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61–956 2010

WHAT’S COOKING WITH GAS: THE ROLE OF 

NATURAL GAS IN ENERGY INDEPENDENCE AND 

GLOBAL WARMING SOLUTIONS 

HEARING 

BEFORE THE

SELECT COMMITTEE ON 

ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JULY 30, 2008 

Serial No. 110–46 

( 

Printed for the use of the Select Committee on 

Energy Independence and Global Warming 

globalwarming.house.gov 


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SELECT COMMITTEE ON ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

EDWARD J. MARKEY, Massachusetts, Chairman 

EARL BLUMENAUER, Oregon 

JAY INSLEE, Washington 

JOHN B. LARSON, Connecticut 

HILDA L. SOLIS, California 

STEPHANIE HERSETH SANDLIN, 

South Dakota 

EMANUEL CLEAVER, Missouri 

JOHN J. HALL, New York 

JERRY MCNERNEY, California 

F. JAMES SENSENBRENNER, JR., 

Wisconsin, Ranking Member 

JOHN B. SHADEGG, Arizona 

GREG WALDEN, Oregon 

CANDICE S. MILLER, Michigan 

JOHN SULLIVAN, Oklahoma 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

GERARD J. WALDRON, Staff Director 

ALIYA BRODSKY, Chief Clerk 

THOMAS WEIMER, Minority Staff Director 


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C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. F. James Sensenbrenner, Jr., a Representative in Congress from the 

State of Wisconsin, opening statement .............................................................. 5 

Hon. Earl Blumenauer, a Representative in Congress from the State of Oregon, opening statement ...................................................................................... 6 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 6 

Hon. Hilda Solis, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 7 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 7 

Hon. Stephanie Herseth Sandlin, a Representative in Congress from the 

State of South Dakota, opening statement ........................................................ 8 

Hon. John Sullivan, a Representative in Congress from the State of Oklahoma, opening statement .................................................................................... 9 

Hon. John Hall, a Representative in Congress from the State of New York, 

opening statement ................................................................................................ 9 

Hon. Emanuel Cleaver II, a Representative in Congress from the State of 

Missouri, opening statement ............................................................................... 10 

Prepared statement .......................................................................................... 12 

WITNESSES 

Aubrey McClendon, Chief Executive Officer, Chesapeake Energy ...................... 13 

Prepared statement .......................................................................................... 15 

Marc Smith, Executive Director, Independent Petroleum Association of Mountain States ............................................................................................................ 24 

Prepared statement .......................................................................................... 26 

Clay Harris, Chief Executive Officer, Suez LNG North America ........................ 31 

Prepared statement .......................................................................................... 33 

David Manning, Executive Vice President, National Grid ................................... 39 

Prepared statement .......................................................................................... 41 

Rich Wells, Vice President Energy, The Dow Chemical Company ...................... 53 

Prepared statement .......................................................................................... 55 

John German, Manager, Environmental and Energy Analysis, American 

Honda .................................................................................................................... 70 

Prepared statement .......................................................................................... 72 


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HEARING ON WHAT’S COOKING WITH GAS: 

THE ROLE OF NATURAL GAS IN ENERGY 

INDEPENDENCE AND GLOBAL WARMING SOLUTIONS 

WEDNESDAY, JULY 30, 2008 

HOUSE OF REPRESENTATIVES, 

SELECT COMMITTEE ON ENERGY INDEPENDENCE

AND GLOBAL WARMING, 

Washington, DC. 

The committee met, pursuant to call, at 1:28 p.m., in Room B– 

318, Rayburn House Office Building, Hon. Edward Markey [chairman of the committee] presiding. 

Present: Representatives Markey, Blumenauer, Inslee, Solis, 

Herseth Sandlin, Cleaver, Hall, Sensenbrenner, Walden, Sullivan, 

and Blackburn. 

Staff present: Ana Unruh Cohen. 

The CHAIRMAN [presiding]. Welcome to the Select Committee on 

Energy Independence and Global Warming. We have a very important hearing today that I think is going to illuminate an issue that 

has not really been discussed as fully as it should in our country. 

Natural gas has been called the prince of fossil fuels, and with 

good reason. It is cleaner burning and emits half the carbon dioxide 

of coal and one-third the amount of oil. Natural gas supplies a 

quarter of U.S. energy needs. It is a crucial component in many aspects of the U.S. economy, from home heating to electricity generation to transportation fuel, to a feedstock for the chemical industry 

for everything from fertilizer to pharmaceuticals. 

Over the last decade, the price of natural gas has increased dramatically, leaving consumers with bills that require a king’s ransom to pay. Despite the recent dip, natural gas prices remain twoto three-times higher than they were at the beginning of this decade. It would be hard to imagine on a hot July day, but winter will 

be here soon and many of our most vulnerable families will struggle to pay their heating bills. 

High prices have allowed the extraction of natural gas, using 

more expensive drilling techniques and spurred new exploration 

and the discovery of significant new on-shore resources. If developed in an environmentally responsible way, U.S. natural gas production could increase substantially. But we must not forget that 

natural gas, like all fossil fuels, is both a finite resource and a contributor to greenhouse gases. Because of that reality, we must use 

it wisely in a targeted manner, and we must use it efficiently and 


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in ways that help transform our economy to one that is more energy secure and climate friendly. 

Today, our witnesses will discuss a number of natural gas uses 

that are already helping to achieve those goals, and what might be 

possible in the near future. For example, the chemical industry 

produces composites that make our cars stronger and more fuel efficient, and insulation that reduces energy use in buildings. Natural gas is helping to supply cleaner electricity to dense urban 

areas and expands the use of renewable technologies by providing 

electricity when the wind isn’t blowing or the sun isn’t shining. 

New highly efficient micro-combined heat and power systems will 

allow homeowners to generate electricity and heat their homes 

while barely increasing their usage of natural gas. Natural gas vehicles are already displacing gasoline and diesel and improving air 

quality. The replacement of diesel fleets such as buses and trucks 

with natural gas-powered vehicles has especially helped reduce 

dangerous air pollution in some of our most polluted cities. Fuelcell vehicles hold the promise of using natural gas more efficiently 

in the transportation sector. 

As Congress considers energy policies that will increase our energy independence and help solve global warming, understanding 

the role of natural gas is critical. The testimony of our witnesses 

today should help us understand what policies are necessary to 

best deploy this precious natural resource. 

That completes the opening statement of the chair, and I will 

turn to recognize the ranking member of the committee, the gentleman from Wisconsin, Mr. Sensenbrenner. 

[The prepared statement of Mr. Markey follows:] 


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Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

Natural gas is one of the most versatile and useful fuel sources 

in the world. It fires power plants, heats homes, and is a feedstock 

for many fertilizers and pharmaceutical products, and it can be 

used as an automotive fuel. Not only that, natural gas is one of the 

cleanest-burning fossil fuels there is. It produces much less CO2

than coal or oil and almost negligible amounts of nitrogen oxide 

and sulfur dioxide. 

Our country needs more of this useful fuel. In fact, there is plenty of it out there for us to use. The United States uses about 23 

trillion cubic feet of natural gas a year and the Interior Department’s Mineral Management Service believes that there may be as 

much as 420 trillion cubic feet of natural gas on the outer continental shelf. Unfortunately, 85 percent of this potential natural gas 

bonanza is off-limits to production right now, thanks to a congressional moratorium on exploration. 

But the congressional moratorium on natural gas doesn’t just 

stretch to offshore exploration. The testimony of Marc Smith of the 

Independent Petroleum Association of the Mountain States, shows 

that of the 279 million acres of federal land that have oil and natural gas potential, 145 million of these acres are closed to leasing. 

Many of those acres are in the natural gas-rich intermountain 

west. 

It is not just the cost of gasoline that is skyrocketing. People are 

starting to feel the pinch of higher natural gas prices as well. The 

Energy Information Administration projects that the average cost 

of natural gas for home heating will rise by more than 40 percent 

this winter. That is an average of $364 per home and for most people that is not chump change. 

And these high costs are having a profound effect on industry, 

too. The testimony of Rich Wells of the Dow Chemical Company 

shows that Dow’s expenses for natural gas have quadrupled since 

2002. With these skyrocketing energy costs, it is a wonder more 

manufacturers like Dow aren’t taking their operations overseas. 

And did I mention that natural gas is cheaper in China and India? 

The Democratic governor of Pennsylvania, Ed Rendell, understands the value of natural gas. His state uses more than 500 billion cubic feet a year, nearly half of which is for residential uses. 

Just this April, Governor Rendell opened up 75,000 additional 

acres of state forest for natural gas exploration, while acknowledging the need for cleaner-burning fuels and increased energy 

independence. If the Democratic governor of Pennsylvania can do 

it, why can’t Congress? 

Republicans are for increasing our domestic energy supplies 

across the board. We call it our all-of-the-above energy strategy. 

And yes, that includes renewables like solar and wind power, but 

as Mr. Smith notes in his testimony, natural gas will have to serve 

as the backup power source for these renewable energy sources because sometimes the wind doesn’t blow and sometimes it is cloudy 

or even snowy where I come from. 

From the testimony today, I think it will be clear to everyone 

how valuable natural gas will be to our economy and our energy 

security. I think it will be clear to everyone that increasing our doVerDate Mar 15 2010 02:16 Nov 13, 2010 Jkt 061956 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HR\OC\A956.XXX A956

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mestic supply of natural gas will help improve our economy, as well 

as our environment. 

What won’t be clear is why the House Democratic leadership is 

blocking a vote on opening these offshore areas for production of 

this vital natural resource. It sure isn’t clear to me, and I am sure 

it isn’t clear when many people get their home heating bills this 

winter, and it won’t be clear to them either. I urge Speaker Pelosi 

to let the House vote on this important issue today because the 

American people can’t wait until tomorrow for relief from these 

high energy prices. 

I thank the chair and yield back. 

The CHAIRMAN. Great. The gentleman’s time has expired. 

The chair recognizes the gentleman from Oregon, Mr. 

Blumenauer. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. 

I, too, look forward to the conversation here. Natural gas is going 

to play a critical role. We are going to have again and again pointed out that it has less than half the greenhouse gas emissions of 

coal. It has flexibility. It can be, as my good friend from Wisconsin 

points out, a bridge. It is also going to be important that we capture some of the natural gas that is currently being flared off. 

I hope that we are also able to focus on ways that we are going 

to be able to also do a better job of conserving the resource. I am 

pleased that we were able to advance an amendment earlier in this 

Congress to promote de-coupling, so that gas companies are not penalized for conservation. I would be interested if any of our witnesses have thoughts and observations about how we might further 

adjust the regulatory scheme so that they are actually rewarded for 

conserving—something that comes up periodically as we have had 

these conversations. 

I look forward to an opportunity to explore this in greater length 

with our witnesses, and I will just sort of yield back at this point 

so we can get to it. 

The CHAIRMAN. The gentleman’s time has expired. 

The chair recognizes the gentlelady from Tennessee, Mrs. 

Blackburn. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I thank you for the 

hearing, and I want to welcome all of our witnesses. I want to 

thank you for submitting your testimony so that we had it in order 

to prepare for the hearing today. 

I think we are all interested in what you have to say. I will say 

this, the chairman mentioned what a precious resource natural gas 

is. I think that we all realize that. But in order for Americans to 

benefit from that, it means it is going to require some action on behalf of Congress to enable companies to get to our natural resources, to actually be able to move that gas to the marketplace. 

I think we have to realize that, and we know that that is what 

our constituents want to see happen. Take, for instance, Memphis. 

That is in my district in Tennessee. There was a 13.5 percent increase in the natural gas rates from MLGW last year. The prediction is that those could go up 30 percent more this year. 

For families who are already feeling the pain at the pump or 

families who know that their home heating is going to increase as 

much as their electric power rates are increasing this summer, and 


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that their usage is going to change, doing nothing and not addressing the supply issues that we have is not something that they are 

willing to accept. They want to see some action. They want to see 

the supply problem solved. That means that we need to agree on 

how to best do that. 

We all know the attributes of the product that you are going to 

talk about. We know that it is important to the portfolio of options 

that we have. We know that we as Republicans are supporting an 

all-of-the-above strategy. We welcome you and we are looking forward to hearing your remarks. 

The CHAIRMAN. The gentlelady’s time has expired. 

The chair recognizes the gentlelady from California, Ms. Solis. 

Ms. SOLIS. Thank you, Mr. Chairman. I appreciate having the 

hearing this afternoon, and also to thank our witnesses for being 

here. 

We know that the U.S. is home to about 3.4 percent of the global 

reserves of natural gas, and I am pleased to note that about 2 percent of the proven technically recoverable natural gas reserves in 

the OCS are currently available for leasing and development. The 

multiple uses of natural gas as we know, however, pose an interesting alternative to oil. In the district I represent, there is a concerted effort to switch to cleaner-burning vehicles. I am happy that 

I was able to secure funding for one of my local cities who actually 

reconverted their buses to a natural gas system. 

So I think the movement is happening more and more readily 

across the country. I am eager also to hear today about the efforts 

of Honda Corporation and hopefully other auto manufacturers will 

take their lead as well and begin to look at alternative vehicles 

that can be more useful and better proven for our economy, as well 

as for our environment. 

We had a terrible earthquake yesterday in Los Angeles. It did affect my area. It was a 5.8 I believe. We are always worried about 

LNG facilities and safety factors and containment, so that is an 

issue that I personally have of concern. We have had our issues 

also with respect to the siting of a potential LNG facility out along 

the coast in Santa Barbara, I believe it was. Not Santa Barbara, 

actually one of the cities close to East Los Angeles where I represent. 

Just a lot of issues regarding consulting the local communities 

and making sure that input is available where these sitings are 

going to be placed. I think it is a way that we have to realistically 

look at, but we also have to look at where we place these particular 

plants. In my case, we suffer from a large number of egregious 

projects that have been placed in a city that has been overburdened 

many times. We refer to it as an environmental justice playground 

for people because they site a lot of different sites there that are 

heavily contaminating. Of course, our community becomes concerned and affected. 

Just with that, I just want to raise those questions and hopefully 

have some opportunity to talk to you about that. Thank you. 

The CHAIRMAN. The gentlelady’s time has expired. 

The chair recognizes the gentleman from Oregon, Mr. Walden. 

Mr. WALDEN. Thank you very much, Mr. Chairman. 


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I want to welcome our panelists and guests today. Obviously, this 

issue of natural gas and its availability and affordability are paramount no the minds of those of us on this select committee, those 

of us on the Energy and Air Quality Committee, as well as our constituents. I know in the Northwest in Oregon, they have announced 

a residential rate increase of 35 percent to 40 percent for natural 

gas for this coming heating season. 

So consumers who are feeling the shell-shock at the pump are 

going to feel it when they get their home heating bill this winter. 

And that is going to be yet another shock to the family budget and 

shock to the economy of our country. I already hear it when I go 

out in my 70,000-square-mile district and talk to farmers and 

ranchers who are paying double for their fertilizer costs, when you 

are seeing $5 diesel to run the vehicles. 

This is a real problem in this country. This Congress has been 

an absolute failure when it comes to addressing access to energy, 

America’s great reserve of energy. I am preparing to introduce legislation that will open up the outer continental shelf, give states 

new unprecedented authorities out to 12 miles, share the revenue 

back with those states, but also invest in renewable energy in a 

way that actually produces real revenue, not some mystical, magical offset or something where we come up every year and figure 

out how to extend like the production tax credit, but a real 10–year 

investment from the royalties in production of geothermal, wind, 

solar, and other alternative resources. 

It also has a provision in there for conversion of gas guzzlers to 

natural gas in a match grant arrangement, as well as helping those 

on low incomes to be able to afford their home heating bills, and 

allow for full payment in our part of the world for county timber 

payments, which is a commitment the federal government has apparently given up on. 

We can do that. We don’t have to be mired the way we are today 

thinking America is going to be third-rate to some other country 

while we ship billions of dollars overseas to countries that hate us. 

It doesn’t have to be that way. This Congress needs to act. We will 

have legislation to do that. I just hope that the majority will allow 

it. 

Thank you, Mr. Chairman. 

Mr. BLUMENAUER [presiding]. Thank you. 

The gentlelady from South Dakota. 

Ms. HERSETH SANDLIN. Thank you, Mr. Chairman. 

I thank our witnesses for being here today. I think this is a very 

important hearing. I represent the state of South Dakota, an agricultural district. Like Mr. Walden, I hear from the farmers I represent more than anyone else about the cost of natural gas and the 

need to increase supply because of the essential component of natural gas into nitrogen fertilizer. 

So unlike those who may believe that farmers are reaping substantial profits given the price of commodities, when you look at 

the doubling of their fertilizer and fuel costs, they are demanding 

additional action to increase supply. It also makes me wary not 

only for them, but those of my constituents who through investorowned utilities supply electricity with natural gas to those in some 

of our larger communities and our more rural ones as well, but 


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these proposals are seeking to propel an increased demand for natural gas before we really grapple with the supply issue. 

So I am looking forward to hearing from the witnesses today and 

posing some questions, particularly as it relates to agricultural constituents, and not just fossil fuel and natural gas, but renewable 

natural gas. I think one of the witnesses will talk about it at greater length. 

So Mr. Chairman, I thank you and yield back. 

Mr. BLUMENAUER. The gentleman from New York, Mr. Hall. 

Oh, I am sorry, John. The gentleman from Oklahoma. 

Mr. SULLIVAN. Thank you, Mr. Chairman. 

Thank you for holding this hearing on the important role that 

natural gas can play in helping our nation achieve energy security. 

If our nation is going to be serious about reducing the price of gasoline and lowering our dependence on foreign oil, then natural gas 

must be an important part of any comprehensive energy policy that 

Congress pursues. 

In the first session of the 110th Congress, I introduced bipartisan 

legislation with Congressman Towns and Congressman Hall which 

reauthorizes the Department of Energy Natural Gas Research, Development, Demonstration and Deployment Program for an additional 5 years. I look forward to hearing testimony from all our witnesses, and especially Aubrey McClendon, chairman and CEO of 

Chesapeake Energy. Chesapeake Energy is located in my home 

state of Oklahoma and is the largest independent producer of natural gas in the United States. 

Mr. McClendon also serves as the chairman of the American 

Clean Skies Foundation that just today announced a 

groundbreaking study about the supply of natural gas. It is my understanding that the study does not take into account areas that 

are currently in moratorium. I can only imagine the impact on supplies if we can successfully lift the moratorium on these areas in 

the west and off-shore. 

I am glad that our committee will get to hear first-hand about 

these important findings, and I thank you and yield back the balance of my time. 

Mr. BLUMENAUER. The gentleman from New York. 

Mr. HALL. Thank you, Mr. Chairman. 

Before I make my prepared remarks, I just wanted to say that 

contrary to some of the comments of some of my friends on the 

other side of the dais, I and other members of this caucus, the majority Democrats, are not against exploiting our resource. We are 

not against drilling. In fact, we voted for the Drill Act last week, 

which was unfortunately defeated largely through the opposition of 

the minority, which would have required oil companies to drill on 

the 68 million acres-plus that they already have leased and permitted and are ready to put the drill-bit in the ground, but for 

some reason they are not doing it. 

So I just would like to lay that once again to rest. I am also for 

renewables. Thirty years ago, I co-founded a nonprofit that raised 

over $1 million and gave it away in small grants for solar, wind, 

geothermal and conservation and other alternatives. I only wish 

the government had been doing that for the last 30 years, or we 

wouldn’t be where we are today, where the skyrocketing prices of 


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oil and gasoline have rightfully garnered a significant amount of 

attention and debate. 

In which context, it would almost be understandable to call natural gas the forgotten fuel. This would be a drastic mistake and I 

am glad the committee is taking time to examine the issues surrounding the use and potential of natural gas. Natural gas tends 

to be cleaner-burning than oil and coal, and proportionately we 

have more of the world’s gas resources than we do oil reserves. 

It makes sense, then, that increasingly the choice for new power 

generation is natural gas. While natural gas does have advantages, 

it would be dangerous to delude ourselves into thinking it can be 

a cure-all for our energy crisis, because it is also an important feedstock for chemical production of fertilizer and a number of other 

uses. We have to be careful that we factor in the impact of increased demand on these commodities as we discuss how to best 

capitalize on our natural gas resources. 

Likewise, we must make sure that as we contemplate developing 

natural gas resources, we fully understand and address the impacts of exploration. My district in the Hudson Valley of New York 

state is very close to areas that are considered part of the 

Marcellus shale gas reserve. Much of the discussion about exploring the reserve has centered on the method of hydrofracking, which 

could have severe water-use and environmental impacts. 

I look forward to hearing the thoughts of our panel on how we 

can make the most effective and responsible use of our natural gas 

resources. I yield back. 

The CHAIRMAN [presiding]. The gentleman’s time has expired. 

The gentleman from Missouri, Mr. Cleaver, is recognized. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

I would like to associate myself with the comments of my colleague, Mr. Hall, the preface he made before his comments about 

natural gas. 

I would also like to welcome our distinguished guests. We appreciate your presence here today. 

Natural gas is cleaner, and I had to do this argument last night 

with a group of people pushing something else, but it is much 

cleaner than coal. It releases about half the carbon emissions of 

coal, and it has the potential of becoming a viable replacement for 

coal to heat and cool homes, and to power vehicles. 

I am always fascinated by and have much appreciation for the 

buses that move up and down the streets of the District of Columbia. They have the lettering on the side that this bus is powered 

by clean natural gas. I have also made attempts to get our area 

transportation authority interested in trying to get more buses that 

are fueled by natural gas in Kansas City, Missouri. 

The collection of natural gas is an invasive process and increased 

demand could encourage calls for drilling in protected areas. Additionally, natural gas is a limited and finite resource. The supply 

that exists within our borders today will last only until it is all 

gone. After all the natural gas is utilized by our homes and our vehicles, we will still have to find a new source of energy. 

So I think realistically we need to look at natural gas as a temporary solution and to leave such a fate to future generations is a 

morally bankrupt thought. I think it is our responsibility now to 


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have the vision to do those things that will enable future generations and even their progeny to inherit a cleaner planet. 

So I look forward to hearing what our witnesses have to say 

about this critical issue and what the future of natural gas is for 

our country. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

[The prepared statement of Mr. Cleaver follows:] 


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The CHAIRMAN. Great. The gentleman’s time has expired. 

Now, we will turn to our panel and recognize our first witness, 

Mr. Aubrey McClendon. He is cofounder and serves as chairman of 

the board and CEO of Chesapeake Energy Corporation. Chesapeake Energy is the largest independent producer of natural gas 

and is responsible for 4 percent of domestic natural gas production. 

We welcome you, Mr. McClendon. Whenever you are ready, 

please begin. 

STATEMENTS OF MR. AUBREY MCCLENDON, CEO, CHESAPEAKE ENERGY, OKLAHOMA CITY, OKLAHOMA; MR. MARC 

SMITH, EXECUTIVE DIRECTOR, INDEPENDENT PETROLEUM 

ASSOCIATION OF MOUNTAIN STATES, DENVER, COLORADO; 

MR. CLAY HARRIS, CEO, SUEZ LNG NORTH AMERICA, HOUSTON, TEXAS; MR. DAVID MANNING, EXECUTIVE VICE PRESIDENT, NATIONAL GRID, WASHINGTON, DC.; MR. RICH WELLS, 

VICE PRESIDENT ENERGY, THE DOW CHEMICAL COMPANY, 

MIDLAND, MICHIGAN; MR. JOHN GERMAN, MANAGER, ENVIRONMENTAL AND ENERGY ANALYSIS, AMERICAN HONDA, 

WASHINGTON, DC. 

STATEMENT OF AUBREY MCCLENDON 

Mr. MCCLENDON. Thank you, sir. 

Thank you, Mr. Chairman and members of the committee for the 

opportunity to discuss the great promise of natural gas in the 

United States. I am Robert McClendon, CEO of Chesapeake Energy and also chairman of the American Clean Skies Foundation. 

Today, we issued a groundbreaking new study which proves that 

America’s natural gas resources will last for at least the next 100 

years. We are a public company founded in 1989. We do produce 

4 percent of America’s natural gas. We drill 9 percent of America’s 

new natural gas wells. In 2008, we will invest $10 billion to develop new reserves of natural gas right here in America. 

If there is one message I would like to effectively communicate 

today it is that America is at the beginning of a great natural gas 

boom. This boom can largely solve our present energy crisis. The 

domestic gas industry through new technology has found enough 

natural gas right here in America to heat homes, generate electricity, make chemicals, plastics and fertilizers, and most importantly, potentially fuel millions of cars and trucks for decades to 

come. 

This great new period of discovery in our industry has largely 

gone unnoticed by the media and most policymakers. Our industry 

has recently learned how to extract natural gas from massive rock 

formations called gas shales buried deep below the earth’s surface. 

For example, just a month ago Chesapeake announced a new 

area in Louisiana and Texas called the Haynesville shale, which 

was featured 2 days ago on the front page of the New York Times, 

that we believe will become the nation’s largest gas field and the 

fourth largest gas field in the world. In just the past month since 

we made that announcement, natural gas prices have declined by 

about 35 percent. Just by itself, we believe this one field has 

enough gas to meet the country’s gas needs for 20 years. 


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I believe natural gas can be the driving force for how Congress 

can take bold action to free our country from the death grip of high 

prices for imported oil, thereby improving our economy, enhancing 

national security, and helping the environment. How might Congress lead us to that freedom? It is actually very easy. All you have 

to do is provide incentives for gasoline station owners to add a 

CNG pump, provide incentives for homeowners with natural gas already piped into their homes to add a home refueling device, provide incentives for manufacturers to make cars and trucks that run 

on CNG, and finally provide American consumers with incentives 

to buy new CNG vehicles or retrofit their existing vehicles to CNG. 

Why should you provide incentives to switch to CNG? It is simple. Nothing less than the survival of the American way of life is 

at stake. Oil production around the world has stagnated, while demand in developing countries is rising rapidly. The result is that 

the days of cheap oil are over and America has been left holding 

the bag, a bag into which we put $700 billion each year of our national wealth and export it to various countries around the world. 

We are on the road to national bankruptcy and we must change 

our ways. 

The good news is it is easy to do. We don’t need a new fuel. We 

don’t need new technology, and we don’t need hundreds of billions 

of dollars. All you have to do is modify or replace today’s gasoline 

and diesel engines with engines that run on CNG. That is natural 

gas that costs half the price of gasoline, is more than two-thirds 

cleaner, is made in America and we have plenty of it. 

Imagine tomorrow if you could announce a new energy plan that 

would in one stroke cut your constituents’ gasoline bills in half, reduce our oil imports, improve our air quality, enhance national security, strengthen the dollar, reduce greenhouse gas emissions, and 

create tens of thousands of new jobs in the U.S. I believe your upcoming reelection chances would be even higher than they already 

are if that were possible. [Laughter.] 

In closing, I would like to offer my 100 percent support to Representative Sullivan’s bill, as well as the Emanuel-Boren New Alternative Transportation to Give America Solutions Act, or more 

simply, the NATGAS Act which was introduced on July 22, that 

would start us down the road of freedom from foreign oil. I urge 

each of you to become a cosponsor of this legislation and lead 

America out of our energy wilderness into a brighter future fueled 

by clean, affordable, abundant American natural gas. 

Thank you. 

[The statement of Mr. McClendon follows:] 


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The CHAIRMAN. Thank you, Mr. McClendon, and thank you so 

much for dramatically increasing the likelihood of the reelection of 

Mr. Sullivan. We appreciate that. [Laughter.] 

Let me now turn to recognize our second witness, Marc Smith, 

the executive director of the Independent Petroleum Association of 

Mountain States, a nonprofit trade association responsible for oil 

and natural gas development in the intermountain west. Mr. Smith 

has also worked in research for teacher planning and government 

affairs. 

We welcome you, Mr. Smith. 

STATEMENT OF MARC SMITH 

Mr. SMITH. Mr. Chairman, members of the committee, thank you 

for the opportunity to appear before you today. This is a very important and timely hearing. 

I am here today on behalf of the Independent Petroleum Association of Mountain States, a nonprofit, nonpartisan organization representing more than 400 independent oil and natural gas producers 

and related companies committed to environmentally responsible 

oil and natural gas development. 

Armed with new technologies and a new generation of high-tech 

savvy employees, America’s independents are producing energy 

from complex reservoirs that were thought to be uneconomic just 

10 years ago. This Congress could help put America on a path to 

greater energy independence and a sustainable energy future by 

lifting restrictions on OCS drilling and addressing the barriers that 

are limiting development of new supplies of oil and natural gas in 

the intermountain west. 

As the cleanest-burning fossil fuel, natural gas will also play an 

increasingly important role in a carbon-constrained world as an essential part of any plan to reduce greenhouse gas emissions. If we 

increase demand for natural gas, we need to have corresponding 

policies to plan for the development of new supplies. Natural gas 

producers don’t need special subsidies. They need access to the 

places where energy resources are found and a predictable regulatory and tax structure in order to make long-term investment decisions that ensure uninterrupted supply. 

Some of the most promising areas for future development of natural gas are the outer continental shelf and the on-shore federal 

lands in the intermountain west. In total, 279 million acres of federal land have oil and natural gas potential. Of these acres, 145 

million are close to leasing and another 20 million are inaccessible 

because of surface occupancy or ground disturbance is prohibited. 

The intermountain west is possibly best poised to help the U.S. 

meet its near-term energy needs. The region already supplies more 

than 25 percent of our nation’s natural gas, while occupying less 

than 1 percent of federal lands in the region. Production from this 

region has grown by nearly one billion cubic feet a day this year, 

and has grown more than 50 percent in the last decade. 

Recently, there have been misleading claims that U.S. energy 

companies are not actively developing federal lands they have already under lease. As a remedy, congressional leaders have proposed use-it-or-lose-it legislation in the Drill Act. The use-it-or-loseit approach is the wrong approach and would not solve the real 


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problems that exist with developing federal leases, which are the 

extensive restrictions, expensive permitting requirements, bureaucratic delays, and frivolous lawsuits that hinder timely development of American energy supplies. 

Drilling new wells is and will continue to be critical to maintaining supply. To highlight this point, consider the fact that 50 percent of the natural gas we use today comes from wells that were 

drilled in the last 31⁄2 years. In fact, according to the Cambridge 

Energy Research Associates, natural gas drilling in the intermountain west will need to increase 75 percent over the next 10 

years to sustain current production levels. 

If Congress increases the demand for natural gas by moving forward with cap-and-trade legislation to reduce CO2 emissions, it 

should carefully consider policies that ensure timely access to some 

of the most promising areas for future supply. Ignoring the current 

policies that contribute to bureaucratic delays and limit access to 

federal lands will only serve to deepen our nation’s energy challenge. 

Please consider the following list of policy recommendations as 

tangible, near-term steps that can be taken to ensure supply. Congress should increase the budget for the Bureau of Land Management oil and gas programs so that the agency has the necessary 

staff and resources to process applications for permits to drill and 

rights-of-way for gathering and pipeline infrastructure. 

Congress should consider ways to shorten the timeframe for processing APDs and other environmental analysis. The bureaucratic 

delays and runaway costs associated with environmental studies 

provide no additional environmental protections. Instead, they artificially restrict the development of new supplies of oil and natural 

gas. 

Congress should not delay the leasing of areas with significant 

natural gas resources. Legislation currently pending before Congress, such as the Roan Plateau Oil and Gas Leasing Improvement 

Act of 2008 would place significant restrictions on the development 

of new natural gas supplies on the former naval oil shale reserves. 

Congress should carefully consider how the creation of new wilderness areas will limit America’s ability to meet future energy 

needs. The Red Rocks Wilderness Act and the Colorado Wilderness 

Act of 2007 present specific threats to some of our nation’s largest 

supplies of natural gas. 

Congress should also consider limiting the ability of obstructionist groups to stop leasing, exploration and development on federal lands. And Congress should appropriate the statutorily mandated funds for research and development of new technologies, the 

section 999 program. 

The CHAIRMAN. If you could summarize, Mr. Smith. 

Mr. SMITH. As this committee examines the daunting task of ensuring America’s energy independence and addressing the important issue of climate change, independent oil and gas producers 

stand ready to help. Thank you for allowing us to appear today. 

[The statement of Mr. Smith follows:] 


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The CHAIRMAN. Thank you, Mr. Smith. 

Next, we welcome Mr. Clay Harris, a geologist by training and 

the CEO and president of Suez LNG North America, an international energy company that is one of the main LNG importers 

in the U.S. market. 

Please begin whenever you are ready. 

STATEMENT OF CLAY HARRIS 

Mr. HARRIS. Thank you, Chairman Markey and members of the 

committee, for inviting me to present testimony regarding LNG 

and for your leadership on the important issues of energy independence and global warming. 

I will concentrate on three points. First, LNG can contribute substantially to a region’s energy supply. As you know, Mr. Chairman, 

our terminal in Everett meets 20 percent of New England’s natural 

gas demand. We supply the fuel for one of the region’s largest 

power plants, which can generate enough electricity for 1.5 million 

homes. If LNG resources were not available in New England, supplies would be far tighter and consumers would suffer. 

We are also starting construction of our new offshore re-gasification system near Gloucester, which is designed to provide an additional 400 million cubic feet a day to the New England market. 

In Florida, we are working to complete the permitting process for 

a similar offshore re-gasification facility near Fort Lauderdale. This 

project could ultimately bring as much as one billion cubic feet a 

day of natural gas to the Florida market. We believe that wherever 

there is a re-gasification facility, LNG keeps downward pressure on 

prices by helping to diversify and increase a region’s energy supply. 

Second, LNG alone cannot meet all of our growing needs for natural gas. We view LNG as an important energy source in addition 

to other North American natural gas supplies, not as a substitute 

for them. As a nation, we need to do a better job of developing our 

natural resource base, in part because traditional fuel sources are 

going to be the backbone of the energy system for some time. 

We at Suez are fully committed to renewable energy, with about 

430 megawatts of renewable capacity either installed or under construction, and another 2,000 megawatts in development, but the 

data is clear. Last year, renewables account for 4.4 quadrillion 

BTUs of the more than 101 quads that we consumed. By comparison, fossil fuels accounted for 86 quads of energy last year. Consequently, we believe that we will need more supplies of natural 

gas, including LNG, in the future. 

In the last few years, expansions and new construction have 

raised LNG re-gasification capacity in North America to around 14 

billion cubic feet a day. By 2015, that number will be more than 

22 billion cubic feet a day. 

With respect to actual imports, even though 2008 imports of 

LNG will likely be only half of 2007 imports, they are projected to 

return to 2007 levels next year and continue to increase. EIA has 

projected that by 2030, we could bring as much as 2.8 tcf of LNG 

into the United States, which could be as much as 10 percent of 

the total gas demand. 

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portunities to further improve the use of natural gas in electric 

power generation. Right now, natural gas accounts for about 20 

percent of electricity generation, and it is clear that it is being 

looked to as a bridge fuel for power generation for the foreseeable 

future. 

Unfortunately, in some regions, particularly those that have not 

adopted competitive and fully transparent tocell power markets, 

older, less efficient natural gas power plants continue to operate, 

while newer, more efficient and cleaner natural gas power plants 

remain idle or underutilized. Such inefficient use of natural gas not 

only increases emissions and wastes natural gas, but increases the 

electricity cost to the consumer. 

Third, I would like to address the international aspects of LNG. 

While LNG is a global commodity, it is premature to talk about a 

world gas price. In reality, there are several regional markets for 

natural gas and the prices in each one vary according to local circumstances. Additionally, on a global scale, there is more re-gasification capacity than there is liquefaction capacity. That is the nature of the LNG business model. More re-gasification capacity provides flexibility in supply and price responsiveness to markets, but 

also means a growing proportion of the LNG marketplace, perhaps 

as much as 20 percent, consists of divertible cargoes. 

Finally, the presence of LNG means that there are some interrelationships between the regional gas markets. For instance, when 

Japan’s gas demand spiked last autumn due to a shutdown of nuclear units, divertible LNG went to Japan. Similarly, when the 

price of natural gas in Great Britain dropped last spring and summer, divertible LNG wound up being shipped to the United States. 

Those transfers simply reflect market dynamics. 

Thank you again for inviting me. We think LNG can be and is 

an important part of the energy supply equation for the United 

States. I look forward to answering any questions you might have 

and working with the committee on these important issues. 

Thank you. 

[The statement of Mr. Harris follows:] 


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The CHAIRMAN. Thank you, Mr. Harris, very much. 

Now turning now from natural gas production to its use, we welcome Mr. David Manning, the executive vice president of U.S. external affairs at National Grid, an international electricity and gas 

supplier. He has previously served as the executive vice president 

and chief environmental officer of KeySpan, one of the nation’s 

largest gas distributors. Early in his career, he served as deputy 

minister for energy of the province of Alberta in Canada. 

So we welcome you, Mr. Manning. Whenever you are ready, 

please begin. 

Move in closer to the microphone, please. 

STATEMENT OF DAVID MANNING 

Mr. MANNING. Thank you very much. That is better. I apologize. 

If I could speak with the mic from the consumer’s end of the 

pipeline. Just a quick word about National Grid. We are one of the 

largest distributors of natural gas and electricity. We have about 

9,000 miles of transmission. We serve about 15 million people. We 

move 718 billion cubic feet of gas per year to generators and to 

home and to businesses which accounts for about 3 percent of the 

U.S. supply. 

So obviously, these issues are very critical to us. We spend about $1.5 billion in energy efficiency programs in New England alone. 

Energy efficiency is obviously one of our primary missions as a 

company, both on the gas and electric side. So we do believe that 

while natural gas is critically important and offers a great advantage in terms of its CO2 emissions, it is also the fuel which facilitates the greatest opportunity for energy efficiency technology. 

So if I could just go a little bit further. The generation side of 

natural gas is critically important to the Northeast. Forty percent 

of the generation in New England is now running on natural gas, 

slightly more than that. In New York, it is probably about 12 percent pure natural gas, but about 24 percent of the plants in New 

York state run on some combination of gas and oil. 

We are the largest—today, we are the largest independent power 

generator in New York state and all of our plants, of course, are 

running on natural gas currently, which is better for the environment and also has a price advantage, so it is critically important. 

But more important than that, of course, if I could just repeat, 

and I know that the chairman brought this up, pounds per billion 

BTUs of energy, 117,000 for natural gas, 164,000 for oil, 208,000 

for coal. This is not to say that we shouldn’t try and drive our 

clean-coal technologies and shouldn’t find ways to improve the use 

of all these energy fuels, because as every member has pointed out, 

your constituents are being afflicted by high energy costs. 

So I think National Grid’s agenda is we need to first and foremost drive energy efficiency of all fuels, and the fuels that we do 

use not only must be available, but they must be used in the best 

way possible, both for the environment and also in terms of energy 

efficiency to reduce our dependence on imported fuels. 

So turning to electricity just again, not only do you have the opportunity for combined cycle cogeneration—there is a wonderful 

plant in Oregon I had the opportunity to cut the ribbon in a former 

life, as the chairman pointed out—where natural gas comes in and 


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runs the generator. The waste heat from that generator runs a second turbine. Two sources of power go to Spokane. That, of course, 

is cogeneration, so you have two sources of power. 

The waste heat from that second—now, it is still waste heat from 

the generator—goes out the back end, so for those of you who 

haven’t been, Idaho and Oregon have a lot of potato farms, all run 

by satellite. It is wonderful to see. The waste heat from that steam 

blows the skin off the potato, slices, fries, freezes, and cycles back 

into the plant. 

Now you have taken a power generator into a much higher efficiency level, and of course that same kind of technology is available 

at homes, businesses, with the technologies like combined heat and 

power, which of course are driven primarily and best by natural 

gas. 

Honda has the best example we have seen, which is freewatt, 

which is a unit for the home which we can discuss in a moment. 

Also, natural gas vehicles, we have tremendous expertise I believe 

as a company. This has been an issue for us for many years. Mass 

Bay Transit, we have converted over one-third of their fleet, 100 

percent of the vehicles in the Long Island bus fleet are operating 

now on natural gas. We have a fleet of Honda natural gas vehicles 

for our customer service. We have our own corporate fleet of natural gas vehicles. 

Our benefits, however, have been primarily in fleets, and our 

current emphasis is on school buses. We have converted the entire 

school division because those school buses not only are running 

more efficiently, but they are also improving the air quality of the 

passengers, which we think is a critically important opportunity. 

Not to leave aside, however, electric vehicles, because again our 

point is these are prime fuels. They are premiums fuels and we 

must use them efficiently. We have a combined cycle plant, the 

most efficient plant in New York. It has not stopped since the day 

it started in 2004. But between the hours of 2 a.m. and 6 a.m., it 

drops from 250 watts to 160. So the idea of plugging in your hybrid 

to a windmill is a great idea, but in the near term plugging into 

Ravenswood dramatically improves the air quality from that point 

alone. 

I look forward to your questions. Thank you, Mr. Chairman. 

[The statement of Mr. Manning follows:] 


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The CHAIRMAN. Thank you, Mr. Manning. 

Our next witness is Rich Wells, the vice president of energy at 

the Dow Chemical Company, one of the world’s leading manufacturers of chemicals and plastics. Dow is committed to corporate 

sustainability and since 1990 has reduced its emissions of greenhouse gas emissions by 20 percent. 

We welcome you, Mr. Wells. Whenever you are ready, please 

begin, if you can turn on the microphone and move it up close to 

you. 

STATEMENT OF RICH WELLS 

Mr. WELLS. It is on, thank you. 

Thank you, Chairman Markey, Representative Sensenbrenner—— 

The CHAIRMAN. Pull in the microphone a little bit more close. 

Mr. WELLS. Certainly. 

Thank you, Chairman Markey, Representative Sensenbrenner, 

and other members of the committee. Thank you for the opportunity to provide our views on natural gas and its role in the future 

and energy climate change policy of our country. 

First, I would like to address the role natural gas plays for Dow. 

As the nation’s largest chemical and plastics producer, Dow uses 

natural gas and natural gas liquids as both a fuel and a raw material. For its global operations, Dow uses the energy equivalent of 

850,000 barrels of oil each and every day. Of this total, approximately half is in the United States. 

Dow converts natural gas and natural gas liquids into more than 

3,000 products essential to our economy and our citizens’ quality of 

life. These products serve as building blocks for everything from 

pharmaceuticals, insulation, electronic materials, fertilizers and 

much more. 

The rising price of natural gas has had a dramatic impact on 

Dow’s operating costs. In 2002, our total annual energy and feedstock bill was $8 billion. For this year, it is projected to be $32 billion. As a result, we have taken a number of actions necessary to 

sustain our operations and retain the ability to invest in our future. 

Let me give you some examples of what we have done. Our relentless focus on energy efficiency has saved over 1,400 trillion 

BTUs of energy since 1994. That is enough to power every home 

in California for 16 months. We have shut down over 90 facilities 

since 2003. In the last 2 months, we have announced price increases totaling 45 percent. These increases will be reflected in the 

prices consumers pay for items such as trash bags, diapers, detergents, food and many other daily household items. 

We are pursuing alternative and renewable energy end-feed 

stock projects. As an example, we are building a world-scale plastics plant in Brazil where polyethylene will be made from sugar 

cane. And finally, we are preferentially investing in other parts of 

the world where energy costs are considerably lower. In fact, Dow 

has announced projects in Brazil, China, Kuwait, Libya, and Saudi 

Arabia. These investments will create 10,000 direct and 60,000 indirect jobs. Many of these jobs would have been created here in the 

U.S. but for the high and volatile cost of natural gas. 


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We believe natural gas is of greatest value as a raw material for 

value-added products. At Dow, we turn $10 billion worth of natural 

gas and natural gas liquids into $45 billion of value-added products 

each year. Chemistry creates wealth by converting precious resources like natural gas into value-added products essential to our 

way of life. 

With additional proposed uses of natural gas, the industrial sector will become the shock absorber in the form of demand destruction. Demand destruction is a sterile economic term for job loss. In 

fact, with natural gas prices increasing more than 460 percent over 

the last 8 years, our country’s manufacturing sector has lost 3.7 

million jobs. 

As our country becomes more concerned with energy security and 

reducing global warming, we run the risk of dramatically increasing demand for natural gas. As an example, natural gas in the 

power sector could ramp up dramatically under a climate change 

policy that does not rapidly deploy nuclear technology and carbon 

capture sequestration. 

To prevent this, we recommend that Congress enact a comprehensive energy policy that addresses high prices, dependency on 

foreign sources of energy, and climate change. We believe this can 

best be accomplished by focusing on aggressive energy efficiency 

measures, increasing and diversifying domestic energy supplies, including more natural gas production, further developing alternative 

and renewable sources of energy, and passing environmentally effective and economically sustainable climate change legislation. 

Recent proposals, such as the Pickens plan, have some positive 

elements, like increased wind and solar power generation. However, we are concerned that adding new uses for natural gas such 

as in transportation will create new and relatively inelastic demand that we may not be able to meet without high prices and further demand destruction in the industrial sector. 

In conclusion, the U.S. needs a comprehensive, sustainable energy policy. Simply increasing demand for natural gas without addressing the supply issue is not a sustainable policy. It seems that 

members of Congress are talking past each other on energy policy. 

We need serious action on both supply and demand. It is a need 

that cries out for bipartisan solutions. 

I thank you for the opportunity to participate in today’s discussion. 

[The statement of Mr. Wells follows:] 


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The CHAIRMAN. Thank you, Mr. Wells. 

Our final witness is Mr. John German, the manager of environmental and energy analysis for the American Honda Motor Company. Honda is the only company currently offering a compressed 

natural gas passenger vehicle, the Civic GX, in the United States. 

Since its introduction in 1998, both EPA and the American Council 

for Energy Efficient Economy have ranked it as one of the greenest 

cars in America. 

We welcome you, Mr. German, and we look forward to your presentation. We will just wait a second here so you can get your props 

set up. 

Mr. GERMAN. I am taking a page out of your book, Mr. Chairman. [Laughter.] 

The CHAIRMAN. I think it has already got my attention. I like 

props. We have a little bit of an obstructed view there. If you can 

pull that out a little bit further. All right. Beautiful. Thank you. 

So Mr. German, please begin. 

STATEMENT OF JOHN GERMAN 

Mr. GERMAN. Okay, thank you. 

Mr. Chairman and members of the committee, good afternoon. I 

appreciate the opportunity to appear today to discuss Honda’s work 

with natural gas. I request that my full statement be submitted for 

the record. 

Honda believes there is no single solution to America’s dependence on petroleum and global warming. As a result, we are dedicated to advancing and implementing a variety of fuels and technologies. Our objective is to introduce technologies that lower emissions, improve energy conservation, and increase fuel economy, 

while meeting the needs of our customers and of society. 

One such technology is our dedicated natural gas vehicle, the 

Civic GX. It is the only natural gas vehicle produced or sold in 

America. Natural gas offers significant benefits when used as a 

transportation fuel, as it operates cleanly and efficiently in internal 

combustion engines and works in a variety of vehicle applications. 

Natural gas also has low upstream emissions and a lower ratio of 

carbon-to-energy output than petroleum, which reduces greenhouse 

gas emissions. 

First introduced in 1997, the GX is produced at Honda’s Liberty 

manufacturing plant in Ohio. It has been called the cleanest vehicle ever tested by the USEPA. Historically, our sales have been between 500 and 1,000 vehicles per year, but Civic GX demand is 

now at an all-time high and the market is growing due to the combination of high gasoline prices, concerns about energy security, 

and the introduction of a home refueling station. 

The price of the Civic GX is approximately $25,000, which is 

about $7,000 more than a comparable gasoline engine Civic. Part 

of this price differential is offset by a federal tax credit of up to 

$4,000. The price premium, due primarily to the increased expense 

of key components such as the special tank and fuel system, could 

be lowered somewhat by increased volume. The GX has a range of 

up to 220 miles and an eight-gallon gas equivalent fuel capacity. 

Compared to plug-in hybrids, fuel cell and battery electric vehicles, the cost increment for gasoline—I am sorry—the cost increVerDate Mar 15 2010 02:16 Nov 13, 2010 Jkt 061956 PO 00000 Frm 00074 Fmt 6633 Sfmt 6602 E:\HR\OC\A956.XXX A956

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ment for natural gas vehicles is much less. Due to infrastructure 

constraints, Honda’s initial market for the Civic GX was fleets. 

However, with the development of a home refueling device known 

as PHILL, Honda has begun to market the vehicle to retail customers. PHILL, which is illustrated up here, that is a full-size 

photo, taps into the consumer’s residential natural gas line, connects to the vehicle and fills the tank overnight. 

We have found that the convenience of home refueling is a major 

attraction to many customers. Mile for mile, natural gas is much 

less expensive than gasoline, particularly at residential rates. 

Every gallon-equivalent of natural gas displaces one gallon of gasoline and cuts CO2 emissions by about 25 percent. 

Honda’s experience with natural gas vehicles also serves as a 

pathway to hydrogen fuel cell vehicles. The physical properties of 

hydrogen and natural gas are similar and so are many of the components. Natural gas being the base fuel in many cases for producing hydrogen, Honda is testing an innovative home energy station that generates hydrogen from natural gas. Honda’s home energy station, developed in cooperation with Plug Power of New 

York, makes efficient use of a home’s existing natural gas supply 

for production of hydrogen, while providing heat and electricity to 

the home. 

Our fourth generation station is currently deployed at our Torrance campus and is used to fuel the Clarity, our new fuel cell vehicle. Incidentally, last week Honda leased its first Clarity to a retail customer in California. We will be releasing 200 additional 

Clarity vehicles to individuals over the next several years at the 

rate of $600 per month for 36 months. 

Honda also makes a micro combined heat and power system for 

the home. This is the freewatt system illustrated on the other one. 

It is a home natural gas cogeneration unit that produces about onethird less carbon dioxide emissions than a conventional heating 

system, with electricity provided from the grid. The product is marketed in New England and sold through a joint venture known as 

Climate Energy. The system combined two technologies: an advanced furnace provided by ECR of Utica, New York, and a natural 

gas-fired generator produced by Honda. Economic viability of the 

system would be further increased if the electric grid could accept 

excess electricity generated by freewatt. 

Our energy and global climate challenges are so immense we are 

going to need rapid deployment and implementation of as many 

feasible technologies as possible. Although supplies of natural gas 

are not unlimited, natural gas vehicles are one of a number of important near-term technologies. 

Natural gas may also be a core fuel for what may be our best 

long-term technology, fuel cell vehicles with hydrogen extracted 

from natural gas. 

This concludes my statement. I would be happy to answer any 

questions. 

[The statement of Mr. German follows:] 


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The CHAIRMAN. Great. That completes the time for the opening 

statements from the witnesses. I think we will have time for Mr. 

Sensenbrenner and for myself to ask questions, so I will begin, and 

then we will come back right after the roll call to recognize other 

members. 

So the chair will recognize himself, and I am going to ask Mr. 

McClendon and Mr. Smith, you both mention in your testimony 

that U.S. natural gas production is up, while demand has remained 

relatively flat, but prices are still high, and many American families are already worried about paying for their heating bills this 

winter. 

Will prices come down substantially as more and more of this 

natural gas goes into the system? And will expanded use of natural 

gas, as we have heard from Mr. Wells in the vehicles sector, have 

an impact on pricing for home heating purposes if there is that expanded demand part? Mr. McClendon. 

Mr. MCCLENDON. Thank you, Mr. Chairman. 

The first thing I would say is that gas production has actually 

been increasing for the last 3 years at a compounded rate of 6 percent. 

The CHAIRMAN. Over the last 3 years? 

Mr. MCCLENDON. Over the last 3 years on a compounded rate. 

Before then, for the last 5 or 6 years before, then gas production 

was flat to slightly declining. This year looks like we will have the 

industry’s best year in modern history. We will be up probably 9 

percent, and that is the equivalent of four or five tcf a day of new 

production in the U.S. 

So do we have enough natural gas to meet all these new needs 

for natural gas? We see demand going up for natural gas for electricity. Certainly, it has become harder and harder to build a coal 

plant these days. It is difficult to build a nuclear power plant. Our 

view on that is simply that gas is there. It is clean. It is affordable 

and we think it ought to be used. 

With regard to whether or not there is enough to fuel the automobile industry, right now if you were to move two million cars to 

natural gas, it would be about 1 percent of the U.S. car fleet. We 

think that would increase natural gas demand by about .75 percent. So the Emanuel-Boren bill seeks to increase the amount of 

cars in the U.S. that run on natural gas 10 percent. We think that 

that would require only about a 7.5 percent to 8 percent increase 

in demand for natural gas. Again, that is over 10 years, and in the 

context this year, our industry will increase production by 9 percent. 

The CHAIRMAN. Can I talk for a second about using natural gas 

to generate electricity? We will have in some manner, shape or 

form legislation that passes here over the next couple of years that 

is a cap-and-trade system that puts some price on carbon. How 

much of these new discoveries can be used in order to make it possible to retire dirty old coal-generating plants, and as a result help 

us to meet whatever commitments the United States makes in the 

Copenhagen round? 

Mr. MCCLENDON. Well, the American Clean Skies Foundation 

today released a study that had been performed by Navigant Consulting, which the authors of that report have concluded that over 


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the next 20 years, you could begin to retire the dirtiest of the coalfired plants and not affect the price of natural gas, again because 

of the amount of production increase that we have. 

The CHAIRMAN. Do you know how many megawatts they are 

talking about in terms of retired coal-fired plants? 

Mr. MCCLENDON. I don’t, but you have about 500,000 megawatts 

of installed power and use about 400,000 of it in—— 

The CHAIRMAN. On a daily basis. 

Mr. MCCLENDON. Right. Most incremental megawatt—— 

The CHAIRMAN. So is it possible that 50,000 new megawatts of 

natural gas electrical generation, or 100,000 new megawatts of 

electrical generation is possible? 

Mr. MCCLENDON. Right now, 20 percent of all electricity is made 

from natural gas, and that only consumes about 25 percent of natural gas in the U.S. So if you are increasing natural gas by 5 percent to 10 percent per year, you can add tens of thousands of 

megawatts a year and not impact. 

The CHAIRMAN. So is it possible, in other words, to reduce from 

50 percent the electrical generating capacity for coal in the United 

States, down to let’s say 35 percent, and to increase the natural gas 

electrical generation from 20 percent up to 35 percent of our total 

needs, and as a result meet a big climate change goal that we 

would have? 

Mr. MCCLENDON. Three years ago, I would have said no. Today, 

I say yes because of the technological breakthrough that has occurred in drilling for natural gas into these shale deposits. 

The CHAIRMAN. So with the supply available, how long do you 

think it would take to make a transition like that? 

Mr. MCCLENDON. I am not an expert in that. What I am an expert in doing is telling you that I believe that we can increase the 

supply of natural gas—— 

The CHAIRMAN. You are saying the supply will be there—— 

Mr. MCCLENDON [continuing]. By at least 5 percent per year. 

How the market decides to use that, whether it be for cars, whether it be for electricity, whether it be for more plastics and chemicals, I can’t really comment on, but I think the surprise that I have 

for people today is that the technological breakthrough that we 

have developed in finding gas from shales changes everything 

about what you think about natural gas scarcity in America. 

The CHAIRMAN. Thank you, Mr. McClendon. 

Mr. Sensenbrenner is recognized. 

Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

As the chairman knows, I am a sharp critic of what I refer to 

as cap-and-tax, because it is an indirect tax that people will pay 

through their utility bills and at the pump and practically everyplace else. We have heard today from many of the witnesses that 

if there is a cap-and-tax proposal passed by the Congress, there 

will be a huge incentive for utilities that generate electricity from 

coal to convert to natural gas because they won’t have to buy many 

carbon credits by using natural gas. That is going to increase the 

demand in natural gas and put pressure on increased prices. 

With that in mind, I do not share my chairman’s feeling that 

cap-and-tax is inevitable, but if it does pass, does that increase the 

urgency of lifting the moratorium on offshore drilling? And even if 


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it didn’t, I would like to ask all of the witnesses simply to give me 

a yes or no answer of whether they support lifting the moratorium 

on offshore drilling right away. 

Starting with you, Mr. McClendon. 

Mr. MCCLENDON. We don’t drill offshore. We don’t drill in the 

Rocky Mountains, but I am for all things American, so I think we 

should develop all of our American assets. I will tell you that this 

new surge of shale production comes from private lands and I think 

it is something we all need to recognize, that there is a lot of gas 

coming out of some traditional—— 

Mr. SENSENBRENNER. The clock is ticking both across the way 

and here. 

Mr. Smith. 

Mr. SMITH. Policies that call for increased demand without corresponding plans to increase supply are a recipe for disaster. We 

absolutely believe that we should be developing all of our energy 

resources in the U.S., especially in the intermountain west and the 

outer continental shelf. 

Mr. SENSENBRENNER. Okay, thank you. 

Mr. Harris. 

Mr. HARRIS. Sir, just a simple yes. 

Mr. SENSENBRENNER. Okay. 

Mr. Manning. 

Mr. MANNING. [OFF MIKE] 

Mr. SENSENBRENNER. Okay. Thank you. 

Mr. Wells. 

Mr. WELLS. The answer is yes. 

Mr. SENSENBRENNER. Okay. 

Mr. German. 

Mr. GERMAN. It is a little different. We produce vehicles. We are 

not on the fuel-generation side, but Honda is certainly on record as 

saying that we need to reduce consumption and all ways to help 

do that should be on the table. 

Mr. SENSENBRENNER. Okay. 

The CHAIRMAN. Can the record just at this point note that the 

chairman could have had six people who took the opposite point of 

view, so it just showed the open mindedness of the chairman of this 

panel. [Laughter.] 

Mr. SENSENBRENNER. Well, we will excuse the mistake the chairman may feel that he made on this, and I yield back the balance 

of my time. 

The CHAIRMAN. I thank the gentleman. 

We are going to take a—how much time is left? Does anyone 

know, on the roll call right now? What I am going to do is recognize 

the gentleman from Oregon, Mr. Blumenauer, and pass the gavel 

to him, and he can make a decision as to how long he wants his 

question period to go. 

Mr. BLUMENAUER [presiding]. Thank you for your courtesy, Mr. 

Chairman. 

I do appreciate the gist of the presentations here and particularly, Mr. McClendon, starting with what you were talking about 

in terms of increased supply. As you see, there is a modest difference of opinion around here in terms of point of emphasis. The 

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jority of the outer continental shelf is already available. There is 

only about 2 percent of the 7 percent of the gas that is off limits, 

and that basically nothing is going to happen for 20 to 30 years 

that is going to profoundly affect supply here. 

So there are a couple of choices. We can spend all our time in 

energy battling over something that may happen 15 or 20 or 30 

years from now, burn a lot of political energy. Or we can focus on 

what you have been talking about here—maximize supply. What I 

mentioned in my opening statement about providing incentives for 

people to actually conserve and reward people for stretching it 

more, and be able to talk about the amazing flexibility that the 

product that you are talking about here today offers for the next 

10 or 15 years, while we are still increasing domestic supply, while 

we can deal with things that don’t have people at each other’s 

throats, and be able to actually make some progress. 

I am curious, starting with you, sir, if you have some thought 

that maybe we might be able to have an energy policy for this century that talks about substitution. For example, why in the world 

would we have anybody heating hot water with electricity today 

from coal-fired plants, until we deal with it. 

I am trying to get a sense of if you have some thoughts about 

how we might be able to get past the knife fight and the dueling 

statistics that won’t make any difference for 20 years, and maybe 

get at what you are talking about here, to change the system, provide the incentives, and make that transition. 

Mr. MCCLENDON. I believe my role in this hearing and in this 

world is to do one thing, and that is to increase the supply of affordable, clean-burning, American natural gas. I am not an expert 

on access. I am not an expert on offshore drilling. What I can offer 

is that our company is going to spend $10 billion this year to increase our number one position in the industry by 25 percent. Our 

production this year is going to increase by 25 percent. We produce 

4 percent of our nation’s natural gas. 

I am here to testify that from existing sources, areas of production—Texas, Oklahoma, Louisiana, Arkansas—that there are enormous new resources of natural gas that in my view will increase 

the supply of natural gas in this country for at least the next decade by a minimum of 5 percent per year. What the market wants 

to do with that in terms of making cleaner cars, making cleaner 

electricity, I will leave that to the market, but I will tell you that 

it will take a while for people to adjust to this news—— 

Mr. BLUMENAUER. I am sorry. I want to move to Mr. Manning. 

I appreciate what you are saying, but I think it is very important 

if we are going to be able to roll the—nothing that we are hearing 

indicates that some of the peripheral things are going to make any 

difference for 10 or 15 years, but you are looking for policy changes 

that will make a difference almost immediately. You have confidence that we can do this within the range of supply? 

Mr. MANNING. I am sorry, I missed it again. 

The tankless water heater which we now have to source from Europe gives you a 70 percent reduction in heat energy to heat water, 

and it only heats water when you need it. So there is a tremendous 

amount of low-hanging fruit out there. I think you are right. Decoupling and those sorts of policy initiatives, like the OCS debate, 


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that starts to bring in the states and the opportunity for the federal government to work with the states and to create some sort 

of a set of rules with a transparent, clear understanding of how to 

get this stuff done. The cheapest power plant is the one that you 

never build. 

Mr. BLUMENAUER. I appreciate your courtesy. I apologize that I 

am running off to vote and leave you to your own devices. But I 

would like to follow up with each of you about the policy framework 

that we should be doing here in the next 10 years. One of the 

things we are advocating is with Senator Obama, with the House 

Democratic leadership and trying to make it part of a discussion, 

is an infrastructure plan for this century that is realistic about 

what we do with energy and making these pieces, particularly as 

it relates to natural gas, be able to coax as much out of that as possible. 

I would be very interested in being able to explore with you the 

sorts of—your comfort level for being able to go ahead for the next 

dozen years or so, and the specific policies that we might be able 

to do to encourage transition, encourage appropriate conservation. 

I mean, I feel good that my hot water heater in Portland is not 

working when I am here in Washington, D.C., but there are other 

things I think large and small that we would really like the benefit 

of your counsel so that when we finish the partisan knife fighting 

and we do all this stuff, we are able to move forward with things 

that will make a difference this next decade. 

I appreciate your courtesy and how informative your testimony 

was. It was very useful. 

[RECESS] 

The CHAIRMAN [presiding]. So ladies and gentlemen, we welcome 

you back to this Select Committee on Energy Independence and 

Global Warming, and our discussion of the role which new discoveries of natural gas can play in our energy and climate change legislative deliberations in our country. 

I am looking around, and not seeing any member, I will recognize myself, which is the prerogative of the chair. 

Mr. German, Honda has some of the best engineers in the world. 

I find it interesting that after building a compressed natural gas 

passenger vehicle, Honda’s engineers have pursued a fuel cell passenger vehicle based initially on producing hydrogen from natural 

gas. Explain to the select committee Honda’s reasoning here. Was 

this driven by a desire to find a more efficient way to use natural 

gas in the transportation sector? 

Mr. GERMAN. No. The fuel cell—— 

The CHAIRMAN. Would you turn on the microphone, please? 

Mr. GERMAN. It should be on. 

Our fuel cell vehicle uses compressed hydrogen simply because 

right now that is the best option for powering a fuel cell vehicle. 

We looked at all the other ways of doing it, at least the current 

states of technology, and that was the best. If you are using compressed hydrogen, then there are a lot of things you can learn from 

compressed natural gas, both from the customer side, how they respond to refueling, especially refueling at home. 

We see the home refueling stations as a way to help break the 

chicken-and-egg problem that you have with new technologies and 


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new fuels. It is very interesting in that this home refueling is very 

similar for both natural gas and for hydrogen, so there are just a 

lot of similarities there. So we have been continuing our natural 

gas program. One of the advantages of that is that we get experience that we think will translate into fuel cells. 

The CHAIRMAN. Now, can you talk a little bit about this heat 

electricity product that you have that people can purchase in their 

homes? How many have you sold in the United States? 

Mr. GERMAN. So far in the U.S. it is probably double digits, but 

this is something that we have been selling in Japan—— 

The CHAIRMAN. So more than nine. 

Mr. GERMAN. More than nine, yes. [Laughter.] 

But we have been selling this similar product in Japan since 

2003 or 2004, and we have sold 70,000 of them. 

The CHAIRMAN. Seventy-thousand of them in Japan? 

Mr. GERMAN. In Japan. 

The CHAIRMAN. And they are in residences? 

Mr. GERMAN. Yes, primarily. 

The CHAIRMAN. And is there a tax break for that in Japan? 

Mr. GERMAN. I don’t know. Sorry. 

The CHAIRMAN. Would it be advisable for us to have a tax break 

here in the United States to encourage people to move in that direction? 

Mr. GERMAN. In general, Honda thinks that temporary near-term 

incentives can be really helpful in getting a new technology started. 

So yes, that could be something that could help jumpstart it here 

in the U.S. 

The CHAIRMAN. Okay. Is there a difference between the receptivity in the Japanese market and the U.S. market? Or is it just 

that you focused on Japan first and you are just breaking into double digits here because of a later start? 

Mr. GERMAN. Yes. We have just started in the U.S. and we are 

starting in the Northeast. There is probably one major difference 

between Japan and the U.S., and that is the complexity of the regulatory structure. Where in Japan basically you work it out with 

one place and you have the whole country covered, and here you 

have every utility and every state has different rules. 

The CHAIRMAN. So you can sell the electricity back into the grid 

in Japan? 

Mr. GERMAN. Yes. 

The CHAIRMAN. And you can’t really do that in the United 

States. 

Mr. GERMAN. No. 

The CHAIRMAN. Is that a law we have to change here to move 

to net metering? 

Mr. GERMAN. It doesn’t necessarily require a law. Certainly, a 

law would help streamline things, but the utilities and the PUCs 

certainly have the ability to allow it and to set it up without that. 

The CHAIRMAN. Right, but—— 

Mr. GERMAN. Yes, they are not. 

The CHAIRMAN. Except for the fact that they are not. 

Mr. GERMAN. Right. 

The CHAIRMAN. If you leave aside the fact that they are not, do 

you think a law would help? 


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Mr. GERMAN. Yes, it would certainly help. There is a major market—— 

The CHAIRMAN. If there was a law that actually allowed for net 

metering across the whole country and you sold 70,000 units in 

Japan right now, how many units do you think you could sell in 

the United States? 

Mr. GERMAN. I can’t answer that. One of the problems you have 

is that—— 

The CHAIRMAN. You are not in—this is the development sector. 

[Laughter.] 

Mr. McClendon would have answered that section. Okay? 

Mr. GERMAN. Honda made the mistake of sending an engineer 

here. [Laughter.] 

The CHAIRMAN. My time is—okay. 

Mr. GERMAN. It is a unique product. Anytime you have a unique 

product, you have a consumer education process that you have to 

go through to get them comfortable with it. 

The CHAIRMAN. Okay. I won’t be throwing bigger watermelons 

across the plate for the rest of the day. 

Let me turn and recognize the gentleman from Oklahoma, Mr. 

Sullivan. 

Mr. SULLIVAN. Thank you, Mr. Chairman. 

I have some questions for Mr. McClendon. Can you speak about 

the outlook for Barnett shale and Marcellus shale? Is there adequate pipeline capacity to market the Barnett shale production? 

Mr. MCCLENDON. Sir, let me give you some context here. The 

Barnett produces about four bcf a day out of about 53 bcf produced 

in the U.S. right now, so about 7 percent or 8 percent of the nation’s gas—the largest gas field in the country. The Marcellus you 

referred to is the formation that underlies Pennsylvania, New York 

and parts of West Virginia. 

There is sufficient pipeline capacity now, but as production increases both in those two areas and also in the Woodford in Oklahoma and in the Haynesville in Louisiana, we are going to have 

to build more pipelines. But the industry has the financial ability 

to do that. We have the responsibility to do that, and we will. 

Mr. SULLIVAN. What is the break-even point for gas shale? 

Mr. MCCLENDON. Today, I believe the break-even point using 

Henry Hub pricing is somewhere around $8 per MMBTU for the 

natural gas industry. That includes some return on investment. 

That is why I think that the range of prices for natural gas will 

over the next call it 3 to 5 years average between $9 to $11 per 

MMBTU. 

Mr. SULLIVAN. Are you currently considering exploring in areas 

of Pennsylvania that were under drilling moratorium that were lifted by Governor Rendell? 

Mr. MCCLENDON. We have operations or leaseholds, rather, all 

across Pennsylvania. We are drilling there today. We were not affected by the previous moratorium, but we are now affected by one 

in New York, which has been passed by the governor in the past 

couple of weeks that has shut down Marcellus drilling in New York 

until further environmental impact work has been completed. 

Mr. SULLIVAN. Thank you very much. 


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Mr. German, how many cars are you guys making right now— 

the ones that are dedicated NGVs a year? 

Mr. GERMAN. Yes. Since we introduced it in 1997, we have sold 

about 7,500. Currently, the demand has spiked with the spike in 

gas prices. We can’t currently keep up with it, so it is something 

we have to evaluate increasing the sales in the future. But it has 

been averaging less than 1,000 a year so far. 

Mr. SULLIVAN. How much do they cost? 

Mr. GERMAN. It is $25,000, which is about a $7,000 incremental 

over a comparable Civic. 

Mr. SULLIVAN. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Do you rest your case? Natural gas speaks for 

itself. 

The gentlelady from California, Ms. Solis, is recognized. 

Ms. SOLIS. Thank you, Mr. Chairman. 

I just wanted to mention that on Monday I had the privilege of 

attending a special hearing that was held between Republicans and 

Democrats in New Orleans. The subject matter was energy independence and security, and a lot of the issues were talked about 

here. 

But I am still kind of concerned about comments that Mr. Smith 

made regarding our inability to open up more opportunities to drill, 

when the facts are that we do have about 68 million acres that are 

available in the national petroleum reserve that is available that 

we are not really taking advantage of. Those are already available. 

There are leases. There are permits. 

I haven’t heard of any major environmental problems that have 

come up to restrict any further opportunities there. In fact, several 

years ago one of the refinery companies in Arizona, in Yuma to be 

more exact, asked for permits and they were issued, and the company there decided not to go forward as a result of costs—not environmental costs, but costs that they thought wouldn’t be profitable, 

so they didn’t go ahead and build their refinery. 

With respect to the outer continental shelf, we have passed legislation in the past 2 years to allow for drilling. In fact, that was 

something that was done by this Congress. I don’t understand why 

there is this insistence that we continue to have this dependence 

on fossil fuel when we know that it is detrimental, it is limited. 

There should be other ways of looking at alternative fuels and technology. 

My question at that debate, and would be for you, is what are 

the petroleum companies doing to invest in renewable technologies? 

I mean, obviously you are up against many financial factors as 

well, in terms of having adequate equipment and the workforce and 

what have you. But what are we looking at down the line so that 

we can really kind of cut our dependency on what happens in the 

Middle East and geopolitical matters that we are never going to be 

able to control? 

So I would like to have a response. 

Mr. SMITH. I think that is a very appropriate and good question. 

Natural gas, as you know, is really the silent partner to renewable 

energy. It is the thing that takes renewable energy from a vision 

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tricity demand and it has the potential to grow quite a bit more. 

Solar is about .01 percent of our electrical demand today, or electrical production. 

When utilities build new production or new capacity for natural 

gas or for wind and solar, they want to be able to ensure their customers that when the sun isn’t shining and the wind isn’t blowing 

that they can still produce electricity for homes and for businesses. 

So natural gas is that source of power that gets billed as the intermittent source that backs up those renewable supplies of energy. 

So it is not an either-or. Natural gas is the partner to renewable 

energy as we move towards a more renewable future. 

Ms. SOLIS. But you didn’t answer my question, though. What 

kinds of investments can your industry make to help? Or is there 

any talk about that? I mean, that is what is disturbing to me. We 

are in a recession. We have high unemployment. We have people 

paying outrageous amounts for their energy, their electricity, and 

it is going to get worse. In places like mine in California, it is 

unstoppable. We are seeing a little relief—20 cents—but that 

doesn’t make it. People need to step up to the plate and take responsibility. 

I am glad to hear there are other sources of energy that we can 

look at, and I agree that liquefied natural gas is something that we 

should be looking at. But it needs to be done also in a very safe 

manner because the placement of facilities in communities, there 

was a project that was going to be placed in East Los Angeles and 

many in the community were very alarmed because they were not 

notified appropriately about what elements were being taken into 

consideration—safety, first responders, who is responsible if there 

is something, an accident; who is going to be liable for much of 

that? 

So those are some of the questions I have also. I am not turning 

it off, but I am saying that I think there is an important factor 

there because there aren’t a lot of regulations on the books also 

that talk about protecting where sitings are. And I don’t even know 

if that is where we need to go on this, because we import a lot of 

our natural gas, but I think that it is something that we are going 

to have to talk about as well. 

The CHAIRMAN. The gentlelady’s time has expired. 

The chair recognizes the gentlelady from South Dakota, Ms. 

Herseth Sandlin. 

Ms. HERSETH SANDLIN. Thank you, Mr. Chairman. 

I again thank the witnesses. 

I support increased domestic production of natural gas on the 

outer continental shelf as well as on public lands. I think technology has brought us a long way to look at some unconventional 

ways of extracting this resource in an environmentally sound way. 

You know, it is all about how the mix of incentives that we set 

forth for the different energy sources that I think all should be on 

the table as we move forward to meet the nation’s energy needs. 

One of the areas I wanted to explore, Mr. German, was an area 

you didn’t get a chance to talk about in your opening remarks, but 

it is in your written testimony, and that is biogas. So with non-fossil renewable methane gas, whether it is coming from cellulosic biomass, whether it is coming from sewage and other organic mateVerDate Mar 15 2010 02:16 Nov 13, 2010 Jkt 061956 PO 00000 Frm 00089 Fmt 6633 Sfmt 6602 E:\HR\OC\A956.XXX A956

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rial, if you could just explain for the committee, describe for us the 

current state of the technology for turning biogas into liquid fuel 

for use in conventional vehicles, and what more Congress can do 

to help advance renewable biogas. 

Mr. GERMAN. The current source that is already being utilized to 

some extent is natural gas that is produced as landfills deteriorate. 

It is just a matter of capturing it. A lot more could be done with 

that, but that supply is inherently limited. We should try to take 

advantage of as much as we can, but it is never going to be a large 

percentage of the fuel that is produced. 

The more interesting case is from cellulosic feedstocks, where a 

lot of work has been going into that. It is recognized that cellulose 

should have much lower greenhouse gas emissions and much lower 

energy needs than trying to produce ethanol from starches, for example. 

But there is a lot of work that still needs to be done on the development of that process, and it is by no means certain that fermentation of cellulosic is going to work better than some other 

processes. If gasification proves to be a better solution in the long 

run, now you could have a very large supply of renewable biogas. 

So now the question comes, what do you do with this biogas? You 

can either take it through another step and liquefy it, or you can 

use it directly, perhaps in natural gas vehicles. So looking down 

the road, if gasification of cellulosic feedstocks becomes feasible, 

then that could be a major boost to compressed natural gas vehicles. 

Ms. HERSETH SANDLIN. We certainly do hope it becomes feasible, 

and Mr. Manning, I want to hear from you as well. As you may 

know, in the farm bill, a different committee on which I sit, the Agriculture Committee, we took important steps to facilitate research 

and development of cellulosic biofuels, and we do hope that working with USDA and the Department of Energy that we will see the 

types of advancements made to make it commercially available to 

consumers across the country. I think there are some additional 

steps that Congress can take in that regard. 

Mr. Manning, did you have a comment? 

Mr. MANNING. Very quickly. Our company was the first to capture methane off a landfill in Staten Island, probably 30 years ago. 

You are exactly where you need to be, and of course there is the 

opportunity with agricultural waste, animal waste, but there is 

also the opportunity to use the whole chicken, for lack of a better 

word. I recently met last week with Tysons and partaking of what 

they are doing. 

So I think it is still very early days. I think it is also very interesting, coming from an urban environment like we do, the tipping 

fees, the refuse fees from our cities in this country, are enormous. 

So there should be a tremendous opportunity for Congress, I would 

think, to look at that as a very real option. 

As you know, the components, the methane components are quite 

practical. So there is a whole array of options. Part of the issue 

that we face, if I could just finish, is transmission—in other words, 

getting it from the farm to the load; getting it from the solar desert 

to the load; getting natural gas moved around. Transmission is a 

critical issue for Congress. We have been trying to build a pipeline 


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that will re-power a number of power plants in the New York area 

for 6 years without success. All federal approval is in place, and we 

were defeated. And that would just immediately back-out use of oil 

for natural gas. So that is a very important issue as well. 

Ms. HERSETH SANDLIN. I appreciate your comments. My time is 

almost expired, but you know, where I am from, we don’t say use 

the whole chicken. We say we use the whole plant. You know, corn 

ethanol gets a bad rap, but there is a lot of agricultural waste 

when you are talking about corn harvests, whether it is corn stover, whether it is the corn cob. There is a whole host of opportunities here for us technologically. 

And I couldn’t agree with you more on transmission, whether it 

is the siting of pipelines and the construction of those pipelines, or 

the siting of energy corridors to get the vast amounts of wind and 

solar that we have in certain parts of the country transmitted to 

more populated areas. 

So I thank you all for your testimony, and I yield back. 

The CHAIRMAN. Great. 

The chair recognizes the gentleman from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. McClendon, based on your testimony, I think you would 

agree that while natural gas is much cleaner, it is finite, and I 

think you mentioned we may have supplies for 100 years. 

Mr. MCCLENDON. It is 118 today, and that is at least in way of 

thinking—— 

Mr. CLEAVER. We will all be gone when it runs out, most of us. 

Mr. MCCLENDON. It is 118 years on what we know today, with 

the technology that we have today, on the resources that we have 

found. So it is a pretty ingenious human species that we are, and 

I would think 50 years from now we will find more gas and we will 

find more ways to get a higher percentage, a higher recovery factor 

out of these shales that we are drilling into right now. 

Mr. CLEAVER. The point I want to make along those lines is 

while I agree with your testimony, and I also think that we are 

probably not moving fast enough toward using natural gas in any 

number of ways, but my concern is that it is invasive when we extract it. How do you compare the process of getting natural gas 

with fossil fuel—well, both are fossil fuels—but oil in terms of their 

impact on the environment? 

Mr. MCCLENDON. Well, when you talk about invasive, I think 

about a weed that takes over the country. I think the good news 

today is that the natural gas that we are finding in the shales is 

being found, frankly, underneath gas fields that have already been 

in production for decades—Oklahoma, Louisiana, Arkansas, Texas. 

And so these are places where people are comfortable with additional drilling. Pennsylvania is the cradle of the American oil industry, 1859. 

So I wouldn’t agree that we are an invasive species. We are certainly drilling in more areas today, but I think the good news is 

33 of the 50 American states do produce. I would say that if you 

are looking at the total environmental impact—natural gas versus 

oil versus coal—that natural gas ends up being very low on the environmental impact scale. So it is produced today in areas where 

people want it to be produced, and it is the key to rolling back oil 


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prices, gasoline prices to where they were 5 years ago. I know of 

no other way to do that, but natural gas can do that. 

Mr. CLEAVER. I represent Kansas City, Missouri, but I was born 

and raised in Texas, and went to college, my first year, in Oklahoma. There were gas and oil fields less than a mile from the 

house, from the public housing project where I grew up. But the 

environmental issue is something that I am concerned about. 

Many Texans probably are as confused as me. You drive down 

the highway and you will see flames coming out of the ground, just 

flames with no apparent danger. My assumption is that that is natural gas. 

Mr. MCCLENDON. My assumption would be it would be illegal. 

Our company operates 38,000 wells, the largest number in the 

country, and we are not allowed to flare gas anywhere in the 

United States. So I really need you to think about, on the environmental balance sheet, natural gas is the fuel that can back out 

dirtier oil, back out dirtier coal, and on a net-net basis we are 

much ahead by using natural gas. 

Mr. CLEAVER. So you have never seen the flames? 

Mr. MCCLENDON. I have seen them in pictures and I know that 

in the Middle East today and in Nigeria today they flare a lot of 

natural gas, but in the states where we operate, we are not allowed 

to flare natural gas, and we are the biggest producer of gas in 

Texas, so that is news to me that you can flare gas in Texas. Again, 

maybe a long time ago I think you probably could, but—— 

Mr. CLEAVER. Well, are you suggesting that I am old? 

Mr. MCCLENDON. Pardon me? [Laughter.] 

You know, you are not any older than I am I don’t think, and 

things have changed a lot in our lifetimes, for sure. 

Mr. CLEAVER. Yes, I haven’t seen it in the last few years because 

I don’t live there, and maybe it is a practice that has been discontinued. 

Mr. MCCLENDON. It really has. I mean, for a lot of reasons, not 

the least of which is for environmental reasons, but also why would 

you flare something that is as valuable as natural gas today? You 

capture it and sell it. 

Mr. CLEAVER. Well, yes, that was the point I was going to make. 

That was the question I was going to ask, about environmental 

damage and also wasting. 

All right. I yield back the balance of my time. 

The CHAIRMAN. Great. The gentleman yields back. 

The chair recognizes the gentleman from Washington state, Mr. 

Inslee. 

Mr. INSLEE. Thank you. 

There is I think a discrepancy in a couple of the testimonies that 

I want to see if we can clear up. I think Mr. German in his testimony provided a graph showing CO2 emissions reductions associated with natural gas. It was well-to-wheel emission reductions and 

it showed CO2 reductions, as I read it, about 42 percent or something in there. Is that about right, Mr. German? Am I reading 

that? 

Mr. GERMAN. That is for the Civic GX compared to an average 

vehicle. 


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Mr. INSLEE. Okay. And I was reading this, I think Mr. Manning’s 

testimony that quoted a figure of 90 to 95 percent reduction, as I 

understand it. 

Mr. MANNING. [OFF MIKE] 

Mr. INSLEE. I am sorry? 

Mr. MANNING. Yes, I am sorry. I apologize. That number relates 

to if you take old technology and convert to natural gas. In other 

words, the least efficient, we are making reference there to displacing ancient technology. 

Mr. INSLEE. I see. Okay. 

Mr. MANNING. Mr. German is comparing new to new, which is 

probably the better number. 

Mr. INSLEE. Got it. 

Mr. MANNING. We are talking about getting old vehicles off the 

road with brand new technology running on natural gas. 

Mr. INSLEE. So if we replaced—comparing new gasoline-run internal combustion sleet, a new internal combustion gasoline-powered fleet, with a new internal combustion natural gas-powered 

fleet, the best evidence is we would reduce CO2 emissions about 40 

to 42 percent. At least that is Honda’s experience, then, is that 

right? 

Mr. GERMAN. If you convert a larger car to natural gas, the savings won’t be as large. If you converted the entire fleet, the CO2

reductions would probably be 25 to 30 percent. 

Mr. INSLEE. I will take your word for it. I know there is a good 

rationale, and I won’t get into it. So if we were, as opposed to replacing our fleet with gasoline-powered internal combustion engines, if we replaced the whole fleet with natural gas internal combustion engines with the same model-type and size, the CO2 reductions would be about what number? 

Mr. GERMAN. About 25 to 30 percent. 

Mr. INSLEE. About 25 to 30 percent. Okay. Thank you. 

Mr. GERMAN. Of course, this would be on top of any technology 

improvements you make to the baseline vehicle. 

Mr. INSLEE. Right. Right, which can be very significant, by the 

way. We are very excited about that. I just drove a plug-in hybrid 

that Toyota has made just as kind of a prototype yesterday, and 

of course Honda’s got a lot of fuel cell progress, and GM has I think 

made a commercial decision to do a plug-in hybrid vehicle, the Volt. 

I believe this is really in the near-term future, the electrification 

of the car. So I am very excited about that, but we have to have 

the electricity obviously to run the cars. So I want to ask you about 

that. 

We are having this debate, this discussion of offshore drilling in 

part for natural gas. I want to try to ask you all about the parameters of the possible of natural gas exploration domestically, compared to the potential parameters for other fuel sources. For instance, I am advised that the National Renewable Energy Lab 

found that if you look at the land domestically that could be available just for solar technology—let’s just take solar-thermal technology, to use thermal energy with mirrors that bounce the heat 

onto a pipe, you heat up salt, and you drive a steam turbine engine. 


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They found that if you exclude mountain ranges, if you exclude 

cities, if you exclude environmentally protected areas, if you exclude areas that the grade would not allow—if you just look at the 

areas that are really suited for solar energy in the American Southwest, we could produce seven times more than the entire energy 

usage of the United States, just using solar-thermal power. 

Now, today that would be considerably more expensive than natural gas with today’s situation, before we enjoy scales of economy. 

But nonetheless, it is significant. I just met with a company that 

has plans to produce in America—it is the MON Company. It is 

now a German company, but they tell me that in a 90-mile area 

of the Southwest, you could produce all of the electricity the United 

States used and run, according to the Pacific Northwest Lab, and 

run the entire transportation system of the United States once cars 

are electrified, which I think is relatively soon. 

So I guess looking at those enormous potential growth, how does 

natural gas stack up as far as potential growth in domestic production? Is it the same? Is it more? Is it less? Just give me some ideas 

in that regard. 

Mr. Manning. 

Mr. MANNING. If I could just take the first shot at that. The critical role of natural gas—and this has been discussed a little bit— 

is that technology when the sun goes down and the load is still 

maintained for a couple of hours, the best way obviously as you say 

you have salt storage. There are other ways to do that, but a lot 

of the benefit of natural gas is to accommodate intermittent power, 

be it wind or solar. The opportunity to balance the grid, which is 

a critical need, is best with natural gas generation because it can 

come up very quickly. 

Large baseload plants can’t respond quickly. Natural gas plants 

can. So you could use a combination of peaking plants. This leaves 

aside the whole conversation about high-efficiency technologies and 

distributing your generation. There are lots of things that you can 

do, but what my friend referred to here was the silent partner of 

renewable power is natural gas because it can facilitate. 

What you are talking about is large desert solar, massive installation, the cover story in Scientific American last year—absolutely, 

that opportunity is there, but natural gas I do believe still plays 

a major role. But we have also been speaking about the opportunity to use natural gas for things like the freewatt unit by 

Honda, where you can actually—natural gas is very efficient in its 

final use. It can be very efficient at the burner tip. 

So then, of course, one of the biggest issues and the challenges 

that you referred to in terms of major central plant solar is transmission. How do you get that power from those large opportunities 

into the load? And so transmission is very difficult to do, and if you 

only want to build transmission that is just intermittent power, 

that is just solar or wind, which of course, you know, I recognize 

that is important in your bill. 

The challenge that we have, of course, then is how you balance 

that load. And that is an area of real challenge for our industry. 

Mr. INSLEE. There is an answer to that, which is pass my bill on 

establishing a high-capacity corridor. Thank you. 

Thank you, Mr. Chairman. 


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The CHAIRMAN. The gentleman’s time has expired. 

What we will do is we will go to a round of 2-minute questioning 

from the members. 

Mr. McClendon, I would like to talk to you about water, the role 

that water plays in the hydraulic fracturing. New York state has 

just passed a law which requires there to be a consideration of the 

environmental impact that this new natural gas drilling will have 

on the water supply. Can you talk about it? 

Mr. MCCLENDON. I can. Water cannot be separated from the discovery of natural gas any more than water can be separated from 

any industrial process. It is part and parcel of agriculture. It is 

part and parcel of industry, and we have to have a lot of water to 

drill our wells. 

Now, how do we go about getting that water? We operate in some 

of the most arid parts of the United States—west Texas, western 

Oklahoma—places with less than 10 inches of rain. We do a good 

job of building collection dams for water in those areas. We use 

municipal water. In New York state and Pennsylvania, there is a 

fair amount of stream water that we think we can access. 

We have to work with the Susquehanna Water District, the Delaware Water District, and other water districts, but we are just like 

any other industry that comes to an area and wants to set up shop 

to create jobs. We are going to have to have water and we will be 

responsible users of that water. 

The CHAIRMAN. Okay, great. I think it is going to be a big issue 

for us to have to deal with. This water issue is not unlike the corn, 

ethanol, food issue. You know? You wind up with a tension, and 

I think we are going to have a tension here on water and we are 

going to have to get down to the bottom of it and create a policy. 

One final question, yes and no. You were good to do the outer 

continental shelf drilling issue, and each of you expressed a lack 

of expertise in it. That is subject material. So I am going to give 

you another issue. Pending before the Senate right now is the extension of the renewable tax credit. We have passed it through the 

House four times. Should the Senate pass the renewable tax credit 

before we adjourn this year, and put it on the president’s desk? 

Mr. McClendon. 

Mr. MCCLENDON. I don’t know really anything about it. 

The CHAIRMAN. You said earlier you wanted all assets on it—so 

this is how to get the asset out there. 

Mr. MCCLENDON. I am just there to provide the firm foundation 

underneath renewables, and if the market wants renewables—— 

The CHAIRMAN. Okay. 

How about you, Mr. Smith? 

Mr. SMITH. Who pays for it? 

The CHAIRMAN. The American taxpayer, the same people who 

give the tax breaks to your industry. [Laughter.] 

Who else? 

Mr. SMITH. I would ask, with the prices we have today for energy, why aren’t those sources of energy competitive on their own? 

The CHAIRMAN. That is what we are saying about the natural 

gas tax breaks, the oil tax breaks, so thank you for raising that 

issue. 

Mr. Harris. 


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Mr. HARRIS. Yes, an unqualified yes. 

The CHAIRMAN. Okay, thank you. 

Mr. Manning. 

Mr. MANNING. Unqualified yes, and it should be a top priority. 

The CHAIRMAN. Thank you. 

Mr. Wells. 

Mr. WELLS. Yes. 

The CHAIRMAN. Thank you. 

Mr. GERMAN. Yes. 

The CHAIRMAN. Thank you, Mr. German, very much. 

That completes my time. I will recognize the gentleman from Oregon, Mr. Blumenauer. 

Mr. BLUMENAUER. Thank you. 

I am curious if any of you have some thoughts or observations 

about, as we are dealing with the primary role that coal is playing 

now and is going to probably continue to play for the foreseeable 

future, even with natural gas as a transition, if there is some potential in your judgment for some of the technologies to create gas 

in the coal seams, some of the processing that is underway sort of 

dealing with a combination of carbon sequestration and conversion 

in a way that appears to have some promise. 

Mr. Wells. 

Mr. WELLS. Yes, excellent question. As part of our effort to diversify our sources of energy today for pure energy, we are 99 percent 

dependent on natural gas, and are looking into the gasification of 

coal into natural gas. We have several projects that we are working 

with partners around the United States looking at deploying that. 

Mr. BLUMENAUER. Great. 

Mr. WELLS. As part of that gasification process, you do produce 

a purer stream of CO2, which makes the potential for carbon sequestration much easier. 

Mr. BLUMENAUER. Mr. McClendon. 

Mr. MCCLENDON. My opinion is it is completely unnecessary. You 

have an inferior molecular product in the form of coal. You are trying to turn it into a superior molecular product in the form of natural gas. Nobody is trying to coalify gas and there is a reason for 

that. Gas is a superior environmental product to coal. People want 

to gasify coal for a reason. Once you are done, you still have a lump 

of carbon over there that you have to get rid of. 

So I would ask Congress to spend more time thinking about how 

to enhance the production of the superior molecular product, natural gas, as opposed to spending billions of dollars on coal gasification. 

Mr. BLUMENAUER. There are people who are using the technology, as I understand it, developed by Hitler and Stalin, that 

looks promising in terms of actually being able to sequester that 

carbon. But you think not? 

Mr. MCCLENDON. I sure haven’t seen it, and I notice that Congress killed most of the funding for that research earlier this year. 

Mr. BLUMENAUER. It was the president that pulled the plug on 

it. It was not the Congress. 

Mr. MCCLENDON. Okay. 

Mr. BLUMENAUER. We put money behind it because we were trying to have a balance, and the administration killed it. 


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The CHAIRMAN. The gentleman’s time has expired. 

Mr. BLUMENAUER. Can I just see if anybody else had some 

thoughts on gasification? 

Mr. SMITH. Yes, just a quick comment on that. Basically in countries where the coal gasification is utilized is in countries where 

there is no domestic source of natural gas, basically. 

Mr. BLUMENAUER. Thank you. 

The CHAIRMAN. The chair recognizes the gentleman from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

I mentioned the D.C. buses with the signs on natural gas. 

What—any of you—how much do you think we can do to create a 

higher level of natural gas usage in vehicles? What amount of natural gas that is available could we inject into the market right now 

to power vehicles? 

Mr. MANNING. If I could just start, I can’t quantify that immediately, but what I can tell you is that Long Island Bus has 400 

buses 100 percent committed. They did it when it was non-economic to do so. They did it in large measure with incentives from 

the company and from the state and from the federal government 

a number of years ago. Now, it probably makes good economic 

sense, now they are ahead of the game. 

As I indicated, there is a lot of interest right now. We are probably over one-third of the buses in the Massachusetts area are now 

converted to natural gas. It is a money issue. There is competing 

technology in diesel hybrids. One of the numbers that we did have 

in our testimony is that you have a 99 percent reduction in particulate when you have a natural gas vehicle bus. 

The beauty of buses, of course, is they are centrally fueled, so 

that we are big fans of natural gas vehicles, but our success has 

been where they are centrally fueled, such as buses. But what we 

had to do, we built 17 gas depots in New York City. We built 15 

in Boston, and we built the Jackie Gleason bus garage for $3 million 2 decades ago to force the MTA’s hand to get them to do this. 

They had a bit of a love affair with diesel hybrid. Now, they are 

coming back to natural gas. It may be a price issue, but it is a 

money issue, but it is there. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. McClendon has to leave. We usually ask the witnesses to 

give us a 1-minute summation. So before I recognize Mr. Inslee, 

could you give us your 1-minute before you run out the door? 

Mr. MCCLENDON. Certainly. My 1 minute would be, as you all go 

home for recess, I hope that you take back the message to your constituents that you have a plan that can lower their gasoline costs 

in half; that you can allow them to drive environmentally more 

friendly cars; and that you can allow them to use a product that 

creates American jobs as it is consumed; and use a product that enhances national security. 

Natural gas does all that, and this industry can increase natural 

gas production by at least 5 percent per year for at least the next 

decade. Please think about your policies with regard to natural gas, 

with a mind-frame of abundance, rather than scarcity. 

The CHAIRMAN. Thank you, Mr. McClendon, very much. 

Mr. MCCLENDON. Thank you for the opportunity to be here. 


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The CHAIRMAN. Thank you, sir. Thank you for being here. 

The chair recognizes the gentleman from Washington state, Mr. 

Inslee. 

Mr. INSLEE. Yes, a question for the whole panel. Are any of you 

opposed to the adoption of a cap-and-trade system to limit the 

amount of global warming gases emitted and have a permit system 

for those who are emitting them? Are any of you opposed to the 

adoption of such a system? 

No one is opposed? 

Mr. SMITH. I think the devil is in the details. I think everyone 

would want to see the details of that plan before they blindly said 

yes. 

Mr. INSLEE. Well, do you think, Mr. Smith, do you think we 

ought to have a national limitation on our emissions of global 

warming? And do you think we ought to have a permit system that 

polluters pay for to pollute? 

Mr. SMITH. I think one in five Americans today currently qualify 

for energy assistance, and they are struggling to pay their heating 

and electricity bills. They are struggling to get to work. They are 

struggling to pay for their food. I think you need to ask the American public if that is their highest priority is to make energy more 

expensive or if there are more creative market-based approaches to 

help lower the price of energy, while also reducing carbon emissions and other greenhouse gases. 

Mr. INSLEE. So do you think polluters should pay to pollute in 

this country? And let me tell you, I ask you, when you go to the 

garbage dump and you unload your pickup load of stuff, I bet they 

charge you $10 to $20 to do that where you live. You are shaking 

your head yes. 

So do you think that industries that use our one atmosphere as 

a refuge dumping spot should have to pay for the right to use that 

as a garbage dump? 

Mr. SMITH. I am not sure if I understand. I think generally what 

you are saying, or what you are asking me is should there be a cost 

to pollute, and I would agree with that. That is probably fair. 

Mr. INSLEE. I appreciate that. I will remind you of that next year 

when we are working on this cap-and-trade system. [Laughter.] 

Thanks. 

The CHAIRMAN. That completes the time for questions, so we will 

go to the summation of each of our witnesses, 1 minute apiece, 

what the big thought is that you want us to remember as we move 

forward legislatively. 

Mr. Smith. 

Mr. SMITH. Thank you. 

Well, it is clear from the testimony today that energy drives our 

economy, and we have heard compelling reasons why we need more 

natural gas for transportation, for food, for feedstocks, and for electricity. Natural gas, especially off of federal lands, is a critical supply today and it looks like it will be for quite some time. It is proven. It is a near-term solution, and we can’t kick the can down the 

road anymore on the deciding whether or not these areas should 

be open for development. It will just be delaying those problems for 

future generations, and I hope this Congress will look at opening 


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the OCS and providing better, more timely access for development 

in the intermountain west. 

The CHAIRMAN. Okay. 

Mr. Harris. 

Mr. HARRIS. Yes, I think I would like to close by saying global 

warming and energy security are issues we should address, and I 

believe the way to address those issues are access to resources and 

the ability to build the infrastructure necessary to bring those resources to the marketplace, and also import LNG and other products that will diversify our energy supply. 

The CHAIRMAN. Mr. Manning. 

Mr. MANNING. We have made an 80 percent commitment to reduce climate change emissions by 2050. We are 37 percent of the 

way there. I was a delegate to Kyoto in 1997 for 13 days. We have 

been working on this file now since about 1994, by my recollection, 

in terms of strategies. We think that this could be a critical component, the work that you are doing today. 

We think that gas is a critical facilitator of the technologies that 

we will need to do that. We would encourage you to give us a set 

of rules so that we can invest in a set of rules, probably involving 

cap-and-trade, and that kind of certainty will drive that kind of investment which we believe will allow us to use less fuel. 

Natural gas is a precious commodity. It facilitates a great deal 

of technological change. We should use it wisely. 

The CHAIRMAN. Okay. Thank you. 

Mr. Wells. 

Mr. WELLS. Thank you. 

I sit here representing a solutions provider to a lot of the issues 

that we talked about today. My company alone develops products 

like styrofoam insulation, which that product alone saves over 200 

million metric tons of CO2 each year. You mention in your opening 

the lightweight plastics that get to be used in automobiles, that 

allow them to be more efficient. We talked about landfill gas. We 

have been a pioneer in the use of landfill gas. Just last week, we 

signed an agreement with EnRel to use plant waste towards ethanol and towards auto fuels. 

But we sit on the natural gas margin. As natural gas prices will 

rise as demand increases, we will be the industry that leaves. We 

want to invest in the U.S. We want to provide these solutions to 

the U.S. by being in the U.S. We ask for policy that allows us to 

do so. Thank you. 

The CHAIRMAN. Thank you, Mr. Wells. 

Mr. German. 

Mr. GERMAN. Yes, hi. Certainly, needs are great and we need to 

pursue multiple avenues to meet our transportation needs. Natural 

gas has a lot of potential to be a significant part of the near-term 

solution, but there are a lot of other potential solutions and a longterm need to avoid mandates. Set performance standards. Let the 

best technologies win in the long term. 

Of course, this assumes equal playing fields for different technologies, and along those lines we would like to work with the committee on how to address selling electricity from our freewatt system back to the grid. 

The CHAIRMAN. Thank you, Mr. German, very much. 


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We thank each of you. Obviously, if the predictions come to pass, 

this is an incredible development. Some of our witnesses are maintaining that there could be a doubling of natural gas production in 

the United States over the next 10 years. If that is true, it is incredible news. 

Right now, we produce about eight million barrels of oil per day 

in the United States; about 11 million barrels of oil equivalent in 

natural gas; and about 10 million barrels of oil equivalent in coal. 

If natural gas could be used to substitute for coal in the eventuality 

that a carbon capture and sequestration plan is not in place over 

the next 10 years; if natural gas could be used to displace oil in 

the vehicles which we drive—obviously in both global warming and 

in energy independence, there is something quite big as an ingredient, which is being added to the formula. 

We thank you for being witnesses at our first hearing on this 

subject. I think it is going to rise in prominence as each month 

passes as we try to put in place the policies to solve these problems. 

With that, this hearing is adjourned with the thanks of the committee. 

[Whereupon, at 3:51 p.m., the committee was adjourned.] 


jbell on DSKDVH8Z91PROD with HEARING