[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


                                                                                                                                            
 
THE AMERICAN ENERGY INITIATIVE, PART 8: DISCUSSION DRAFT OF H.R. ------
      ------, THE NORTH AMERICAN MADE ENERGY SECURITY ACT OF 2011

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 23, 2011

                               __________

                           Serial No. 112-49


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
?

                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chair                         DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             ANTHONY D. WEINER, New York
ROBERT E. LATTA, Ohio                JIM MATHESON, Utah
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            JOHN BARROW, Georgia
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky              Islands
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 7_____

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JAY INSLEE, Washington
GREG WALDEN, Oregon                  JIM MATHESON, Utah
LEE TERRY, Nebraska                  KATHY CASTOR, Florida
MICHAEL C. BURGESS, Texas            JOHN D. DINGELL, Michigan
BRIAN P. BILBRAY, California         EDWARD J. MARKEY, Massachusetts
STEVE SCALISE, Louisiana             ELIOT L. ENGEL, New York
CATHY McMORRIS RODGERS, Washington   GENE GREEN, Texas
PETE OLSON, Texas                    LOIS CAPPS, California
DAVID B. McKINLEY, West Virginia     MICHAEL F. DOYLE, Pennsylvania
CORY GARDNER, Colorado               CHARLES A. GONZALEZ, Texas
MIKE POMPEO, Kansas                  HENRY A. WAXMAN, California (ex 
H. MORGAN GRIFFITH, Virginia             officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     3
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     5
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     5
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     7
Hon. Steve Scalise, a Representative in Congress from the State 
  of Louisiana, opening statement................................     7
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     8
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   114
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, prepared statement......................................   116

                               Witnesses

Daniel McFadyen, Chairman, Energy Resources Conservation Board of 
  Alberta........................................................    10
    Prepared statement...........................................    13
James Burkhard, Managing Director, Global Oil, IHS Cambridge 
  Energy Research Associates.....................................    29
    Prepared statement...........................................    31
Alex Pourbaix, President, Energy and Oil Pipelines, TransCanada 
  Corporation....................................................    36
    Prepared statement...........................................    39
Jeremy Symons, Senior Vice President, Conservation and Education, 
  National Wildlife Federation...................................    53
    Prepared statement...........................................    55
Murray Smith, President, Murray Smith & Associates...............    65
    Prepared statement...........................................    68
Stephen F. Kelly, Assistant General President, United Association 
  of Journeymen Plumbers and Pipe Fitters........................    76
    Prepared statement...........................................    78
Randy Thompson of Martell, Nebraska \1\..........................
    Prepared statement...........................................    88

                           Submitted Material

``If gas prices go up further, blame Canada,'' StarTribune.com 
  article by Philip K. Verleger, dated March 13, 2011, submitted 
  by Mr. Waxman..................................................    91
Statement of Mark H. Ayers, President, Building and Construction 
  Trades Department, AFL-CIO, submitted by Mr. Whitfield.........   104
Letter, dated April 7, 2011, from Tim M. Irons, Senior Land 
  Coordinator, TransCanada, to Alta Frances Thompson, submitted 
  by Mr. Rush....................................................   110
Discussion Draft of H.R. --------, to direct the President to 
  expedite the consideration and approval of the construction and 
  operation of the Keystone XL oil pipeline, and for other 
  purposes.......................................................   117

----------
\1\ Mr. Thompson was unable to attend the hearing.

 
THE AMERICAN ENERGY INITIATIVE, PART 8: DISCUSSION DRAFT OF H.R. ------
      ------, THE NORTH AMERICAN MADE ENERGY SECURITY ACT OF 2011

                              ----------                              


                          MONDAY, MAY 23, 2011

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 3:09 p.m., in 
room 2123, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Present: Representatives Whitfield, Walden, Terry, Scalise, 
McKinley, Gardner, Rush, Green, and Waxman (ex officio).
    Staff Present: Michael Beckerman, Deputy Staff Director; 
Jim Barnette, General Counsel; Mike Bloomquist, Deputy General 
Counsel; Dave McCarthy, Chief Counsel, Environment/Economy; 
Maryam Brown, Chief Counsel, Energy and Power; Ben Lieberman, 
Counsel, Energy and Power; Jeff Mortier, Professional Staff 
Member; Charlotte Baker, Press Secretary; Andrew Powaleny, 
Press Assistant; Sean Bonyun, Deputy Communications Director; 
Allison Busbee, Legislative Clerk; Anita Bradley, Senior Policy 
Advisor to Chairman Emeritus; Cory Hicks, Policy Coordinator, 
Energy and Power; Ray Baum, Senior Policy Advisor/Director of 
Coalitions; Aaron Cutler, Deputy Policy Director; Garrett 
Golding, Professional Staff Member, Energy; Carly McWilliams, 
Legislative Clerk; Alexandra Teitz, Minority Senior Counsel, 
Environment and Energy; Greg Dotson, Minority Energy and 
Environment Staff Director; Caitlin Haberman, Minority Policy 
Analyst.

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

    Mr. Whitfield. I would like to call this hearing to order. 
This is the American Energy Initiative hearing, and we have had 
eight hearings on the subject of the American Energy 
Initiative. We have examined many of the challenges and 
opportunities confronting America's producers and consumers of 
energy. I want to thank all of our witnesses today. We look 
forward to your testimony.
    There is not any question that we have many issues facing 
our country, and none more important than energy, both on the 
transportation side and the production of electricity side, 
because the cost of energy goes a long way in determining how 
competitive we are in the global marketplace and creating jobs 
in America, these jobs are being created in other countries.
    The Obama administration, and particularly President Obama, 
has done a tremendous job when he is out there speaking about 
how he wants to support energy. He talks about speeding up the 
permit process; he talks about more drilling; he talks about 
the impact of regulations on jobs. And all of us agree with his 
statements, but the reality is that his administration, the 
Department, seem to be taking the exact opposite tact of what 
he is talking about. For example, there has been an air permit 
related to drilling off the coast of Alaska, it has been 
sitting there for 5 or 6 years and has not been issued yet.
    More and more regulations are coming out being proposed by 
EPA relating to coal, for example, the utility MACT, which is 
going to cost an additional $10 billion a year to produce 
energy. And that does not include the air transport rule which 
would raise it up to $14 billion a year. So it is one thing to 
say you want to produce more energy, it is something else when 
your administration is taking the exact opposite tact. And that 
is certainly true in the subject of our hearing today, which is 
the discussion draft of the North American Made Energy Security 
Act of 2011 which has been introduced by Mr. Lee Terry. That 
application to obtain a presidential permit was applied for 
over 3 years ago, and we are still waiting on it. So at this 
time I am going to recognize the gentleman, Mr. Terry, to talk 
about his legislation.
    [The prepared statement of Mr. Whitfield follows:]
    [GRAPHIC] [TIFF OMITTED] T0748.001
    
    [GRAPHIC] [TIFF OMITTED] T0748.002
    
   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Well, thank you, Mr. Chairman. I appreciate your 
assistance and counsel on the North American Made Energy 
Security Act. Simply stated, this Act is to put a time date on 
the administration to accomplish its review and issue their 
order. As you mentioned, it has been with the State Department 
for 3 years, there has been an environmental impact study, and 
at the request of many Nebraskans, request for a second one 
that has been completed and sent to the State Department.
    So at this point in time, we think all of the information 
has already been provided to the appropriate parties. And its 
time that we have a decision. So the North American Made Energy 
Security Act, or NAMES, simply sets the date of November 1st 
for the administration for the President, by Presidential 
executive order, to issue his yes or no approval of this 
pipeline. Once he signs that, then the legal parameters fall in 
place for each State to have to deal with, including the my 
State of Nebraska. So this is rather a simple bill, that just 
says let's move on with this.
    Now the impact of this is important to the United States. 
Obviously, the oil sands are an important product for our 
independence from OPEC oil, it is a major source of fuel for 
us. So the issue is to get those oil sands to refineries across 
the Nation. The small independent ones in the Midwest, whether 
it is Kansas, Oklahoma or the bigger ones in southern Texas, 
which is the end of this pipeline, that will help our 
constituents when they go to the pump if we have more of that 
source and refined here domestically. It will create jobs in 
every State it goes through, including Nebraska, good, high 
paying union jobs.
    So I want to thank the chairman for assisting and 
counseling. I want to thank Mr. Ross and Mr. Green for making 
this a bipartisan bill, and the others on this committee that 
have joined me in this process. And by the way, Mr. Chairman, 
we will file this bill when we go vote this afternoon. I yield 
back.
    Mr. Whitfield. I thank you, Mr. Terry. At this time I 
recognize the gentleman from Illinois, Mr. Rush, for 5 minutes, 
opening statement.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman. And I want to 
thank all of our guests for being here today. Today we are 
holding a hearing on the North American Made Energy Security 
Act of 2011, which would require the Secretary of Energy to 
coordinate all of the Federal agencies in charge of issuing a 
final decision on the Keystone XL pipeline in an expeditious 
manner.
    On the surface, this proposal seems reasonable enough, 
requiring the Obama administration to quickly come to a 
decision on whether it would grant approval for the Keystone XL 
pipeline, which would bring additional Canadian crude oil into 
U.S. Markets and help replace the supply of oil that we import 
from the Middle East and from other overseas countries.
    If this issue was really that simple, then it wouldn't take 
an act of Congress, Mr. Chairman, to make it happen. And we 
wouldn't be here today holding a hearing on this bill in this 
committee at this time.
    Mr. Chairman, today our whole judgment on whether or not I 
can support this bill because there are some important issues 
that deserve greater examination, and I am pleased that we are 
holding this hearing in order to bring some of these issues to 
light.
    This bill would force the administration to issue the 
presidential permit for the pipeline within 30 days of the 
final environmental impact statement, and no later than 
November 1st, 2011. This arbitrary time line will reduce the 
allotted time that Federal agents will have to determine the 
national interests in deciding this proposal by almost two-
thirds, while also reducing or eliminating the 30-day public 
comment period. And I, for one, have some very serious concerns 
about this. I believe public input is a vital and necessary 
part of the determination process, especially for local 
communities that were mostly affected by the decision to move 
forward. I also look forward to learning more about the 
environmental impact of importing crude oil from western 
Canadian oil sands and how this would affect greenhouse gas 
emissions.
    However, Mr. Chairman, my biggest concern I have today is 
what type of impact this pipeline will have on oil prices for 
my very own constituents in Chicago, in Illinois, and in the 
Midwest in general. According to the AAA's fuel gauge report, 
Mr. Chairman, in Chicago, we are already paying the highest 
average gas prices in the Nation at $4.37, which is well above 
the national average.
    Mr. Chairman, I might add that yesterday I filled the tank 
up and it was 5.15 that I had to pay. I have here APR dated 
January 25th, when TransCanada Corporation responsible for the 
Keystone pipeline stated they expected oil prices in the 
Midwest to rise if this pipeline is approved. In fact, I also 
have part of the TransCanada assessment, as well as the 
transcript before the Canadian Energy Board, the NEB, in which 
TransCanada testified that the Keystone pipeline would drive up 
the price of crude for many Midwestern States, including 
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, 
Missouri, Nebraska, the Dakotas, Ohio, Oklahoma, Tennessee and 
Wisconsin.
    TransCanada representatives are on the record saying that 
Keystone XL would address what they term an oversupply midwest 
market, which they believe has resulted in price discounting 
for Canadian heavy crude oil. Building this pipeline would 
divert supply from the Midwest to the Gulf Coast. And I quote, 
Mr. Chairman, the resulting increase in the price of heavy 
crude is estimated to provide an increase and annual revenue to 
the Canadian-producing industry in 2013 of 2 billion to 3.9 
billion U.S. dollars.
    Now, Mr. Chairman, as fond as I am of our friends in the 
north, I would much rather keep that 2 to 3.9 billion dollars 
in the pockets of our constituents in the Midwest rather than 
giving it to our close friends, our deeply held friends in 
Canada. I look forward to this hearing, Mr. Chairman, and I 
yield back the balance of my time.
    Mr. Whitfield. Thank you. Mr. Upton is not here this 
afternoon. Is there any one on our side that would like to 
claim his 5 minutes? I recognize the gentleman from Oregon, Mr. 
Walden.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Thank you very much, Mr. Chairman. I can take a 
minute or 2 here of the time just to say, look, we have got a 
heck of a problem in this country with access to enough 
affordable oil and gas. And it seems it me that if we can build 
the trans Alaska pipeline in a matter of a couple of years as a 
result of an act of Congress to expedite its construction, and 
produce and bring to the lower 48 through Valdez, incredible 
amounts of oil, we should be doing this as well working with 
our best trading partner in the world, Canada, to get this 
done. It would create jobs in the United States Canada. It will 
bring 700,000 barrels per day of crude oil to the United 
States. For the life of me, I can't understand how adding to 
supply by some economist drives up cost. I always thought it 
was the other way around. You add supply and you drive down 
cost. I still am a firm believer in that value of economics.
    And so, if we are going to ever get more energy independent 
in the United States for a transportation fleet, while we 
worked on other forms of energy for transportation, we still 
need more oil and gas. We still need the ability to access 
America's great reserves and those of our neighbors, and do so 
in the most efficient way possible, that is why I support this 
legislation because I think this will help out.
    With that, Mr. Chairman, I don't know if there are others 
on our side that I could yield to. Mr. Scalise, for as much 
time as he may consume.

 OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Scalise. Mr. Chairman, I appreciate the ability for us 
to hear the testimony from our panelists. I am looking forward 
to hearing it. I know as we have been promoting ideas to lower 
gas prices and create jobs, the sad reality is it is this 
administration's policies that have been running thousands of 
energy jobs out of our country and leading to dramatically 
higher prices for energy. It was the President himself who said 
just 2 years ago that he would prefer a gradual adjustment to 
near $4-a-gallon gasoline. That was the President's comments. I 
am sad to say the President has gotten his wish, because we are 
near or at $4-a-gallon gasoline.
    It was his own Energy Secretary who sat before our 
committee just a couple weeks ago, couldn't even articulate an 
answer to Congressman Gardner's question about what is the 
President's plan to lower gas prices. The Secretary of Energy. 
The President's Secretary said somehow we have to figure out 
how to boost the price of gasoline to the levels in Europe. 
Again they are getting their wish, but they are doing it at the 
expense of families all across this country who are paying 
dramatically higher for gas prices today, more than double what 
the price was when President Obama took office. So we have seen 
an assault on American energy by this administration, and it is 
coming at a steep, Obama premium, as I call it, at the pump, 
and people are fed up with it. And I am glad that at least this 
House Republican Congress has taken action to reverse that 
trend to say, let's become more energy secure, and, of course, 
in Canada, our biggest trading partner for oil, our biggest 
importer of oil.
    Frankly, I want to see us completely eliminate our 
dependence on Middle Eastern oil. And we can do that if we 
increase production here at home and work with our partner in 
Canada to instead of having their energy go to places like 
China to keep that here. And this pipeline represents billions 
of dollars of investments, up to $13 billion, I am reading the 
testimony from one of our panelists today, $13 billion of prime 
investment associated with the Keystone pipeline, not to 
mention thousands more high-paying jobs that will occur in 
America if we do this.
    So we reduce or dependency on Middle Eastern oil, we create 
more jobs here at home, and we lower the price of gasoline 
because we are increasing the supply, and then futures markets 
will recognize once you untap that potential, you will lower 
the price. And again, maybe the President won't be happy with 
that, because the President's comments are very clear. The 
President said in 2008 he would prefer a gradual adjustment to 
near $4-a-gallon gasoline. Well, guess what, the price of 
gasoline back then when he made those comments was less than $2 
a gallon. So while the President is getting his wish on raising 
gas prices and the wish of his Energy Secretary, Americans are 
fed up with the premium that we are paying at the pump. And we 
can do something about it, and here is one good example where 
we are create great jobs here at home and reduce our dependence 
on Middle Eastern oil at the same time. I hope the 
administration doesn't continue to promote failed policies that 
are costing us jobs and leading to higher prices at the pump, 
and I yield back.
    Mr. Whitfield. Thank you. At this time, I recognize the 
gentleman from California, Mr. Waxman, for 5 minutes.

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

    Mr. Waxman. Thank you, Mr. Chairman. Today we are holding a 
hearing on legislation to short-circuit an ongoing decision-
making process and pressure the Department of State into 
approving a massive new oil pipeline called Keystone XL, which 
would carry a sludge made from tar sands through the middle of 
America. This project would raise gas prices, endanger water 
supplies and increase carbon emissions. What is good for oil 
companies is not always good for America. That is especially 
true of this proposal.
    True energy security means reducing our oil dependence and 
moving to cleaner, safer, domestic energy. That is not tar 
sands. Canadian producers must burn vast quantities of natural 
gas to extract tar sand sludge, and then use a lot more energy 
to process it into something approximating conventional crude.
    On a life-cycle basis, tar sands may emit almost 40 percent 
more carbon pollution than conventional fuel. That is why this 
project is such a big step backwards environmentally. Some will 
say we have to make tradeoffs and sacrifice our air quality for 
lower gas prices, but with this project, we would be 
sacrificing our air quality for higher gas prices. And you 
don't have to take my word for it. That is what TransCanada 
told the Canadian government in its official permit 
application.
    TransCanada said that the pipeline will address 
oversupplies of crude in the Midwest which produce ``price 
discounting.'' Reducing those supplies by moving crude to the 
Gulf means higher prices for Canadian crude producers, and 
higher gas prices for Midwestern consumers. As a result, 
TransCanada stated that the pipeline would rise prices for 
Canadian tar sands by $2 to $4 in 2013. In my view, this makes 
Keystone XL a lose-lose proposition for America.
    There is an ongoing process at the State Department for 
evaluating the pros and cons of the pipeline. The 
administration has not come down one way or the other, so it is 
interesting that they are being criticized, even if they 
haven't done anything. That process should be allowed to pride. 
But that is not what the legislation we are considering does. 
It takes the extraordinary step of interfering in the ongoing 
State Department review. And it pressures the State Department 
to approve the project on an expedited time frame. Congress 
should not be playing this role. The State Department should 
evaluate the proposal on its merits, not be ramrodded by 
Congress into approving a boondoggle for the oil industry.
    One question that has arisen about the project is how it 
would affect Koch Industries, a largely private-held oil 
company run by the Koch brothers. According to press accounts, 
Koch would be one of the big winners if the pipeline is 
approved. My staff contacted Koch last week to learn more about 
its investments in tar sands. Other oil companies, such as 
ConocoPhillips and Shell, have been willing to discuss their 
interest in developing tar sands, but Koch refused to answer 
basic questions. The company's representative told my staff 
that Koch is not an investor in the Keystone XL pipeline, and 
has not taken a public position on the project, but the 
representatives would not discuss whether Koch would export oil 
from Canada through the new pipeline, whether Koch holds tar 
sands leases, or whether Koch has plans to produce oil from tar 
sands.
    I think these are legitimate questions. Koch is a large 
political donor, and major backer of the Tea Party. Members and 
the public are entitled to know whether the company would be a 
prime beneficiary of this legislation.
    Last week, I wrote to Chairman Upton and Chairman Whitfield 
to seek their assistance in getting answers. Today I learn that 
they will not make any inquiries. If their objection is that 
Koch should not be singled out by the committee, I have no 
objection to asking other companies about their interest in tar 
sands.
    What I do object is to protecting Koch from legitimate 
scrutiny. This--and I will continue to discuss this with the 
chairman. This pipeline, and the legislation that supports it, 
will enable the oil companies to charge American consumers more 
for their gasoline while increasing carbon pollution and 
endangering precious water supplies. We know who will lose. We 
also need to find out who will benefit. Thank you, Mr. 
Chairman.
    Mr. Whitfield. Thank you. And once again, welcome the 
witnesses today, we have one panel of witnesses and we do look 
forward to your testimony. We have with us Mr. Dan McFadyen, 
who is chairman of the Alberta Energy Resources Conservation 
Board. We have Mr. James Burkhard, who is managing director of 
Global Oil, IHS Cambridge Energy Research Associates. We have 
Mr. Alex Pourbaix, President, Energy and Oil Pipelines, 
TransCanada. We have Mr. Jeremy Symons, senior vice president, 
conservation and education, National Wildlife Federation. We 
have Mr. Murray Smith, president of the Murray Smith & 
Associates. And we have Mr. Stephen Kelly, who is assistant 
general president of the United Association of Plumbers and 
Pipefitters. All of you will be recognized for 5 minutes for 
your opening statements, following which we will be asking you 
questions.

    STATEMENTS OF DAN MCFADYEN, CHAIRMAN, ENERGY RESOURCES 
    CONSERVATION BOARD OF ALBERTA; JAMES BURKHARD, MANAGING 
DIREC70R, GLOBAL OIL, IHS CAMBRIDGE ENERGY RESEARCH ASSOCIATES; 
      ALEX POURBAIX, PRESIDENT, ENERGY AND OIL PIPELINES, 
TRANSCANADA; JEREMY SYMONS, SENIOR VICE PRESIDENT, CONSERVATION 
  AND EDUCATION, NATIONAL WILDLIFE FEDERATION; MURRAY SMITH, 
PRESIDENT, MURRAY SMITH & ASSOCIATES; STEPHEN KELLY, ASSISTANT 
     GENERAL PRESIDENT, UNITED ASSOCIATION OF PLUMBERS AND 
                          PIPEFITTERS

    Mr. Whitfield. I would note that there is a little 
instrument on the table there that has red and yellow and green 
lights. When it gets to red, we would appreciate it if you 
would think about concluding your remarks at that point. So Mr. 
McFadyen, we will recognize you for your opening statement. And 
be sure and turn your microphone on.

                 STATEMENT OF HON. DAN McFADYEN

    Mr. McFadyen. Mr. Chairman and members of the committee, 
good afternoon. Thank you for the invitation to speak to you 
about Alberta's comprehensive regulatory regime with respect to 
oil sands development. Alberta's oil sands are being developed 
under a rigorous and transparent regulatory framework that is 
based on the application of sound science and continuous 
improvement.
    Our integrated and comprehensive regulatory regime is 
founded on stringent legislation regulation that takes into 
account environmental, social and economic impacts, as well 
resource conservation and technical excellence. Or, to put it 
another way, the regulatory regime is designed to ensure oil 
sands are developed in the public interest.
    Implementing this regulatory regime is the responsibility 
of three regulatory agencies: The Energy Resources Conservation 
Board, the Alberta Department of Environment, and the Alberta 
Department of Sustainable Resource Development.
    ERCB is arm's length, a quasi-judicial independent 
decision-maker established through legislation 73 years ago by 
the Alberta government. The government of Alberta created the 
ERCB to ensure that the discovery, development and delivery of 
Alberta's energy resources takes place in a manner that is 
fair, responsible and in the public interest.
    The ERCB directly administers seven provincial acts to 
ensure that all aspects of oil and gas development are carried 
out in a responsible manner. The Board is responsible for 
setting down detailed regulatory requirements through 
regulations and directives.
    We have a budget of $175 million annually, and about 900 
staff working in 13 locations across Alberta. About one-third 
of our staff members are licensed professionals, including 
engineers, geologists and environmental scientists. About 100 
of our staff in our office is in Calgary and Ft. McMurray are 
focused strictly on the oil sands.
    With bitumen reserves at 170 billion barrels, we have 
responsibility to ensure the oil sands are developed in 
sustainable way.
    Every oil sands project is subjected to regulatory scrutiny 
throughout its lifecycle, from authorization and operational 
compliance to end-of-life closure. No oil sands project in 
Alberta may proceed without an approval from ERCB. On every 
application we examine, we look at three criteria to determine 
if a project is in public interest: Environmental protection, 
societal impacts and economic impacts.
    On particularly complex or contentious projects, a formal 
hearing by an ERCB board panel may be established. The hearings 
allow for those that may be directly and adversely affected by 
a development to present evidence related to their concerns and 
cross-examine the project proponent before a board panel. Some 
applications for oil sands mining development result in a joint 
federal and provincial review.
    A formal decision is issued but sets additional conditions 
that must be met in addition to the rigorous requirements set 
out in our legislation, regulation and directives.
    As noted in my introduction, our regulatory regime is not 
static. It is based on continuous learning and continuous 
improvement. I would like to highlight two important advances 
we have made in oil sands regulation over the last 2 years. In 
2009, we released Directive 73 aimed at formalizing our oil 
sands inspection process. Directive 73 consolidated ERCB 
regulatory requirements and expectations that operators of oil 
sands, mining and processing plant operations must follow, as 
well setting out the expectations of ERCB field inspections. 
This directive has greatly improved our industry's ability to 
ensure compliance with our regulatory requirements. Last year, 
our Ft. McMurray field staff conducted about 120 detailed mine 
inspections, we also conducted more than 10,000 inspection of 
in situ facilities over the last 4 years.
    The second major advance I would like to speak about 
involves tailings management. Every oil sands mine requires a 
tailings pond of one kind or another. Over the past decade, it 
became apparent we needed tighter regulations to hold industry 
accountable for improving tailings management performance. So 
on February 2009, we released Directive 74. It set out 
performance-based requirements for companies to reduce the 
amount of fine particles in tailings and place larger particles 
in areas where they can be returned to a solid surface more 
quickly.
    The ERCB has now approved plans for all eight mining 
projects. We estimate directive as a result commitment to some 
$4 billion in new technology, infrastructure and upgrades 
detailing management facilities to meet the directive. One of 
the unforeseen outcomes of the directive was the emergence of 
an industry consortium on research. Seven oil sands companies 
have signed a ground-breaking agreement to share their 
knowledge and resources to find joint solutions to close and 
reclaim tailings ponds.
    Our regulatory partners are also committed to continuous 
improvement. As part of its adaptive management approach, the 
government of Alberta has implemented the land use framework to 
bring about accumulative effects management system across 
Alberta. The lower Athabasca regional plant, or LARP, 
specifically focuses on where oil sands development occurs. To 
guide future decisions about oil sands development, LARP will 
establish social, economic and environmental outcomes, and set 
limits and thresholds for regulated and non-regulated 
activities. This is an innovative approach to management, that 
will ensure Albertans' values are upheld regarding resource 
development and the environment.
    The end of the day, the goal of all the work of ERCB and 
our regulatory partners to ensure that our regulatory system is 
comprehensive, fully integrated, responsive, utilizes strong 
results based on science, and is continually improving. We are 
working to create a legacy for future generations and a stable 
and environmentally responsible energy source. Thank you, Mr. 
Chairman.
    Mr. Whitfield. Thank you, Mr. McFadyen.
    [The prepared statement of Mr. McFadyen follows:]
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    Mr. Whitfield. Now, Mr. Burkhard, you are recognized for 5 
minutes.


                  STATEMENT OF JAMES BURKHARD

    Mr. Burkhard. Thank you, Chairman Whitfield and other 
members of the subcommittee, for the opportunity to discuss 
today the role of Canadian oil supply in the U.S. market. 
Libya, before the civil war, exported about 1.2 million barrels 
per day. And since the civil war, exports obviously have 
halted. The price of crude oil is up about $19 barrels per 
barrel, on average, since the civil war. That translates into a 
gasoline price increase of about 45 cents per gallon.
    The amount of oil we get from the oil sands, the United 
States imports from Canada in oil sands is equivalent to the 
amount of oil that Libya exported before the civil war, just to 
provide some context.
    Today is obviously a very timely opportunity to discuss 
this issue, the impact of high prices on the economy, and the 
American people is creating a deep concern, a potentially 
momentous change in the Middle East, and we are still seeing 
rising demand, in some cases, very strong demand growth in 
emerging markets for oil.
    But in the realm of U.S. energy security, one of the 
biggest achievements in the past decade has been the growing 
role of Canadian oil supply in the U.S. market. And it is 
connected by land-based pipelines, not water-borne imports.
    Last year in 2010, we imported about 2 million barrels per 
day of Canadian crude oil. That made Canada the number one 
foreign source for oil by far. That is about 22 percent of U.S. 
crude oil imports last year were from Canada up 15 percent just 
a decade earlier.
    What has been driving this growth? It is the growth in the 
Canada oil sands, which is a mega resource that is right next 
door to the U.S.
    Without the oil sands, we would be faced with a tighter oil 
market and higher prices. The oil sands are also relatively 
new, at least in the context of the oil industry. In the 1970s, 
there were no imports of oil sands. But by 2010 the oil sands 
alone were equivalent to what we imported from our number two 
sources supply, Mexico. The oil sands are poised to become the 
largest single source of American oil, at least from foreign 
sources, in the very near future.
    This story, the oil sands story is part of a broader 
relationship with Canada. Trade, jobs, energy, oil in 
particular, are part of the interconnected pillars of the U.S. 
and Canadian relationship. Last year saw $525 billion in trade 
between the two countries.
    Canada's the largest export market for the United States. 
Very dense network of trade and investment between the two 
countries. And trade with Canada is what 8 million jobs depend 
on in the United States. The multibillion-dollar Keystone XL 
project is also among the largest project in this country that 
could start construction in short order.
    The oil sands, the Canadian oil sands could play an even 
bigger role in the U.S. market, which would benefit consumers. 
Pipeline infrastructure in this country needs to catch up with 
trends in oil supply growth. The growth out of Canada has been 
strong, it could continue to be strong. We are also seeing 
strong supply growth in the northern Midwest, North Dakota and 
Montana.
    Oil production in that area, namely the Bakken formation 
could double over the next 5 to 6 years. Some of that oil would 
also find its way in the Keystone XL pipeline if it is 
approved.
    So the Canadian oil sands could play a bigger role, but 
they lack greater access to the market, which is currently 
depriving the broader U.S. market with oil that is available 
from both Canada and the United States.
    The more flexible robust supply system would be better able 
to handle shifts in supply and demand. It would not result in 
higher gasoline prices, certainly not in the Midwest. The more 
supply there is in the global oil market, the lower prices are 
for a given level of demand. Midwest gasoline prices are 
already comparable to the national average. In fact, year to 
date, they are slightly higher. Why is that? The reason for 
that is the Midwest must import up to 500,000 barrels per day 
of gasoline from other parts of the United States, which means 
it is connected to the global price of gasoline. They need to 
pay that price, or else sellers of that gasoline would ship 
their gasoline elsewhere. So the U.S. Midwest gasoline market 
is connected to the global oil market, but there is currently a 
disconnect in the crude oil market in the Midwest. Expansion is 
not enabled, if the pipeline system not able to expand to 
become more robust, it is certainly an alternative.
    In terms of GHG emissions, we calculate through a meta-
analysis, we looked at 13 different studies, lifecycle 
greenhouse gas emissions for the oil sands are about 6 percent 
higher than the average crude oil consumed in the United 
States, 6 percent higher.
    Just to conclude, a fact-based discussion and informed 
dialogue will help Americans and Canadians achieve a balance to 
enhance mutual prosperity, just some key fundamental facts to 
review. Oil sands are a mega resource right next door, the oil 
sands have made Canada the number one supplier by far. Growth 
in Canadian oil supply to the U.S. Is reorienting imports and 
enhancing energy security through lambaste connections, but the 
U.S. pipeline system needs to catch up with the changes and 
supply. The larger more dynamic system which benefits consumers 
compare with the constricted and more limited system, and 
again, lifecycle GHG missions from Canadian oil sands are 6 
percent higher when you look at what is actually imported to 
this country.
    So energy and oil, in particular, are key element in the 
overall relationship. Canada's oil sands are an integral part 
of the fabric of U.S. Energy security with the potential to 
play an increasingly important role in the years to come. Thank 
you.
    Mr. Whitfield. Thank you.
    [The prepared statement of Mr. Burkhard follows:]
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    Mr. Whitfield. Mr. Pourbaix, you are recognized for 5 
minutes.


                   STATEMENT OF ALEX POURBAIX

    Mr. Pourbaix. My name is Alex Pourbaix, and I am president, 
Energy and Oil Pipelines, for TransCanada.
    As I said, my name is Alex Pourbaix, and I am president of 
Energy and Oil Pipelines for TransCanada. In that role, I am 
responsible for TransCanada's oil pipeline business as well as 
our company's power business and unregulated gas storage 
business.
    Before I discuss the specifics of the Keystone project, I 
thought I would give the committee a brief overview of our 
company. TransCanada is $46 billion energy infrastructure 
company with over 60 years of experience in the responsible 
development and reliable operation of North American energy 
infrastructure. At this time, the company employs over 4,200 
employees, with almost half of those employees located in the 
United States. We operate the largest pipeline, gas pipeline 
network in North America, over 35,000 miles, with the capacity 
to transport approximately 20 percent of the gas produced in 
North America every day. And now with Keystone Pipeline System, 
TransCanada is developing one of North America's largest oil 
delivery systems.
    Keystone will bring many benefits to the United States, but 
I believe the most important role Keystone will play is to help 
bring more energy security to the United States during a very 
volatile period recently. I think when you boil down the debate 
on this project, it comes down to a very simple question for 
Americans: Do they want secure, stable oil from a friendly 
neighboring Canada, or do they want to continue importing even 
more high-priced foreign oil from volatile regions such as 
Venezuela or the Middle East?
    Keystone XL will help secure that stable supply of oil by 
linking Canadian and U.S. crude supplies with the largest 
refining markets in the United States. Canada's oil reserves 
are vast, approximately 175 billion barrels are estimated to be 
recoverable. This compares to the U.S. reserves, which are 
estimated to be around 20 billion barrels. In addition to 
energy security, our project will also create valuable jobs for 
Americans, 20,000 high-paying jobs and 118,000 person years of 
employment in spin-off jobs in communities along the pipeline 
route.
    Keystone is expected to inject $20 billion into the U.S. 
economy. And the project will pay over a half-billion dollars 
in taxes to the individual States along the pipeline route 
during construction. While transporting oil from Canada, 
Keystone XL will also ship domestic U.S. crude oil. Keystone XL 
has the capacity to move 100,000 barrels a day of American 
crude production from North Dakota and Montana, to Cushing, 
Oklahoma or the Gulf Coast, and a further 150,000 barrels a day 
of capacity to move Cushing oil to the Gulf Coast.
    The need for prompt approval of the Keystone XL project is 
particularly crucial today when U.S. consumers are struggling 
to cope with the high cost of gasoline, something that impacts 
the pocketbooks of everyone. Specifically, the Keystone XL 
project has the capability to replace nearly half the volume of 
higher priced Middle East oil presently consumed by the United 
States. A recent Department of Energy study found that the 
delivery of western Canadian crude oil to U.S. Gulf Coast 
refineries by Keystone would fill a gap being created by 
declining supply from traditional heavy crude suppliers such as 
Mexico and Venezuela. This supply further projected that if 
Keystone XL was not built, more oil would be shipped by foreign 
countries to the U.S. primarily from the Middle East to fill 
that gap.
    I would like to take a moment to talk about pipeline 
safety. Keystone's opponents have attempted to characterize oil 
pipelines as unsafe and dangerous. These allegations are 
untrue, Keystone XL will be safe. We are using the latest 
technologies and the strongest steel pipe from American and 
Canadian mills to build a pipeline. It was designed, built and 
will operate in excess of the present regulatory standards. In 
addition, it will be monitored 24 hours a day, 7 days a week, 
16,000 data points along the entire road of the pipeline are 
linked to satellites with data being refreshed every 5 seconds. 
If we detect a drop in pressure, our control center will 
remotely close valves, isolating the line and shutting it down 
within minutes.
    TransCanada has agreed to implement 57 additional 
conditions developed by our regulator to go beyond the existing 
Federal standards, such as increased inspections, and more 
shutdown valves in sensitive locations.
    I want to emphasize that the Keystone XL project has 
already undergone a thorough and comprehensive review process. 
We submitted our presidential permit close to 33 months ago. 
Since 2008, we have held over 90 open houses and public 
meetings along the pipeline route. We have given hundreds of 
hours of testimony to local, State and Federal officials, and 
submitted thousands of pages of information to government 
agencies in response to questions.
    Before I conclude, I would likes to address misinformation 
that has been reported in the media on the oil the Keystone XL 
pipeline will transport. The bottom line is very simple: Oil is 
oil. The heavy oil transported in the Keystone pipeline system 
is very similar in chemical properties and physical 
characteristics to heavy oil from California, Venezuela and 
Mexico that is transported daily throughout the United States 
and consumed in refineries.
    It is completely false to say that this oil is heated or 
that it is more toxic, corrosive or shipped at a higher 
pressure than any other similar crude oil transported or 
consumed in the United States. Our opponents have gone so far 
as to describe the oil we transport as tar sludge, and I can 
tell you that oil is like any other oil that is consumed in 
U.S. refineries.
    To the people who make these allegations of corrosive and 
dangerous oil, I would respond by saying why would we build a 
$13 billion oil pipeline that will operate for decades, and 
then turn around and put a product in that pipeline that would 
harm it or destroy it? That does not make any sense.
    In conclusion Keystone will help produce the United States 
reliance on higher price unstable foreign oil from Venezuela 
and the Middle East, and replace it with secure supplies from 
Canada and the U.S. We are going to create 20,000 American jobs 
at a time when unemployment remains high, but we will inject 
$20 billion into the U.S. economy and pay billions in taxes for 
decades to come so communities can build schools and ball 
fields. This project is needed, the benefits are clear, the 
time is of the essence to receive the approvals we need so 
Americans can begin to experience the benefits of this project. 
Thank you.
    Mr. Whitfield. Thank you.
    [The prepared statement of Mr. Pourbaix follows:]
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    Mr. Whitfield. Mr. Symons, you are recognized for 5 
minutes.


                   STATEMENT OF JEREMY SYMONS

    Mr. Symons. Thank you, Mr. Chairman. Thank you for the 
opportunity to be here today. My name is Jeremy Symons, I am 
senior vice president for conservation and education at 
National Wildlife Federation, which is a nonpartisan, nonprofit 
organization supported by 47 State affiliates and 4 million 
conservationists throughout America.
    Before I start, I would like to take a moment and offer my 
condolences to Randy Thompson and his family. Randy's family 
has a farm in Nebraska, and he wanted to be here today to share 
his experience with TransCanada bullying them, as they tried to 
gobble up land for their pipeline route.
    But, unfortunately, Mr. Thompson, his mom passed away this 
weekend and he couldn't make it. Hopefully we can find a way to 
get his testimony in the record. I am sure that his family, 
farmers, ranchers, landowners along the pipeline route will 
look back on this hearing to see--with a lot of interest--to 
see if Congress is willing to stand up for their rights.
    National Wildlife Federation first became engaged in the 
tar sands issue because Alberta's scorched-earth tar sand 
operations are the most destructive source of oil on the 
planet. I personally traveled to Alberta last year to see these 
operations, and I detailed the impacts in my testimony before 
the House Committee on Foreign Affairs on March 31st.
    In the course of our work, I have come to realize that 
there is a web of deception surrounding the KXL pipeline scheme 
that is unlike anything I have seen in my 20 years of 
experience. My parents taught me that when something sounds too 
good to be true, you better take a second look. The idea that 
big oil companies want to spend $13 billion on a pipeline in 
order to help Americans pay less at the pump sounds too good to 
be true because it is simply not true. The KXL pipeline scheme 
is a big oil wolf hiding in Canadian sheepskin.
    The risky and unnecessary KXL pipeline will raise gas 
prices, harm our energy security, and jeopardize some of 
America's most important clean water supplies. At a time when 
families are already hurting from spiking gas prices, oil 
companies want to build a KXL pipeline to increase U.S. gas 
prices by another 10 to 20 cents per gallon, with the highest 
price spikes occurring in the Midwest States, Congressman, you 
mentioned.
    This KXL scheme is equivalent to a $4 billion-a-year tax on 
the oil we are already getting from Canada, with all the money 
going from American wallets and pocketbooks to oil companies. 
How do we know? We now have the companies' own documents that 
spell it out. When making the case for the pipeline to the 
Canadian government, TransCanada argued that this pipeline 
would allow Canadian oil companies to increase prices for every 
barrel of oil that America's already getting from Canada. 
TransCanada estimated that the KXL pipeline would create a $4 
billion annual windfall for Canadian oil companies at our 
expense.
    Mr. Burkhard mentioned that prices have gone up on world 
oil for $19 a barrel since the outbreak of violence in Libya. 
What hasn't been mentioned is that the price of Canadian oil 
has gone up $30 a barrel in that same time frame. That doesn't 
sound like a friendly Canadian neighbor. That sounds like the 
same old oil companies that won't let any global crisis go to 
waste.
    Piping Canadian oil across America does not make it 
American oil. The KXL pipeline scheme opens the Canada-China 
oil route that oil companies have long sought. The pipeline 
will take Canadian oil that is already flowing to America in 
the Midwest refineries, and instead send it to refineries on 
the Gulf Coast, where they can export it.
    The data show that the KXL pipeline will do nothing to 
reduce our reliance on oil from hostile nations. A study 
commissioned by the Department of Energy concluded that the 
pipeline, ``Will not, of itself, have any significant impact on 
the U.S. oil imports.''
    The State Department's latest impact assessment has 
concluded that the proposed project would not subsequently 
influence the overall volume of crude oil transported to the 
U.S. refined in the U.S.
    The oil companies behind this project are desperate for 
Congress and the administration to rush the approval of this 
pipeline scheme because the truth is finally coming to light. 
From the very beginning, TransCanada has mislead the U.S. State 
Department about the purpose of this pipeline. By hiding the 
ball in its permit application, TransCanada itself is 
responsible for any delays going forward as the facts are 
investigated. The arbitrary deadline included in the discussion 
draft would reward TransCanada for failing to be as transparent 
and forthcoming here today and in its permit application to the 
U.S. Government as they were with Canada in their application 
to the Canadian government.
    The arbitrary deadline could also prevent the consideration 
of safety findings from several recent catastrophic ruptures of 
tar sludge pipelines. These investigations are not complete. 
Even though tar sands supply only a small fraction of the oil 
we consume, the pipelines carrying tar sands account for over 
half of all crude oil spilled in the U.S. In 2010.
    According to EPA, the toxic tar sludge from another massive 
spill to the Kalamazoo River watershed in Michigan has defied 
cleanup efforts because the heavy tar sludge sunk quickly 
beyond the reach of skimmers. Residents are still dealing with 
the health impacts of thousands of great blue heron, geese, 
swans and other wildlife have been killed. Transplanted as 
latest state-of-the-art pipeline, Keystone 1 has had 11 leaks 
in less than a year of operation.
    These recent spills are clear warnings that America's 
outdated pipeline safety laws are not prepared for highly 
corrosive and toxic tar sludge. And I urge the committee to set 
aside the idea of an arbitrary deadline and instead, take a 
more critical and independent look at the what this pipeline 
scheme really means for gas prices, for energy security, and 
for America's clean water supplies, thank you.
    Mr. Whitfield. Thank you.
    [The prepared statement of Mr. Symons follows:]
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    Mr. Whitfield. Mr. Smith, you are recognized for 5 minutes.


                   STATEMENT OF MURRAY SMITH

    Mr. Smith. Thank you. Thank you, Chairman Whitfield, 
Ranking Member Rush, members of the committee. My name is 
Murray Smith, I am a former elected member of the Alberta 
legislature. I served from 1993 to 2004. I served in various 
cabinet portfolios, including the Minister of Energy for 2001 
to 2004. And I served at the request of Alberta's premiere, 
Alberta's first official diplomatic representative to the 
United States from 2005 to 2007. Today, I serve on various 
boards in the energy sector, and it is a privilege to be here 
to discuss U.S. energy supplies.
    Firstly, let me thank the United States for being Alberta's 
top customer for natural gas and crude oil for the last 50 
years. Today's hearing recognizes the importance of North 
American energy and the pressing need for new infrastructure to 
ensure North America's resources are being used to the 
advantage of consumers throughout the country.
    I also want to recognize the great contribution citizens of 
this country have made in developing a strong, vibrant and 
responsible energy industry in Alberta. The 50-year 
relationship has built strong bonds between the two countries 
and created wealth and prosperity for citizens on both sides on 
the 49th parallel. This energy relationship is deemed to be so 
important by the two countries that the North American Free 
Trade Agreement has a separate energy section that encompasses 
this relationship that ensures continued uninterrupted flow of 
energy from the U.S. To Canada. It is on this strong foundation 
that the opportunity to expand shipments with new pipelines has 
become a reality.
    Today, the U.S., while we hold this hearing, the U.S. will 
receive about 1.6 billion barrels of oil from Alberta and about 
2 million barrels in total from all of Canada. Canada's your 
largest non domestic supply of oil providing over 9 percent of 
the total daily oil needs of this great country. Alberta's home 
to the third largest proven oil reserves in the world, totaling 
over 170 billion barrels. In context, Mr. Chairman, Alberta 
covers an area of 256,000 square miles, slightly smaller than 
the State of Texas, but producing about one and a half times of 
amount of oil that Texas produces. We expect this production to 
increase over the next decade.
    Alberta's oil sands are an important component to the U.S. 
Recovery program. Producing oil from Alberta's oil sands adds 
great economic value to the economy of the U.S., billions of 
dollars and thousands of jobs generated each year. 470-ton 
trucks called Caterpillar 797Bs are manufactured in Decatur, 
Illinois. Each truck sells for U.S. $5 million. The engines are 
made in Indiana and tires come from South Carolina. The shovels 
that fill these large trucks in four scoops come from Bucyrus 
in Wisconsin, now owned by Caterpillar. Consulting and 
fabrication expertise for extraction and separation equipment 
comes from U.S. companies. One of them just received a billion-
dollar contract for a new oil sands facility. Upgrades to 
refineries, to process Alberta in the U.S. Creates new jobs for 
construction workers, trades people, engineers and steel 
manufacturers. These expansion will increase volumes of Alberta 
oil in the major U.S. market. Multiple studies have placed job 
creation in excess of 13,000.
    Clearly, Mr. Chairman, Alberta oil delivers more economic 
value per barrel than any other barrel of oil imported into the 
U.S. And it arrives by underground pipeline in a safe, 
uninterrupted secure supply 365 days a year.
    Unlike an oil tanker that can be treated many times and 
increase in price from time of shipment to arrival in the U.S., 
pipeline crude is contracted at an initial strike price and 
leaves little or no room for price speculation to its journey 
to the destination terminal.
    Canada, predominantly Alberta, has been the premier 
supplier of crude oil refined products in the U.S. for the past 
8 years. We have helped replace declining U.S. Production, 
reduced imports from Venezuela, reduced imports from non 
continental oil supply.
    Oil and gas companies spend more money on environmental 
issues than any other sector in the Canadian economy. Companies 
continue every day to improve the efficiency costs of 
environmental sustainability of oil sand operations. Air 
quality in Ft. McMurray exceeds that of that Toronto 98 percent 
of the time, and New York City 100 percent of the time. Carbon 
emissions from oil sands production differ only marginally from 
heavy oil production, Venezuela, Mexico and the heavy oil of 
California.
    Mr. Chairman, the dynamic tension of environmental 
pressures in cost efficiency serve to reduce oil sands 
greenhouse gas emissions as proved by industry's record of 
reducing emissions annually. Personally, I serve on the board 
of two emerging technologies designed to reduce emissions and 
surface disturbance. N Solv is a solvent-based technology that 
reduces greenhouse gas emissions by some 85 percent, and uses 
no water in its in situ oil sands extraction.
    Today there is about $15 spread between foreign oil 
imported form offshore sources, North Sea Brent, and west Texas 
intermediate, or oil priced North America. If we find these in 
the Gulf coast, could we find Alberta crude consumers could 
expect a savings at the pump from crude oil replacement for 
some million barrels a day. It also lessons the pressure on 
U.S. defense spending protecting vital oil supply lines across 
the world.
    In order to start this new cycle of U.S. job creation, 
increased oil supply, secure oil supply and downward pressure 
and gas prices, a permit to construct Keystone should be 
initiated to start the process. The opportunity is now. In 
2003, when the EIA recognized Alberta's 174 billion barrels of 
produceable reserves, I was the Minister of Energy for the 
province. I knew this global recognition would create an 
avalanche of investment. In the past years, well over $40 
billion has been invested. Today's oil sand investors include 
China, South Korea, Japan, Thailand, Norway, France and U.S. 
private sector companies. A pipeline is in the permitting 
process to move Alberta crude to a port in western Canada and 
from there to Asia. Once new markets are reached, the product 
will be forever lost to the U.S.
    If The U.S. delays, it will never recover the opportunity 
it stands to gain today by expending pipeline infrastructure 
now. Canada and Alberta have stood shoulder to shoulder with 
the U.S. through World War I, World War II and today as we 
meet, our troops are deployed in Afghanistan and fly together 
Libya. We have fought together, and we have died together and 
now we can build together. We can build a stronger North 
America, a more secure North America, and a more prosperous 
North America. Thank you.
    [The prepared statement of Mr. Smith follows:]
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    Mr. Whitfield. Mr. Kelly, you are recognized for 5 minutes.

                   STATEMENT OF STEPHEN KELLY

    Mr. Kelly. Thank you, Mr. Chairman.
    Mr. Whitfield. Be sure and turn your microphone on.
    Mr. Kelly. I am sorry.
    Thank you, Mr. Chairman, Ranking Member Rush, Ranking 
Member Waxman and Members. My name is Stephen Kelly. I am the 
assistant general president of the United Association of 
Plumbers and Pipefitters, or the UA. We represent over 340,000 
members employed in the plumbing and piping industry here and 
in Canada. I thank you for allowing me the opportunity to 
provide testimony with regard to the Keystone XL project.
    In a word, the UA strongly supports this project and the 
draft legislation to expedite its approval. We have a number of 
reasons for supporting this. This is a mega-project in the 
construction industry, and it is estimated that somewhere in 
the neighborhood of $20 billion will be injected into the U.S. 
economy. This project generates thousands of good, high-quality 
jobs, and this country desperately needs such work. This will 
produce other economic benefits, including economic stimulus in 
the affected States and cities and new tax revenues.
    At the same time, Keystone will increase our Nation's long-
term security by accessing oil from our friendly neighbors to 
the north, from Canada. This project is financed solely from 
private dollars, and the benefits coming to the United States 
are at zero cost to the taxpayer.
    This project will generate somewhere in the neighborhood of 
13,000 construction jobs. In a time of recession, the 
construction industry is hit first and hardest, and in the 
current climate where we are facing nearly 20 percent 
unemployment, we also have pockets that exceed 40 percent 
unemployment, we need these jobs desperately. The 13,000 
construction jobs mentioned are high-paying jobs that include 
health and welfare as well as pension benefits. These are the 
kinds of jobs that make America strong.
    Construction jobs are only the beginning. It is estimated 
that during the construction of the pipeline, there will be 
7,000 manufacturing jobs which are associated with producing 
the raw material that is needed for the pipeline. It is also 
estimated that over 100,000 jobs that are related to the 
pipeline, whether it be design, construction or operation, will 
be generated. In fact, according to a study released this month 
by the Canadian Energy Research Institute, the number of U.S. 
jobs associated with Canada's oil sands is expected to go from 
21,000, as counted in the year 2010, to approximately 465,000 
by 2035. There will be a tremendous influx in personal income 
to the workers, and this helps to generate the tax revenue that 
is so desperately needed by our States and local governments.
    Experts project the U.S. will need oil and natural gas 
supplies to meet more than half of our Nation's energy needs 
through 2035. The reality is that we have to pursue all 
available new and alternative energy sources, but we are going 
to be dependent on carbon fuels for the foreseeable future and 
we need to procure them from the most reliable source.
    Keystone offers us a solid partnership with one of our 
closest and most trusted allies, and provides a reliable long-
term supply of crude oil absolutely essential to our energy 
security. Keystone provides a rare opportunity to reduce our 
dependence on unstable Middle Eastern oil reserves and we can 
begin to insulate ourselves from the supply side uncertainties 
that we are already facing, allowing us to build a more secure 
energy future.
    Mr. Chairman, in conclusion, I simply want to reiterate the 
fact that the UA, or United Association, fully endorses this 
project and the draft legislation.
    Thank you.
    Mr. Whitfield. Thank you, Mr. Kelly.
    [The prepared statement of Mr. Kelly follows:]
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    Mr. Whitfield. And I thank all of you for your testimony.
    I would like to make just one comment. My friend, the 
gentleman from California, in his opening statement made some 
references to the Koch brothers who we all know about, and we 
all understand that in any kind of development project, certain 
people are going to benefit from that because of financial 
interests. I don't know if the Koch brothers have an interest 
in this project or not.
    I do know and have been told that George Soros has a strong 
interest in SunCorp, the oil sands company that will directly 
benefit from this pipeline, and we know that Mr. Soros 
contributes huge amounts of money to MoveOn.org, whose purpose 
is to defeat Republicans, Tea Party members and others. And I 
have no objection to that, except I wish he wouldn't do that. 
But I think that this is not about personalities. This is about 
a project and its benefit or lack of benefit to the American 
people. So I just wanted to point that out.
    Mr. Symons, I will tell you I am a real fan of protecting 
wildlife. I have been involved in a lot of those issues. You 
made some pretty strong statements in your testimony and I am 
going to ask the gentleman from TransCanada to respond to it, 
because in reading this, you say, ``Recently uncovered 
documents have revealed the true motivations for this 
pipeline--price manipulation. In seeking their Canadian permit, 
TransCanada argued that the pipeline would allow Canadian oil 
companies to increase prices for all the oil Canada is already 
selling to the U.S.'' They submitted a market analysis that it 
would be a windfall, that the U.S. would hand over to Canadian 
oil companies $4 billion annually.
    Then there are other people that have made comments that it 
is going to increase prices of oil products in the Midwest.
    Would you respond to that, Mr. Pourbaix?
    Mr. Pourbaix. I would be happy to, Mr. Chairman.
    I think right off the bat, it is important for people to 
understand that the Keystone XL pipeline is a federally 
regulated pipeline. We charge a toll per barrel of throughput 
on our pipeline. We do not make one extra penny if the price of 
oil goes up or make less money if the price goes down.
    I think my friend in his testimony is failing to make a 
distinction between the price of crude and the price of 
gasoline. We are not hiding anything. Our testimony was 
obviously public in front of our Federal regulator. But it is 
without debate that right now there is a significant oversupply 
of pipeline capacity from Canada into the U.S. Midwest, into 
the Chicago market. That has resulted for the time being in a 
very significant discount for Canadian crude oil into that 
market. That is a situation that will not persist indefinitely. 
Producers will find a way to get to markets where they do not 
see a discount for their product.
    As my friend Mr. Burkhard stated in his testimony, the 
price of gasoline is not tied directly to the price of crude 
oil. In the Midwest right now, as Representative Rush 
mentioned, Chicago gas prices are as high or higher than 
anywhere else in the country, and yet crude oil prices are 
lower than anywhere in the country. So while it is true that 
building Keystone XL pricing-- sorry, building the Keystone XL 
pipeline will likely reduce the very significant discount that 
Canadian producers receive for their crude, that crude will 
still remain the cheapest source of crude by a long shot that 
U.S. refineries have access to.
    To give you an idea, today Canadian crude regularly trades 
at a discount of $20 to $35 a barrel over OPEC-based supply. So 
I hope that gives some color into our argument.
    Mr. Whitfield. Twenty dollars to $35 a barrel.
    Mr. Burkhard, will you make any comment on this issue?
    Mr. Burkhard. Yes, this is a key point, because the core 
message, at least from us, is more supply at a given level of 
demand tends to lower prices rather than raise prices, and we 
have a pipeline system that has been constructed to deliver 
crude oil to the U.S. Midwest, not out of the Midwest. So we 
have had this surge in supply that is stuck in the Midwest, yet 
the Midwest needs to import gasoline from outside the Midwest; 
therefore, the gasoline they import from other parts of the 
U.S. is priced at a global level. So that is why there is a 
disconnect between the gasoline price in Chicago and the crude 
oil price.
    Mr. Whitfield. Thank you.
    Mr. Rush, you are recognized for 5 minutes.
    Mr. Rush. Mr. Symons, you seem to have created quite a stir 
here in the hearing. Maybe you will want to kind of respond to 
some of the characterizations of your testimony by some of your 
colleagues at the table there.
    Did you fail to distinguish between crude oil prices and 
gasoline prices in your testimony, and what are some of the 
other matters that you might have to say about these glorious 
comments?
    Mr. Symons. Thank you, Congressman. I do agree on one 
thing. I agree that TransCanada isn't a company that makes more 
money when prices go up. But the oil companies, the many oil 
companies, Valero and others, will make a lot of money, and 
they are in partnership in helping push this pipeline through. 
And the document, and it is right here, the application, says 
very clearly, I mean, it is only three paragraphs on crude 
pricing impact. And, Congressman Waxman, you actually cited 
some of it, $2 billion to $3.9 billion in windfall profit to 
Canadian oil producers. Nothing in here about discounts in 
prices, or any of the things in the testimony, once they start 
coming down here to the United States and talking to unions and 
talking to others. A totally different story.
    The reason that we are focused on gas prices, and the 
evidence of that comes from Dr. Philip Verleger, who is a 
widely respected oil markets economist, he started off in the 
Ford administration as a senior economist for the Economic 
Council.
    In a Star Tribune article he says very clearly, and I will 
quote from it, ``U.S. farmers, who spent $12.4 billion on fuel 
in 2009, according to the Department of Agriculture, could see 
expenses rise to $15 billion or higher in 2012 or 2013 if the 
pipeline goes through.'' He goes on, ``Millions of Americans 
will spend 10 to 20 cents more per gallon for gasoline and 
diesel fuel as tribute to our friendly neighbors to the 
north.''
    So I think we are focused on the right issues. I don't 
think that the discount that is supposed for Canadian tar sands 
is real. The reason it is cheaper is because it is one of the 
dirtiest fuels on the planet and it is really expensive to 
refine it, so you have got to buy it cheaper to begin with. In 
fact, only certain refineries can handle it because it is so 
dirty.
    Mr. Rush. Mr. Pourbaix, Midwest gas prices, Chicago gas 
prices, are exorbitant. My constituents are suffering. I just 
want a simple answer to this question: How will this pipeline 
affect the gas prices in the Midwest? Will they increase it or 
decrease it or have no effect? How it will affect it?
    Mr. Pourbaix. As Mr. Symons referred to, there is a 
possibility that by building this pipeline, Canadian crude oil 
producers will see a reduction in the discount that they 
presently receive for their oil. I think we testified it was a 
couple of dollars a barrel.
    Mr. Symons once again ignores that we are talking about the 
price of crude oil rather than the price of gasoline in the 
Chicago market. And as I said earlier, the price of gasoline is 
actually not set in Chicago. The price of gasoline tends to be 
set in the Gulf Coast. That is the largest refining center in 
the market, and the refineries in the Gulf Coast typically are 
paying a global price for oil rather than that Midwest price of 
oil.
    So, what I would expect to have happen, and it is something 
that was also mentioned by others in the testimony, our project 
will be delivering an incremental supply of 700,000 barrels a 
day of crude oil into the largest refining market in North 
America, the market that sets the price of gasoline for the 
United States. And it has been a long time since I took 
economics in college, but my experience on that was pretty 
clear: If you add a significant new supply to a static demand 
for a product in a market, you should see the price of that 
product go down.
    So it is my absolute expectation that over time, with 
incremental supplies of Canadian crude oil coming into the U.S. 
market, you will see downward pressure on refined market 
products prices throughout U.S. markets.
    Mr. Rush. So you can't guarantee or assure my constituents 
that if this pipeline is approved, that the cost of their 
gasoline will not increase?
    Mr. Pourbaix. I wish I could, but gasoline and crude oil, 
they are heavily traded commodities. I think an important point 
to remember is that the price of gasoline, and indeed crude 
oil, does not just depend on the supply and demand; it also 
depends on the future expectation of supply and demand. And 
with what has been going on in the world, the price of crude 
oil has risen across the world because of the perception that 
it is becoming harder--or secure supplies of oil are harder to 
come by.
    If we are to build Keystone XL and add a secure connection 
to one of the largest supplies of crude oil on the planet, it 
would be my expectation that not just supply would increase, 
but the expectation of continued security would increase, and 
that would have a further impact moderating gasoline prices.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Whitfield. Yes. Before I recognize Mr. Terry, Mr. 
Symons, you referred to Randy Thompson. Without objection, we 
do have his statement. I am going to enter it into the record.
    Mr. Symons. Thank you, Mr. Chairman.
    [The prepared statement of Randy Thompson follows:]
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    Mr. Waxman. Mr. Chairman, could I ask unanimous consent 
that the Philip Verleger document be added to the record?
    Mr. Whitfield. Without objection.
    [The information follows:]
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    Mr. Terry, you are recognized for 5 minutes.
    Mr. Terry. Thank you, Mr. Chairman. You started off with 
what I wanted to do, which was get Mr. Thompson's testimony in 
the record. So I thank you for bringing that up, and if you 
talk to him, pass on my condolences for the passing of his 
mother.
    Mr. Symons. Thank you. And thank you for the help in 
getting the information, which is the key to the whole project 
at this point.
    Mr. Terry. I appreciate that. But obviously I think the 
discussion here on the prices and the discussion about heavy 
crude and transportation and discounts is a little convoluted 
for some of us more lay people. It just seems to me that if we 
have 700,000 reliable, is it barrels----
    Mr. Pourbaix. Yes.
    Mr. Terry [continuing]. Coming in, that that level of 
certainty, consistency, in a transportation system, in a 
pipeline, would actually reduce price points, not increase. So 
I understand that there is transportation discounts of heavy 
crude and those type of things, but overall, even the CRS 
report, the initial one from March 4th, 2011, not the one that 
I had requested, states on page 10 that crude oil prices are 
set in a global market. And they go through a discussion and 
say that this is not going to--there are just so many global 
pressures on the price points, as you said.
    But I want to not ask about TransCanada, but the gentleman 
from Cambridge Research or HIS Cambridge Energy Research 
Associates, what is your take on the economics of this 700,000 
barrels of oil coming into the United States? Is it going to 
cost more by transporting it through a pipeline? Is it going to 
impact gas prices negatively at the pump once it is refined?
    Mr. Burkhard. Well, that is a good question. And by the 
way, you represent a great district, the district where I was 
born and raised, so thank you for your service, Congressman 
Terry.
    Mr. Terry. You are welcome back any time. As a matter of 
fact, you could probably move the whole business back to 
Nebraska.
    Mr. Burkhard. Well, I try and get back as often as I can.
    The price of gasoline in Chicago, in Omaha, in New York, is 
set by the global market. And the price along the Gulf Coast, 
which is by far the most important refining market in the U.S., 
one of the three most important in the world, that is 
essentially the market benchmark where prices are set for 
gasoline. Bringing more oil into that market from Canada, 
700,000 barrels per day, is a large amount of oil. Again, just 
to put that in context, that is more than half of what Libya 
exported. So that is significant.
    Bringing more supply to the global crude oil market at a 
given level of demand would tend to lower prices. There is a 
vast array of factors that shape the global crude oil market. 
But simply looking at basic economics, more supply at a given 
level of demand would lower prices, and that global crude oil 
price is the single most important determinant of the gasoline 
price in the Midwest or anywhere else in the United States.
    Mr. Terry. So just a lay economist like me, if you have a 
steady supply in a pipeline that is reliable, wouldn't that put 
less pressure on prices and they could actually fall? You have 
about 8 seconds.
    Mr. Burkhard. The anxiety about the reliability and 
adequacy of oil supplies around the world is a factor that has 
pushed up prices at times. So to the extent that supply is more 
secure, more reliable, that would be a downward force on 
prices.
    Mr. Symons. Mr. Congressman----
    Mr. Terry. Hold on. I don't want to be rude, Jeremy, but I 
have 45 seconds to ask TransCanada, I wanted the State 
Department here; did we request the State Department or DOE to 
be here?
    Mr. Whitfield. Yes.
    Mr. Terry. Have you provided the State Department and the 
respective agencies, including the States, the documents and 
studies that are required, Mr. Pourbaix?
    Mr. Pourbaix. I would certainly take the perspective that 
the review into the Keystone XL project has been exhaustive. 
You heard me talk about the 90 public meetings, the hundreds of 
hours of testimony, the thousands of pages. I think it would be 
fair at this point, with all of the work that went into the 
draft environmental impact statement and the supplemental draft 
environmental impact statement, that the State Department would 
be in receipt of all the information they would require to make 
a decision on this Presidential permit application.
    Mr. Terry. All right. One last question. I know I am past 
my time. But the next level of complaint from constituents in 
Nebraska, not particularly my district, is what they perceive 
as kind of a brutal way of negotiations. You don't have eminent 
domain so you have to negotiate with landowners.
    Would you explain the process, and if we are getting 
complaints that they are not being treated fairly, that is a 
concern.
    Mr. Pourbaix. Sure, I would be happy to. Right off the bat, 
I made the point earlier that we have been in this business for 
a very long time, and absolutely one of our core beliefs is 
that we have to treat our--we treat our landowners with respect 
and we treat them fairly.
    This idea of eminent domain, we do actually have-- 
utilities in Nebraska do have the ability to seek condemnation 
of right-of-ways. TransCanada, we have always viewed that as a 
last resort. And to give you an idea, on the base Keystone 
project, which was a $6 billion project that went directly 
through Nebraska, we achieved voluntary easements with 99 
percent of Nebraskans.
    To give you an idea, to compare that to the industry, on 
average, pipeline companies resort to eminent domain or 
condemnation proceedings in about 10 percent of the landowner 
situations they have. TransCanada's record is that we are only 
forced to do that in about 2 percent of the situations.
    Mr. Terry. And if we have a complaint, we got someone we 
can call.
    Mr. Pourbaix. You absolutely do.
    Mr. Terry. I am sorry, we have to move on.
    Mr. Whitfield. I might also say we did invite the State 
Department and the Department of Energy.
    Mr. Waxman, you are recognized.
    Mr. Waxman. Mr. Chairman, you invited them and they refused 
to come?
    Mr. Whitfield. I have been told they declined.
    Mr. Waxman. I see.
    Mr. Pourbaix, your company has put the application in, the 
State Department is reviewing it. Do you have a reason to 
believe that they are not going to give you a fair review?
    Mr. Pourbaix. No. As I said earlier, we have had a very 
exhaustive review, which I think is entirely appropriate, given 
the magnitude of the project and ensuring that people and 
stakeholders are heard in this process.
    Mr. Waxman. Why do you think we should change our law? If 
they are reviewing your application, it has been exhaustive, 
they are trying to make a decision, I know you would like to be 
approved as quickly as possible. Do you think you need a 
special law, and is Canada prepared to pass special laws for 
Americans when your government takes too long? Are we taking 
too long; is that the problem?
    Mr. Pourbaix. No, we have certainly had no involvement in 
this proposed legislation, sir.
    Mr. Waxman. Oh, you haven't. OK.
    The question about the extra costs for the pipeline, Mr. 
Symons, we have already had unanimous consent to put in Philip 
Verleger's editorial from the Star Tribune. He makes a case 
that we are going to be spending $5 billion extra as a duty to 
Canadian oil companies for this project, if this project goes 
through. Explain that to us, because we hear such contradictory 
statements to the contrary.
    Mr. Symons. Yes. It is really not that complicated. The oil 
companies want to make more money. They have a plan here. The 
whole supply issue, everyone is working on a false assumption, 
a myth that has been perpetuated, that building a pipeline with 
a lot of pipeline capacity means you are going to get more oil. 
That is actually not what is happening here.
    This is all about taking the oil that is coming into the 
Midwest and moving it down to the Gulf Coast where they have 
access to China and other markets, and once they have that 
access, they can charge a higher price to anyone for all their 
oil. The theory that is being offered, I guess, is oil prices 
will go up but gas prices won't. I don't know if you believe 
that, but I don't think I would be able to bank on that theory.
    What is really happening is, as the CEO of Valero said 
recently, America is becoming the middleman in the global oil 
business. We are importing lots of crude, we are refining it, 
and we are exporting more and more gasoline and refined diesel 
products around the world. We are actually significantly 
increasing our exports from the Gulf Coast. That is what they 
want to do. Gas prices will go up in 15 States, according to 
TransCanada's own analysis.
    Mr. Waxman. Now, you indicated that some of these foreign-
owned refineries in the Gulf will simply ship the refined 
product to China, so it doesn't really do much good for us, 
does it?
    Mr. Symons. No. I mean, this is the gateway they always 
wanted. These refineries, again, a pipeline, taking Canadian 
oil to foreign-owned refineries in the Gulf Coast doesn't make 
it our oil. We have a bigger expansion being funded by Saudi 
Arabia. We have declining oil coming into the CITGO refinery 
owned by Chavez. These are the kind of owners that are going to 
be in control of this oil.
    Mr. Waxman. This pipeline imposes other risks for America. 
The Ogallala Aquifer provides drinking water for 2 million 
people and is critical for farming and ranching across several 
States, and TransCanada assures us their pipeline will be safe. 
How comfortable should folks be who depend on the aquifer for 
their drinking water and their livelihood?
    Mr. Symons. This really strikes close to home for a lot of 
people. But having been down at the Gulf just after the Deep 
Water Horizon explosion, we have to learn the lessons, we have 
to learn the lessons from the Commission that said our 
technology got ahead of our regulatory oversight safety. That 
is exactly what is going on here again.
    All the promises aside that we are hearing about safety and 
fail-safe, just recently there was a Keystone--the last 
pipeline that TransCanada built, 21,000 gallons shot 6 to 8 
feet into the air, despite the claims they are making.
    This type of oil is more dangerous than conventional oil 
pipelines. We need updated safety regulations. And FEMSA and 
the administration actually need to do a better job of getting 
out in front of this right now.
    Mr. Waxman. In his statement submitted for the record, 
Randy Thompson, a Nebraska farmer, raised the concern that the 
pipeline could threaten ``the largest natural body of clean 
water in this hemisphere with contamination.'' He also stated, 
``TransCanada has bullied and intimidated American landowners 
with threats of eminent domain.''
    Are Mr. Thompson's concerns unique, or do they reflect the 
concerns of many farmers and ranchers along the route of the 
proposed pipeline?
    Mr. Symons. Well, I have a letter that is one of many 
letters here from TransCanada to landowners. They said, we are 
going to condemn your property as a last resort.
    Right now, TransCanada does not have the right to use 
eminent domain to condemn property, but they are sending 
letters to landowners that say if you don't sign this final 
offer, we will begin proceedings. We will be forced to invoke 
the power of eminent domain and we will initiate condemnation 
proceedings. They are threatening American landowners.
    Mr. Waxman. Mr. Chairman, I want to make a comment that the 
State Department has a responsibility to make a decision after 
consulting with other relevant Federal agencies on whether this 
project is in the national interest and should get a permit. 
The last thing this committee should do would be to set an 
artificial deadline and pressure the Department into granting 
the permit. We will live with the consequences of this decision 
for decades or longer, and we should take the time to get it 
right.
    Furthermore, Mr. Chairman, I will discuss with you further 
about getting adequate information. Whether it is from Mr. 
Soros or the Koch brothers or anyone else, we ought to get all 
the information that is needed for us to understand fully what 
are the consequences upon which this hearing is based.
    I yield back my time.
    Mr. Whitfield. Thank you.
    Mr. Scalise, you are recognized for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman.
    I want to try to bring the questions I have back to what 
the focus I think most people in the country are concerned 
about, and that is lowering the price of gasoline and creating 
jobs. While it has been just kind of glossed over that some 
people on the panel have implied that this is just shifting oil 
from the Midwest to the Gulf Coast and no increase in supply, 
the numbers I have looked at show that you would have a 
dramatic increase, over 700,000 barrels more of Canadian oil 
coming into the United States and into refineries along the 
Gulf Coast, areas I represent, where despite what some people 
think, they pay what the world price of oil is for the oil.
    To suggest that somehow, mysteriously, they are going to 
have some deal where I am going to convince you to pay even 
more than the spot price than you can get it from other places, 
just because it is from Canada, I think maybe some people need 
to go back and take some basic economic courses to understand 
supply and demand.
    I want to ask you, Mr. Burkhard, about that question. As we 
talk about an increased supply coming into America, in this 
case roughly 700,000 more barrels coming in from Canada, which 
hopefully would reduce some of that oil that is being shipped 
in by tankers from places like Saudi Arabia and other Middle 
Eastern countries that don't like us, where numbers I have 
seen, over 70 percent of all the oil spills come from tankers, 
surely not from pipelines. If you can address the question of 
increased supply, what that would do to price, both what the 
refineries would pay but also the price at the pump?
    Mr. Burkhard. Thank you for the question, Congressman. One 
of the issues is, is the pipeline needed? Is there going to be 
too much supply? In the next couple of years refineries in the 
U.S. Midwest will be saturated with supply. So if the 
government, the U.S. Government decides to enable greater 
access of Canadian supply, namely oil sands, to the rest of the 
country, that would allow that oil to be delivered to 
refineries in Texas and Louisiana, which are the most 
sophisticated in the world.
    A lot of those refineries in Texas and Louisiana, they 
process heavy crude oil. They have made very large investments 
to process that type of crude oil. A lot of the oil sands 
product that could come down from Canada is similar in its 
characteristics to that heavy crude oil. So there would be a 
welcoming market along the Gulf Coast, that could also back out 
crude oil from other countries.
    Also some other important sources of supply, Mexico and 
Venezuela, are struggling to maintain production, and they are 
two of the very heavy oil producers at the moment.
    Mr. Scalise. Thank you. I remember 2 years ago I went out 
to Alaska. We looked at--we went out to the North Slope. We 
also went out to section 1002 of ANWR, that tiny strip of ANWR 
that many of us are trying to get opened up, where there are 
billions of known barrels of reserves and the Federal 
Government continues to shut off the supply.
    Again, I will just show a chart here tracking the price of 
gasoline since President Obama has been in office, and they 
continue to shut off more known areas and reserves in the 
United States of America. Of course, Canada being a strong 
trading partner, somebody who, if we are going to import oil, 
should be the first place we look to increase that production.
    I remember when we went out to the Alaskan pipeline and we 
were walking along the line, I harken back to all of those 
groups that came out against the Alaskan pipeline and extolled 
all of the dangers, and it was going to destroy the wildlife 
and it was going to kill the caribou population. Well, of 
course, I had video. I was taking a video. As we were walking 
along, caribou were literally walking up to the pipeline 
literally yards away from us, and they talked about how the 
caribou population has tripled since they built the pipeline. 
Even all these groups were threatening, oh, it is going to make 
the caribou extinct.
    Their population has tripled because the caribou like the 
warmth of the pipeline. So it has actually worked to the 
opposite of what some of these radical groups have talked 
about. And you are hearing some of the same things with this 
pipeline.
    But to the contrary, let's talk about the jobs and 
benefits. I want to ask Mr. Kelly, because in your testimony 
you talked about this, can you give an idea of just how many 
jobs you would expect to be created here in America? Forget 
about the benefits that Canada would see. In America, how many 
jobs would you expect to see and at what kind of wage would you 
expect these Americans to be able to find employment if this 
project moves forward?
    Mr. Kelly. Yes, sir. The pipeline, or main line industry as 
it stands today, has four crafts that are involved. You have 
the UA, the Pipefitters, Teamsters, operating engineers that 
operate the equipment, and then members of the Laborers Union 
that handle the ancillary work.
    Between those four crafts, in discussions with TransCanada, 
we estimate that somewhere around 13,000 U.S. construction jobs 
is what we are going to be looking at. There will be additional 
work in Canada as the line moves towards the States. But, 
overall, what we are looking for in the U.S. is about 13,000 
construction jobs.
    Mr. Scalise. Do you have an idea of the average pay?
    Mr. Kelly. It is going to run with wages and fringe 
benefits around $50 an hour.
    Mr. Scalise. These are really good jobs that we could be 
getting here in America.
    Mr. Kelly. That is the kind of jobs we have to have. The 
pipeline industry, or mainline industry in the U.S., has been 
quite successful. Our pipeline local, not last year, the year 
before, worked 12 million man-hours on just pipeline. This line 
here is about 1,600--a little over 1,600 miles long. It will 
have somewhere in the neighborhood of a dozen pump stations. So 
there is a great deal of construction work involved just in 
installing the line.
    Mr. Scalise. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Thank you.
    The gentleman from Texas, Mr. Green is recognized for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman. I have a statement I 
would like to place in the record.
    I do represent a district in East Harris County where we 
asked the State Department to have a hearing. They did have one 
at the end of it in East Harris County and we had testimony. Of 
course, we have five refineries, and two of those refineries I 
know do use heavy oil from Pemex in Mexico and PDVSA from 
Lyondell.
    Mr. Burkhard, you talked about how ongoing advances in 
technology and operational experience had demonstrated 
environmental concerns. Particularly greenhouse gas emissions 
are being addressed. Life-cycle GHG emissions for the average 
oil sands product actually imported from the United States are 
just 6 percent higher than those of the average crude oil 
consumed in the United States.
    How do the oil sands compare to the heavier crude currently 
being refined from Venezuela and Mexico in our district? And 
the research I have seen is there is very little difference 
between the two. So we are already refining heavier crude? Is 
that correct?
    Mr. Burkhard. Yes. Certainly on our analysis of 13 
different studies about life-cycle greenhouse gas emissions, 
those from the oil sands are comparable to a number of other 
crudes that are currently consumed in the United States. 
Certainly they are similar to the heavy crudes that we 
currently import.
    Mr. Green. Again, there is a price difference that most 
people don't understand. If you have heavier crude, it is less 
per barrel than maybe $112 a barrel that may be lighter, sweet 
crude. Heavier crude is much less expensive because it costs 
more to refine.
    Mr. Burkhard. Absolutely. That is why the refineries along 
the Gulf Coast have made these very significant investments to 
enable them to process the heavy crudes, because there is a 
lower price relative to the other.
    Mr. Green. I know the Lyondell refinery in our district, 
they made a $2 billion investment to be able to handle 
Venezuelan heavier crude, but they didn't get any exemption 
from clean air standards because they are using heavier crude 
than they are light sweet in their refinery. They still have to 
comply with the same environmental laws that the refinery down 
the street, in our case maybe down the road, would be that is 
using lighter crude. You don't know of any waivers they get by 
using heavier crudes to standard environmental protections?
    Mr. Burkhard. I am not aware of any.
    Mr. Green. OK. Mr. Pourbaix, you talk about how the 
pipeline application process today has already substantially 
exceeded the duration of the two most recent similar cross-
border Presidential permit applications. How long did it take 
to get these permit applications approved?
    Mr. Pourbaix. The two previous applications that I referred 
to in my testimony were our initial base Keystone and a 
competitor company of ours, Enbridge, had a similar 
Presidential permit request for their Clipper pipeline a couple 
of years ago, and in both those cases from start to finish it 
was around 20 months.
    Mr. Green. OK. And this one has taken how long so far?
    Mr. Pourbaix. We are close to 3 years now and looking for a 
decision towards the end of the year.
    Mr. Green. So your testimony is there should be some 
oversight because of the distinction between the time for the 
approval of these three.
    Mr. Pourbaix. Sorry?
    Mr. Green. There should be some oversight by Congress, 
because it has taken so long in this application compared to 
the previous two?
    Mr. Pourbaix. You know, we really haven't taken a public 
position on the proposed legislation. I think our perspective 
is that we have had a very comprehensive process, review 
process on this permit, and we take comfort that we are seeing 
increasing focus to have a decision on this permit before the 
end of the year.
    Mr. Green. Let me ask a question very quickly. Keystone 
agreed to comply with 57 additional conditions developed by 
PHMSA for the Keystone project, and yet Mr. Symons says that 
there is something about this operating at a higher pressure, 
using thinner steel, than a pipeline carrying less dangerous 
products.
    Is there any validity to that? I have to admit I have 
pipelines everywhere in our district and I have lived along 
them my whole life. Are they actually going to be able to use 
thinner steel?
    Mr. Pourbaix. No. No. This pipeline uses a thickness of 
steel that is in common use for crude oil pipelines throughout 
the world.
    Mr. Green. And it seems like if it is heavier crude, it 
would have less, you know, it is harder to get it through the 
pipeline than it is lighter, sweet crude.
    Mr. Pourbaix. Well, despite the comments about this viscous 
tarry sludge, I can provide assurances to the committee that 
the oil we are transporting on this pipeline is not tarry, it 
is not sludge; it is very liquid crude oil.
    Mr. Green. Mr. Chairman, I have additional questions, but 
if I could, Mr. Kelly, thank you for being here. I was actually 
at your local Pipe Fitters on Friday in Houston, 211, and I 
work with the other local too. And believe me, every time I 
visit with them, they ask me about where this pipeline is at in 
the process. Thank you.
    Mr. Whitfield. The gentleman from West Virginia, Mr. 
McKinley, is recognized for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman. Alex--I can't 
pronounce that last name.
    Mr. Pourbaix. No one else can either.
    Mr. McKinley. Can you give me just some insight. If this 
pipeline for whatever reason is not authorized, are the oil 
sands going to dry up and not come to the United States?
    Mr. Pourbaix. Well, I think Mr. Smith talked a little bit 
about what the options are for oil sands production. I think 
one thing that should be made clear to everybody in this 
hearing is that the oil sands are a truly massive resource. 
Hundreds of billions of dollars have been invested both by 
domestic Canadian companies, a large amount by American 
companies, and as Mr. Smith mentioned, an increasing investment 
by China, by Korea and their national oil companies. And I 
think it would not be an exaggeration to state that the oil 
sands are really expected to be the engine of economic growth 
for Canada for the next 50 years.
    Mr. McKinley. So you are going to continue producing them 
and shipping them someplace? That is really the bottom line, 
isn't it?
    Mr. Pourbaix. Absolutely.
    Mr. McKinley. I want to go to Mr. Symons, if I could, 
please. I didn't pick up, I am sorry, I missed the author, you 
had some paper you were referencing, a document that says gas 
prices will go up 10 to 20 cents?
    Mr. Symons. Dr. Philip Verleger, who is a well-respected 
oil market economist. He has a newsletter.
    Mr. McKinley. And was he hired by someone to do this?
    Mr. Symons. No. He does an independent analysis.
    Mr. McKinley. He just decided I am going to write a paper. 
And he wasn't hired by any group?
    Mr. Symons. I can't speak for--I know he wasn't hired.
    Mr. McKinley. Could you try to find out? I am just curious 
who paid for it, because I don't think many scientists are 
going to just write a paper without someone paying for it.
    Mr. Symons. Actually, oil companies paid for his analysis.
    Mr. McKinley. OK. So oil companies are saying that prices 
are----
    Mr. Symons. If someone is making money off this pipeline, 
someone is losing money.
    Mr. McKinley. OK. Now, do you know what his track record is 
in credibility in making these kinds of predictions? Can you 
find out somehow?
    Mr. Symons. Absolutely.
    Mr. McKinley. To show his record is fairly accurate, that 
we can expect that, or is this a one-shot deal?
    Mr. Symons. The reason oil companies and others----
    Mr. McKinley. If you could get back to me on that, I would 
like that.
    Mr. McKinley. The other thing you were saying that I find 
curious, you seem to be trying to prevent Canadian oil sands 
from going to China. You said it several times. Is that a fair 
statement, or did I mishear that? You don't want it to go to 
China?
    Mr. Symons. I think there is a whole web of deception 
saying this is going to make us more secure, when really they 
are trying to get it to China and to other markets.
    Mr. McKinley. So we are willing to put potentially 20,000 
jobs at risk because of a hypothesis you have or a theory you 
have that this could go to China. You are not willing to see 
20,000 Americans find jobs?
    Mr. Symons. I am just telling you what the data says. I 
thought this was an informational hearing. What the Department 
of Energy and the Department of State say----
    Mr. McKinley. Well, we ship coal to China every day and it 
hasn't had that impact. If you think shipping it to China is 
going to raise the price of oil in America, but we ship coal 
every day to China and we are not seeing that increase 
attributed to the exporting of coal, I think it is a bit 
disingenuous in your argument.
    The other is that I have got to say, Mr. Symons, wouldn't 
it make more sense for them to just simply build a pipeline 
over to Seattle than it would be to take it 1,700 miles down to 
the Gulf Coast, if they have this clandestine study to ship it 
to China? This doesn't make sense.
    Mr. Symons. We could debate all day where the oil should 
end up, but here is the thing we have to remember: The 
Presidential permit is a green light for a foreign energy 
company to come take the rights of Americans to protect their 
land away from them. If there is is not a national interest 
need, the President is ordered by Congress not to issue that.
    Mr. McKinley. I hear you. But what happens, Mr. Symons, do 
you have some kind of inside knowledge that the President is 
not going to approve this? What happens if he approves it?
    Mr. Symons. I have no idea.
    Mr. McKinley. Are you going to be just as outraged as you 
are now?
    Mr. Symons. Absolutely. We have been very clear with the 
administration that we oppose this pipeline.
    Mr. McKinley. Do you have copies, does anyone have copies 
of these draft conclusions? Do we have a sense of where they 
are going with the environmental impact?
    Mr. Symons. There is a supplemental--draft supplemental 
environmental impact statement that is now available.
    Mr. McKinley. Can you give us a short version, because we 
are running over time here? Do you have a short version? Does 
it say this is going to be catastrophic and we can't afford to 
have the 20,000 jobs in America? What is the sense of what it 
is saying?
    Mr. Symons. It concludes that----
    Mr. Rush. Will the gentleman yield for a moment?
    Mr. McKinley. I am just waiting to hear his answer, please.
    Mr. Symons. I said that it concludes that it won't help 
America's energy security.
    Mr. Rush. Will the gentleman yield just for a moment?
    Mr. McKinley. Yes.
    Mr. Rush. You mentioned a couple things, and I think the 
record should reflect that the State Department is not here 
because they are in the middle of the negotiations and the 
review and all of the other kind of activities that are 
necessary for them to contemplate in order for them to make a 
decision. So they are not here at this hearing, I wish they 
were, because they feel as though it would be inappropriate for 
them to be at a hearing when they are in the middle of the 
negotiations.
    Mr. McKinley. Taking back my time, I am not demeaning the 
fact that they are not here. I am just simply trying to find 
out which direction they were going in. That is all.
    Thank you. I yield back.
    Mr. Pourbaix. Could I?
    Mr. Whitfield. Yes, go ahead.
    Mr. Pourbaix. The specific question that the Representative 
asked, I believe, is, Has the Department of State indicated 
where they are going with on the environmental--draft 
environmental impact statement?
    What I can tell you is that the first draft environmental 
impact statement, delivered in April of 2010, stated as a 
conclusion that the construction and operation of the Keystone 
XL pipeline system would have limited environmental 
repercussions in the United States. They followed up with a 
supplemental draft environmental impact statement a month ago 
that reiterated that finding after reviewing significantly more 
information.
    Mr. McKinley. Thank you.
    Mr. Whitfield. Thank you. I might add also that, without 
objection, we accepted the documentation that Mr. Waxman asked 
us to introduce. We introduced into the record Mr. Thompson's 
testimony.
    I am going to ask unanimous consent that we introduce into 
the record the statement of Mark Ayers, who is president of the 
Building Construction Trades Department, AFL-CIO, who in his 
statement said, ``The Keystone pipeline project has been 
subjected to 32 months of scrutiny through the National 
Environmental Policy Act, which includes review by ten Federal 
agencies as well as numerous State and local agency reviews. 
The State Department, FDEIS, has concluded that the pipeline 
would have limited adverse environmental impact during 
construction and operation and that it would significantly 
strengthen U.S. economic security.'' You can put that in the 
record.
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    Mr. Rush. Mr. Chairman, if I might, I would also ask for 
unanimous consent to enter into the record a letter that was 
sent under the signature of Mr. Tim Irons, Senior Land 
Coordinator for the TransCanada Keystone Pipeline LP, and this 
letter states in the last paragraph, ``While we hope to acquire 
this property through negotiations, if we are unable to do so, 
we will be forced to invoke the power of eminent domain and 
will initiate condemnation proceedings against this property 
promptly as of the expiration of this 1-month period. In the 
event that we are forced to invoke the power of eminent domain, 
this letter and its content are subject to Nebraska revised 
statute 278-408 and are not admissible to prove the existence 
or amount of liability.''
    Mr. Chairman, I would like to submit this, in that there 
was testimony that the company, TransCanada, does not have or 
has not been threatening people and does not have any legal 
right to enter into the eminent domain process for an American 
landowner.
    Mr. Whitfield. Without objection.
    [The information follows:]
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    Mr. Whitfield. This is our first day back and we didn't 
have quite as many members as we had hoped on this important 
subject, but I do want to give Mr. Smith and Mr. McFadyen an 
opportunity, like 3 minutes, if you all want to respond to 
anything you heard today, because I don't think a specific 
question went to you all. I am not saying you have to, but if 
you feel compelled to, I will give you 3 minutes to respond or 
make a statement.
    Mr. Smith. Thank you, Mr. Chairman. I will be exceedingly 
brief.
    Because there are a few of us in this room who can remember 
the gas lineups of 1973-79 and the shortage of oil supplies, 
every day that the U.S. produces oil, you produce less oil, 
there is an immutable law that you have declining production. 
This replaces production that is declining. It gives you 
options about not having lineups at the gas pump. No matter 
what the price is, you won't have the lineups, or it will help 
ameliorate those.
    There is a pipeline in the permitting process that would go 
direct to China from Alberta, that would go across British 
Columbia. It wouldn't have to use anything here. China is 
building refineries that are 700,000 barrels a day. They are 
serious.
    And I believe that we have got a trade relationship we can 
build on here; that what I have heard today doesn't go back to 
the fact that, in fact, your supply has been interrupted, and 
this helps stop that interruption. It creates high-quality 
jobs. It gives us an opportunity to build with common law, 
common property, right next door to each other, and I think 
that is valuable to everybody.
    Mr. Whitfield. Thank you, Mr. Smith.
    Mr. McFadyen.
    Mr. McFadyen. Thank you, Mr. Chairman.
    Just very briefly, I just want to reiterate that we are 
very proud of our regulatory construct in Alberta and can 
assure you that the oil sands are being developed in a very 
responsible manner with respect to environmental protection, 
economic impacts and the social impacts on our citizens. We 
live there, we work there, we play there, and we are determined 
to keep it a great place to do all of those things.
    Thank you.
    Mr. Whitfield. Well, I thank all of you. That will conclude 
today's hearing. We appreciate your testimony very much and 
look forward to working with all of you. The record will remain 
open for 10 days for any additional documents.
    Thank you.
    [Whereupon, at 5 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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