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





                    TAPPING AMERICA'S UNCONVENTIONAL
                   OIL RESOURCES FOR JOB CREATION AND
                      AFFORDABLE DOMESTIC ENERGY:
                     TECHNOLOGY AND POLICY PATHWAYS

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

                                HEARING

                               BEFORE THE

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                       WEDNESDAY, APRIL 17, 2012

                               __________

                           Serial No. 112-75

                               __________

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



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

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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                    HON. RALPH M. HALL, Texas, Chair
F. JAMES SENSENBRENNER, JR.,         EDDIE BERNICE JOHNSON, Texas
    Wisconsin                        JERRY F. COSTELLO, Illinois
LAMAR S. SMITH, Texas                LYNN C. WOOLSEY, California
DANA ROHRABACHER, California         ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland         BRAD MILLER, North Carolina
FRANK D. LUCAS, Oklahoma             DANIEL LIPINSKI, Illinois
JUDY BIGGERT, Illinois               DONNA F. EDWARDS, Maryland
W. TODD AKIN, Missouri               BEN R. LUJAN, New Mexico
RANDY NEUGEBAUER, Texas              PAUL D. TONKO, New York
MICHAEL T. McCAUL, Texas             JERRY McNERNEY, California
PAUL C. BROUN, Georgia               TERRI A. SEWELL, Alabama
SANDY ADAMS, Florida                 FREDERICA S. WILSON, Florida
BENJAMIN QUAYLE, Arizona             HANSEN CLARKE, Michigan
CHARLES J. ``CHUCK'' FLEISCHMANN,    SUZANNE BONAMICI, Oregon
    Tennessee                        VACANCY
E. SCOTT RIGELL, Virginia            VACANCY
STEVEN M. PALAZZO, Mississippi       VACANCY
MO BROOKS, Alabama
ANDY HARRIS, Maryland
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota
LARRY BUCSHON, Indiana
DAN BENISHEK, Michigan
VACANCY










                            C O N T E N T S

                       Wednesday, April 17, 2012

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

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

                           Opening Statements

Statement by Representative Ralph M. Hall, Chairman, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..    17
    Written Statement............................................    18

Statement by Representative Eddie Bernice Johnson, Ranking 
  Minority Member, Committee on Science, Space, and Technology, 
  U.S. House of Representatives..................................    19
    Written Statement............................................    20

                               Witnesses:

Mr. Andrew Slaughter, Chair, Resource and Supply Task Group, 
  National Petroleum Council Report, ``Prudent Development''
    Oral Statement...............................................    22
    Written Statement............................................    25

Ms. Karen Harbert, President and Chief Executive Officer, 
  Institute for 21st Century Energy, U.S. Chamber of Commerce
    Oral Statement...............................................    32
    Written Statement............................................    34

Dr. Michelle Michot Foss, Chief Energy Economist, Center for 
  Energy Economics, Bureau of Economic Geology, University of 
  Texas-Austin
    Oral Statement...............................................    42
    Written Statement............................................    46

Mr. James Brown, President and Chief Operating Officer, Whiting 
  Petroleum Corporation
    Oral Statement...............................................    60
    Written Statement............................................    63

Mr. Daniel Weiss, Senior Fellow and Director of Climate Strategy, 
  Center for American Progress
    Oral Statement...............................................    74
    Written Statement............................................    76

Discussion.......................................................    94

             Appendix I: Answers to Post-Hearing Questions

Mr. Andrew Slaughter, Chair, Resource and Supply Task Group, 
  National Petroleum Council Report, ``Prudent Development''.....   118

Ms. Karen Harbert, President and Chief Executive Officer, 
  Institute for 21st Century Energy, U.S. Chamber of Commerce....   120

Dr. Michelle Michot Foss, Chief Energy Economist, Center for 
  Energy Economics, Bureau of Economic Geology, University of 
  Texas-Austin...................................................   123

Mr. James Brown, President and Chief Operating Officer, Whiting 
  Petroleum Corporation..........................................   132

Mr. Daniel Weiss, Senior Fellow and Director of Climate Strategy, 
  Center for American Progress...................................   136

            Appendix II: Additional Material for the Record

Executive Summary of the National Petroleum Council report 
  submitted by Chairman Ralph Hall...............................   148

Article submitted by Chairman Ralph Hall, ``Scarce oil? U.S. Has 
  60 Times More Than Obama Claims''..............................   149

Article submitted by Chairman Ralph Hall, ``New regs could create 
  'nightmare scenario' for industry--Texas regulator''...........   152

 
                    TAPPING AMERICA'S UNCONVENTIONAL
                     OIL RESOURCES FOR JOB CREATION
                    AND AFFORDABLE DOMESTIC ENERGY:
                     TECHNOLOGY AND POLICY PATHWAYS

                              ----------                              


                        TUESDAY, APRIL 17, 2012

                  House of Representatives,
               Committee on Science, Space, and Technology,
                                                   Washington, D.C.

    The Committee met, pursuant to call, at 10:17 a.m., in Room 
2318 of the Rayburn House Office Building, Hon. Ralph Hall 
[Chairman of the Committee] presiding.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Chairman Hall. Good morning, and thank all of you. The 
Committee on Science, Space, and Technology will come to order. 
I want to welcome you to today's hearing entitled ``Tapping 
America's Unconventional Oil Resources for Job Creation and 
Affordable Domestic Energy: Technology and Policy Pathways.'' 
In front of you are packets containing the written testimony of 
everybody.
    Where is everybody? I guess they are still out watching the 
shuttle. But this is a very busy day with a lot of committee 
work going. I think they will be in and out of here. You didn't 
come all this way just to talk to two people; I know that. But 
it will go into the Congressional Record. Everybody is going to 
have to read your testimony whether they want to or not. So we 
welcome you here, and I might as well take the next five 
minutes and give time for the shuttle to land. They are going 
to Disneyland or wherever they are going.
    I welcome you to this morning's hearing, and as I have 
said, it is entitled ``Tapping America's Unconventional Oil 
Resources and Job Creation and Affordable Domestic Energy: 
Technology and Policy Pathways.''
    Currently, gas prices average just under $4 per gallon 
nationwide, and are expected to remain at that level through 
the spring and the summer, maybe go higher. These prices are 
hurting consumers and the economy, and have sparked yet another 
national debate on energy policy, and to address high energy 
prices, Republicans have long supported an ``all of the above'' 
approach, which includes expanding supply and production of our 
vast domestic energy resources and development of market-based 
solutions to reduce demand and increase energy efficiency.
    In recent years, President Obama also adopted the 
Republican ``all of the above'' slogan to describe his own 
approach to energy policy. His Energy Secretary, Steven Chu, 
has changed his tune as well, taking back his remark that we 
need to ``somehow boost the price of gasoline to the levels in 
Europe'' only after standing by that statement for over three 
years and refusing to retract it before this Committee just in 
March and went across the Hill to the Senate and told them how 
he really felt.
    When it comes to oil and gas drilling, however, the 
Administration's actions simply don't match the President's 
rhetoric. Pro-drilling actions at the federal level have been 
few and far between, and while the President works hard to 
claim credit for recent domestic energy production increases, 
it is important to note that these come primarily from state 
and private lands beyond the reach of his Administration or he 
would probably preclude them too.
    Faced with a direct and urgent opportunity to address U.S. 
oil supply and infrastructure concerns, the President opposes 
drilling in ANWR, restricts development in the Gulf of Mexico 
and Outer Continental Shelf, rejects the Keystone XL pipeline, 
and blocks over a million acres of public land from oil shale 
development. But for these actions, America could be a seller 
of energy, not a buyer of energy. It is extremely difficult to 
consider this Administration's actions and conclude that the 
President's strategy can be objectively characterized as ``all 
of the above.''
    Despite this backdrop, technology moves forward as is 
evidenced by the ability of recent advancements in horizontal 
drilling to safely and economically unlock vast amounts of oil. 
For example, in 1995, North Dakota was estimated to hold 150 
million barrels of oil. Today, thanks to technology, it is 
estimated to hold 8 billion barrels. The economic benefits of 
this newly enabled production are very dramatic. North Dakota 
has the Nation's lowest unemployment rate, just 3.3 percent. 
Jobs are so plentiful in Williston, North Dakota, that the 
average salary is $90,000 per year and McDonald's is reportedly 
hiring new workers at $18 an hour with a signing bonus.
    A true all-of-the-above policy would be aggressively 
looking to replicate the North Dakota economic success story. 
But instead of unleashing technological innovation and energy 
production, the President continues to ask multiple agencies to 
regulate, delay, and raise the costs of American energy 
production. Just this week, EPA is expected to issue new rules 
restricting emissions from oil and gas operations.
    As the Committee, we feel responsible for overseeing the 
commercial application of energy technologies. We hope to learn 
more today about the status of and outlook for efficiently and 
economically increasing domestic oil production in the United 
States. We will explore challenges and opportunities resulting 
from new technologies such as horizontal drilling that are 
enabling expanded production, and we will discuss how continued 
technological development could position the United States as a 
top global energy producer for decades to come.
    [The prepared statement of Mr. Hall follows:]
               Prepared Statement of Chairman Ralph Hall
    Good morning, and welcome to this morning's hearing, entitled 
Tapping America's Unconventional Oil Resources for Job Creation and 
Affordable Domestic Energy: Technology and Policy Pathways.
    Currently, gas prices average just under $4.00 per gallon 
nationwide, and are expected to remain at that level through the spring 
and summer. These prices are hurting consumers and the economy, and 
have sparked yet another national debate on energy policy.
    To address high energy prices, Republicans have long supported an 
``all of the above'' approach which includes expanding supply and 
production of our vast domestic energy resources and development of 
market-based solutions to reduce demand and increase energy efficiency.
    In recent weeks, President Obama also adopted the Republican ``all 
of the above'' slogan to describe his own approach to energy policy. 
His Energy Secretary, Steven Chu, has changed his tune as well, taking 
back his remark that we need to ``somehow boost the price of gasoline 
to the levels in Europe''--only after standing by that statement for 
over three years and refusing to retract it before this Committee in 
March.
    When it comes to oil and gas drilling, however, the 
Administration's actions simply do not match the President's rhetoric. 
Pro-drilling actions at the Federal level have been few and far 
between, and while the President works hard to claim credit for recent 
domestic energy production increases, it is important to note these 
come primarily from State and private lands beyond the reach of his 
administration or he would probably preclude those too.
    Faced with a direct and urgent opportunity to address U.S. oil 
supply and infrastructure concerns, the President opposes drilling in 
ANWR, restricts development in the Gulf of Mexico and Outer Continental 
Shelf, rejects the Keystone XL pipeline, and blocks over a million 
acres of public land from oil shale development.
    It is extremely difficult to consider this Administration's actions 
and conclude the President's strategy can be objectively characterized 
as all-of-the above.
    Despite this backdrop, technology moves forward as is evidenced by 
the ability of recent advancements in horizontal drilling to safely and 
economically unlock vast amounts of oil. For example, in 1995, North 
Dakota was estimated to hold 150 million barrels of oil; today, thanks 
to technology, it is estimated to hold eight billion barrels.
    The economic benefits of this newly enabled production are 
dramatic. North Dakota has the nation's lowest unemployment rate--just 
3.3 percent. Jobs are so plentiful in Williston that the average salary 
is $90,000 per year and McDonald's is reportedly hiring new workers at 
$18 an hour with a signing bonus.
    A true all-of-the-above policy would be aggressively looking to 
replicate the North Dakota economic success story. But instead of 
unleashing technological innovation and energy production, the 
President continues to ask multiple agencies to regulate, delay, and 
raise the costs of American energy production. Just this week, EPA is 
expected to issue new rules restricting emissions from oil and gas 
operations.
    As the Committee responsible for overseeing the commercial 
application of energy technologies, we hope to learn more today about 
the status of and outlook for efficiently and economically increasing 
domestic oil production in the United States. We will explore 
challenges and opportunities resulting from new technologies such as 
horizontal drilling that are enabling expanded production, and we will 
discuss how continued technological development could position the U.S. 
as a top global energy producer for decades to come.

I now recognize Ranking Member Johnson for a five minute opening 
statement.

    Chairman Hall. I now recognize Ranking Member Mrs. Johnson 
for a five minute opening statement.
    Ms. Johnson. Thank you very much, Mr. Chairman, and welcome 
to all of the panelists.
    This is an interesting topic for this Committee to examine 
today, and certainly, the oil and gas sector is one area in 
which we see how advances in science and engineering can 
translate into large-scale economic value, and our agencies 
have played a historic role in unconventional fossil research 
and development. But, being an election year and with gas price 
on their way to new heights, I have little confidence that the 
discussion will stay within the bounds of the jurisdiction of 
this Committee today.
    Even as late as decades ago, we had little idea of the 
fossil resources that would be available today. But high energy 
prices and a healthy dose of geologic luck aligned with some 
critical research investments made by the Department of Energy 
over 30 years ago to bring new natural gas online, and with it, 
oil.
    The Department of Energy program wrapped up in the early 
1990s with a private company--when a private company took the 
research performed by DOE and ran with it to ignite the oil and 
gas boom we see today. I think my colleagues would agree that 
that is the model for applied research programs we all hope to 
see: federal investments shepherding transformational 
technologies to the marketplace, even when the path is not 
clear.
    But that also begs the question: Being the Science, Space, 
and Technology Committee, what are we really here to discuss 
today? After all, it does not get much more commercial, much 
more profitable, than oil and gas. At a time of severe fiscal 
restraint, is it appropriate to talk about expanding the 
federal role in technology development for the oil and gas 
industry? What about the fear of government picking winners and 
losers, crowding out private investment, or otherwise engaging 
in market-supported activities that my Republican colleagues 
are usually so quick to malign clean tech research programs for 
supposedly perpetrating? How many decades and how many billions 
of taxpayer dollars can we spend picking the same winners?
    If sustained high oil prices are not enough to drive 
further innovation in unconventional oil, is it really the job 
of the taxpayer to buy-down the oil industry's risk? Are 
billions of taxpayer dollars in subsidies not enough of a 
handout for the most profitable industry in the world?
    Maybe we are here to talk about the importance of oil to 
the economy. If so, don't worry; we get that.
    I am from Dallas, Texas, and Democrats drive cars too. Oil 
and gas will play an important role in our Nation's economy for 
decades.
    The real reason we are here today is that it is an election 
year, and this hearing is another installment in the losing 
campaign to pin the Nation's escalating gasoline prices on 
President Obama. To that, I add my voice to the bipartisan 
chorus of industry and policy experts that consider that as 
ridiculous as the notion that we can somehow drill our way into 
low gas prices and energy independence.
    The Republicans' multi-million dollar effort to create an 
alternate reality in which a President controls gas prices is 
backfiring. The American people are smarter than that, and are 
coming to appreciate the real cost of our addiction to oil. 
Even if the oil comes from our own backyard, and I have 
relatives who had gas pumps in our backyards--I lived to see 
that--you pay the global price. The only guaranteed relief from 
the pain at the pump is to visit the pump less often. We need 
more transportation options, with cars and trucks that are 
dramatically more efficient, more alternative fuels, and more 
vehicle electrification. The cheapest gas is the gas you don't 
have to buy.
    In closing, I would like to dispel the myth that President 
Obama and the Democrats are mounting a war on fossil fuels. We 
simply want future generations to have a choice. Where 
Democrats differ from our Republican counterparts is that we 
recognize that our Nation will be strengthened by diversifying 
our energy supply and protecting public health, and that is 
more important than short-term profits of industry. The oil 
will be there. It is up to the markets to make the price right, 
and the industry to make sure it can be produced sustainably.
    Thank you, and I yield back, and I look forward to the 
testimony.
    [The prepared statement of Ms. Johnson follows:]
       Prepared Statement of Ranking Member Eddie Bernice Johnson
Thank you, Mr. Chairman.

    This is an interesting topic for this Committee to examine today. 
Certainly, the oil and gas sector is one area in which we see how 
advances in science and engineering can translate into large-scale 
economic value, and our agencies have played a historic role in 
unconventional fossil R&D.
    But, being an election year and with gas price on their way to new 
highs, I have little confidence that the discussion will stay within 
the bounds of our jurisdiction here.
    Even as late as a decade ago, we had little idea of the fossil 
resources that would be available today. But, high energy prices and a 
healthy dose of geologic luck aligned with some critical research 
investments made by the Department of Energy over 30 years ago to bring 
new natural gas online, and with it, oil.
    That DOE program wrapped up in the early 90's when a private 
company took the research performed by DOE and ran with it to ignite 
the oil and gas boom we see today. I think my colleagues would agree 
that that is the model for applied research programs we all hope to 
see--federal investments shepherding transformational technologies to 
the marketplace, even when the path is not clear.
    But that also begs the question: Being the Science, Space, and 
Technology Committee, what are we really here to discuss today? After 
all, it does not get much more commercial, much more profitable, than 
oil and gas.
    At a time of severe fiscal restraint, is it appropriate to talk 
about expanding the federal role in technology development for the oil 
and gas industry? What about the fear of government ``picking winners 
and losers,'' ``crowding out private investment,'' or otherwise 
engaging in market-supported activities that my Republican colleagues 
are usually so quick to malign cleantech research programs for 
supposedly perpetrating? How many decades and how many billions of tax 
payer dollars can we spend picking the same winners?
    If sustained high oil prices are not enough to drive further 
innovation in unconventional oil, is it really the job of the taxpayer 
to buy-down the oil industry's risk? Are billions of taxpayer dollars 
in subsidies not enough of a handout for the most profitable industry 
in the world?
    Maybe we are here to talk about the importance of oil to the 
economy. If so, don't worry, we get that. I am from Dallas, and 
Democrats drive cars too. Oil and gas will play an important role in 
our nation's economy for decades.
    The real reason we are here is that it is an election year, and 
this hearing is another installment in the losing campaign to pin the 
nation's escalating gasoline prices on President Obama. To that, I add 
my voice to the bipartisan chorus of industry and policy experts that 
consider that as ridiculous as the notion that we can somehow drill our 
way into low gas prices and energy independence.
    The Republicans multi-million dollar effort to create an alternate 
reality in which a President controls gas prices is backfiring. The 
American people are smarter than that, and are coming to appreciate the 
real cost of our addiction to oil.
    Even if the oil comes from your own backyard, you pay the global 
price. The only guaranteed relief from the pain at the pump is to visit 
the pump less often. We need more transportation options, with cars and 
trucks that are dramatically more efficient, more alternative fuels, 
and more vehicle electrification. The cheapest gas is the gas you don't 
have to buy.
    In closing I would like to dispel the myth that President Obama and 
the Democrats are mounting a war on fossil fuels. We simply want future 
generations to have a choice. Where Democrats differ from our 
Republican counterparts is that we recognize that our nation will be 
strengthened by diversifying our energy supply and protecting public 
health, and that is more important than short-term profits of industry. 
The oil will be there. It is up to the markets to make the price right, 
and the industry to make sure it can be produced sustainably.

Thank you, and I yield back.

    Chairman Hall. I thank Ms. Johnson. We are neighbors and we 
are good friends, but we don't always agree. So the gentlelady 
yields back.
    If there are Members who wish to submit additional opening 
statements, your statements will be added to the record at this 
point, or when they do arrive here.
    Our first witness is Mr. Andrew Slaughter, Chair of the 
Resources and Supply Task Force of the National Petroleum 
Council's report entitled ``Prudent Development: Realizing the 
Potential of North America's Abundant Natural Gas and Oil 
Resources.'' He is currently the Business Environmental Manager 
for Shell's upstream America's exploration and production 
business. In this capacity, he is responsible for strategic 
counseling and analysis relative to North American crude oil 
and natural gas markets covering short- and long-term supply, 
demand, price and other regional market issues in support of 
investment, planning and business strategy.
    Our second witness is Karen Harbert, President and Chief 
Executive Officer of the Institute for 21st Century Energy. 
Mrs. Harbert is the former Assistant Secretary for Policy and 
International Affairs at the U.S. Department of Energy and 
served as the Deputy Assistant Administrator for Latin America 
at the Caribbean and the U.S. Agency on International 
development. Mrs. Harbert received her degree in international 
policy studies and political science from Rice University in 
Houston.
    Our third witness today will be Dr. Michelle Michot Foss, 
the Chief Energy Economist of the Center for Energy Economics 
at the Bureau of Economic Geology at the University of Texas-
Austin. Hook 'em, Horns. Dr. Foss has over 30 years of 
experience in energy and environmental. I couldn't help but put 
that in there. Dr. Foss's expertise is in applied energy 
economics and business development, enterprise strategy and 
commercial operations and business-government relations across 
the energy value chain. She received her Ph.D. in political 
science from the University of Houston, a master of science 
from the Colorado School of Mines and her bachelor of science 
from the University of Louisiana-Lafayette.
    And then our next witness will be James Brown, President 
and Chief Operating Officer of Whiting Petroleum Corporation. 
Mr. Brown has served in his current capacity since January 
2011. He previously served as Senior Vice President of 
Operations. Mr. Brown began his career with Shell Oil Company 
in Houston, Texas, in 1975 and he has held engineering and 
supervisory positions at American Petroleum, BP and Whiting 
Petroleum Corporation. Mr. Brown received his bachelor's degree 
in civil engineering from the University of Wyoming and a 
master's of business administration from the University of 
Denver.
    Our final witness, or our last witness, will be Daniel 
Weiss, Senior Fellow and Director of Climate Strategy, center 
for American Progress. Before coming to American Progress, he 
spent 25 years working with environmental advocacy 
organizations and political campaigns. Mr. Weiss is an expert 
in energy and environmental policy, legislative strategy and 
tactics, and advocacy communications. Mr. Weiss received his 
master's of public policy and a bachelor of arts degree from 
the University of Michigan.
    As our witnesses should know, spoken testimony is limited 
to five minutes, but you won't be held absolutely to that. You 
have come a long way and you have prepared many years, and you 
are kind enough to give us your time today. So we won't just 
hold you to that, but do your best to stay as close to it as 
you can. After which the Members of the Committee will have 
five minutes each to ask questions.
    I now recognize our first witness, Mr. Slaughter, for your 
five minutes more or less.

               STATEMENT OF MR. ANDREW SLAUGHTER,

        BUSINESS ENVIRONMENT ADVISOR, SHELL EXPLORATION

               AND PRODUCTION COMPANY, AND CHAIR,

               RESOURCES AND SUPPLY TASK FORCE OF

                 THE NATIONAL PETROLEUM COUNCIL

    Mr. Slaughter. Good morning, and thank you, Mr. Chairman, 
Ranking Member, distinguished Committee. Thanks for the 
opportunity to be here and talk about unconventional oil 
resources in America and their future development.
    As Mr. Chairman said, my name is Andrew Slaughter. I work 
on supply and market fundamentals for Shell. But today I am 
here in my capacity as Chairman of the Resources and Supply 
Task Group of the ``Prudent Development'' report, which was 
recently published by the National Petroleum Council, an 
advisory body to the Secretary of Energy.
    This report was a comprehensive assessment of North 
American oil and natural gas with a special focus on the 
environmental issues associated with development and of course 
the future productive capacity of that resource. The study was 
commissioned in September 2009. The final report was delivered 
in September 2011. And you can access and look at the report 
and all the backup materials on the National Petroleum Council 
website.
    I did submit a written statement for the record with 
further background on the NPC, the Prudent Development study 
and its parameters. But today I will focus my shorter comments 
on the study's conclusions and recommendations, mainly 
addressing the size of unconventional resources and factors 
that could increase or decrease their productive potential.
    Let me first clarify what we mean by unconventional. 
Unconventional resources are those oil and natural gas 
resources produced by other means than by producing from a 
defined reservoir through a vertical well bore using natural or 
induced pressure. So basically it is using some different 
technology or different production techniques to produce the 
resource. These include heavy oil, bitumen or kerogen produced 
through in situ thermal recovery. It includes tight oil 
produced from source rock using horizontal drilling and 
multistage hydraulic fracturing. And on the gas side, it 
includes such resources as shale gas, tight gas and coal bed 
methane.
    So with regard to the scope of these resources, we analyzed 
virtually every non-proprietary resource assessment conducted 
by government agencies, the private sector and many 
organizations from the United States and Canada, and the 
conclusion was, the ultimate potential of the North American 
unconventional oil resource is huge. It is composed of several 
distinct resources, each at a different stage of development. 
The unconventional oil in place in the United States and Canada 
was estimated to be about 3-1/2 trillion barrels of oil with 
technical recoverable resources today of about 180 billion 
barrels. By comparison, the total conventional oil resource in 
the United States is about 185 billion barrels. In terms of 
natural gas, we have about 2,000 to 5,000 TCF of technically 
recoverable resource. About half to two-third could be 
considered unconventional.
    So this leads to a potential for production. It is 
important to say that not all the oil in place will be 
produced. We concluded that about 1.1 trillion barrels could be 
ultimately recoverable. And of that, approximately just under 
180 billion barrels are recoverable using technology in place 
today. With new technology and technology development, an 
additional 1 trillion barrels is probably ultimately 
recoverable with technology and other advances over the next 
years and decades.
    So in 2010, the United States and Canada produced 10 
million barrels a day together. Approximately 2 million barrels 
a day came from unconventional plays, mainly the oil sands, and 
3 million barrels a day came from natural gas liquids, much of 
which comes with unconventional gas production.
    So there are potential development pathways for these 
resources that depend on choices that are made from policy and 
the investment and technology. In a limited production case, 
total 2035 production was estimated at 10 million barrels a 
day, but with a growing contribution from unconventional oil up 
to 3-1/2 million barrels a day. But in a high potential case, 
if we get supportive policy, access and fiscal support, total 
North American production can grow to over 20 million barrels a 
day by 2035 with further potential thereafter, and 
unconventional oil comes to about 10 million barrels a day in 
that total. The oil shale resource is not included in those 
totals but could be of huge development potential thereafter.
    For each of these sources of unconventional supply, the 
path to production is unique. Oil and gas technology could lead 
to surprisingly rapid production growth for tight oil but other 
unconventional resources will be developed over a much longer 
time period.
    I will finish up here by just saying there are some three 
principal recommendation areas to support prudent development 
of these resources. First, establish an independent forum to 
research the facts and potential of all the unconventional 
hydrocarbon space to inform policy. Second, put policies in 
place to support innovation and production growth, particularly 
stable leasing access and fiscal regimes and technology support 
regimes. And finally, work very closely with Canada, who have a 
very successful track history in developing unconventional oil 
resources, particularly in the Alberta oil sands.
    And with that, I will conclude my remarks. My apologies for 
running over time.
    [The prepared statement of Mr. Slaughter follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Hall. We thank you for your own time. Thank you, 
sir.
    Now I recognize Mrs. Harbert.

                STATEMENT OF MS. KAREN HARBERT,

             PRESIDENT AND CHIEF EXECUTIVE OFFICER,

               INSTITUTE FOR 21ST CENTURY ENERGY,

                    U.S. CHAMBER OF COMMERCE

    Ms. Harbert. Thank you, Chairman Hall and Ranking Member 
Johnson, Members of the Committee. I represent the Institute 
for 21st Century Energy, which is an affiliate of the U.S. 
Chamber of Commerce.
    I really appreciate the opportunity to discuss an issue 
area that gets very little coverage in the public policy 
debate. That is the potential benefits and the existing 
obstacles to greater development of our vast unconventional oil 
and natural gas resources. Rarely does public debate include 
the fact that America has hundreds of years of supply stored in 
unconventional formations in the United States. In fact, 
Colorado, Wyoming and Utah alone contain more oil from oil 
shale than all of the conventional oil contained in the Middle 
East. These resources are so vast that when made commercial, 
they have the real potential to completely alter the global oil 
market and secure America's energy future. Yet today we have a 
policy in this government to ignore the value of these 
resources, sacrifice the revenue, the jobs and security 
dividends that we could realize from developing them.
    After the Arab oil embargo, the price of oil increased 
tenfold by 1980, and as a response, the United States began a 
very big development program for domestic oil including oil 
sands and oil shale as a hedge against future supply 
disruptions. Canada took a similar tack. However, in the mid-
1980s we saw the price of oil decline precipitously and the 
United States stopped that program. Canada, notably, did not, 
and Canada saw its oil production double between 1982 and 2008, 
and the United States saw its production decrease by 43 
percent.
    The International Energy Agency says that global energy 
demand is going to go up by 50 percent by 2035, and in that 
time frame, fossil fuels will still dominate 80 percent of our 
energy landscape. Countries around the world are increasing 
their production and looking to acquire assets abroad but the 
United States is on a different course. Under this 
Administration, more than 86 percent of federal offshore lands 
and 83 percent of federal interior lands are off limits for 
exploration. The Interior's Bureau of Land Management reduced 
the acreage for oil shale activities in Colorado, Utah and 
Wyoming by over three-quarters and it reduced available acreage 
in eastern Utah as it relates to oil sands by nearly 80 
percent.
    Recent claims that U.S. oil production is up are accurate 
but the reason is much more telling. Production of oil from 
federal lands is down 11 percent comparing 2011 to 2010 but is 
increased by 14 percent on private and state lands. And of 
course, we also have to remember, we are paying more for what 
we import. In fact, we are accounting--our imports account for 
60 percent of our total trade deficit, and fuel prices are 
dominating the political and legislative debate for good 
reason. Every 1-cent increase in the price of gasoline costs 
Americans roughly $1 billion a year. The average American 
household spent about 8.5 percent of its household income on 
gasoline, which is the highest since 1981. And let us not 
forget that every $10 increase in oil prices can knock a few 
tenths of a percent off any increase in GDP.
    Yes, it is true, there are a few mechanisms that the 
Federal Government has its disposal to immediately lower fuel 
prices but it is not accurate to say that the government can do 
nothing to affect prices in the future. A signal to the global 
energy market that the U.S. is committed and serious about 
accelerating the development of its vast conventional and 
unconventional oil resources would not go unnoticed. 
Introduction of new supply from the North Slope of Alaska or 
the North Sea in the early 1980s helped cause the global price 
to collapse in 1986. And new commercial production in Alberta 
also impacted global prices. So similarly, our unconventional 
resources have the potential to be the game changer our U.S. 
economy needs and upon which our future competitiveness can 
depend.
    According to the U.S. government, the country has an 
estimated 2.7 trillion barrels of oil in place of oil shale and 
oil sands but 80 percent of it is located on federal lands. 
These resources would supply ourselves for at least 380 years. 
These resources are twice the size of the entire world's proven 
conventional oil reserves of 1.3 trillion barrels.
    A paper by Anton Dammer, who is the U.S. government's 
former head of oil shale reserves, said if we were to develop 
our oil shale and oil sands resources as Congress instructed in 
2005 in the Energy Policy Act, over the next 25 years we could 
realize a gain in oil production of 1.1 billion barrels. We 
could increase economic growth by $153 billion, government 
revenue by $31 billion, and not send $129 billion overseas to 
finance our demand for energy. Congress was clear in 2005 when 
it created an interagency task force to look at this and make 
recommendations, and the Administration complied with that in 
2008 and made those recommendations. This Administration is now 
walking those backwards. We are taking lands off the table. We 
are picking energy favorites and we are trumping the Nation's 
strategic interests. Lack of access has prevented oil shale 
development technologies from aggressing as far as the oil 
sands in Canada. But we need access to federal lands, not just 
private lands.
    As such, the policy pathway to realizing even a portion of 
this huge asset is to allow access to our unconventional 
resources which are in control of the Federal Government. This 
Administration has ignored Congress's mandate, and unless this 
approach changes, our largest strategic asset will remain 
untapped until this or a subsequent Administration decides to 
allow access to these strategic assets and to secure our energy 
future. America's business depends on that decision. Thank you.
    [The prepared statement of Ms. Harbert follows:]


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    Chairman Hall. Thank you, and well said, Ms. Harbert. Thank 
you.
    I now recognize Dr. Michot Foss for five minutes, and I 
must warn you that when I said hook 'em Horns, the lady in red 
here sent me a note, also put in the record, gig 'em, Aggies, 
so they are equal, and since I have a granddaughter down at 
A&M, I am forced to say that. We recognize you now for five 
minutes.

             STATEMENT OF DR. MICHELLE MICHOT FOSS,

                    CHIEF ENERGY ECONOMIST,

                  CENTER FOR ENERGY ECONOMICS,

                  BUREAU OF ECONOMIC GEOLOGY,

                UNIVERSITY OF TEXAS-AUSTINBUREAU

                      OF ECONOMIC GEOLOGY,

                   UNIVERSITY OF TEXAS-AUSTIN

    Dr. Foss. Thank you, Mr. Chairman, Ranking Member Johnson 
and Members of the Committee. Thank you so much for inviting me 
to join you today, and Chairman Hall, it is nice to see you 
again and see you looking well. And let me say I am agnostic. I 
have degrees from lots of different universities and support 
them all.
    I will add some comments to the record to supplement what 
my colleagues have said already and to make a few key points 
that I think are important for us to consider as you debate all 
of these issues.
    First of all, in my view, our major concerns should be 
about replenishment and deliverability. I include some 
information in my testimony to demonstrate long-term efficiency 
of the industry, the U.S. industry. It is remarkable, really, 
how well the industry has performed over time to sustain the 
ability to deliver hydrocarbons when we need them and where we 
need them. That is really the key thing is keeping that cycle 
going. It is a long process to develop ideas, to develop 
prospectively, to make the investments, to yield the supply, to 
serve the market, and it can't be interrupted. Any interruption 
is what creates distortions and disruptions that impact 
customers.
    The essential industry capability to maintain a long-term 
reasonably steady balance between reserves and production is 
one of the most important ingredients to U.S. energy security 
and long-term prosperity. We really have to keep that in mind.
    I want to make a point. A robust resource base, we have 
known for a longtime that we have a robust resource base. This 
alone does not fully protect producers and consumers from short 
swings in price but it is key to restoring market balances at 
times when we have very fast economic growth and we have 
constraints in the system.
    Now, the Committee asked me to take on four very large 
questions, and I have attempted to do my best to address those. 
The first one had to do with primary economic factors that 
shape energy markets and prices with a focus on gasoline. First 
and foremost, global oil markets are a complex daily dance, and 
I put in a wonderful and very complex and detailed chart that 
we came up for the U.S. Department of Energy's Energy 
Information Administration to try to illustrate all of the 
interactions that occur between buyers and sellers, producers 
and customers, intermediaries, countries, governments, 
independent and international companies, traders, brokers, 
shippers, transporters and so on to try to deliver what we 
really demand, which are the products from crude oil, not the 
raw material itself. Price level is most immediately impacted 
by cost of incremental supply to serve incremental demand at 
any one time, and we look at lot at surplus capacity worldwide. 
We measure it. We try to monitor it as best we can. One of the 
most important things that U.S. government agencies can do is 
keep the transparency between us and producing countries open 
and vital and vibrant so that we can get the data that we need 
to understand where at any one point in time deliverability 
worldwide exists, and I showed an illustration of that using 
the OPEC data and some points that you can ponder. Whenever 
world demand grows as quickly as it has during the 2000s when 
we have supply capacity constraints, you can expect an increase 
in price, and that is what happened.
    Variation also in price comes from incremental demand in 
the United States, regionally, interregionally and 
intraregionally, differences been domestic and international 
crude prices, which is very strong right now, the cost of 
inputs like steel and raw materials that are essential for 
drilling, production and processing, and let me say also that 
when it comes to the cost of inputs, these are critical not 
just for oil and gas operations but all energy technologies. So 
we have to think about preserving our ability to supply inputs 
not just oil and gas production but also for alternative energy 
technologies, renewable technologies and everything else that 
use the same raw material inputs and require a hefty industrial 
base to be able to supply those.
    With regard to the potential impacts of supply and 
production on energy prices in the national economy, we all 
know that there are huge benefits that are delivered by the oil 
and gas industries every day in terms of jobs and related 
benefits for households and local economies and assortment of 
other things, but we have to keep in mind that these fuels and 
materials are important for the overall national economy and 
really focus on that. What do these products and the supply of 
these products on a competitive basis do for the overall U.S. 
economy, not just local job creation in any one place where the 
industry is active?
    Hydrocarbons provide a greater measure of energy density 
than other forms of energy. This is a key point that way too 
often gets missed in the debate about what we should do and how 
we should do it. This means that on a unit energy basis, 
hydrocarbons actually yield environmental benefits over other 
energy technologies that have lower energy densities and are 
therefore harder and more expensive to build up, to scale up 
and to manage when it comes to intermittent use.
    Natural gas and gas-fired electricity have provided relief 
from more expensive oil and gas products so we have savings 
today. We have been having savings to consumers for the past 
year or so because of lower natural gas prices and 
commensurately lower electricity prices.
    Finally, on the point of economic benefits, I want to make 
an addition to Andrew's statements on the NPC study. I was on 
the industrial subcommittee for that report. There was a lot of 
discussion about what supports manufacturing in the United 
States, and some very strong views about the role of not just 
energy but all aspects of macroeconomic and monetary policy in 
the United States. Industrial growth is more strongly linked to 
gross domestic product than any other factor. Energy is 
important but it is a relatively small part of the cost of the 
manufacturing base in the United States. So many things affect 
the health of the manufacturing sector. So much has to be done 
if we want to actually build that sector back up. It goes well 
beyond energy. But in terms of understanding what we can do 
with our energy supplies, I included an example from the 
trucking industry. This is new information that was presented 
to me just recently on the status of the trucking industry 
itself. We are looking at using incremental natural gas supply 
as a clean fuel for trucking operations in a liquefied form in 
particular but trucking companies are having a hard time 
recruiting drivers. They have to deal also with a great deal of 
federal and state regulatory compliance. They face high cost 
structures, poor infrastructure and all of the other things 
that affect the ability to move goods when and where we need 
them in the United States, and so I think that is a very good 
example to look to for the full picture of things that affect 
our energy space.
    When it comes to regulatory and supply chain hurdles, we 
have a great deal of investment that needs to take place in the 
midstream businesses, pipelines, gas processing, raw material 
processing for the crude oil side. We have existing fairways 
that have been very efficient in moving product, mainly to the 
Gulf Coast. Those fairways need to be expanded and we actually 
need to do some replumbing of our midstream network in the 
United States to be able to move oil and natural gas and 
natural gas liquids to different locations in the mid-
continent, the Northeast and other places where new capacity is 
needed.
    Unconventional plays are helping to insulate us against 
Gulf of Mexico issues but I want to put into the record that we 
have to sustain production from the Gulf of Mexico. There is no 
choice. That is just too vital a province for the United 
States.
    Finally, on the role of technology, I appreciate all of the 
comments about the role of federally supported technology and 
the importance of all of that. I included an example for 
everyone in order to understand the lead times. I think it is 
worth thinking about the 30 years that it took before 
horizontal drilling, just horizontal drilling by itself, 
finally topped 50 percent of the overall market for drilling 
services in the United States. I have intermittent experience 
with that. I worked for Matt Simmons at Simmons and Company 
International when the first horizontal drilling transaction 
was done in the late 1980s. It is a long haul to get this stuff 
working and to have it function the way that it needs to so 
that the industry can benefit from all of those examples, all 
of those technologies.
    To close, when it comes to regulatory and policy 
bottlenecks and the things you all can do, the Ranking Member 
mentioned taxes. Yes, the oil and gas industry is profitable. 
It is also one of the largest, if not the largest, taxpaying 
industries in the country at all jurisdictions, federal, state 
and local. Last time I checked, Apple was actually more 
valuable than any one I believe of the energy companies, at 
least on a cash basis, pays relatively little in taxes, I might 
add, along with General Electric and a few others. So I think 
we have to put some perspective on all of that. These companies 
pay a great deal into the federal treasury, state and local 
treasuries, into households and taxpayers' pocketbooks, and I 
think it is important to recognize that and understand that 
benefit that gets created. Thank you very much.
    [The prepared statement of Dr.. Foss follows:]


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    Chairman Hall. Thank you very much. I must stay, you really 
answered all the questions, but I need a little more time with 
you on your chart sometime. Thank you, Dr. Foss.
    I recognize Mr. James Brown now for your five minutes, or 
more.

                 STATEMENT OF MR. JAMES BROWN,

             PRESIDENT AND CHIEF OPERATING OFFICER,

                 WHITING PETROLEUM CORPORATION

    Mr. Brown. Mr. Chairman, Ranking Member and Committee 
Members, thank you. It is a great honor and pleasure for me to 
be here this morning.
    I am going to step out on a limb and just think that maybe 
many in the room haven't heard of Whiting Petroleum Company, so 
Whiting is a Denver-based E&P company. The company was founded 
in 1980. We have kind of endured the ups and downs of the E&P 
business during that time. Whiting became a publicly traded 
company in 2003, and through acquisitions doubled the size of 
the firm in 2004 and again in 2005. Those acquisitions provided 
three assets that today comprise approximately 70 percent of 
our 345 million barrels of oil equivalent proved reserves that 
we have in the company. Those assets are the Postle Field 
located in Texas County, Oklahoma, out in the panhandle near 
Guymon, the North Ward Estes Field located in the Permian Basin 
out near the big town of Monahans, and also several assets up 
in North Dakota that provided us the springboard to become the 
number three oil producer in that state. What has enabled 
Whiting to grow production from 33,000 BOE per day in 2005 to 
over 76,000 BOE per day in 2012 is new technology. Today in the 
Bakken, and I am going to say Bakken, and what I am referring 
to is the total Bakken hydrocarbon system which includes the 
Upper Bakken shale, all the Members of the Middle Bakken, the 
Lower Bakken shale and the Three Forks, and for those that are 
interested I brought samples of all those for you to look at 
today if you have any interest in doing that.
    Whiting drills down 10,000 feet vertically, about 2 miles, 
turns and drills another 2 miles horizontally. We run 4-1/2-
inch pipe in the well with up to 40 sliding sleeves and swell 
packers. The drilling rig is moved off. Production facilities 
are constructed. Frack ranks are moved in, filled with water. A 
pressure pumping company moves in and the wells are fracture 
stimulated with sand in 30 to 40 stages, depending on how many 
sliding sleeves we run. This entire fracture stimulation 
treatment is completed in around 24 hours. The pressure pumping 
company moves off location and the well is placed on 
production. Our goal is zero gas emissions from the well during 
flowback.
    The gas produced with the Bakken oil must be processed 
before it can be sold. Whiting has constructed two gas plants 
in North Dakota with a combined processing capability of 120 
million cubic feet per day. We process as much gas from other 
operators' wells as we do from Whiting wells. We have built two 
oil-gathering systems and we transport as much produced oil as 
we can from the basin via pipeline.
    I am going to switch gears and move over to our two 
enhanced oil recovery projects. In Texas down in North Ward 
Estes, we are utilizing CO2 to recover an additional 
15 to 20 percent of the oil in that mature reservoir. At North 
Ward, we are injecting 325 million cubic feet of CO2 
a day, managing 790 patterns containing over 2,000 wells. The 
CO2 that comes back out of the producing wells is 
recycled, separated using a membrane technology, and 
reinjected. Approximately one-half of the CO2 that 
we inject stays in the reservoir and will be permanently 
sequestered once that process ends.
    Whiting recently executed a contract with the Texas Clean 
Energy Project to use CO2 from their coal 
gasification plant in our North Ward Estes field.
    Much of what I just discussed would not have been possible 
even five years ago. Unconventional resource plays and 
technology have impacted every facet of our business from 
consummating the lease to drilling the well to reporting 
production. We routinely drill a 20,000-foot horizontal well in 
15 to 20 days. We use technology to send information being 
recorded at the drill bit to the surface in real time that our 
engineers and geologists in Denver can access at their desktop.
    Sliding sleeve technology continues to improve. Whiting was 
the first company to pump a 24- and 40-stage sliding sleeve 
frack job.
    We have constructed a rock lab in Denver where we have two 
scanning electron microscopes to help us understand how oil is 
produced from these unconventional reservoirs. Our goal is to 
transfer this knowledge from the Williston Basin to other 
basins across the lower 48. We are actively working in the DJ 
Basin in Colorado and the Delaware Basin in West Texas where 
recent results have been very encouraging. We believe there is 
potential to utilize what we have learned in several other 
prospects.
    How does this translate into jobs? When Whiting went public 
in 2003, we had 110 employees. As of April 1, 2012, Whiting 
employed 746 individuals. We currently have 271 open positions 
in the company. Currently, we have 19 drilling rigs in 
operation in North Dakota. If you take the number of people 
directly employed by the drilling company, add up all the 
individuals that provide service and the vendors required to 
drill a well, that amounts to 600 indirect jobs that we have 
created in North Dakota. These people need homes, food, 
schools, and other services. The economic impact of what we are 
doing is far reaching.
    As we have already heard this morning, the price of 
gasoline at the pump is getting a lot of attention. It seems 
that all oil companies get lumped together and get blamed for 
this oil price. I just want to say in this regard, Whiting is 
similar to the local farmer. We are price takers. Whiting tries 
to protect our cash flow utilizing hedges and commodity markets 
but we have little influence over the overall oil price. To 
impose legislation that would make it more expensive to produce 
oil makes no sense.
    Along those lines, the Keystone XL pipeline was scheduled 
to transport around 200,000 barrels of oil per day out of North 
Dakota to markets. This would be very beneficial and help 
alleviate the price differentials that we experience in North 
Dakota. It would improve the net backs and increase royalties 
paid to the Federal Government, the State of North Dakota and 
the individual mineral interest owners.
    I thank you for the opportunity to present to you today.
    [The prepared statement of Mr. Brown follows:]


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    Chairman Hall. I thank you. Mr. Brown.
    Now the Chair recognizes our last witness, Dr. Daniel 
Weiss, for five minutes, and thank you, sir.

                 STATEMENT OF MR. DANIEL WEISS

        SENIOR FELLOW AND DIRECTOR OF CLIMATE STRATEGY,

            CENTER FOR AMERICAN PROGRESS ACTION FUND

    Mr. Weiss. Thank you, Mr. Chairman. Chairman Hall, Ranking 
Member Johnson and Members of the Committee, thank you very 
much for the opportunity to testify today. I am Daniel J. 
Weiss, a Senior Fellow at the Center for American Progress 
Action.
    High oil prices are responsible for high gasoline prices. 
The Energy Information Administration estimates that 72 percent 
of the cost of a gallon of gas was due to the cost of crude 
oil. As Mr. Brown just noted, oil prices are set on the global 
market, which is controlled by the Organization of Petroleum 
Exporting Countries, a cartel. The Federal Trade Commission 
found that ``OPEC attempts to maintain the price of oil by 
limiting output and assigning quotas.''
    Canada, which produces most of its own oil, also has high 
gasoline prices right now. On March 30th, the Edmonton Journal 
reported that ``Canadians are paying some of the highest prices 
they ever have for gasoline.''
    The President has little control over oil prices, as 
recently noted by the Wall Street Journal, the Cato Institute 
and a survey of economists by the University of Chicago. 
Gasoline prices are up 84 cents per gallon since Representative 
Boehner became Speaker in January 2011, yet is he to blame for 
the recent high gasoline prices?
    The increase in shale oil production in places such as the 
Bakken shale in North Dakota and Eagle Ford in Texas is due to 
advances in horizontal drilling and hydraulic fracking 
developed with the assistance of federal research, as Mr. 
Slaughter noted.
    As you can see on this slide [oil production v. gas 
prices], more oil production cannot lower gasoline prices. The 
Associated Press study of oil production and gasoline price 
data from three decades determined that there was ``no 
statistical correlation between how much oil comes out of U.S. 
wells and the price at the pump.'' The red line is gasoline 
prices. The blue line is U.S. oil production. And as you can 
see, even as oil production has increased on the right-hand 
side of the slide, gasoline prices have increased even more 
dramatically.
    Fortunately, we are using less oil due to modern vehicle 
fuel economy standards adopted by President Obama in 2009. By 
2025, the average car will go twice as far on a gallon of gas 
compared to 2010. This will save 2 million barrels of oil per 
day and save $8,000 in gasoline costs compared to a 2010 
vehicle.
    We are also producing more of our own oil. The Energy 
Information Administration determined that in 2011, the United 
States generated 3.7 quadrillion BTUs of energy from crude oil 
produced from federal lands and waters compared to 3.3 
quadrillion BTUs in 2008, a 12 percent increase in production 
from federal lands and waters compared to 2008.
    Continued dependence on a product where we consume 20 
percent of the annual supply but have only two percent of its 
resources will leave us vulnerable to oil and gasoline price 
spikes. As Ms. Johnson noted in her opening statement, the most 
effective way to reduce pain at the pump is to reduce our oil 
use so we pump less. We must invest in alternatives to oil. 
Plug-in hybrids and all-electric vehicles consume little or no 
gasoline. During their first year, the combined sales of the 
plug-in hybrid Chevrolet Volt and all-electric Nissan Leaf were 
twice as large as the now-familiar Toyota Prius and Honda 
Insight hybrids during their first year. In March, Chevrolet 
sold more Volts than in any previous month.
    Investments in buses, subways and trains can also reduce 
our dependence on oil and create jobs. Public transportation 
saves 4.2 billion gallons of gasoline annually. Every $1 
billion invested in public transportation supports 36,000 jobs.
    The House-passed fiscal year 2013 budget resolution 
authored by Representative Paul Ryan would worsen pain at the 
pump by slashing billions of dollars of investments in transit, 
alternative fuels and clean energy technologies that will 
reduce oil consumption. Instead, the budget would retain $40 
billion in tax breaks for big oil companies.
    We must also reduce Wall Street speculators' ability to 
drive up prices. Many experts believe that these speculators 
are driving up oil prices to make a quick profit preying on the 
fears of a supply disruption. The reports of President Obama's 
new plan to be announced today to fight Wall Street speculators 
would reduce their ability to drive up prices and would put 
more cops on the beat policing oil trades.
    One so-called solution won't reduce gasoline prices. The 
State Department determined that, and I quote--this is from 
their analysis of the Keystone pipeline--``Building Keystone XL 
would not of itself have any significant impact on U.S. total 
crude runs, total crude and product import levels, or costs.''
    Mr. Slaughter in his work with the National Petroleum 
Council has put together essential recommendations that would 
help protect public health as we develop our shale oil and 
natural gas resources. This means avoiding, and I quote from 
the NPC study ``air and water pollution that directly affects 
public health as well as these and other impacts affecting 
habitat, fisheries and the global climate.''
    Lastly, I would also note that the NPC also strongly 
advocates ``a mechanism for putting a price on greenhouse gas 
emissions that is economy-wide.''
    Thanks very much for the opportunity to testify and I would 
be happy to answer any questions.
    [The prepared statement of Mr. Weiss follows:]


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    Chairman Hall. Dr. Weiss, thank you very much, and I thank 
all the witness. This Committee was dubbed the Committee of the 
Day, and I see why. All five of you have certainly given us a 
good basis for our questions, and I thank you for your 
testimony. I will remind our Members that the Committee rules 
limit questioning to five minutes. We will try to stay close to 
that. The Chair at this time will open the round of questions, 
and I recognize myself for five minutes.
    I will start off. Mr. Slaughter, your testimony described 
the National Petroleum Council's ``Prudent Development'' report 
in detail. The report's findings on the amount of economically 
recoverable oil and gas resources are very striking. Could you 
describe just how much oil and gas we now think is recoverable 
and what that means in the context of global energy resources 
over the coming decades? How has the development of new energy 
exploration and production technology increased the estimated 
resource base? Those are three questions in one but you can 
handle them any way you want to.
    Mr. Slaughter. Sure, and just a clarification to start off 
with, resource is a wider term than the reserves estimate, 
which Mr. Weiss just mentioned. Reserves is a very narrow 
definition based on current technology and current economics.
    When we are looking at future development over several 
decades, we look at technically recoverable resources and 
ultimately recoverable resources. Today's technology, we define 
the total unconventional resources at about 180 billion 
barrels, which is additive to the conventional resources of 
approximately 185 billion barrels. But as we move into 
technology development in some of these longer-term plays, we 
could be recovering over 1 trillion barrels of oil in several 
decades if you include resources like the oil shale of 
Colorado, which can be developed in several decades' time if we 
keep working on the technologies to develop that. So these are 
huge amounts of oil.
    Chairman Hall. Yes, and I thank you.
    Dr. Foss, given the potential amount of domestic energy we 
now realize that we can access, it is really appropriate to 
suggest that we only have two percent, as the President says, 
of the world's oil resources, as President Obama suggests? How 
correct is that?
    Dr. Foss. Well, again, like Andrew, the use of the word 
``resource'' and other words are often confused. I have a chart 
that I submitted in testimony, and it is a big of an 
exaggeration, admittedly, because I did the same thing but to 
make a point. In our country, because we have transparent 
government data, we have transparent industry data and lots of 
processes for looking at that information, we feel comfortable 
that we can look at our resource potential the way we do, and 
it puts us at the top of the world in terms of overall resource 
wealth. Now, what you do to deliver the ultimately recoverable 
resource into the market at any one time, that is a different 
question. We have much more than two percent of the world's 
known resources. In fact, we have the majority of the world's 
known resources if every country went out and did the same 
things that we did to evaluate the resource base and maybe that 
percentage would change. But for the time being, we are 
extremely large.
    Chairman Hall. I thank you for that. I have a minute and 42 
seconds left. Let me ask one more question.
    President Obama's position is that because the price of oil 
is set on a global market, there is little or nothing that the 
United States policymakers can do to impact gas prices. Ms. 
Harbert and Dr. Foss, you both touched on this in your 
testimony. If the President increased oil production or even 
signaled that he intended to increase oil production in such 
areas as Alaska where little ANWR is just 19 million acres, or 
the Outer Continental Shelf, would prices be impacted?
    Ms. Harbert. When you look at the statistics from the 
International Energy Agency, the global demand for energy is 
going to go up by 50 percent. If we do not increase supply, we 
will be certain of one thing: prices will go up. So what are we 
doing here at home to inoculate ourselves against that 
inevitable price increase if we don't increase supply? We have 
an opportunity to be part of our own solution which we are 
depriving ourselves of. So if you look at the longer-term 
market fundamentals that are basically supply and demand, 
without more supply, and we have a lot of it, prices will go 
up.
    Chairman Hall. Dr. Foss?
    Dr. Foss. Yes. Thank you. Studies of the type that have 
been mentioned today looking at domestic gas production and 
gasoline prices are inevitably flawed because they do not take 
into account the impact of not having domestic production on 
gasoline prices, which----
    Chairman Hall. I just have about 10 more seconds, so go 
ahead.
    Dr. Foss. And I also think that one thing that we haven't 
put on the table today is the cost of other things that impact 
gasoline prices to customers: the ethanol mandate, taxes on 
gasoline and other things that actually make gasoline purchases 
expense for households.
    Chairman Hall. I thank you, and I now recognize Mrs. 
Johnson for her five minutes.
    Ms. Johnson. Thank you very much. I noticed that some of 
the testimony indicates support for a continued role for the 
federal research into oil and gas drilling-related 
technologies, and I realize that in many of your responses you 
have already indicated that it would take decades to produce 
from these sources that you are speaking of. In what way do you 
think that the Federal Government should continue to invest in 
research right now during this very scarce taxpayer dollars for 
research?
    Mr. Slaughter. If I can have a go at that, what we are 
looking at here is some parts of the resource base which are 
pre-commercial by quite a long time and so the private sector 
by itself does not put a lot of investment focus on pre-
commercial resources, for example, the oil shale or the oil 
sands or methane hydrates in natural gas. So in these 
circumstances, to keep the necessary research and development 
effort going, we in the NPC study recommended partnerships of 
industry, academia and government to keep the momentum going on 
those essential technology development programs.
    Ms. Johnson. It really sounds great to talk about all the 
drilling that we can do and all of the resources we have and we 
talk about the oil shale and all. It would take decades to 
produce, wouldn't it?
    Mr. Slaughter. The development pathway for oil shale 
particularly is long but if we want to have it available when 
we need it, then we need to keep working on it. It won't be 
available if we stop working on those questions now.
    Ms. Johnson. How much do you think that the private 
industry is willing to fill in while we don't have the dollars 
for the research?
    Chairman Hall. Ms. Harbert, you were trying to ask a 
question or answer a question?
    Ms. Harbert. I was just going to say, the Department of 
Energy answered that question. They issued a report in 2007. 
They were asked to look at all the private-sector activities 
underway to develop the technology and they issued a report of 
every--whether it is Exxon or Shell or Red leaf or Whiting, all 
the multitude of companies that have been investing in 
developing this technology on their own dime without asking for 
any subsidies from the Federal Government. What the industry is 
asking for is some certainty, that knowing that I can have 
access to this resource base so I can develop the technology, 
make it commercially viable and bring this resource to market 
in a reasonable time frame, and adhering to all the 
environmental regulations that are in place.
    So we have a very good idea of the multitude of 
technologies that are under development but if the 
opportunities being closed down to access the resource base, 
they are not going to develop the technology. I don't think you 
will find anybody in the industry that is saying we need more 
money from the Federal Government. They are saying we just need 
the opportunity. The economic conditions have changed 
dramatically for this resource and now they want to be able to 
have the opportunity to develop it.
    Ms. Johnson. Thank you.
    Mr. Brown, you mentioned some of the oil shale 
availability. What is your company doing at this time to access 
that resource?
    Mr. Brown. Can I ask for a clarification? When you are 
saying the oil shale, you are talking about like western 
Colorado, the very--one of the companies that I mentioned the 
acquisition that Whiting made early in their--well, after they 
went public in 2003, one of those companies owned a very large 
oil shale position in western Colorado, and we--and they owned 
it outright. It was actually granted to them by the government 
back in the 1930s to develop, and they own it in fees, so they 
own the minerals, they own the--or we own the minerals, we own 
the surface.
    Currently, we are not doing anything out there. I mean, it 
is not a lease that is going to go away on us. We are producing 
hydrocarbons from other zones on that lease out there because 
it is productive in the deeper zone for natural gas. But right 
now we can't see a path forward that makes that an economic 
project in any reasonable time.
    Ms. Johnson. What do you mean, you can't see a path 
forward?
    Mr. Brown. You know, you have to somehow be able to 
generate a lot of heat down in the reservoir to make this 
project--to turn the kerogen into a liquid hydrocarbon product, 
which Shell is actively pursuing out there right now. Right 
now, we don't--to be able to do that, we can't see that it is 
an economic venture for us to undertake at this time.
    Ms. Johnson. I have less than 10 seconds, so I am going to 
do Ms. Adams' technique. Just answer yes or no for all of you. 
Is President Obama the cause for the high gas prices right now? 
Just yes or no down the line.
    Mr. Slaughter. No.
    Ms. Harbert. Yes and no.
    Ms. Johnson. I just need one of those.
    Ms. Harbert. Yes and no. It is too complex to go to a yes 
or no question--answer, quite honestly.
    Ms. Johnson. Next?
    Dr. Foss. Same for me.
    Mr. Brown. No.
    Mr. Weiss. No.
    Ms. Johnson. Thank you for the truth. Thank you.
    Chairman Hall. The gentlelady's time is up, and I recognize 
the gentleman from Alabama, Mr. Brooks. And thank you for 
staying within the time, Ms. Johnson.
    Mr. Brooks. Thank you.
    I would like to hear Ms. Harbert and Dr. Foss expound on 
why they believe that the White House policies are partially 
responsible for our American soaring gasoline prices.
    Ms. Harbert. Well, if we were to have access to federal 
offshore and onshore lands, and then you take a much more 
aggressive stance on unconventional oil shale, and then you add 
to that the Keystone pipeline, which would bring more resources 
to the--you combine all those together, there is a lot of 
government revenue, a lot of new supply, and America then 
stands on a very different energy footing, and those are just 
three things to start, and that is jobs, it is revenue, it is 
energy security, and that would dramatically alter our standing 
in terms of our power within the global energy market.
    Mr. Brooks. Dr. Foss?
    Dr. Foss. I don't think the question is about gasoline 
prices. I think that is the wrong way of looking at things. I 
think the point is to look at household--the transportation 
portion of household energy cost, and I think the problem is 
that a lot of the alternatives that you are spending both 
taxpayer dollars on and private money on are more expensive 
than actually the things that can be done to encourage more 
efficient use of the existing petroleum product base that we 
have.
    Mr. Brooks. Now, I presume each of you is aware that in 
September of 2008, Dr. Steven Chu, the current Secretary of 
Energy for Barack Obama, said ``Somehow we have to figure out 
how to boost the price of gasoline to the levels in Europe.'' 
Currently, gasoline prices in Europe range from $6 to $8 per 
gallon, and quite frankly, when I got gasoline a couple of days 
ago coming into Washington, over $4 per gallon. That was a 
first for me, and I searched for 30 minutes trying to find 
something less expensive but finally gave up. Now, Secretary 
Chu had the opportunity in this very room to backtrack on his 
position; he did not. However, later in a Senate hearing, he 
did backtrack. I personally believe that his original statement 
that he wanted to essentially double gasoline prices on 
American citizens reflects his true beliefs inasmuch as he 
backtracked in the Senate after having had the opportunity to 
do so here and did not but in the Senate. We all understand 
this is an election year, and I would suspect that in an 
election year setting, that had something to do with his views. 
Perhaps we can give him the benefit of the doubt. The public 
can make a final judgment on that.
    But having said all that, if Secretary Chu's preference for 
doubling American gasoline prices were to occur, what would it 
mean for the United States economy if gasoline were at European 
levels, and I would like to direct that question to Ms. Harbert 
and Dr. Foss.
    Ms. Harbert. We would look like Europe, which doesn't look 
very good right now. I was just there a couple of weeks ago, 
and there is a great deal of discussion about how to change 
this very entrenched, very long-term approach towards taxing 
fuels. I think there is proof in the pudding coming up this 
summer. Given the weakness of the European economy, the cost to 
customers and businesses, I think that we are going to be 
seeing some pretty interesting eruptions with respect to how 
fuels are taxed over there.
    Americans are already paying 8.5 percent of their household 
income on gasoline, and that would go up. That is the highest 
level since 1981. It would impact certainly the economic 
recovery, our GDP, and it would affect business investment. Let 
us not forget that manufacturing is starting to figure out how 
it can get back on its feet based on low natural gas prices. We 
have the chemical industry that left this country and went to 
the Middle East because there were lower natural gas prices 
there. They are now coming back, and we want to see those types 
of things happen. And so price matters, and that matters in our 
economy, it matters in business decisions, it matters in 
investment decisions, and it certainly matters at the family 
dinner table. So it would have a very bad knockoff effect on 
the economy.
    Mr. Brooks. But again, I personally believe for emphasis 
that it is the White House strategy to drive up energy prices 
in order to make them more competitive with the exotics that 
this Administration is pouring so many billions of tax dollars 
into. But having said that, President Obama repeatedly claims 
he supports an all-of-the-above energy strategy. However, the 
President's rhetoric rarely matches his Administration's 
actions, especially when it comes to the EPA and its regulatory 
culture. Can you please describe what EPA's numerous proposed 
regulations such as the recently proposed New Source 
Performance Standards for Power Plants and Cross State Air 
Pollution Rule as well as forthcoming rules on greenhouse gas 
emissions at drilling sites and tier three refining standards 
mean for the United States energy use and energy prices? And 
again, Dr. Foss or Ms. Harbert, very quickly.
    Ms. Harbert. The real answer is that no one knows because 
the modeling of those combined rules and regulations have not 
been done, and so we really don't know the ultimate cost and 
what it is going to do to energy prices. And that is why in 
some cases the court system has stepped in and stalled the 
implementation of some of these regulations until more review 
has been done.
    Mr. Brooks. Well, Mr. Chairman, if I could just add a 
comment, since my time is expired, for Dr. Foss. I sincerely 
believe that it is another effort to jack up prices.
    Chairman Hall. The gentleman's time is expired.
    Mr. Miller, the gentleman from North Carolina, is 
recognized for five minutes. Is he here? All right. Who is 
next? Mr. McNerney, you are recognized for 5-1/2 minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    I want to thank the panel. I think all your testimonies 
were very well thought out and I appreciate what you are 
bringing to the table here.
    Mr. Slaughter, all Americans are clearly struggling with 
the price of gasoline now, and there is no doubt in my mind 
that there is a lot of gas or a lot of oil there from all 
sources within our borders. But I am worried about the costs 
both direct and indirect of extracting some of these 
unconventional sources. For example, I worry a little bit about 
the effects of global warming as do a lot of people, but let us 
talk about the economics here. Are the unconventional sources 
more expensive per barrel to extract than conventional sources?
    Mr. Slaughter. That depends. Not all unconventional sources 
look alike. Many of the tight oil resources that have been 
ramping up production now and over the last couple of years are 
actually not on the margin as the most costly production. Some 
of the more frontier-type resources like, for example, the oil 
sands tend to be the most expensive but they are economic in 
today's environment.
    Mr. McNerney. Well, the unconventional sources have unique 
risks regarding the environment. What safeguards do you think 
should be in place to reduce the risk of extracting these 
hydrocarbons in a safe manner?
    Mr. Slaughter. The NPC study did a tremendous amount of 
work on this question, and the oil and gas companies take this 
very seriously. So there is a lot of recommendations in that 
study about disseminating best practices, developing 
responsible extraction technologies, about promoting councils 
of excellence to raise the game in terms of environmental 
performance. This is something we have to do and we have to 
take it seriously.
    Mr. McNerney. I agree. If local extraction causes local 
environment pollution and contamination of groundwater, local 
communities will turn against that. So we want to make sure 
that that doesn't happen as part of the outcome.
    Ms. Harbert, thank you for your testimony again. In your 
written testimony, I believe I took that you indicate that 
while U.S. demand for oil has decreased in recent years, an 
increasing international demand has led to increasing prices in 
gas at home. How much impact do you think recent American 
policy has on domestic gasoline prices?
    Ms. Harbert. Well, you know, the reason we have decreased 
demand is for a very unfortunate reason, which is the recession 
that we have all been suffering through. So we certainly don't 
want to substitute that for an energy policy. We know the 
economy is going to recover. We will hope it recovers as fast 
as it possibly can and that is going to command more energy, 
you know, consumed domestically. So if we look at, you know, 
what is the effect of the recession on the global energy price, 
I don't know that anybody knows the answer to that. Maybe my 
friend here to the left that is an economist can quantify that 
for us.
    But I will say when we look outwards and we look at the 
increasing demand from China, India, the Middle East--which is 
the second-fastest growing region for energy consumption--we 
know we are going to need more supply. And so it is incumbent 
upon us to look at all of our tools in our toolbox, whether it 
is increasing access, whether it is examining taxes, whether it 
is examining all the different things that we have to ensure 
that we are maximizing our competitive advantage here, because 
we do have a lot of resources and we could certainly be using 
that as the foundation to compete more effectively in a very, 
very globally competitive market.
    Mr. McNerney. Thank you. Mr. Weiss, you have----
    Mr. Weiss. Mr. McNerney, two things about that: first, 
studies have indicated the reason why demand is down is due to 
increased fuel economy standards that this Congress passed in 
2007 and Mr.--President Obama implemented in 2009; second, the 
International Energy Agency reports that estimated demand 
worldwide for oil is only up about one percent this quarter 
compared to the previous quarter. So I don't believe there is a 
huge increase in demand that is driving up oil prices, and in 
fact, research by McClatchy and others indicates that it is 
Wall Street speculators that are helping to drive up the price 
of oil due to preying on fears of a supply disruption in the 
Persian Gulf.
    Mr. McNerney. I think you sort of answered my next question 
to Ms. Harbert.
    We have heard a lot about domestic production; we haven't 
heard a lot about efficiency of our automobiles. Do you think 
that that has had any impact on the price we are paying for 
gasoline today?
    Ms. Harbert. I think everybody recognizes that, as an 
economy, we certainly can become more efficient and that means 
in our transportation sector and in our electricity 
infrastructure without a doubt. Since the fuel standards that 
were put in place and are coming into the marketplace, they--a 
lot of people haven't bought cars recently. The new cars that 
have the efficiency standards, just based on our economy, will 
they have an impact on reducing the amount of consumption over 
time? I mean I think that was the--ultimately the purpose of 
that. And I think we have to examine all ways we can become 
more efficient without a doubt. But the real answer is that the 
reason we have had decreased demand is directly tied to the 
economy, but the fuel standards will certainly have some 
beneficial impact in the out years.
    Mr. Weiss. One point of fact: the auto companies are on 
record to produce more--sell more cars this year than any year 
since 2007.
    Mr. McNerney. Okay, thank you.
    Mr. Chairman, I had better yield back or I will get the 
gavel.
    Chairman Hall. You won't get the gavel but thank you for 
yielding back.
    The Chair now recognizes Dr. Harris, the gentleman from 
Maryland.
    Dr. Harris. Thank you very much. And thank you, Mr. 
Chairman for holding a hearing on a very important subject. As 
people go to that gas pump and see that $4 a gallon at the top 
and the farmers in my district paying $4 a gallon for diesel 
and the watermen, they are interested in this. Here is the yes 
no question. If the President had an epiphany today, got up 
tomorrow and, you know, in the White House, had a press 
conference, said that we are going to increase onshore and 
offshore drilling in the United States, we are going to 
maximize American energy production, he announced that the $4 
billion Department of Energy budget was going to go to research 
programs to convert natural gas to liquid fuels and--what would 
the response of the oil market the next day be--price on the 
oil market? Would it go up or down? Mr. Slaughter? The 
President announces the United States is going to become an 
energy leader in the world.
    Mr. Slaughter. The oil market is very complex. It depends 
on many factors----
    Dr. Harris. Will it go up or down? Because we--it has been 
done before. See, President Bush did it once so we don't--you 
know, we actually have historical evidence of what happens.
    Mr. Slaughter. Yeah, I have to pass on that one.
    Dr. Harris. Okay. Ms. Harbert?
    Ms. Harbert. You point out an interesting thing. When 
President Bush lifted the moratorium, the price of oil went 
down $9 overnight. I don't know exactly what happened. It is 
complex. And I will be serious because this is----
    Dr. Harris. Yeah.
    Ms. Harbert. --a serious issue and we have----
    Dr. Harris. Sure.
    Ms. Harbert. --to take it seriously. There are a lot of 
different complicating things in there, but the long-term price 
signals of the market would be is that America is back open for 
energy business.
    Dr. Harris. Thank you very much.
    Dr. Foss, you are an economist. What happens to the 
speculators? What do they get worried about the next day?
    Dr. Foss. Perception is reality and I agree with my friend, 
Karen Harbert, that a signal like that would have a huge 
impact, especially given everything else that is going on.
    Dr. Harris. Sure.
    Mr. Brown?
    Mr. Brown. You know, I have been in the business trying to 
predict the oil price for a long time here, but if you have the 
ability to do this, let us talk later because we--it could 
really work to my benefit.
    Dr. Harris. That is what I thought.
    Mr. Weiss?
    Mr. Weiss. It would make no difference and would take seven 
years to produce any oil from increased offshore oil drilling.
    Dr. Harris. Mr. Weiss, the question was----
    Mr. Weiss. It would make no difference----
    Dr. Harris. --the next day, the next day----
    Mr. Weiss. --no difference----
    Dr. Harris. --there is no difference?
    Mr. Weiss. No difference.
    Dr. Harris. Let us talk about Mr. Weiss' testimony because 
it is kind of a tome here. Mr. Slaughter, Mr. Weiss says the 
Council--the National Petroleum Council ``also strongly 
advocates a greenhouse gas pollution reduction regime.'' I read 
that report. I don't see an advocacy for greenhouse gas 
reduction regime. I see a statement that if you are going to do 
one, here are the things you ought to do. Did the Council 
strongly advocate a greenhouse gas reduction regime?
    Mr. Slaughter. No, we were all----
    Dr. Harris. Thank you very much.
    Ms. Brown--Mr. Brown, the Secretary of Energy was here and 
admitted that the Department of Energy spends 1/8 of one 
percent of their budget on natural gas research, 1/8 of one 
percent. Now, what can the Federal Government do to help you 
and your companies develop unconventional oil? Do you think 
that is an adequate amount for the Department of Energy to 
spend on research into this field?
    Mr. Brown. You know, for what we do, we try to react very 
quickly. The reason we built the rock lab for ourselves in 
Denver is because the commercial labs that are out there will 
do what we want to do; they won't do it quick enough for us. So 
if the government is going to invest money in research, it has 
to be on some of the subjects we talked about earlier. It has 
to be long-term, has to be something out there. We operate in a 
much--we have even had these discussions. We support all the 
universities across Montana, North Dakota--we haven't got to 
Wyoming yet but we are working on that one--Colorado School of 
Mines. Academia does not work fast enough for us.
    Dr. Harris. Sure. So we----
    Mr. Brown. So that----
    Dr. Harris. I know they need the help. Mr. Brown, the 
testimony from Mr. Weiss says that the price of oil coming out 
of the ground is $15 a barrel and of course you are selling it 
for $100. Mr. Brown, what is your average price of the oil that 
you produce?
    Mr. Brown. Oh, wow.
    Dr. Harris. I know because $15 is not what American 
companies are paying to produce oil. What do you charge or what 
your cost is?
    Mr. Brown. That is in our SEC filings. You can see our 
finding cost for oil is around 25 bucks a barrel----
    Dr. Harris. Twenty-five.
    Mr. Brown. --25, 27, somewhere in there.
    Dr. Harris. So they are off by a factor of, oh, 60 percent 
or so. Okay. So it is a second thing and I will look through 
the rest of this and I will submit some questions for the 
record later.
    Ms. Foss, let me ask you a question. The--what will the 
effect--the President says, you know, there is $4 billion, oh 
my gosh, we have to reduce all these subsidies to oil companies 
at $4 billion. How--if we do that, how in the world are they 
going to do research if we eliminate the advantages that we 
give to all businesses whether it is pharmaceutical industry, 
whether it is the music industry--Apple gets the same benefits. 
How are we expecting the--because Mr. Brown just suggested that 
actually you have to be nimble. You actually have to be able to 
produce some of this research for these groundbreaking 
technologies. How are we going to do it if we remove that $4 
billion in tax incentives that every manufacturing business in 
the country gets?
    Dr. Foss. Thank you for making the point that way because 
that is something that doesn't get spoken correctly I think to 
the wider audiences. I--we have been through every bit of 
taxing and forms of taxing and subsidies and credits on 
different industries and there is no difference between what is 
done for oil and gas versus anything else. There are very large 
upfront research and development costs. Exploration is a 
research and development business. And so in that way, 
pharmaceuticals is a great example. You sink a lot of money 
into the business without knowing what you are really going to 
get for it.
    I think the key thing is transparency and predictability 
and feeling like there is a fiscal regime in the country that 
is clear, is not going to be handled capriciously, that is 
consistent. I think all business in the United States 
appreciates that, not just the oil and gas industry.
    Dr. Harris. I think you are right.
    Thank you very much, Mr. Chairman.
    Chairman Hall. And thank you.
    The Chair now recognizes Mr. Lujan, gentleman from New 
Mexico.
    Mr. Lujan. Mr. Chairman, thank you very much. Appreciate 
the testimony today and you bringing us here today, Mr. 
Chairman.
    A lot of conversations about who is to blame for high gas 
prices, anyone that truly believes that President Obama or 
Secretary Chu or Speaker Boehner or Congressman Lujan wants 
higher fuel prices for the American people, it is not true. And 
I think that we need to get past this so that way we can start 
solving the problems. People are paying more at the pump. 
People are paying more for eggs. Our farmers as well are paying 
more for diesel. And there are some things that we can do as 
well. Why is the United States exporting more diesel now in 
2011 than ever before? If my farmers are paying more for diesel 
or we are moving signs or this weekend I was on the Bobcat 
cleaning up around our sheet bars moving that dirt and it did 
cost a bundle to be able to fill up that Bobcat. Why are we 
exporting more diesel?
    And therein lies some of the questions that I have is if we 
produce more oil and natural gas in the United States, we are 
going to increase supply, correct? That means lower gas prices 
at the pump for the American people? And I would ask the 
witnesses yes or no. Mr. Slaughter, we will start, just come 
down the line.
    Mr. Slaughter. All things being equal, more supply in the 
market of----
    Mr. Lujan. All things being equal, if the United States 
increases its supply, will fuel prices at the pump go down for 
the American people?
    Mr. Slaughter. It would reduce the supply of crude oil. 
Refined product prices have more complex dynamics. But all 
things being equal, it reduces the----
    Mr. Lujan. Ms. Harbert?
    Ms. Harbert. Demand is going up, we need more supply. We 
don't have the supply, the prices go up. So if we have more 
supply, the prices will--that price increase will be somewhat 
ameliorated, if not go down.
    Mr. Lujan. Okay. Let us stay there for a second. So if the 
United States increases supply, fuel prices will go down is 
what you are saying. All right. So do you support--you support 
increasing production in the United States?
    Ms. Harbert. Is that a question?
    Mr. Lujan. Yes.
    Ms. Harbert. Yes.
    Mr. Lujan. Do you support keeping any increased production 
in the United States for American consumption to be refined in 
the United States only?
    Ms. Harbert. To be refined here and then kept here for use?
    Mr. Lujan. Yes.
    Ms. Harbert. So putting up trade barriers to----
    Mr. Lujan. Call them whatever you want.
    Ms. Harbert. --to keep those molecules back in the United 
States?
    Mr. Lujan. I am saying if we are going to increase 
production in the United States, shouldn't we keep it in the 
United States to be able to help the American consumer and 
American businesses, the people that you represent?
    Ms. Harbert. We are not going to be able to put a ring 
around the United States, erect a wall and have the price, you 
know, be dramatically different on the island of the United 
States versus what it is set on the world market. So--but when 
you look at the overall world market----
    Mr. Lujan. So then if there is not a little island around 
the United States, then we won't be able to impact prices. Is 
that what you are saying?
    Ms. Harbert. No, that is not what I am saying.
    Mr. Lujan. So then if we are able to create this magic ring 
around the United States and increase production in the United 
States, shouldn't we keep it here?
    Ms. Harbert. We are not----
    Mr. Lujan. That is what I mean.
    Ms. Harbert. --able to build a hypothetical wall around the 
United States so this--you started the conversation very----
    Mr. Lujan. Well, then how are we going to----
    Ms. Harbert. --importantly. You said this is a very 
important subject to maybe get beyond some of this.
    Mr. Lujan. Ms. Harbert, my time is limited. I apologize. 
If----
    Chairman Hall. You have time to let her answer the 
question.
    Mr. Lujan. Well, Mr. Chairman, I appreciate that but it is 
my line of questions so we will get through this and I will try 
to be----
    Chairman Hall. Well, I am trying to help you.
    Mr. Lujan. Well, I want to be respectful to our colleagues 
so I appreciate that, sir. We will submit some things in 
writing as well.
    But these have been conversations we have had in the 
Natural Resources Committee as well. If I remember correctly, 
back when the United States built a pipeline after the oil 
embargos in the early '80s, there was a requirement that was 
put in place by this Congress by one of our Republican 
colleagues that authored the amendment that said any oil that 
flows through this pipe is for American consumption. They built 
a little circle around us then and it helped the American 
people, right? So I don't know why we are having this 
fundamental disagreement today where if we are going to 
increase production, American people are hitting $4 a gallon, 
some places higher. Diesel, which is a byproduct that we are 
exporting more now is hitting our farmers and ranchers even 
harder. Why don't we say----
    Chairman Hall. All right. The gentleman is using all of his 
time for his question. If we can get to the question and let 
them give a quick answer.
    Mr. Lujan. Mr. Chairman--one second. Mr. Chairman, if I may 
ask that time be suspended and ask a personal inquiry here, the 
rules allow for a Member to get five minutes to be able to ask 
questions in any way that they so choose, but when Members of 
the other side of the aisle are interrupting answers that are 
coming in, no one was correcting to be able to ask the 
witnesses to respond in a certain way.
    Chairman Hall. I tried to give everybody five minutes, but 
if some of you go over and some of you go over with your 
questions.
    Mr. Lujan. But it is important.
    Chairman Hall. All right. Go ahead and go with it. How much 
time did he have coming?
    Mr. Lujan. I was about 1 minute 40 if I am not mistaken, 
Mr. Chairman.
    Chairman Hall. All right.
    Mr. Lujan. So if that is the case, I don't understand why 
we are not trying to learn what we have done in the past. If 
there is going to be support across the aisle to work together, 
which was done after the oil embargos in the '70s to say what 
can we do to increase production but make sure that we keep it 
in the United States for American consumption to truly help us 
here, why that is just not even put on the table any longer? 
And I guess that is something I can't get my hands around.
    Dr. Foss. Congressman, if I could I think I have some ideas 
that might help you understand the issues. The places in the 
United States where we have the cheapest fuel prices right now 
are where the new sources of production are located. You can 
look at----
    Mr. Lujan. So this----
    Dr. Foss. --this--you can look at----
    Mr. Lujan. Dr. Foss, if I may----
    Dr. Foss. Let me finish, please.
    Mr. Lujan. No, Dr. Foss, this is my line of questioning 
here. So do you support keeping increased production in the 
United States and not exporting it?
    Dr. Foss. No, I don't.
    Mr. Lujan. Okay----
    Dr. Foss. What I was going to distinguish was----
    Mr. Lujan. Well, I appreciate that but my line of 
questioning is quick here. So--but I do have an area where I 
think that there is a silver lining for us and we talked about 
this in the Natural Resources Committee as well. This is 
something that the Chamber I believe supports as well and I 
think that there may be support across the panelists. There is 
a piece of legislation that was authored in the previous 
Congress that has been reintroduced in this Congress. And we 
talk about using natural gas. Natural gas in New Mexico right 
now, we know production is down because of where the price is. 
There is a piece of legislation that would actually encourage 
natural gas use in 18-wheelers. So as we talk about moving the 
largest vehicles across the country, using a domestic resource, 
keeping the dollars in the United States, there is a piece of 
legislation ready to go and I hope that there is a way that we 
can work together to get our leadership to get this bill 
moving.
    Lastly, I will say is that, you know, with all this 
pushback against biofuels and making investments in other 
sources of energy, 80 percent of convoys in Iraq and 
Afghanistan are for fuel and it is estimated that 46 convoys 
resulted in a casualty. From 2003 to 2007 we lost 30--we lost 
3,000 uniformed and civilian contractors. Something has got to 
change.
    Thank you, Mr. Chairman.
    Chairman Hall. I interrupted you and cost you about 30 
seconds. Would you like to have 30 seconds back to give Dr. 
Foss a chance to answer as you asked?
    Mr. Lujan. Mr. Chairman, I think what I will do is I will 
just put some questions in writing there and I will get them to 
the witnesses.
    Chairman Hall. Okay. You have that right.
    The Chair now recognizes Mr. Rohrabacher, gentleman from 
California.
    Mr. Rohrabacher. And, Mr. Chairman, just for the record, I 
think the--our colleague did have a point that he does have a 
right to control those five minutes any way we sees fit and 
just would--with due respect, I think that that is something 
that--he did point out that quite often I will question a 
witness and demand an answer and interrupt if they are trying 
to elongate the answer. So--but I do that with respect and I 
know you are just trying to make sure we get all the 
information out. Sometimes the rules are contradictory to that 
but sometimes they are meant to keep things fair.
    Let me just note here that if the gentleman's point is that 
new energy--if we keep it here rather than let it go into the 
world market that that will create lower prices here, why is he 
stopping with oil? What about food? Why don't we just say any 
agriculture products that are made in the United States can 
only be sold in the United States? Well, think of how low the 
price of food would go or anything else that we manufacture. 
The reason we don't do that is because it creates other 
barriers that will hurt our economy and put other people out of 
work and hurt the overall prosperity of our country because it 
is more than just a one-step process. But we do know if you 
increase the supply of something, usually that means that the 
prices--that the pressure for higher prices go down.
    Let me note--and correct me if I am wrong, Mr. Weiss, how 
many oil refineries have we built in this country in the last 3 
decades?
    Mr. Weiss. Oil refinery capacity has increased dramatically 
in the last 3 decades.
    Mr. Rohrabacher. How many new oil refineries?
    Mr. Weiss. None, but we have expanded----
    Mr. Rohrabacher. None. That is a good answer. Thank you. 
And I will follow my colleague's lead. Yes, we have built none.
    Mr. Weiss. We have expanded capacity.
    Mr. Rohrabacher. No new refineries have been built. 
Luckily, our--the people who run our refineries now are trying 
their very best to keep up with technology.
    Let me ask, I have heard some really incredible analyses of 
how much oil we--and gas we have in this country but also I 
hear something which seems contradictory to that from Mr. 
Brown. Ms. Harbert, the predictions you said about how much oil 
and gas we have, was that including the predictions from shale 
oil? And Mr. Brown suggested that we don't really have the 
technology now to get that.
    Ms. Harbert. The specific figure that I referenced, which 
is 2.7 trillion barrels, that is in-place oil shale and oil 
sands----
    Mr. Rohrabacher. Um-hum.
    Ms. Harbert. --important to note that 80 percent of those 
resources however, are on federal lands, not private lands.
    Mr. Rohrabacher. Right.
    Ms. Harbert. In order to develop those, the Federal 
Government has to allow access.
    Mr. Rohrabacher. Now, I am just thinking about the 
technology now. Do we have the technology to get that shale 
oil?
    Mr. Slaughter. We are working on the technology. Shell has 
had a project--a research project going for ten years or so. It 
is a very long process to make that technology work.
    Mr. Rohrabacher. Does that mean no?
    Mr. Slaughter. It means we need to work on it----
    Mr. Rohrabacher. I know but----
    Mr. Slaughter. --and it is the same basis.
    Mr. Rohrabacher. --we don't have it now.
    Mr. Slaughter. We do not produce commercial oil shale 
today, no.
    Mr. Rohrabacher. Okay. So----
    Ms. Harbert. But in order for those investments to continue 
and to grow, there has to be some certainty that ultimately 
they are going to be able to produce this resource in the 
United States----
    Mr. Rohrabacher. Okay, but----
    Ms. Harbert. --and right now, that is one of the----
    Mr. Rohrabacher. Well, we didn't know how we would get a 
lot of gas before fracking came up. We didn't know how we were 
going to get a lot of the oil, so we would hope the technology 
was there, but I am just trying to get right now how much 
reserves we can actually count on.
    Mr. Brown, there is--I read an article somewhere that 
suggested that there was a new method of fracking that was not 
going to be using water, that would be using some sort of 
explosives, a fuel of some kind. Do you know anything about 
that? Could you enlighten me to that?
    Mr. Brown. There is a technology out there called GASFRAC--
--
    Mr. Rohrabacher. Um-hum.
    Mr. Brown. --and they actually use--they--you can use any 
propane--or any hydrocarbon product. I think the one they are 
currently using is propane. So instead of using water, you use 
propane to move your materials.
    Mr. Rohrabacher. Okay. And that would make it less likely 
to have water pollution? Why would someone use that?
    Mr. Brown. Part of the issues we have--like with this 
Bakken shale--not so much in the Bakken shale but some of the 
other formations that we are looking at you have in the porous 
space in the rock you have some clay particles in there similar 
to bentonite that would swell up when they are contacted with 
water, which is what we currently use for fracking----
    Mr. Rohrabacher. Um-hum.
    Mr. Brown. --so you try to frack them with something other 
than water.
    Mr. Rohrabacher. So that would make it more efficient.
    Mr. Brown. Yes. Yeah.
    Mr. Rohrabacher. So I have no doubt that we are going to 
have technological advances that will increase our ability to 
obtain this type of fuel and energy for our country as long as 
the--our government has the purpose and it is the purpose of 
government to increase the amount of energy in our country and 
I would suggest that it is the purpose of this government not 
to increase oil and gas production out of some unfortunate 
loyalty to this idea that CO2 is creating huge 
changes in our climate which will result in the fact that we 
are not going to develop those energy sources.
    Thank you very much, Mr. Chairman.
    Chairman Hall. The gentleman yields back. Thank you.
    Recognize Mr. Quayle, gentleman from Arizona, for five 
minutes.
    Mr. Quayle. Thank you, Mr. Chairman.
    Mr. Brown, the President routinely has been claiming 
recently that under his Administration America is producing 
more oil today than at any time in the last eight years. This 
is a few years after the fact the President actually said 
during an editorial board meeting--I believe it was in San 
Francisco--that under his Administration energy prices would 
necessarily skyrocket. And Secretary Chu I believe has been 
quoted as saying that he would like to see gas prices in the 
United States to be at European levels. So I think that that 
kind of shows where the Administration is.
    But even though he is trying to say all this, the reality 
is that most of the domestic production has occurred on state 
and private lands, not federal land, which the Administration 
actually has. And I believe Ms. Harbert said that in her 
testimony that the data shows that oil production on federal 
lands declined by 11 percent and natural gas production on 
federal lands declined by 27 percent in 2009 to 2011.
    Now, in Arizona where I am from and in many of the Western 
States, much of our land is federal. It is under federal 
control. And I really--routinely hear from companies with 
renewable energy and also traditional energy that they are 
extraordinarily frustrated by the permitting problems and the 
administrative roadblocks that are put up when people are 
trying to get projects on federal lands. And in your testimony 
you said that ``it is fortunate that Bakken exists in North 
Dakota because most of the surface and mineral ownership is by 
private individuals with minimal federal ownerships.'' Could 
you expand on this because this is the big thing that we have 
been hearing over and over again is that, wow, oil and natural 
gas production is going up and this is because the 
Administration's actions when in actuality it is in spite of 
the Administration's actions because most of this has been 
developed on state and private land. So could you expand on 
what you are talking about with the Bakken field?
    Mr. Brown. Sure. One of the projects that we are developing 
in North Dakota is an area or a prospect we call Pronghorn. It 
is located in Stark County, North Dakota, and that project 
butts right up against the Theodore Roosevelt National Park up 
there. The park is off limits. We can't drill in the park; we 
can't even drill under the park so that is totally off limits. 
There is a halo of federal acreage around the park that is 
administered by the BLM. We are able to get drilling permits in 
North Dakota from--on state and on fee ground in something 
around 60 days. On the acreage or the leases that we have that 
are federal, the current--and this is their number; this isn't 
our number--the current number is 298 days to get a permit.
    As I mentioned in my testimony, we currently have 19 
drilling rigs running in North Dakota and trying to make--
trying to get the logistics to all this to work, when you--you 
know, you are saying--when you start in they are going--they 
are saying a permit may take 6 months to get. You plan on 6 
months. The 6 months gets there, you don't have a permit, but 
you have got a drilling rig you have got to do something with. 
So it has just been--it adds another level of complexity, 
another level that we have to take into our planning right now. 
The other--I mean--so that--you know, we are waiting almost a 
year to go drill a well. We are waiting almost a year to start 
paying royalties that would be going to the Federal Government.
    The other issue we have is there are leases within the area 
that we are drilling that we have nominated to come up on the 
lease schedule that just isn't occurring. And so we are not 
able to drill federal--or fee minerals that surround this 
particular federal lease just because we can't get access to 
that federal lease that may exist right in the middle of one of 
our spacing units.
    Mr. Quayle. And when you say it was 296 or 298----
    Mr. Brown. Two hundred and ninety-eight.
    Mr. Quayle. Two hundred and ninety-eight days. Is that on 
the low end? That is a low-end estimate and usually it is 
longer than that or----
    Mr. Brown. Well, that is their average over--I think it was 
the last 9 months or something like that. That was--when--Mr. 
Salazar went to North Dakota a couple of weeks ago. That was 
the number that they put out in the print to BLM.
    Mr. Quayle. Okay. Dr. Foss, a recent report by Citigroup 
declared that North America is the new Middle East and that--
this is a quote--``the only thing that can stop it is 
politics.'' And can you explain some of the hurdles that 
politics could pose to the timely, safe, and economic recovery 
of hydrocarbon resources and how our current policies are 
impacting energy development?
    Dr. Foss. Actually, I was thinking of an example as I was 
listening to Mr. Brown. We have something like 110 species on 
the watch list in Texas, endangered species. You probably have 
something like that in Arizona. And currently, there are 
attempts to use the ESA to try to slow down oil and gas 
development in West Texas. This is of concern to the State 
because of the impact on oil and gas severance tax receipts and 
other receipts. The point that we have made is that these same 
species that are being discussed also impact non-hydrocarbon, 
nontraditional alternative energy projects, as you have well 
pointed out because they are in the same places that people 
want to use the development of those energy technologies.
    So I think that the thing to focus on is the constellation 
of federal policies, the fact that they often are in conflict 
with each other, there is no one-stop shopping. We created one-
stop shopping in the State and other States are trying to do 
the same thing to at least be able to streamline the process 
for developers so that they can understand what permits they 
need to get, what the timeline is going to look like, what 
their responsibilities are, what they have to do to mitigate 
any impacts they are creating, and so on. The overall 
management of the process has to be improved. There is just no 
doubt about that.
    Mr. Quayle. Thank you, Mr. Chairman. I yield back.
    Chairman Hall. Thank you for yielding back.
    Mr. Cravaack from Minnesota for five minutes.
    Mr. Cravaack. Thank you, Mr. Chairman. I thank the panel 
for being here today.
    A couple questions in regards to--Dr. Foss, can you tell me 
if--we have all heard about you got to pay your fair share and 
we have seen that paying your fair share for some of the oil 
companies if you take a look at, for example, Apple like you 
said, Johnson & Johnson, McDonald's, for example, they are 
paying--they get quite a bit of tax credits in relation to what 
the oil companies get. Now, if the oil companies lost their tax 
credit, what happens? What happens to the consumer?
    Dr. Foss. Not all of the industry is the same. It is a 
pretty diverse cluster of companies, large, small, some of them 
are publicly traded, some of them are privately financed so the 
impacts would be different. If the standard deductions that 
businesses get to cover the cost of making investments were 
removed or if the standard investments for aging equipment and 
assets, whether it is depletion allowances for, you know, aging 
oil and gas fields, new oil and gas industry or whether--or its 
depreciation associated with drilling costs and other expenses, 
then obviously companies are going to look at their investments 
in a different way. It will slow down the cycle time. They will 
move more slowly. They will choose not to make certain 
investments in certain places. And the likelihood is that we 
would actually have a reduction in our potential domestic 
production as a result of that.
    Mr. Cravaack. So when I go plug in at the pump, gas is 
going to go up. Are we going to pretty much say that?
    Dr. Foss. It would have a very big impact.
    Mr. Cravaack. Okay. So now let us talk about--that is gas 
at the pump. I am going to plug in, average American, who pays 
the ultimate price for this? The average American is going to 
pay the ultimate price for the tax if President Obama has his 
way in regards to eliminating the tax credits that are given to 
the oil companies.
    Okay. Let us take it one step further. When I go into town 
halls, I ask people, how many people have 401(k)'s? How many 
people have IRA's? You know, how many people have pension 
plans? A lot of people have big oil in their pension plans, 
would you agree? So what is the bottom line going to happen to 
the pension plans and IRA's and 401(k)'s? Those are probably 
going to go down as well, would you agree with that?
    Dr. Foss. Well, to the extent that the industry would be 
perceived to be both more expensive and less valuable, then, 
yes, it would affect market capitalization and affect holdings 
of those.
    Mr. Cravaack. So what the President, then, is proposing is 
going to affect the average American at the pump and also in 
their long-term retirement plans in the 401(k)'s, IRA's and 
their pension plans as well. So it is a negative effect overall 
for these two things as well.
    Now, let us talk another thing. Let us say we start ramping 
up oil production in the United States, America. Let me ask you 
this question, Mr. Slaughter. You know, we start ramping up--
and also Mr. Brown, too--we start increasing our oil 
production, we start investing into the infrastructure in the 
United States. What happens when you do that? What do you also 
create in the sidelines?
    Mr. Slaughter. There is a tremendous amount of associated 
job creation potential around the oil industry from the service 
sector, the supply chains, and all the supporting dollars in 
that. So there is a tremendous effect which spreads through the 
economy.
    Mr. Cravaack. Creates jobs, wow, what a concept. I think we 
are in need of that, aren't we, creating jobs? So--okay. So if 
we lower--get rid of the tax credits we are going to lower 
IRA's, 401(k)'s, and people are going to have in their pension 
plans, we are going to increase the price of gas, but if we 
start investing in our infrastructure, we will start creating 
jobs which we need badly in the United States as well.

    Now, let me ask you this question. We talked, Mr. Weiss--we 
said something about supply if the supply isn't affected 
whatsoever. The Strait of Hormuz goes down. Ms. Foss, can you 
tell me Strait of Hormuz goes down, Iran becomes potentially a 
nuclear weapon, Strait of Hormuz goes down, 30 percent of the 
oil goes through the Strait of Hormuz, we have harassment from 
pirates going through the Red Sea, lack of supply, what is 
going to happen to gas?
    Dr. Foss. It will go up.
    Mr. Cravaack. Gas is going to go up. So therefore, the 
Strait--so supply going down, gas is definitely going to go up. 
Now, let me take this one step further. Say we do go into a 
possible wartime scenario where we possibly have actually a 
two-theater war concept where both sides, both coasts are--sea 
lanes are shut down, supply is down. Mr. Brown, can you tell me 
do we have enough oil in this country to keep the United States 
running in the present?
    Mr. Brown. We do not.
    Mr. Cravaack. So therefore, we could consider oil 
production within the United States of America as a national 
asset. Would you agree with that statement?
    Mr. Brown. I would, yes.
    Mr. Cravaack. Okay. Now, it is not too long ago I think we 
fought a world war, a lot of it initiated because of oil. Would 
that be a correct statement for Japan?
    Mr. Brown. Yes. Yes.
    Mr. Cravaack. So now we are figuring out that oil 
production within the United States is a national asset, will 
create jobs and creating a tax decrease--our tax credit 
decrease is going to be negative to our economy and possibly 
negative to job production as well. Wow. It seems pretty 
straightforward to me on where we are going here.
    So let me ask--Mr. Weiss, let me ask you a quick question. 
Do you believe that CO2 is the cause of climate 
change?
    Mr. Weiss. Ninety-eight percent of the scientists who have 
done research on this in this field have concluded that it is 
human-caused production of carbon dioxide and other global-
warming pollutants that are responsible for global warming.
    Mr. Cravaack. Let me ask. I only have a couple seconds. Do 
you think we have more CO2 in the air than we did in 
1976 versus where we are today? Do you think we are more 
environmentally friendly today than we were in 1976?
    Mr. Weiss. Yes, we are more environmentally friendly----
    Mr. Cravaack. Hugely. Okay, let me----
    Mr. Weiss. --but we have more CO2 in the air 
than we did in 1976 in the upper atmosphere, yes.
    Mr. Cravaack. Okay, well, I would debate that because of 
the--looking at the arctic ice going down, first off, it says 
that CO2 follows temperature increase, does not 
initiate it. Second thing is in 1976 I was in high school. You 
look around the same generation as I. Do you remember when the 
big theory was then the polar caps were going to expand so 
dramatically it was going to tilt the whole world?
    Mr. Weiss. There had been not as much research then on that 
theory as their as has been now on global warming.
    Mr. Cravaack. I would disagree with you, sir, and looking 
at the arctic caps today, it has been proven that temperature 
follows--or CO2 follows temperature.
    And with that, I am over time and I will yield back, sir.
    Chairman Hall. The gentleman yields back.
    And the very patient lady from Florida is recognized for 
five minutes.
    Mrs. Adams. Thank you, Mr. Chairman. A lot of my questions 
have been answered, but I do want to touch back on something.
    Ms. Harbert, I know you answered this earlier but I just 
want to hear it again because some of these rules, you know, 
the EPA's numerous proposed regulations such as recently 
proposed New Source Performance Standards for power plants and 
Cross State Air Pollutant Rules are very burdensome, especially 
to States like mine in Florida, as well as forthcoming rules on 
greenhouse gas emissions at drilling sites and tier three 
refining standards. What does that mean for our energy use and 
energy prices?
    Ms. Harbert. Well, the reality is that industry cannot 
figure out how to navigate this regulatory tsunami. If you look 
at all of the regulations from EPA from 2011 out to 2014, which 
is what their planning horizon is, there are tens--many, many, 
many, many large-scale regulations that are coming forward and 
nobody has taken a look at the complete amalgamation of all of 
these regulations, what the impact would be on GDP, what the 
real impact is and benefit is to the pollutants they are 
intended to regulate, and what will affect business. And that 
is really troubling that we have all of these regulations 
coming all in a short period of time and nobody can honestly 
say that we understand what the complete cumulative impact will 
be.
    Mrs. Adams. Now, would you say they would affect prices? 
Because I pulled up to the gas pumps just a couple days ago at 
home and the car before me must have had a heart attack because 
on the gas pump it was $81.10. So I can only imagine what my 
constituent was thinking at the time when they were filling up 
their gas tank. Would those regulations, a combination of such 
also add to the cost?
    Ms. Harbert. We certainly need to take a look first at 
electricity because we are seeing this play out in real time 
for us as the implementation of these regulations is already 
underway, plants are shutting down, and the local regulators 
are trying to figure out how to keep the lights on. There is a 
big reliability issue and I can tell you the economic impact of 
having a reliability problem in our grid is significant and 
very, very frightening for the American economy and the 
American business community.
    On the transportation side of things, I mean these are 
going to be coming in over the next couple of years and we are 
going to see the impact. It certainly is going to do nothing to 
decrease prices.
    Mrs. Adams. And we have seen what happens if we lose a grid 
as seen in the Northeast, correct? So----
    Ms. Harbert. Very, very, very big impacts on the economy.
    Mrs. Adams. Mr. Slaughter, I understand you also work for 
Shell North America. What is Shell doing to increase energy 
production in the United States? And also, what challenges has 
Shell faced such as acquiring necessary production permits from 
the Department of Interior or the EPA? And how long did it take 
Shell to acquire a producing permit for the lease in Alaska's 
Outer Continental Shelf? And is that--how does that compare to 
historical timelines?
    Mr. Slaughter. Well, on the first part of the question, we 
are investing billions of dollars a year, $3 to $5 billion a 
year in onshore oil and gas exploration, more in the Gulf of 
Mexico. We are also investing in other sources of energy like 
wind power, very big wind power developer. So we have a very 
robust investment plan because we think the resource is there 
and we think we can develop it for the long-term.
    In terms of the permitting and regulatory experience in 
Alaska, you have to recognize that these are federal offshore 
leases which have a ten-year life. We are almost halfway 
through that ten-year period and we are only now beginning to 
get the necessary permits in place. So we never anticipated the 
complexities and difficulties of navigating that regulatory 
process, which has caused significant risk to that offshore 
drilling program in Alaska.
    Mrs. Adams. And how would that compare to historical 
permitting timelines?
    Mr. Slaughter. I would have to research that. I think 
Alaska is a bit of a special case because offshore developments 
in Alaska is a new activity.
    Mrs. Adams. Well, Mr. Brown, we have heard a great deal 
about the dramatic economic turnaround in North Dakota, you 
know, that is occurring because of--thanks a lot to the oil 
production. Can you describe the current economic outlook for 
your operations in North Dakota and what is the current average 
salary for your employees? How many people has Whiting hired 
since the beginning of this boom? And what is your company's 
short- and medium-term growth potential?
    Mr. Brown. Wow. When we made our first acquisition in North 
Dakota--and this would have been back just before we went 
public in 2003--we had zero employees in North Dakota. We are 
currently at about 270 employees in North Dakota. As I 
mentioned, we have 270 openings in the country right now, 
approximately 100 of those are in North Dakota. As you are well 
aware, you know, there is--in order to get employees up there, 
we have bought housing, we have bought apartments, we are doing 
everything we can to make it, you know, hospitable for the 
folks that we move up there. We moved one gentleman from 
Shreveport, Louisiana, up there. He is wondering if we moved 
him to the end of the world.
    Our outlook for growth, we are currently spending about 
$800 million in North Dakota this year. That level will 
continue to grow next year, and so we are--I mean North Dakota 
is just a very--one of the foundation blocks for Whiting right 
now.
    Mrs. Adams. Average salaries?
    Mr. Brown. Oh, man. I am going to guess. The last time I 
saw the average salary we were paying up there was approaching 
$100,000 a year.
    Mrs. Adams. So this process has been economically good for 
North Dakota and the United States?
    Mr. Brown. Correct.
    Mrs. Adams. And it created jobs?
    Mr. Brown. Both direct and indirect. I mentioned all the--
you know, we hire--a lot of what we get done up there is 
through contractors. And so we--it just, you know, dominoes 
through the economy.
    Mrs. Adams. And I realize I went over, Mr. Chair, but I 
would like for Ms.--Dr. Foss, if she would like to finish her 
response to my colleague when she was talking about 
distinguishing if that would be appropriate?
    Chairman Hall. Without objection, you are recognized.
    Dr. Foss. This is to Congressman Lujan's point you mean? 
Here is the issue--and this is why the debate around Keystone 
and other infrastructure--siting infrastructure like that is so 
important. We have low fuel prices in the middle of the country 
where supply is abundant. The bulk of the population is in 
coastal areas. We don't have good ways right now to move supply 
from the interior of the country where Whiting and other 
companies like Shell are operating to the points where people 
are. And without being able to address that problem, then we 
are not going to be able to provide everyone with more 
opportunities to have more competitively priced energy.
    The other thing I would like to suggest the Committee think 
about is our own waterways--our own coastal waterways by law we 
cannot move production in our own waterways that is 
domestically produced because of restrictions in the Jones Act. 
I know this is controversial but I did put it in my testimony. 
I want to go on the record as suggesting that everyone does 
need to look at that and the constraints that it poses. It is 
really--it is a shame. I do agree it is a shame to think about 
exporting our production outside of the country when we could 
be our own best customers. But we can't get there and that is 
something that people could think about.
    Chairman Hall. All right. The gentlelady yields back. And I 
thank you for that.
    And I certainly do thank all of you. I think we are out of 
questionnaires and questions completed. And I thank you for 
your very valuable testimony and the Members for their 
questions. And this has been a wonderful--I think a wonderful 
presentation on all five of your parts. And I thank you and I 
know the Committee thanks you. And these empty chairs here 
shouldn't have any effect on you because this is all taken 
down. They will all be given to their committee staffs and they 
will either read them to the Congressmen or let him read it or 
her read it themselves. So it is available to them and you have 
made that possible and I sure do thank you.
    The Members might have some additional questions for any of 
you and we will ask you to respond to those in writing if they 
submit them to you. The record will remain open for a couple of 
weeks for additional comments.
    At this time, I would like to enter into the record three 
items--and this is without objection--the Executive Summary of 
the National Petroleum Council report that Mr. Slaughter has 
testified on today. That is the first one. Second, an editorial 
from Investor's Business Daily summarizing the massive amount 
of U.S. oil resources that we could potentially access. That is 
number two. Number three, an article from yesterday's E & E 
News detailing comments made by the Texas Railroad Commission 
Chairman that lifting regulatory burdens could allow Texas oil 
production to quadruple to four million barrels per day. 
Without objection, it is so ordered.
    [The information appears in Appendix II.]
    Chairman Hall. And at this time, if there are no further 
inquiries, we are adjourned. And thank you.
    [Whereupon, at 12:13 p.m., the Committee was adjourned.]
                               Appendix I

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by Mr. Andrew Slaughter


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Responses by Ms. Karen Harbert


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Responses by Dr. Michelle Michot Foss


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Responses by Mr. James Brown


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Responses by Mr. Daniel Weiss


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                              Appendix II

                              ----------                              


                   Additional Material for the Record





Executive Summary of the National Petroleum Council report submitted by 
                          Chairman Ralph Hall
    To view PRUDENT DEVELOPMENT: Realizing the Potential of North 
America's Abundant Natural Gas and Oil Resources, National Petroleum 
Council Report(2011) visit http://www.npc.org/reports/NARD-
ExecSummVol.pdf.
                Article submitted by Chairman Ralph Hall


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                Article submitted by Chairman Ralph Hall


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