow by eight percent, globally, and by 14 

percent in the U.S. and this will amount to almost two trillion dollars in cumulative 

revenues in that timeframe. These profits, if we can make sure they are generated 

here in the U.S., mean good, middle-class, American jobs. 

Finally, we must recognize the impact that our energy choices have on public 

health and the global environment, now and far into the future. Addressing climate 

change is about global security, the ecosystems that feed us, our public health and 

safety, and our future economic well-being. 

From the outset I will say that I believe there is no one-size-fits-all prescription 

or standardized test for the appropriate role of government in securing our energy 

future. In a field as complex as energy, we must be flexible and efficient when deploying taxpayer resources and rely on a mix of scientific expertise, market forces, 

and common sense to identify gaps and inform our policy decisions. 

First and foremost, we should engage our world-class scientific enterprise—from 

universities to national labs—to overcome fundamental scientific and technical challenges. Two national labs in particular, Lawrence Livermore and Sandia, located in 

my congressional district, are hard at work taking on the energy challenges of the 

future. Federal programs have a role to play in giving innovators, investors, and 

companies a space to collaborate. We should do more to replicate public-private 

partnerships like i-GATE (Innovation for Green Advanced Transportation Excellence) that harness the creativity of our best and brightest in science and business. 

We also should leverage equitable and innovative financing mechanisms where 

the market is not well-structured to take on the often high technical and financial 

risks. Finally, when there is no tool to match the problem, we should have the courage to reinvent the way government does business. Programs like Advanced Research Projects Agency-Energy (ARPA-E) and the Department of Energy’s Hubs 

showed us it can be done. 

With scientific research nothing is guaranteed, and so we need to be willing to 

take risks. I come from the Bay Area, which includes Silicon Valley, where risk-taking is critical to the region’s economy. Taking risks means sometimes you will not 

succeed, but scientific progress has never been a straight line. Only by taking risks 

and charging forward can we ever hope to reach goals which today may seem out 

of reach. 

The big energy challenges we face require big lead times to solve. We thus cannot 

let bureaucratic inertia and partisan politics delay or get in the way of us making 

investments that encourage research, innovation, and competition. If the U.S. is to 

be the world leader in all aspects of energy, we must be willing to work together, 

compromise, and embrace innovative ideas. 

Again, I want to thank Chairman Lummis for holding this hearing. I look forward 

to an engaging discussion of the critical energy issues facing our country. With that, 

I yield back the balance of my time. 

Chairwoman LUMMIS. Thank you, Mr. Swalwell. 

You know, my first job out of college was in what is now your 

district. I worked for Flying U Rodeo Company. It was based in 

Marysville, California. And we did a rodeo in Livermore. And I can 

remember jogging around the Lawrence Livermore plant before I 

got to work and it was the first time I ever experienced an earthquake, and that was very memorable. 

Mr. SWALWELL. Yes, and they are our largest employer in the 

district. 

Chairwoman LUMMIS. Well, it is an enormous facility. It would 

be fun to go in it some time. I was just on the perimeter. 

There are so many things that Democrats and Republicans agree 

about when it comes to energy, and I think particularly in this 

Committee. When we are really going to be focused on the research 

and the science and the technology and the innovation, we will find 

a lot of areas of agreement. And I really, really mean that. I want 
17 

to work with both sides of the aisle to achieve something significant. I didn’t come here to just conduct hearings. I really want to 

get the work done. So let us make that our goal. 

Mr. SWALWELL. Great. And you have an ally here—— 

Chairwoman LUMMIS. Thank you. 

Mr. SWALWELL. —that wants to do the same. 

Chairwoman LUMMIS. Fabulous. 

Do any Members wish to submit opening statements? If so, we 

will accept them now and they will be added to the record. Anyone? 

Okay. Well, we are good. At this point we will introduce our witnesses. 

Our first witness is Hon. Adam Sieminski, Administrator for the 

Energy Information Administration at the U.S. Department of Energy. Mr. Sieminski is responsible for collecting, analyzing, and disseminating independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the 

environment. Prior to his appointment, Mr. Sieminski was Chief 

Energy Economist for Deutsche Bank working with the bank’s global research and forecasting energy market trends. 

Our next witness is Mr. Robert McNally, President of the Rapidan Group. Did I pronounce that right? Okay. Mr. McNally has 

over 20 years of government and market experience as an international energy market consultant, investment strategist, and 

White House policy official. His background and expertise spans 

the convergence of energy with economic, security and environmental sectors from global oil market fundamentals to regulatory 

policies. 

And our final witness today is Lisa Jacobson, President of the 

Business Council for Sustainable Energy. Ms. Jacobsen has advised 

states and federal policymakers on energy, tax, air quality, and climate change issues. She serves as a private sector observer to the 

World Bank’s Climate Investment Fund and is a member of the 

Department of Energy’s State Energy Efficiency Steering Committee. 

As our witnesses should know, spoken testimony is limited to 

five minutes each, after which Members of the Committee will have 

five minutes each to ask questions. And although I am not a stickler on going over 15 seconds here or there, after that, I start getting squirmy, so just fair warning. 

Now, I recognize Mr. Sieminski to present his testimony. And we 

are so delighted you are here. Please proceed. 

STATEMENT OF THE HONORABLE ADAM SIEMINSKI, 

ADMINISTRATOR, ENERGY INFORMATION ADMINISTRATION 

(EIA), U.S. DEPARTMENT OF ENERGY 

Mr. SIEMINSKI. Madam Chairman, thank you very much for that 

warm welcome and kind going through my background. I appreciate that. 

Ranking Member Swalwell, Members of the Committee, I really 

appreciate the opportunity to appear before you today to provide 

testimony on the U.S. energy outlook. 

The Energy Information Administration is the statistical and analytical agency within the U.S. Department of Energy. Our data, 
18 

analyses, and forecasts are independent of the approval by any 

other officer or employee of the U.S. Federal Government. The 

views expressed in my testimony should not be construed as representing those of the Department of Energy, the Administration, 

or other federal agencies. 

What I would like to do today is summarize some key findings 

from our February Short-Term Energy Outlook, just released yesterday, as well as the 2013 Annual Energy Outlook Reference case 

that was issued in December. At this point, I would like to highlight that our short-term analysis incorporates the extension of the 

production tax credit for renewables and more recent trends in oil 

and gas production activity here in the United States. 

In the short term to 2014, the EIA expects crude oil prices to decline and gasoline and diesel fuel prices as well. Natural gas prices 

rise but remain below $4 a million BTU in 2013, ’14. As natural 

gas prices rise relative to coal prices, EIA does expect a modest rise 

in coal-fired electricity generation. Generation from conventional 

hydropower will continue through the recent drought-driven decline 

into 2013 and then rebound slightly in 2014. Total electricity generation from renewables should increase through 2014. We expect 

wind generation to grow by 16 percent in 2013 and another eight 

percent in 2014. Solar generation is expected to grow by roughly 

30 percent annually in both 2013 and 2014. Four large solar thermal plants in California, Nevada, and Arizona are expected to come 

online driving utility-scale solar increases 64 percent this year and 

another 47 percent in 2014. 

Turning to the long term, as outlined in the reference case for 

the Annual Energy Outlook, natural gas production increases 

throughout the projection period out to 2040, outpacing domestic 

consumption by 2020 and spurring net exports of natural gas. Relatively low natural gas prices facilitated by growing shale gas production spur an increase of 16 percent in the industrial sector to 

2025 and ensure continuing growth in electricity generation. Natural gas also reaches new markets as a fuel for heavy duty freight 

transportation and as feedstock for producing liquid fuels through 

gas-to-liquids technology. 

Over the next three decades, electricity use is expected to continue to grow but only at a rate of less than one percent per year, 

as you can see in Figure 1 in my testimony. Slowing population 

growth, technological change, efficiency standards for equipment, 

and shifts in the economy towards less intensive industry are all 

factors. For example, just yesterday, EIA published a Today In Energy feature explaining that although newer homes are 30 percent 

larger, they only consume about the same amount of energy as 

older homes. As shown in Figure 3, energy use in the residential 

sector was relatively flat between 1993 and 2009 but used many 

more consumer electronic devices. 

EIA expects the recent shift and the fuel mix for power generation to continue with natural gas plants accounting for most of the 

new capacity added. Strong growth in hydro renewable generation 

is driven by a combination of state renewable portfolio standards 

and federal tax incentives that spur growth in the near term, as 

well as the increase in fossil fuel prices that shift the competitive 

markets. 
19 

EIA projects no growth in transportation energy demand between 

2011 and 2042 with declining light-duty vehicle energy consumption of over 1–1/2 million barrels a day out to 2040. The growth in 

heavy-duty vehicle demand also spurs some fuel-switching to natural gas, as I mentioned earlier. Natural gas is projected to have 

a significant impact on heavy-duty vehicle energy consumption in 

relatively high travel applications such as tractor-trailers, which 

account for two thirds of all heavy-duty travel. 

Finally, U.S. energy-related carbon dioxide emissions remain 

more than five percent below their 2005 level through 2040 due to 

improved efficiency of energy use and a shift towards less carbonintensive fuels. 

This concludes my testimony, Madam Chairman and Members of 

the Committee. I would be happy to answer questions that you 

might have as we proceed. Thank you. 

[The Statement of Mr. Sieminski follows:] 
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Chairwoman LUMMIS. Thank you, Mr. Sieminski, and we look 

forward to asking you some questions. 

I now recognize Mr. McNally for five minutes to present his testimony. 

STATEMENT OF MR. ROBERT MCNALLY, 

PRESIDENT, THE RAPIDAN GROUP 

Mr. MCNALLY. Chairman Lummis, Ranking Member Swalwell, 

Members of the Committee, thank you for the opportunity to testify 

today on technology, market, and policy drivers of the American energy outlook. I approach the subject with 21 years of professional 

experience in analyzing global oil markets and energy policymaking. I am currently an independent analyst, don’t represent 

any entity, and these views you hear today are my own. 

I would like to respectfully make 5 observations and suggestions 

as you set about your important work. First, as you mentioned, 

Madam Chairman, it is hard to overstate but often overlooked how 

much modern civilization depends on the continuous access to substantial flows of energy from producers to consumers. ‘‘Energy,’’ as 

Nobel chemist Richard Smalley noted in 2003, ‘‘is the single most 

important factor that impacts the prosperity of any society.’’ 

Fossil-based energy, or hydrocarbons—oil, gas, and coal—account 

for about 3/4 of our energy supply, and experts project that share 

will grow in coming decades. As a primary energy source, hydrocarbons are far superior to others, such as biomass or renewables, 

because they are dense, highly concentrated, abundant, and comparatively easy to transport and store. Our transportation food and 

electricity systems, among others, depend critically on hydrocarbon 

energy. 

Second, many major energy transitions take a very long time, 

measured in decades if not generations. Recognizing the overwhelming superiority of hydrocarbons, rapidly industrializing and 

urbanizing countries in Asia, the Middle East, and Latin America 

are making enormous investments in hydrocarbon energy production, transportation, refining, distribution, and consumption systems and devices. These could not be quickly replaced in any reasonable scenario. Energy transformations are more akin to a multidecade exodus than a multiyear moon-shot. Pretending otherwise 

misleads citizens and distracts from serious debate about real circumstances and practical solutions. 

Third, just as history has humbled energy experts who make 

bold predictions about future energy trends, policymakers should 

be cautious and restrained when setting arbitrary, unrealistic, and 

aggressive energy targets, much less spending tax dollars on subsidies or grants in an attempt to reach them. The historical record 

is littered with failed policy targets and costly attempts by government to pick winners in the marketplace. Government can play a 

useful role in collaborating with industry in basic core scientific research, but only private sector companies and consumers responding to market-based incentives can develop and deploy viable new 

energy resources and devices. 

Fourth, energy can deliver unwelcome surprises with no shortterm solutions. For instance, our oil production is soaring but so 

are our gasoline prices. They are at record levels. The combination 
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of rising oil production and prices can be befuddling. Moreover, 

large gasoline price swings have become more frequent in recent 

years and consumers are wondering why this is the case. Pump 

prices at home are determined mainly by crude prices set in a global oil market. Crude oil prices are rising mainly because global supply-and-demand fundamentals are tight and geopolitical disruption 

risk is high. OPEC’s spare production capacity—almost entirely 

held by Saudi Arabia and which in the past has been used as a 

buffer against disruptions or tight markets—is low. 

As we saw with Libya in 2011 and Iran in 2012, when the market is tight and fearful, even relatively minor disruptions or risks 

of disruption anywhere in the world can send our gasoline prices 

up fast. Unfortunately, there are no effective short-term policy options to counter the short-term crude and gasoline price volatility 

caused by fundamentally tight and fearful global oil market. A crucial step is to increase oil supply everywhere. In a tight market, 

every extra barrel counts. 

And this leads me to my fifth and final point. Not all surprises 

in energy are bad. The most pleasant surprise in energy, if not in 

our entire economy in the last few years, has been the ability of 

oil and gas producers to unlock vast previously unreachable resources through multistage hydraulic—horizontal hydraulic fracturing of domestic oil and gas reserve trapped in deep shale formations. Last week, Dan Yergin testified before your colleagues in the 

House Energy Committee and called the boom in unconventional 

oil and gas production ‘‘the most important energy innovation so 

far in the 21st century.’’ 

Higher U.S. and hemispheric oil and gas production is great 

news for our economy and energy markets. If the investment and 

regulatory climate allows industry to realize its full supply’s potential, it will mean more jobs, billions of dollars in revenue, improved 

resilience to supply disruptions, and a lower trade deficit. Our companies and workers will have opportunities to take advantage of 

these same techniques and technology to unlock unconventional oil 

and gas resources globally where there appears to be much potential. 

This happy surprise is just the latest in the energy industry’s 

history of continuous improvement and innovation in technology. 

While we cannot predict or prescribe the future, we can be confident that our scientists and our engineers will rise to the challenge of finding and producing the abundant, affordable energy our 

Nation requires while protecting the environment and conserving 

natural resources. 

Thank you. 

[The prepared statement of Mr. McNally follows:] 
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Chairwoman LUMMIS. Thank you, Mr. McNally. 

And now I recognize Ms. Jacobson to present her testimony. Welcome. 

STATEMENT OF MS. LISA JACOBSON, PRESIDENT, 

BUSINESS COUNCIL FOR SUSTAINABLE ENERGY 

Ms. JACOBSON. Madam Chairman, Ranking Member Swalwell, 

and Subcommittee Members, thank you for the opportunity to testify today. 

Over the past several years, we have seen real market penetration of a wide range of sustainable energy technologies and resources, and we have witnessed the results of policies and research 

and development that work. But our work is not done. 

To continue the momentum of growth in these sectors and to receive their co-benefits, long-term, stable policies will be needed to 

level the playing field and to provide market access. We will also 

need to continue to invest in energy research, development, and deployment to increase the efficiency of our energy generation and 

use and to spur new innovations. This is important to domestic economic growth and for U.S. competitiveness in the energy sector. 

I would like to share some of the findings from the recently released Sustainable Energy in America 2013 Factbook. The 

Factbook was researched and produced by Bloomberg New Energy 

Finance and commissioned by the Business Counsel for Sustainable 

Energy. It is a quantitative and objective report intended to be a 

resource for policymakers with up-to-date, accurate market information. 

Some of the most significant findings from the Factbook point to 

the dramatic changes underway in the U.S. energy sector over the 

past several years. The data shows that natural gas, renewable energy, and energy efficiency are on the rise. These changes are increasing the diversity of the country’s energy mix, improving our 

energy security, cutting energy waste, increasing our energy productivity, and reducing air pollution and greenhouse gas emissions. 

In terms of the importance of policy, stable, long-term policies at 

state and federal levels are needed to sustain growth in clean energy sectors. Further, electricity market structures are evolving, 

and the U.S. power sector, long organized around large centralized 

systems, is considering distributed power options such as combined 

heat and power, waste heat-to-power, small-scale renewables, and 

fuel cells. Of note, ensuring ongoing grid reliability is a growing 

concern for electricity market operators and regulators. Dynamics 

contributing to this focus include changes in our energy mix, the 

impact of severe weather events, and increased presence of variable 

energy resources on the electricity grid. 

Yet other changes are occurring as well, including reduced electricity demand through energy efficiency, the introduction of smart 

grid technologies for improved grid management, a new focus on 

distributed generation, and the growing role for dispatch of all resources such as natural gas plants, hydropower, and demand response. They can all help the electricity industry address these 

challenges. 

Still, many market structures do not yet fully recognize the benefits of some of these technologies, including technologies offering 
69 

new flexibility such as energy storage. Given these factors, research, development, and deployment investments are needed in 

the area to—this—needed in these areas to improve efficiency, 

demonstrate performance, and to spur the innovations that will be 

required to meet the evolving needs of the power grid. 

With regard to federal energy investments, the Business Council 

strongly supports the continued funding of basic and applied research for clean energy technologies. This must be balanced with 

work on commercialization, market transformation, and other efforts to ensure that products do not sit on laboratory or university 

shelves but are transferred to the private sector to achieve the intended public benefit. 

There are strong analytical findings that show the overall return 

on investment that have resulted from federal energy research, development, and deployment initiatives. For example, three decades 

of investment in extraction of natural gas from shale have led to 

low natural gas prices saving households and businesses money, attracting new industrial manufacturing opportunities in the United 

States, and helping to create U.S. jobs. In Wyoming, shale production is forecasted to bring 23,000 jobs to the State by 2020. 

For energy efficiency, according to a report released last week by 

the Alliance to Save Energy’s Commission on National Energy Efficiency Policy, private sector research and development budgets are 

limited in many energy efficiency sectors. In the Commission’s Energy 2030 vision, it sets a goal of doubling U.S. energy productivity 

by 2030 and includes a call to support research, development, and 

deployment to meet it. Achieving the goal could save $327 billion 

annually and add 1.3 million jobs. 

For renewables, the development of today’s robust solar market 

and low costs in the United States can be attributed to smart investments in research and development at DOE and national laboratories over the last four decades. For wind, past investments in 

wind have resulted in significant improvements over the past 30 

years such as increased output, improved reliability, and lower 

costs. Technology advances have enabled the typical modern wind 

turbine to produce 15 times more electricity than a typical turbine 

in 1990 but further improvements are needed. 

The value of federal investments in research, development, and 

deployment is essential given current market conditions. According 

to Bloomberg New Energy Finance, a near-term trend is reduced 

private sector investment from venture capital and private equity 

investors in early-stage clean energy companies. 

In closing, I would like to say council members look forward to 

working with this Committee and the Federal Government to ensure that any and all public investment in these sectors is highly 

leveraged, effective, and efficient in carrying out the intended policy aims of these investments. Thank you very much. 

[The prepared statement of Ms. Jacobson follows:] 
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Chairwoman LUMMIS. Well, I would like to thank all of our witnesses for your testimony and for staying around so we can ask 

some questions of you. Before we do that, I want to acknowledge 

that we have been joined by Committee Chairman Lamar Smith of 

Texas. He is the Chairman of the Full Committee. 

Mr. Chairman, thank you so much for joining us. 

And the Chairman Emeritus of this Committee, Mr. Ralph Hall, 

also of Texas. So I would like to welcome these two very distinguished Members. 

And I further want to remind Members that Committee rules 

limit questions to five minutes. And the Chair will at this point 

open the round of questions. So I recognize myself for five minutes. 

Mr. Sieminski, I would like to talk a little bit about coal and the 

technology improvements in that sector sometimes are overlooked. 

And I would like to ask—slide up. They knew I was going to ask 

some questions about this slide or make some points about this 

slide. If you look at the two gigantic dots in red, those are China 

and India and those are proposed global coal-fired plants. And then 

the United States’ dot is on the far left in the middle of the screen, 

obviously, way smaller than what we are seeing in China and 

India, also smaller than what we are seeing in Vietnam, in Turkey. 

And so global demand and global growth in coal-fired power 

plants is going to, I believe, necessitate continued research and development of increasingly clean coal. And so I want to kind of focus 

on that for a minute. 

Mr. Sieminski, what are EIA’s projections on coal export trends 

to meet this growing global demand? As you know, coal consumption in China grew more than nine percent, and I know you recently reported that China consumes nearly as much coal as the 

rest of the world combined. So going forward with China and India 

installing over 500,000 megawatts of coal generation, more than 25 

times what is planned for the United States, we have got this huge 

coal resource available for export to those countries and we can 

also export our technology for them to burn it cleaner and more efficiently. So what do you see is the global demand and what does 

this mean for jobs and the economy? I also want to know what you 

see as barriers to increase in coal exports. 

Mr. SIEMINSKI. Madam Chairman, we have coal demand growing 

very rapidly outside of the developed countries, so outside of the 

OECD. This accounts for, I think, the largest portion of growth in 

energy on a global basis. A lot of that, as you point out on your 

slide, is in China and India. For the United States, because we 

have electricity growth only increasing at less than one percent a 

year, .9 percent per year, the opportunities for almost any fuel 

going into the electricity markets are going to be somewhat limited 

in the United States. And the competition between natural gas and 

coal basically on a price basis has been moving more natural gas 

into electricity generation. 

In EIA’s forecast out to 2040, we have the use of coal in the 

United States actually going up slightly in terms of tons. Although 

coal’s market share is reduced somewhat as natural gas and renewables increase their market share, the actual amount of coal being 

used grows slightly. And the reason that we see that in the United 

States is that there are a number of relatively new cleaner plants 
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that are running at below their maximum capacity utilization factors. And even with retirement of our older plants, we will see 

those utilization factors, if we are correct in our assumption that 

natural gas prices rise over time, creating a better competitive atmosphere for coal. 

As you said, Madam Chairman, the opportunity then for the 

United States to export coal does exist. We have been doing that. 

U.S. coal has been moving into European markets, for example, as 

those countries have higher natural gas prices than we do and 

some countries, including Germany, have talked about lowering the 

amount of nuclear-generated electricity that they have. 

On the R&D side, that is not really something that EIA has 

looked at, but I would be happy to provide to you for the record 

our detailed forecasts on all these numbers. We will be publishing 

the International Energy Outlook this summer and we will have, 

I think, some fairly decent data for you, Madam Chairman. 

Chairwoman LUMMIS. Well, thank you, Mr. Sieminski. And we 

would be most interested in having those figures for the record. 

I want to make sure that everybody gets a chance to ask questions of our witnesses, so at this point I would like to recognize Mr. 

Swalwell for five minutes. 

Mr. SWALWELL. Thank you, Chairman Lummis. And I did want 

to go back to—as I mentioned in my opening remarks, I was interested by the President’s challenge last night when he referred to 

how we can cut in half our energy consumption in our homes and 

our businesses. And before coming to Congress, I was a local city 

councilman and I worked very closely in local economic development projects. And I know that many commercial buildings—that 

the business owners did want to take measures to make their 

buildings more energy efficient so they could reduce their own costs 

and also help make the earth more healthy and our country less 

dependent on foreign sources of oil. But it would always have to 

pencil out. It would always have to make sense financially. And 

often times, not just in my district, but across the country, I have 

heard that commercial buildings and even homeowners have had 

a tough time connecting to the grid and working with public utilities. 

In the United States there are approximately 5 million commercial buildings, approximately 72 billion square feet of commercial 

buildings. And commercial buildings consume about 19 percent of 

all energy in the United States. So my first question—and I will 

ask Mr. Sieminski—is there an opportunity for us to have commercial buildings working better with public utilities to connect to the 

grid where we can install clean energy-type technology on these 

buildings to make them more energy efficient, reduce their consumption, and also create more made-in-America jobs? So how do 

we approach that challenge? Is it something we should be considering as a national energy policy rather than region-by-region, 

state-by-state if our President is issuing sort of this national challenge? 

Mr. SIEMINSKI. I think there are lots of opportunities in the 

building sector for improvements in energy efficiency. And I like to 

think of it that way because it is something that consumers can do 

for themselves in terms of saving money on their energy purchases. 
85 

The opportunities for improvements in the efficiency of heating and 

air-conditioning equipment is something that EIA has tried to build 

into our forecasts. 

Mr. Swalwell, we have a number of surveys that we do and EIA 

is the only group that is seriously undertaking to survey commercial buildings, residential buildings, and manufacturing facilities 

for their energy use. The Commercial Building Energy Survey that 

we are working on right now, and will be sending people out into 

the field in the next few months, will provide a baseline to be able 

to answer some of these questions that you have raised. 

It is a rather expensive part of what EIA’s budget represents, but 

it is supported by numerous people in the private sector, including 

electric utilities and the commercial building owners themselves 

because they like to see how their numbers stack up against the 

averages. I think there are tremendous opportunities. Not just EIA 

but virtually every other research group that has ever looked at the 

opportunities finds that now that we have moved as rapidly as we 

have on light-duty vehicles, the next best place to find energy efficiency savings in the United States is likely in the buildings area. 

Mr. SWALWELL. Great. And Ms. Jacobson, do you care to weigh 

in on this? I bet you could—— 

Ms. JACOBSON. Sure. 

Mr. SWALWELL. —also inform us. 

Ms. JACOBSON. Well, first of all, thank you for the excellent question. And I think data on commercial buildings is essential. And 

there is an initiative called the Better Buildings Initiative, which 

brings all of the players together, including utilities, building owners, financiers to come together to both increase awareness, discuss 

financing models, and try to overcome some of the barriers—the 

split incentives you are describing—that exist between building 

owners and building users. 

But I would like to point out that we have had some success due 

to increased building codes and standards both at the state level 

and federal action as well. ENERGY STAR’s certified commercial 

building floor space has increased by 137 percent from 2008 to 

2012. And the stringency of building air-conditioning efficiency 

standards has increased by 34 percent since 2005. I mean clearly, 

there is more that we can do, but as you have said, there is tremendous potential here. And I think there is a real partnership between utilities, building owners, government, and data providers, 

as well as financiers to really unlock that potential. 

Mr. SWALWELL. Great. And I believe not just to make us more 

energy efficient, which I think is our primary goal, but also to create local good-paying jobs in clean energy. 

Ms. JACOBSON. Well, very much so. When you are talking about 

energy efficiency—I know people have used this saying—but these 

jobs can’t be outsourced—— 

Mr. SWALWELL. Right. 

Ms. JACOBSON. —and a lot of the equipment is—we have an innovative edge and the United States on a lot of the building management technology, a lot of the equipment and significant insulation that is a manufactured here in the United States. So I mean 

the opportunities are abound. 

Mr. SWALWELL. Great. Thank you. 
86 

Chairwoman LUMMIS. Thank you so much, Ms. Jacobson. And 

thank you, Mr. Swalwell. 

I will now recognize the gentleman from Texas, Mr. Weber. 

Mr. WEBER. Thank you, Madam Chair. 

Mr. Sieminski, a question for you. You have done a lot of calculations, a lot of discussion about coal. Has EIA done any calculations 

with improving clean coal technology? Have you factored out going 

into the future what the reduction in emmissions from those new 

clean coal technology plants? 

Mr. SIEMINSKI. We have incorporated that into our estimates of 

energy use and including the numbers that we do on carbon dioxide emissions. We try to build in not leapfrogs in technology but 

the trends so that we are capturing the likely continuous improvement that we are seeing in areas like that, yes, sir. 

Mr. WEBER. Second question would be, this may be above your 

pay grade to use a previous term, have you done any calculations 

when the Federal Government invests money in renewable technology, including, for example, the 500 million I think it was to 

Solyndra, what are we getting on a return in investment? In other 

words, we are investing a lot of money, but exactly how much is 

that increasing solar contributions to the grid? Have you calculated 

that out? 

Mr. SIEMINSKI. EIA has not done such calculations. I am sorry. 

Mr. WEBER. Right. I was afraid you would say that. The reason 

I ask is because, obviously, if you have building owners, and I was 

encouraged to hear Ms. Jacobson say that we have an innovative 

edge in. For example, I am an air-conditioning contractor, so ENERGY STAR means something to me in power requirements. I am 

glad to hear we have an innovative edge, but I am also mindful 

that business owners should be able to take those energy savings 

and plow them back into another property, invest in more jobs and 

into the economy. That kind of return on investment I would be interested in hearing. I don’t know who to ask. If the money that the 

Federal Government is spending in subsidies, what are we getting? 

How much bang for the buck? And then we would have to equate 

that, too, if private entrepreneurs took that money and reinvested 

it, it would mean more purchases of real estate, more jobs in their 

local economies. So I think we would want to look at that. 

That is just more of a statement than a question. And then finally for Mr. McNally, I did not see a footnote on the 2003 quote 

by Richard Smalley. What is that source? 

Mr. MCNALLY. Congressman Weber, that is an article he wrote 

called the ‘‘Terawatt Challenge.’’ And I would be happy to send 

that to you. I apologize. 

Mr. WEBER. Yeah. 

Mr. MCNALLY. I should have footnoted that. 

Mr. WEBER. Yeah. 

Mr. MCNALLY. I will send that to you—— 

Mr. WEBER. Would you send that to my office? 

Mr. MCNALLY. Yes, sir. 

Mr. WEBER. Thank you very much. 

And I yield back the balance of my time that I don’t have. 

Chairwoman LUMMIS. Thank you, Mr. Weber. 
87 

I will now recognize the gentleman from Massachusetts, Mr. 

Kennedy. 

Mr. KENNEDY. Thank you, Madam Chair. And to our Committee 

Chairman as well, thank you, and our Chairman Emeritus, and the 

Ranking Member Mr. Swalwell, thank you for holding this hearing. 

To our witnesses, thank you very much for coming to testify. 

To begin, Ms. Jacobson, I was hoping you could just build a little 

bit on some of your comments about residential efficiency that we 

can build upon. I am from the Northeast. I lived in an apartment 

where in the winter I did not pay for heat. It was heated by the 

management company. It was so hot that I would often keep a window open throughout the entire course of the winter and often had 

a fan in the window because it would be about 85 degrees in the 

apartment. Many apartment buildings in the Northeast, old buildings, they don’t have insulation. Do you have any idea of how 

many—the figures about energy loss that we are losing and how— 

some strategies, either state or federal, that we can start to implement that would help? 

Ms. JACOBSON. Thank you very much for the question. Clearly, 

retrofitting buildings in the residential sector, as well as you are 

talking about apartments, are a significant challenge. In some 

ways, we are doing a little bit better with new construction because 

we can upgrade the codes and standards. But with the majority of 

our buildings living 30 to 50 years or more, we have significant 

challenges to face. 

I don’t have specific statistics on residential and efficiency across 

the board, an aggregate. Perhaps some of the other panelists 

would. But I can get it for you. I point you to one of our board 

Members, the Alliance to Save Energy, but I will take it upon myself to get you whatever data is available, either from the Alliance 

to Save Energy or the American Council on Energy Efficiency. 

They are really the key resources on data for energy efficiency. 

But I think your experience is so telling and I appreciate you 

mentioning it because that is kind of the real world reality that we 

are in. But you know, with more public awareness and by innovative actions by states through revolving funds to help support residential energy efficiency or the PACE program you might have 

heard of, which is facing some challenges, but those types of innovative models will get in front of more customers to help retrofit 

homes. 

Mr. KENNEDY. I appreciate that. 

Mr. McNally, I had a quick question for you as well, sir. I represent a city called Fall River in southeastern Massachusetts, and 

there is a company there called TPI Composites that manufactures 

wind turbines along with other military and transportation equipment in their product lines. I spoke just last week with the CEO 

of TPI Composites and he expressed obviously the importance of 

the production tax credit for their business model and for facilities 

that continue to invest in wind energy despite loaded upfront costs 

that should thus bring an additional element of diversification to 

our American energy portfolio. 

So if we know that clean energy technology manufacturing can 

create high-quality jobs in Fall River, and we know that minimizing uncertainty about our federal investment can create a de-
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pendable landscape that encourages further private sector investment in these technologies, but we also recognize that renewable 

energy alternatives like wind are not yet priced competitive with 

other existing technologies and traditional fossil fuels, what, then, 

would your path forward be that you suggest? You testified a bit 

about the market-based incentives and the need to make energy security policy a priority. While fossil fuels are deeply entwined in 

our current way of life and our standard of living, federal investments like the production tax credit are industry-wide, that you are 

not picking individual winners and losers, I think have a value for 

adding renewables and other clean energy sources to the mix. I 

would appreciate your comments on this if you can, sir. 

Mr. MCNALLY. Thank you, Congressman Kennedy, for that question. As I said in my remarks, in my view in general, and particularly during these times of stretched fiscal resources and difficult 

budget questions and constraints, the proper role for Federal Government is in the basic research area. I would rather shut down 

the production tax credit, which is really helping mature but uneconomic renewable energies, and take some of that money and maybe 

hire some more scientists to figure out how to produce batteries 

that can store and discharge electricity better than they can now 

with the idea being if they can figure that out, they may then— 

those findings can translate down into the commercial sector that 

are without a production tax credit or distorting mechanisms of 

any kind. Industry can take and deploy that. 

So again, I guess I would say in general but certainly in 

stretched budget times, let us focus the government’s role in basic 

research—Ms. Jacobson said and I agree with very much—stable, 

long-term investments in basic research would be my preference, 

sir. 

Mr. KENNEDY. Thank you. I yield back. 

Chairwoman LUMMIS. Thank you. 

Our next questioner is the gentleman from Texas, Mr. Hall. 

Mr. HALL. And I do thank you, Madam Chairman. 

The hearing today is entitled ‘‘American Energy Outlook,’’ and I 

think that is one of the most important outlooks, besides prayer, 

energy is probably the most important word in the dictionary. The 

youngsters that are graduating from high school and going into college, they will be affected by how we treat and how we work with 

the energy people and people who are producing energy. Being 

from Texas, of course, I am sure Mr. Weber is a supporter of fossil 

fuels and coal and all of the above. And I am pleased to see young 

Kennedy on this Committee because of the Kennedy family, not 

just a famous family, but supporters of energy and invested in energy for our country, so I think he will be a a very good Member 

of this Committee. 

We ought to be selling energy and not buying energy. We have 

tried for years to drill on ANWR. We have certain groups here that 

any time you talk about drilling on ANWR they say oh, don’t drill 

on little ANWR. We want to drill on about about 2,000 acres up 

there out of 19 million acres. I doubt seriously that that would ruin 

little ANWR. And we have had previous bills, 22 bills at one time, 

that we sent to the Senate to drill ANWR particularly, and one got 
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through. And President Clinton had some reason—maybe a good 

reason—to veto that particular bill. 

But the other bills never got through because we had a person 

running the Senate then who was a Republican, and Republicans 

had charge of the House, Senate, and the President, and he felt 

like a businessman. And when they would pull up one of those energy bills, some of those fellows would get up over there to filibuster and he would pull it down because he didn’t want to waste 

the Senate’s time. And those 20 bills languishing over there, any 

of the 20 could help us for 60 years of energy from there. 

Those are the things that I am interested in. And I guess I might 

ask Ms. Jacobson. There have been a lot of actions by the EPA onto 

their efforts to regulate or restrain production from hydraulic fracturing, and I would just like to ask you, in their effort to regulate 

or restrain production from hydraulic fracturing impact, does that 

impact not just energy production but our economy as a whole? 

Ms. JACOBSON. Chairman Emeritus Hall, thank you very much 

for the thoughtful question. First, I would say our coalition, which 

is natural gas, renewable energy, and energy efficiency, believes in 

the abundancy and the need to tap into this unprecedented development we have had with natural gas in this country. And the key 

to that is public confidence and making sure that we have the regulatory frameworks in place so it is done in an environmentally 

sound fashion. And we believe that is very possible. 

I think what is interesting is what is happening at the state 

level. There is discussion over at the Senate Energy Committee 

yesterday from the Governor of Colorado about the models that 

they are taking into account with regards to regulation of shale 

production. 

So with regard to the Environmental Protection Agency or a 

state or other federal actions, I think we need to be careful and 

cautious and get the right data and make sure that the American 

public is confident so we can benefit from all the benefits that shale 

development can provide us. 

Mr. HALL. Yeah, their decisions ought to be a little more game 

on scientific background more so we think then they have done. 

The next gentleman to speak, Mr. Rohrabacher, is very knowledgeable on fracturing. And we have had a lot of hearings along that 

line. And I think that we need desperately, and I was here when 

we passed the Clean Air and Clean Water bills, and we kind of 

didn’t create the EPA but I was in favor of the EPA being there. 

And being from Texas and of the oil and gas industry, I thought 

they needed some regulation and some support. And I thought the 

EPA was fine. I don’t think they are so fine today. 

And the election didn’t come out just exactly like I had hoped it 

would, but we might be doing something about that. 

But I thank all three of you and I know you know the importance 

of energy. It is a national defense issue for us. And I thank you 

for your answer. I might have one other question I want to ask you 

if I can find it here for Mr. McNally. 

Let me ask you this. In the last ten years, U.S. energy outlook 

has been transformed from what some refer to as an energy renaissance or revolution. Can you explain how various technological de-
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velopments and advancements such as widespread adoption of the 

hydraulic fracturing have revolutionized the U.S. energy outlook? 

Mr. MCNALLY. Thank you, Congressman Hall, for that question. 

Yes, I think you put your finger on the main one, and that is really 

in innovation and technology and the industry figuring out in the 

late 1980s in Texas and Oklahoma how to get at resources that are 

vast and that we have known are there. Now, we have known that 

there are vast amounts of oil and gas trapped in rock 10,000 feet 

below the ground for decades. And we haven’t figured out how to 

get it. 

We have been using hydraulic fracturing some say since the Civil 

War throwing dynamite down a hole. The Federal Government reportedly looked at nuclear explosions underneath the ocean floor to 

stimulate wells by fracturing. But the real innovation came with 

going after the shale deposits and using hydraulic fracturing. And 

that turned what we call resources, which is the oil that we think 

is in the ground but we don’t know how to get out, into reserves, 

producible by our companies. And we are having continuous improvement and how to frack those wells, how to do so more efficiently, to go horizontally and in multi-stages, not just one straw 

into the ground. 

So really, it is a remarkable story of industry progress with some 

government involvement mainly at the core, basic research level we 

should note. But it is brought to us by the industry and it has 

smoothed out our supply curve not only for natural gas but also for 

oil to the point where, according to some forecasts, we will surpass 

in the near future Saudi Arabia in production. 

Mr. HALL. I thank you. I yield back. 

I am sorry, Madam Chairman. I took him over. 

Chairwoman LUMMIS. Thank you both, Mr. McNally and Mr. 

Hall. 

And I would like to next recognize Mr. Veasey. And Mr. Veasey, 

did I pronounce that correctly? 

Mr. VEASEY. Veasey. 

Chairwoman LUMMIS. Veasey. It is Veasey. 

Mr. VEASEY. Yes, ma’am. 

Chairwoman LUMMIS. And you are also a gentleman from Texas? 

Mr. VEASEY. Yes, I am from Texas. Yes. 

Chairwoman LUMMIS. Well—— 

Mr. VEASEY. From almost the same area where Mr. Hall lives. 

I am a little bit west. 

Chairwoman LUMMIS. Could you name for our benefit a couple 

of communities in your district so we can help—— 

Mr. VEASEY. Yes. 

Chairwoman LUMMIS. —put you in a place? 

Mr. VEASEY. Yes. I live in Ft. Worth—— 

Chairwoman LUMMIS. Okay. 

Mr. VEASEY. —and I also represent the City of Arlington and the 

City of Dallas. 

Chairwoman LUMMIS. Well, you are recognized and welcome. 

Mr. VEASEY. Thank you very much. I appreciate that, Madam 

Chair. 

And I wanted to ask Mr. Sieminski specifically about a concern 

that I have with the flaring of natural gas. As you know in the 
91 

Bakken, they are producing a lot of oil but I also know they do not 

have the pipeline capacity and so they are flaring quite a bit of natural gas. The Texas Railroad Commission does a really good job in 

Texas of keeping up with the number of permits that are given to 

operators, but I know in the Eagle Ford in particular and even 

some in my area, in the Barnett Shale, that there is some flaring 

going. 

I know you specifically talked a little bit earlier about the rising 

cost of natural gas as it goes worldwide particularly. If the Department of Energy decides to export liquefied natural gas, or LNG, is 

there any technology on the horizon that would make it where we 

wouldn’t have to flare so much natural gas so we would have more 

in quantity? I mean I think that that should be one real environmental concern that we have, particularly when you start talking 

about drilling in remote places like Alaska where there would be 

a lot of associated gas produced with oil production that would 

have to be flared off. 

Mr. SIEMINSKI. Congressman Veasey, thank you very much. Just 

to put some numbers on the flaring, although there is a significant 

amount of flaring taking place in the Bakken formation right now, 

I think the latest statistics from North Dakota suggest that it is 

actually coming down. It had been as high as 35 or 36 percent of 

the gas. It is now down slightly below 30 percent. This is usually 

indicative of infrastructure build-out needed in a new area. And 

the gas is associated with the oil production in North Dakota. I 

suspect that over time the pipeline networks will be built out in 

North Dakota and those numbers will come down even further. 

Although it seems like a lot of gas when you just look at the percentage in North Dakota, the amount in North Dakota is less than 

1/3 of one percent, so less than 1/3 of one percent of total U.S. gas 

production. So it is actually a very small number. And you are correct, sir, that there actually has been some flaring in the Eagle 

Ford essentially for the same reason. Eagle Ford is in a part of 

Texas that is not heavily populated. It does not have the same 

pipeline infrastructure that you see in other parts of Texas. And it 

will just take a little bit of time—companies are working on that 

on the technology side. There has been an effort to look into small 

LNG liquefaction facilities that might be put in place in some of 

these remote areas where you could turn that natural gas that is 

being flared into a liquid, which would be easier to transport. 

So I think that there is a lot of thinking going on in the industry. 

And although those satellite pictures showing the sky at night and 

the amount of light being given off in some of these new producing 

areas seem startling, it is I think a relatively small proportion. It 

is fairly normal in the course of development in new areas. 

Very quickly, in Alaska there is a lot of gas that comes up in 

Alaska with the oil, but it is re-injected back into the formation. 

And so there is very little flaring taking place in Alaska. 

Mr. VEASEY. And one more question about the rising prices, particularly if we end up exporting LNG. I know that some of our 

manufacturers and some of our plants of that are dependent upon 

the use of natural gas are concerned about those rising prices as 

they built them into their business models. Where do you see the 

appetite, particularly in Europe, for the production of natural gas, 
92 

particularly as it pertains to fracturing and some of the other environmental things that we have talked about earlier? Because, as 

you know, particularly in my area in the Barnett Shale to where, 

you know, I mean I think that we have a gas lease on one of our 

properties literally in a single family setting I have a frack pond, 

pipelines like in the middle of Ft. Worth, you know, 700,000 people. 

What do you see as far as the future is concerned, Europe’s appetite for developing any formations? Because I would think that 

would be interesting. I don’t know if they are even to a certain extent—can sometimes be even more environmentally sensitive to 

things than we are. 

Mr. SIEMINSKI. There are a number of countries in Europe that 

are taking hydraulic fracturing very seriously. Poland, for example, 

Romania, the Ukraine, there is activity underway by industry 

there. The main thing that makes U.S. LNG exports so attractive 

to some companies and consumers in Europe, and in Asia as well, 

is that in most of the rest of the world, LNG prices are matched 

one-for-one to oil prices. In the United States it is a separate market. The models that we have run at EIA do incorporate the existing already-permitted facility in Louisiana that is going to export 

LNG, and we think that exports of LNG from the West Coast of 

Canada and possibly even Alaska into Asia would make economic 

sense, but there are policy issues, obviously, involved in making 

that decision. 

Chairwoman LUMMIS. Thank you, Mr. Veasey. 

I would like to now acknowledge—since the Bakken came up— 

the gentleman from North Dakota, Mr. Cramer. 

Mr. CRAMER. Thank you, Madam Chair, and Ranking Member. 

And thank you to all of the witnesses. This is quite enlightening 

and it has been hard for me to sit here and not answer half of 

these questions, quite honestly. But your answer was right on with 

regard to—— 

Mr. SIEMINSKI. I would welcome your testimony. 

Mr. CRAMER. No, I spent the last ten years as a public utilities 

regulator in North Dakota prior to coming to Congress, and one of 

the things that oftentimes gets overlooked is that while North Dakota is in fact the second-leading producer of oil, largest producer 

of gas, we mine 30 million tons of coal, generate about 5,000 

megawatts of electricity with that coal, export it to many States 

and provinces, we also enjoyed the lowest natural gas residential 

retail rates in the country. 

And I love, by the way, Mr. Sieminski, your service. I use it a 

lot. I always did use it a lot. And I am looking right now at the 

average retail price of electricity to ultimate customer users by 

end-use sector—that is one of my more common tables that I look 

up—and see that North Dakota continues to be among the three 

for lowest-priced electricity States in the country. 

And so when I hear, frankly, Ms. Jacobson, somebody talk about 

leveling the playing field for all forms of energy, what I really hear 

is manipulating the playing field to create an advantage where one 

doesn’t exist when the playing field is level. And so I would be interested in public policy thoughts as to how we would properly 

incent the marketplace. My definition, of course, properly might not 
93 

be the same as yours. But it truly creates the level as opposed to 

manipulation. 

The other thing, and then I will let Mr. Sieminski perhaps answer this question first and then we can get into the other stuff, 

but with regard to electricity prices and the use of the shift by policy from coal to natural gas, realizing that even in my short term 

on the Public Utilities Commission in North Dakota, the Public 

Service Commission, that I saw gas at $12 and I saw gas at $2 and 

everywhere in between. Do we run the risk of tightening this demand-and-supply curve of natural gas even in this abundance to a 

point where we make ourselves dependent on a fuel source that is 

so volatile? How much of that do you consider when you consider 

the price and the outlook going forward? 

Mr. SIEMINSKI. We try to take that into account by looking at the 

reserve base and ultimate resource base for the different fuels. We 

are fairly confident that the resource base for natural gas will 

allow for continuing increases in production in the United States, 

all the way out to 2040 with shale gas currently accounting for 

about one third of U.S. production reaching half of U.S. production 

by 2040. We think that the coal resource base is also pretty strong, 

and although the deepest research on that was done quite some 

time ago, one of the reasons that it hasn’t been updated is because 

the resource base is actually so vast that it didn’t make as much 

sense to concentrate on that. 

On the oil side, EIA does believe that there are some questions— 

and we do have tight oil production rising fairly sharply, reaching 

almost 8 million barrels a day by 2014, probably continuing to increase into 2020, but possibly coming back down again. What we 

would love to have, sir, is another two or three years worth of that 

on the oil side comparable to what we now have on the gas side 

to let us make a better judgment about the extent of the resource 

base therefore tight oil. 

Mr. CRAMER. Thank you. You do a great job by the way. 

Mr. SIEMINSKI. Thank you. 

Mr. CRAMER. I appreciate the data. 

Mr. SIEMINSKI. And we would be happy to work with your staff 

to show you some of the newer things that we are doing, including 

state mapping where any of you can go down to your Congressional 

District level and look at the energy infrastructure, including resources, power plant facilities, pipelines, and electric transmission 

lines and so on. It is a very useful thing, I think, for the entire 

Congress. 

Mr. CRAMER. I want to allow Ms. Jacobson to respond to my comments earlier. 

Ms. JACOBSEN. Mr. Cramer, thank you very much. And my organization supports a diverse energy mix, and all-of-the-above strategy. Just let me start with that. But as you know very well, given 

your experiences, there are a range of decisions that go into energy 

procurement. Some of them interact with state and federal policy, 

some deal with technology, some deal with price. And clearly, the 

credits that have been given for energy efficiency or various renewable energy sources are attempts to lower the cost and make more 

competitive these resources for a range of reasons, whether they be 

economic, environmental, or technology innovation-related. 
94 

As you know as well, very well, looking at the history of government involvement in energy policy, it is a century deep. And I 

think that when we look at energy efficiency or renewable energy, 

or energy storage, or we could go down the line. There are times 

when strategic investments, whether it be on incentives, for purchase, or lowering the cost for consumers and businesses are in 

play, or opportunities to entice the private sector through new investments that they might make. I mean I think what we are looking for is balance and ensuring that all these technologies will be 

available in the future. 

So though certain incentives may be temporary versus permanent, we think all of them should be looked at critically to make 

sure that they are leveraging private sector investment, that they 

make sense for the public good, and that they are driving the objectives of this Committee and other Members of Congress. 

Mr. CRAMER. Thank you. I yield back. 

Chairwoman LUMMIS. Thank you, Ms. Jacobson. Thank you, Mr. 

Cramer. 

We will go next to Mr. Lipinski. Before we do, Mr. Swalwell has 

had to leave for a Homeland Security meeting. He thanks the witnesses for your time and expertise this morning. 

So next, I will recognize the gentleman from Illinois, Mr. Lipinski. 

Mr. LIPINSKI. Thank you, Chairwoman Lummis. Thank you for 

holding this hearing today. Obviously, it is critical to get this overview right now and I look forward to the work that we are going 

to be doing on the Committee on this issue. 

I want to start out with a question for Mr. Sieminski. EIA projections have nuclear production increasing by—increasing 15 percent 

by 2025, and by 2040, production is still projected to be up 14 percent. Now, these projections are made despite the relatively few orders for expansions of existing nuclear plants. I know that nuclear 

plant operations have made great improvements in the past to 

keep plants operating more efficiently and producing more electricity. But I want to ask, what is the source of these increases in 

projections? Is EIA projecting that most of these plants will have 

their operating licenses extended and that efficiency gains will continue? Or are these projected increases due to new production possibly from next-generation technologies? 

Mr. SIEMINSKI. Thank you, Congressman Lipinski. We have a 

couple of new power plants built into the projections. There are 

several under construction right now. In addition to that, we are 

assuming some further efficiency gains in the industry. They call 

it up-rating where you get more power out of the individual plants. 

And on—the reason that the numbers do begin to trail off at the 

end of the time is that we are assuming that there will be some 

retirements, but in general, I think we have built in extensions of 

licenses in a number of cases for relicensing. 

The overall numbers that we have for the type of fuels used in 

generating electricity, the fastest growth that we see is in solar, 

percentagewise, as well as wind. The biggest from a standpoint of 

not the annual percent increases but the absolute numbers is in 

natural gas, and that comes back more to the continuing strong 

price competition that we see between natural gas and coal. 
95 

Mr. LIPINSKI. Okay. I wanted to continue on a little bit on nuclear technology and how much might be gained from additional 

R&D into our nuclear energy. I just wanted to ask Mr. Sieminski 

but if you have additional comments here also. Do you think advanced concepts like small modular reactors and fast breeder reactors could change the conversation about nuclear to make it safer 

and easier to build while also helping to solve the waste issue? Or 

at a minimum, could it help extend the life of existing reactors 

with greater safety? Because what we are focused on here in this 

Committee is the R&D. So what do you think we can get from nuclear R&D? And what is the future for nuclear? 

Mr. SIEMINSKI. I would be happy to come back to you for the 

record and provide you some background on the assumptions that 

we are making in that area. 

In general, as I said, our overall forecast generally assumes trend 

improvement and technologies but not major breakthroughs. We 

try not to predict changes in regulation, legislation, or huge 

changes in technology. The role that technology has played recently 

has been very strong. In Mr. Swalwell’s district, the labs—Lawrence Livermore and Sandia—as Mr. McNally said earlier, these 

labs played a strong role in providing research, particularly in 3– 

D seismic technology and in horizontal drilling that was instrumental in the Barnett Shale breakthroughs that took place back in 

the 1990s. 

Interestingly, there was also a Section 29 tax credit for shale 

gas—type gas at that time that also spurred things. I think that 

one of the more interesting aspects of that tax credit is is that it 

expired and it was allowed to expire so that we got the benefits of 

the R&D, little help from a tax credit that ultimately was no longer 

necessary once the industry was on its feet. 

Mr. LIPINSKI. My time is almost up. Does anyone else have any 

comments on nuclear R&D? All right. Thank you very much. 

I yield back. 

Chairwoman LUMMIS. Well, thank you, Mr. Lipinski. 

And I would note that Mr. Lipinski, Mr. Rohrabacher, and Ms. 

Lummis all have an interest in this issue. And so we may want to 

pursue that further with you, the notion of modular nuclear reactors, small nuclear reactors, very small-scale electricity production, 

in Texas, too. So I think that you are going to find that there is 

a spark on this Committee for that subject. 

Thank you. 

Thanks, Mr. Lipinski. 

Next, we will go to Mr. Hultgren. I might just for planning purposes tell you that, Mr. Hultgren, you are next. Mr. Rohrabacher, 

who has joined us as a Member of the Full Committee, will then 

have an opportunity to ask some questions. I want to recognize 

that Mr. Veasey has joined us in a capacity as Ranking Member. 

And then after that, Chairman Smith has asked me to ask a question on his behalf. 

Then, unless there is a burning desire on anyone’s behalf to have 

a second round, which would be sort of an abbreviated, one-question-per-person round, if that is not the case, we will conclude the 

hearing. But I do want to put out the opportunity for Members to 
96 

ask a second question. That preparation having been laid, I now 

yield to the gentleman from Illinois, Mr. Hultgren. 

Mr. HULTGREN. Thank you, Madam Chair. Thank you all for 

being here as well. 

Our national competitiveness, our investment in basic research, 

and the critical role that each plays in enhancing the other, as well 

as the energy security of our Nation are very important to me and 

my constituents in Illinois. 

Mr. McNally, you have said in your testimony that too often, 

leaders and observers predict or prescribe unachievable targets 

when it comes to the energy future in this country. In his State of 

the Union address last night, President Obama made frequent references to research and development, something I find ironic coming from the President that cut high-energy physics, nuclear physics, manned spaceflight, and planetary science. I wondered, Mr. 

McNally, in your opinion, is the Administration’s focus on cutting 

basic research in order to subsidize favorable companies in the alternative energy market going to speed up or delay our eventual 

adoption of cleaner technology in the future? 

Mr. MCNALLY. Thank you for that question, Congressman 

Hultgren. In the interest of bipartisan open-mindedness, let me say 

that our energy predictions, our policymakers, are becoming more 

realistic. President Nixon kicked things off in 1973 by predicting 

we would be oil-import-free by 1980. President Carter said we 

would never consume more of a drop than we did in 1979. We are 

getting at least a little more realistic in our productions and prescriptions. 

But to your question, no, in my view it is not consistent with my 

testimony or my beliefs were we to shut down investments in basic, 

core research that then can be deployed by the private sector in a 

viable way that adds to wealth and adds to productivity without 

continual government support, that would be a mistake to end 

those kinds of activities and shift them towards the type of activities that, again, as I said in my testimony, there is a long record 

of failure. So that would not be my preference, sir. 

Mr. HULTGREN. Well, I appreciated, as I was stepping out, I have 

got another Committee going on at the same time, so I apologize. 

Kind of jumping back and forth, but I had heard you mention a little bit earlier, again, of how important basic scientific research is 

and the fear of really undercutting that, of how that puts us at a 

disadvantage. The President seems to think that asking us to 

spend more money on these short-term items is really the only way 

to achieve clean energy future. He seems to have this sense that 

we can just buy an immediate change in our economy. My sense 

is that it is going to take maybe 20 years or even longer of longterm, basic research in the very subjects he is cutting—high energy 

physics, nuclear physics—in order to produce a change and really 

change our fundamental ability to produce energy in a cleaner and 

cheaper way. 

Again, Mr. McNally, I wondered if you could talk—what do you 

think the best use of limited resources at a time like this would be 

in order to best affect that? 

Mr. MCNALLY. Well, thank you for the opportunity to respond to 

that, Congressman. I wanted to connect a dot. I don’t think I did 
97 

clearly enough with Representative Kennedy’s question. The reason 

I thought that we would want to maybe invest in some research 

into batteries is because the reason—one of the main reasons wind 

is not economical is because you cannot store electricity. The wind 

blows in places where we don’t need it and electricity, unlike oil 

and coal, cannot be stored. So if we can figure out ways to store 

and discharge electricity, we will make all renewable forms of electricity, solar and wind, more economic. And that is an example, I 

think, of the potential benefit of core research. 

Another one—and again, my wife calls me Mr. Worst-case-scenario, so I am not known for flowery predictions about wonderful 

transformations, but I will say, as I said in my testimony, if you 

ask me what plausible transformative change is out there that 

could happen in our lifetimes that could completely upend in a 

positive way our energy outlook, and I would think that is—that 

we figure out how to get methane hydrate out of the Earth’s crust. 

Like shale gas and shale oil of the day, we know it is there. We 

know the resources are enormous. Some estimates say there is 6 

trillion TCF in the Gulf of Mexico. That is equal to total proved reserves in the world, conventional reserves. But we have not figured 

out yet—and we and the Japanese and others are working on it 

and DOE is doing some good work here—is to get that methane hydrate out of the crust in a safe way that doesn’t create methane 

burps if you will and emissions. 

So those are the kind of problems that humans can solve. We 

don’t have to figure out how to make algae go into gasoline. We 

know how to use methane. We just have to figure out how to get 

it out of the crust. We did it with shale gas and shale oil. I think 

we can do it with the government’s help in the core basic research 

area with methane hydrates. 

Mr. HULTGREN. My time is winding down, but again, I really do 

appreciate each one of you being here. This is an important discussion to have. I do think, especially at a time like this where budgets are tight, resources are limited, we have got to focus where 

doing the work that only government can do, and I think that is 

basic scientific research. We have seen that industry can step in 

and apply what is discovered, but there are certain things that only 

we can do. So thanks for being here. 

Thank you, Madam Chairwoman. I yield back. 

Chairwoman LUMMIS. Go ahead, Mr. Weber. 

Mr. WEBER. Well, thank you. In the absence of the Chairwoman—oh, I see she is back. 

I do want to very quickly say, though, Mr. McNally, you can 

store direct-current electricity and maybe our tack needs to be at 

producing more appliances that actually operate off of DC as opposed to alternating current AC. But thank you for that. 

And Mr. Rohrabacher, the esteemed gentleman from California, 

you are recognized. 

Mr. ROHRABACHER. It seems the lady is away just for a second 

and the guys have already taken over. What is going on here? 

Well, first of all, let me suggest that Madam Chairwoman is absolutely correct when she says that there is a keen interest in 

small modular reactors and new types of nuclear power, approaches to nuclear power. Let me note also that the Department 
98 

of Energy is moving forward in building light water reactors, which 

is 60-year-old technology as part of their step forward in the research. I have been disappointed many times in my 24 years here 

when government research projects end up focusing on, because the 

companies that get involved in that research make a profit on what 

they already know rather than trying to push the envelope. I remember when they tried to get $500 million from us in research 

money in order to compete with the Japanese on high definition 

TV. And we ended up financing the development of high definition 

TV based on analog technology rather than digital technology. So 

I mean it is just examples. 

The human genome, which we also with this Committee financed, I will never forget it was going to take 20 years, and halfway through it, a private company said look, we can do this cheaper and we can get this done years in advance. Just give us the 

right to own this technology or this approach into the years that 

we are going to save it from when the government when it is going 

to be done. And it was a big debate about that. 

So I am hoping that if we do provide money for energy research, 

it is not for like light water reactors or analog, that we are literally 

pushing the envelope. And that is in terms of our, of course, science 

that is aimed at breaking new ground. Applied science and applied 

research I think that business could do pretty much on their own. 

Let us get to that. 

First of all, I would like to ask, a few years ago we were gloom 

and doom about peak oil and how we are going to be energy-wise, 

things are going to get worse and worse. What about peak oil and 

gas? Is that just a false alarm? 

Mr. SIEMINSKI. Thank you, Congressman. 

The problem that I saw as an energy economist, the problem that 

I always had with the peak oil hypothesis was that it was entirely 

geology-based. The view assumes that the resource base is completely known, and once you produce half of it that you inevitably 

are on a downturn. I think that this Committee particularly understands that there is a role for both prices and technology to dramatically change our understanding of the resource base. And that 

is what we have seen. 

Mr. ROHRABACHER. When you talk about price, which is one 

thing, we heard it earlier about the importance of efficiency. Well, 

assuming that mandates and regulations are what causes efficiency 

as compared to price, and when you allow the price to go up, there 

is going to be a great deal more efficiency. People will turn off their 

lights. Actually, we found that out in California. If indeed the price 

of electricity goes up, again, we go back to market-based solutions. 

Rather than having the government step in to try to mandate what 

direction we go, quite often, the market-based solutions actually get 

the job done better. 

Let me ask about fracking now. I understand that the fracking 

that has given us so much more energy and thus more national security, that this is mainly on private land. Has there been some 

type of stifling of fracking on public lands? 

Mr. SIEMINSKI. There is hydraulic fracturing that takes place on 

federal lands. The Bureau of Land Management actually has 

issued some rules on hydraulic fracturing and how that should pro-
99 

ceed. For the most case, the vast majority of what we see geologically as the type of flight oil and shale gas resource base is on private lands, and I believe that that is one of the main reasons the 

bulk of the development so far has been on private—— 

Mr. ROHRABACHER. But you wouldn’t say that it is being stifled 

on public land? That is not an accurate charge then? 

Mr. SIEMINSKI. That sounds like a policy question and I think I 

am going to stay away from policy questions. 

If the Chairwoman would allow me 30 seconds, some of the 

changes that we are seeing in technology are going to dramatically 

shift the public’s concept of hydraulic fracturing. Right now, in 

Pennsylvania, for example, most of the water—produced water 

from hydraulic fracturing is being recycled and being used again. 

And the companies involved in the fracturing activity are finding 

ways to target the areas that they fracture so that, rather than 

fracturing the entire length of a horizontal wellbore, they are using 

3–D seismic technology to pick where they want to fracture, which 

then reduces the amount of water and chemicals and the impacts 

that come from hydraulic fracturing. And I think it is technological 

breakthroughs like that that offer a tremendous opportunity for the 

public to be reassured that hydraulic fracturing can be done in a 

sound, safe manner. 

Mr. ROHRABACHER. Thank you very much, Madam Chairman. 

And let me thank the Chairwoman for holding this hearing. 

Chairwoman LUMMIS. Thank you, Mr. Rohrabacher.And Mr. 

Weber had a question. Who developed that technology you were 

just talking about? 

Mr. SIEMINSKI. That technology was developed in the private sector by a number of the companies active in oil services activity. A 

gentleman that I spoke to about the developments taking place 

comes from Schlumberger. 

Chairwoman LUMMIS. Does that track with what you recall? 

Mr. WEBER. It does. 

Chairwoman LUMMIS. All right. 

Mr. WEBER. Thank you, sir. 

Chairwoman LUMMIS. There is a little company in Wyoming 

called Well Dog that also was dropping computers down wellbores 

and gathering all kinds of information about whether there were 

commercial quantities recoverable in that wellbore, where they 

were. And so before they even case the well, they had all kinds of 

data. And so these technologies, even in the traditional oil and gas 

business, as you have pointed out, are just improving dramatically 

every year. So that will be a fun subject for this Committee to explore further in the months ahead. 

I do, with your indulgence, have a question from Chairman 

Lamar Smith for Mr. Sieminski. The Energy Information Administration’s 2008 report called ‘‘FederalFinancial Interventions and 

Subsidies in Energy Markets 2007’’ included two very useful tables 

listing federal subsidies by energy source, as well as the amount 

of subsidy per unit of energy produced. Now, this information was 

not included in the EIA’s updated report in 2011. Chairman Smith 

would like to request that EIA update the information contained in 

both tables and provide this to the Committee. Can you do this for 
100 

me, Mr. Sieminski, so I can pass that information on to the Chairman? 

Mr. SIEMINSKI. I understand that we have actually looked into 

that. We will come back with—to the best of our ability with some 

updates. What we found, Madam Chairman, is that the assumptions that you have to use to get to the useful comparable answers 

on which of our fuels are being subsidized in one extent or another 

are extremely complex. But we will come back to you with some 

numbers. Thank you. 

Chairwoman LUMMIS. Well, thanks, Mr. Sieminski. And we expect the information you give us will include appropriate caveats 

and an explanation of the complexity of the calculation. But we 

would like to see those basic facts on subsidies and energy production for the Committee. 

I would like to close. Mr. Weber, do you have any additional 

questions? Okay. This is great. Hey, I want to thank the witnesses 

for their valuable testimony, and I want to thank all the Members 

for their questions. 

Members of the Committee may have additional questions for 

you, and we will ask you to respond to those in writing. The record 

will remain open for two weeks for additional comments and written questions from the Members. 

With our great thanks, the witnesses are excused and this hearing is adjourned. 

[Whereupon, at 11:40 a.m., the Subcommittee was adjourned.] 
(101) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
102 

ANSWERS TO POST-HEARING QUESTIONS

Responses by The Honorable Adam Sieminski 
103 
104 
105 
106 
107 

Responses by Mr. Robert McNally 
108 
109 

Responses by Ms. Lisa Jacobson 
110 
111 
112 
113 
114 
115 

Æ