[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



  U.S. ENERGY SECURITY: ENHANCING PARTNERSHIPS WITH MEXICO AND CANADA

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 14, 2013

                               __________

                           Serial No. 113-14

                               __________

        Printed for the use of the Committee on Foreign Affairs





[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
                                  or 
                       http://www.gpo.gov/fdsys/
                                 ______

                  U.S. GOVERNMENT PRINTING OFFICE

79-893 PDF                WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001




                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida                ALAN S. LOWENTHAL, California
TREY RADEL, Florida                  GRACE MENG, New York
DOUG COLLINS, Georgia                LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina         TULSI GABBARD, Hawaii
TED S. YOHO, Florida                 JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

                 Subcommittee on the Western Hemisphere

                     MATT SALMON, Arizona, Chairman
CHRISTOPHER H. SMITH, New Jersey     ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida         GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ENI F.H. FALEOMAVAEGA, American 
JEFF DUNCAN, South Carolina              Samoa
RON DeSANTIS, Florida                THEODORE E. DEUTCH, Florida
TREY RADEL, Florida                  ALAN GRAYSON, Florida










                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Lee Terry, a Representative in Congress from the 
  State of Nebraska..............................................     7
Duncan Wood, Ph.D., director, Mexico Institute, Wilson Center....    13
Mr. Daniel R. Simmons, director of Regulatory and State Affairs, 
  Institute for Energy Research..................................    18
Mr. Kyle Isakower, vice president, Regulatory and Economic 
  Policy, American Petroleum Institute...........................    36
Michael A. Levi, Ph.D., senior fellow for energy and the 
  environment, and, director of the Program on Energy Security 
  and Climate Change, Council on Foreign Relations...............    40

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Lee Terry: Prepared statement......................     9
Duncan Wood, Ph.D.: Prepared statement...........................    16
Mr. Daniel R. Simmons: Prepared statement........................    20
Mr. Kyle Isakower: Prepared statement............................    38
Michael A. Levi, Ph.D.: Prepared statement.......................    42

                                APPENDIX

Hearing notice...................................................    62
Hearing minutes..................................................    63
The Honorable Matt Salmon, a Representative in Congress from the 
  State of Arizona, and chairman, Subcommittee on the Western 
  Hemisphere: Statement for the record from the Council of the 
  Americas.......................................................    64

 
  U.S. ENERGY SECURITY: ENHANCING PARTNERSHIPS WITH MEXICO AND CANADA

                              ----------                              


                        THURSDAY, MARCH 14, 2013

                       House of Representatives,

                Subcommittee on the Western Hemisphere,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 9:30.m., in room 
2172 Rayburn House Office Building, Hon. Matt Salmon (chairman 
of the subcommittee) presiding.
    Mr. Salmon. This is the Subcommittee on the Western 
Hemisphere, a subcommittee of the whole Committee on Foreign 
Affairs. The subcommittee will come to order.
    I will start by recognizing our distinguished chairman of 
the full committee, Ed Royce, who is here today. We are very 
honored and pleased to have him here. I would like to open the 
gallery for him to yield as much time as he may consume.
    Mr. Royce. Well, let me begin by thanking Chairman Salmon, 
and I just want to mention that this hearing is very, very 
important for several reasons. But one of them certainly goes 
to the issue of national security.
    U.S. energy security has become part of national security. 
This also has been with our partnership here in this hemisphere 
with Canada and with Mexico. And I appreciate the leadership 
here on this critical issue at a very critical time.
    Energy security is the lynchpin for our economic growth. 
Jobs are being created in the energy industry here in the 
United States, and companies, both American and foreign, often 
prefer to manufacture in the U.S. because of our consistent and 
well-priced electrical power supply.
    But I will share with you, energy prices here are about 20 
percent less than they are in Asia. This is one of the few 
areas where we are truly competitive. Unless we are careful, we 
could inverse that equation. Unless we are careful, that 
pipeline which we are discussing today could go west to 
Vancouver in order to take that petroleum to Asia. That would 
make manufacturing in Asia even more of a challenge for our 
competition here in the United States because it would inverse 
that equation and make energy cheaper in Asia than it is in the 
United States.
    When we reflect on this, I think we should think about the 
multiplier effect that dollars earned in the Northern 
Hemisphere that are spent in the Northern Hemisphere have in 
supporting additional jobs and adding to our tax base. Because 
the studies also show that, because of most of what Canada 
purchases, they don't do a lot of manufacturing. Eighty-five 
percent of what we spend in Canada comes back to the United 
States in our economy. And so, as we consider purchasing this 
oil from Canada, rather than our reliance on the Middle East 
and Venezuela for oil, this is another consideration.
    This pipeline is 875 miles from Canada through Montana, 
South Dakota, and Nebraska. It is going to allow, if we can do 
it, delivery of 830,000 barrels per day of crude oil to 
American refineries. It is going to create jobs. And you have 
seen various estimates from a high of 200,000 to a low of 
20,000. I think the best estimate is it is about 130,000 jobs 
that would be created, from the studies I have seen.
    But I am going to return to the argument that it is going 
to enhance our national security. All 24 of the majority 
members of the full House Foreign Affairs Committee wrote to 
the President last month, and here is the argument we made: By 
providing secure access to petroleum from Canada, we would 
reduce our reliance on energy imports from countries in the 
OPEC cartel. The U.S. would be less vulnerable to political and 
security-related disruptions of our energy supply. Further 
hesitation in approving Keystone XL would not only ensure 
higher economic costs, but enhance the fortunes of economic 
rivals, as Chinese state-owned oil companies and others race to 
secure permanent access to North American energy sources.
    The role of the State Department in the approval process is 
to determine that the border crossing and its resulting 
conditions would serve the national interest. The State 
Department's Draft Supplemental Environmental Impact Statement 
on Keystone Pipeline could not assert that there was an 
environmental reason to not approve the pipeline.
    Since there are clear economic and national security 
reasons to support Keystone, the only rational move for the 
administration to make is to go ahead and approve the pipeline. 
It is squarely in our national interest to do so.
    The State Department's Draft Statement becomes final on 
April 14th, and after that, the administration should be out of 
excuses to delay approving this pipeline. They must not come up 
with new excuses.
    The time, I think, Mr. Chairman, for approval is now. And I 
appreciate your yielding me the time.
    Mr. Salmon. Thank you, Mr. Chair.
    I would like to recognize myself to speak and give myself 
as much time as I may consume. And then, afterwards, Mr. Sires, 
I want to recognize you. And then, we would like to hear from 
the Honorable Lee Terry.
    Good morning and welcome to this second hearing of the 
Subcommittee on the Western Hemisphere. During our first 
hearing we discussed the challenges that we face in the region, 
but there are also many opportunities that exist right here in 
our own backyard in the Western Hemisphere.
    Building on our first hearing, I want to take a closer look 
at some of these opportunities, and whether the administration, 
as a matter of policy, is making the most of those 
opportunities for the American people. I want to seize the 
momentum created by our first hearing to talk about our 
relationship with our neighbors directly to the south and 
directly to the north of us, Mexico and Canada.
    The U.S. already enjoys vibrant trading relationships with 
both Mexico and Canada. That said, we need to identify ways to 
complement those partnerships in the pursuit of energy 
security, as the chairman just referenced, jobs for the 
American people and enhanced regional democracy, prosperity, 
free markets, and peace.
    It is my intention that this subcommittee should be a voice 
in promoting and increasing trade as well as building on 
existing free trade agreements throughout our hemisphere. Free 
trade policies go beyond benefitting the American people by 
increasing access to a greater number of goods at lower prices. 
Free and open commerce with our neighbors helps foster economic 
development in poorer countries while reinforcing with our 
neighbors the value of freedom and the rule of law. I think 
that the most important thing that we export as a nation is our 
freedom and our ideals.
    For example, I have always believed that a safe and 
prosperous Mexico is in the United States' national interest. 
We already have the vibrant commercial partnerships with Mexico 
and Canada. We have the world's largest free trade area under 
NAFTA, made up of about one-third of the world's total Gross 
Domestic Product.
    What I would like to see is an enhancement of that already-
close relationship where we can expand on existing bilateral 
trade to achieve North American energy security and 
independence by making us less dependent on oil from the Middle 
East, from Venezuela, and other unpredictable, more unstable 
areas. This, in turn, will make our region more prosperous and 
more stable.
    To that end, I am very interested in taking a close look at 
the proposed Keystone XL pipeline project with Canada to 
determine why exactly the administration continues to stall on 
this project. As we know, Canada is already our largest 
supplier of oil and is the world's fifth-largest petroleum 
producer. This project, once approved, would result in a true 
synergy toward energy security, a system to transport crude oil 
from Canada down to the Gulf Coast refineries equipped to 
refine the heavy crude.
    What's more, approval of this pipeline will create jobs in 
the United States. With our domestic economy still struggling 
and 12 million Americans still looking for work, it is, 
frankly, unconscionable that this project has been essentially 
stalled for over 4 years by the administration.
    I am looking forward to hearing from our witnesses about 
why the administration continues to put off approval in light 
of the Draft Supplemental Environmental Impact Statement put 
out by the State Department earlier this month that stated 
there would likely be no significant impact--I will repeat, no 
significant impact--to resources along the proposed route.
    In addition, we are eager to receive information on how 
swift approval of this project will benefit U.S. national 
interests as well as our bilateral relationship with Canada, 
or, concurrently, how continued delays may, in fact, strain 
that close relationship.
    I am eager to hear from the witnesses about the Trans-
Boundary Hydrocarbons Agreement signed last year with Mexico 
and, again, determine why the administration continues to stall 
on sending this agreement to Congress for approval. I see many 
opportunities in Mexico. For example, if Pemex can achieve true 
reforms, open in a way to direct foreign investment in their 
nationalized energy sector, for the first time in history 
Mexico will prosper, and U.S. energy security will be enhanced 
by a more reliable and prolific source of oil from our closest 
neighbor to the south.
    In my opinion, approval of this agreement will pave the way 
for increased energy cooperation between our two countries and 
will create jobs and economic development both for the U.S. and 
the Mexico economies. I believe, with this first step, we will 
identify other opportunities for energy cooperation and growth 
with Mexico beyond hydrocarbons.
    I want to thank my colleague and friend, the gentleman from 
Nebraska, Lee Terry, for testifying before us today. Lee has 
been a tireless advocate for moving the Keystone XL pipeline 
project forward, and it is a pleasure to have him here to 
provide his insights.
    I know he shares my frustration in the delays that the 
project has experienced at the hands of the administration. I 
look forward to working with him to try and find a solution 
that will ensure swift approval of this timely job-creating 
energy project.
    In addition, I welcome our other witnesses, all of whom are 
experts in the field of energy and our relationship with Mexico 
and Canada. I am looking forward to a truly productive hearing. 
I believe we can come together as Americans and find common 
ground in the value and the imperative of actively and 
seriously pursuing policies that will not only enhance our 
energy security, but also grow our partnerships with Canada and 
Mexico, so that we can complement each other's efforts to 
solidify peace and prosperity into the future for our 
respective nations.
    Now I would like to recognize my colleague, Albio Sires, 
the ranking democratic member for his opening remarks.
    Mr. Sires. Thank you, Mr. Chairman.
    Thank you to our witnesses for being here today.
    I believe our foreign policy toward the hemisphere has gone 
by the wayside for far too long. We are falling short of 
articulating a strategic policy for the region as a whole, 
especially in regards to energy policy in the hemisphere. Our 
lack of attention to our neighbors is disconcerting, especially 
since some of our neighbors are some of our strongest allies.
    This is particularly worrisome, given our energy dependence 
on nations outside our hemisphere. While oil production has 
increased in the U.S., it has not increased enough to overcome 
our need to import oil. In 2011, the United States imported 
four times the amount it exported, and presently we get about 
half of our oil and petroleum from the Western Hemisphere, half 
of which is from Canada.
    Canada is the single-largest foreign supplier of petroleum 
and natural gas to the United States. After Saudi Arabia and 
Mexico, it is the United States' third-largest supplier of 
petroleum. Together, Canada and Mexico account for nearly all 
of U.S. natural gas exports. The combined volume of energy 
trade with Canada and Mexico totaled an estimated $125 billion 
in 2012.
    There is no doubt that maintaining and strengthening our 
energy relationship with Canada and Mexico is in the nation's 
interest. I believe that the proposed Keystone pipeline and the 
Trans-Boundary Hydrocarbons Agreement with Mexico are in the 
national interests of the United States. This is especially 
true in light of the declining foreign oil supplies from Mexico 
and Venezuela, and the fact that we import more than 60 percent 
of our energy needs.
    A pass on the Keystone project is not only a pass on 
Canada, our largest trading partner, but a pass on an 
achievable avenue to help meet our energy needs. A study 
commissioned by the U.S. Department of Energy highlighted the 
possibility that, if the pipeline is not constructed to serve 
U.S. Gulf refineries, then there exists the real possibility 
that market needs will divert Canadian supplies to Asia and 
probably China. Furthermore, the scale of the project will 
create jobs and increase investment during construction and 
provide added downward pressure on world oil prices due to 
additional supply.
    In regard to the Trans-Boundary Hydrocarbons Agreement with 
Mexico, I am glad that we have progressed on a decade-long 
process to provide a legal framework to how we manage the 
resources along our maritime waters in the Gulf of Mexico. 
Mexico is a key component in the United States energy security 
framework. The United States is Mexico's largest trading 
partner and largest foreign investor. Additionally, Mexico is 
the third-largest U.S. trading partner after Canada and China, 
and is the U.S.'s third-largest foreign supplier of petroleum.
    Mexico's administration has committed itself to reverse its 
declining oil production and has opened the possibility to 
pursue joint private ventures with foreign firms in the 
exploration of its resources. I believe that we can work 
together in a constructive manner that mutually benefits both 
our country's energy security and respects the constitutional 
sovereignty of Mexico resources.
    The U.S. does not live in isolation. Clearly, what happens 
in one part of the world has political and economic 
repercussions here at home. In that regard, global instability 
and uncertainty are key threats to our national security of the 
United States. This is particularly true in terms of energy 
security and to events in resource-rich countries. As a result, 
our dependence on oil from the Middle East is concerning.
    Additionally, the nations of the Western Hemisphere are not 
immune to political instability. The recent death of Hugo 
Chavez in Venezuela will have short- and long-term implications 
elsewhere in the region, particularly in regards to energy 
security.
    As long as we look to increase our energy ties within the 
hemisphere, it is important that we address some growing 
concerns in the energy sector throughout the region. Amongst 
current non-Canadian sources for fuel in the hemisphere, the 
prospect for growth in output are tenuous at best. The erratic 
actions of countries like Venezuela, Bolivia, and Equador, and 
now Argentina, whose expropriations and nationalizations of 
private industry have had far-reaching destabilizing effects, 
are worrisome.
    In Mexico, the contraction of Cantarell Field and the many 
years of inadequate investment in the country's national oil 
company have resulted in falling production rates. In 
Venezuela, Chavez was more interested in financing empty U.S. 
alliances than the state oil company, Petroleos de Venezuela. 
Years of mismanagement have pushed away foreign investment and 
led to declines in production.
    Similarly, in Bolivia, President Morales nationalized oil 
and gas in 2006 and gave foreign investors a take-it-or-leave-
it option to comply. The same year, Equador's President Correa 
revoked the contract of Occidental Petroleum, a U.S. company. 
And recently, in April 2012, Argentina's President Kirchner 
moved to nationalize oil companies, expropriating 51 percent of 
the company controlled by Spain's Rexel.
    Moreover, the region's strained relationship and increasing 
pressures of anti-democratic actors such as Russia, Iran, and 
particularly China, whose self-interests are counter to the 
strategic concerns of the United States, should not be taken 
lightly. Economic, political, and energy-related crises occur 
every day.
    The dilemma for us as a nation is, what do we do today to 
mitigate the risk associated with securing our energy needs? We 
have a situation in the Middle East that is unsettling, and we 
have a situation where the upward pressure on the price of oil 
and, in turn, the price of gas is increasing sensitive to 
unpredictable global events.
    Before us we have a situation that we can remedy, some of 
this through the Keystone pipeline with Canada and progressing 
with the Trans-Boundary Hydrocarbons Agreement with Mexico.
    I am sensitive to the environmental concerns associated 
with development of the Keystone project. Efforts to mitigate 
these issues have been outlined in the recently-released 
Environmental Impact Statement. Additionally, the conclusion 
that the approval or denial of any oil transport project will 
not impact the rate of extraction of the oil sands or affect 
the demands for heavy crude at U.S. refineries is considerable.
    Moreover, the economic benefits that will be derived from 
the project are significant. Nearly 118,000 jobs will be 
created and a projected $20 billion would be injected into our 
economy.
    No one single project or initiative is a cure-all for our 
energy or security needs, and no approval will satisfy 
everyone's needs or alleviate every doubt. But we must continue 
to work with our neighbors to develop beneficial energy 
policies for the region. I am confident that these arrangements 
are good for Canada, good for Mexico, and, above all, good for 
the United States.
    Thank you, Mr. Chairman.
    Mr. Salmon. Thank you very much.
    I would like to now get on with our panels. First of all, I 
would like to introduce Congressman Lee Terry. He is a lifelong 
Nebraskan. Congressman Terry has worked continually to empower 
the people of his 2nd District. He has been a leader for 
Nebraska by advocating American energy security. And we thank 
you for that.
    Congressman Lee Terry currently serves on the Energy and 
Commerce Committee for the 113th Congress. He is serving as 
chairman of the Subcommittee of Commerce, Manufacturing, and 
Trade. This subcommittee casts a wide net over issues that 
affect every American every day.
    Congressman Terry, it is a delight to have you here today, 
and thanks for your leadership. We recognize you for your 
testimony.

   STATEMENT OF THE HONORABLE LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Thank you, Chairman Salmon and Ranking Member 
Sires. I appreciate your statement as well.
    Thank you for allowing me to testify on U.S. energy 
security and our partnerships with Canada and Mexico. For over 
2 years, my focus has been mostly on our northern neighbor and 
our need to connect the oil sands of Alberta with our 
refineries in the United States. Specifically, we have been 
waiting over 1,600 days for the U.S. State Department to 
approve the Keystone XL pipeline. Despite the strong ties 
between the United States and Canada, the foot-dragging over a 
Keystone XL pipeline has irritated many Canadian leaders and 
sparked talks about sending output of Canadian oil sands to 
China.
    According to the U.S. State Department, ``The United States 
and Canada share the world's largest and most comprehensive 
trading relationship,'' which supports millions of jobs in each 
country. Canada is the single-largest foreign supplier of 
energy to the United States. Recognition of the commercial 
viability of Canada's oil sands has made it the world's third-
largest holder of oil reserves, after Saudi Arabia and 
Venezuela, and is the only non-OPEC member in the top five.
    Canada and the United States have one of the world's 
largest investment relationships. The United States is Canada's 
largest foreign investor, and Canada is the fifth-largest 
foreign investor in the United States. U.S. investment is 
primarily in Canada's mining and smelting industries, 
petroleum, chemicals, and the manufacturer of machinery and 
transportation equipment; Canadian investment in the United 
States is concentrated in finance, insurance, manufacturing, 
banking, information, and retail trade, and other services.
    To me, this begs the question of why would we want to 
damage that relationship. The politicalization of the Keystone 
XL pipeline has done that. In an interview with Bloomberg News, 
Canadian Prime Minister Stephen Harper said that approval of 
the Keystone is ``a no-brainer.'' After the decision to delay 
the earlier decision, Harper told the AP, ``This highlights why 
Canada must increase its effort to ensure it can supply its 
energy outside of the U.S. and into Asia, in particular.''
    Jack Mintz, the head of the School of Public Policy at the 
University of Calgary said, ``The Keystone decision was a slap 
in the face to Canada, and it is making Canadians rethink the 
relationship.''
    Richard Waugh, Chief Executive Officer of the Bank of Nova 
Scotia, said, ``The Keystone ruling shows that we need to 
diversify away from the U.S. to Asia.''
    The individuals objecting to the project based on the 
thought that, if you stop the pipeline, you stop oil sands 
development in Canada are both shortsighted and wrong. Case in 
point: Faith Birol, Chief Economist at the IEA, told Bloomberg, 
``I am sure that if the oil sands production is not used in the 
United States, they will be used in other countries.''
    Dave Pumphrey, deputy director of the Energy and National 
Security Program at the Center for Strategic and International 
Studies, and 29-year veteran of the U.S. Department of Energy, 
suggested that the rejection of the Keystone XL project last 
January introduced new uncertainties into our economic 
relationship with Canada.
    And how did we get there? In the last 6 years, there have 
been five applications to the State Department for a major 
U.S.-Canadian import pipeline. The State Department has 
approved three pipelines, denied one, and is reviewing another. 
The first one, the Southern Lights Pipeline, was approved in 14 
months. The next two were approved in 23 and 27 months, 
respectively. And here we are, more than 65 months into the 
review of the Keystone XL pipeline, and we don't have a 
commitment. We don't have a timeline.
    The Draft Supplemental EIS issued March 1 by the U.S. State 
Department summary of impact stated that, ``The analysis of 
potential impacts associated with the construction and normal 
operation of the proposed project suggests that there would be 
no significant impact to most resources along the proposed 
project route.''
    So, what have we done? We are in the midst of drafting and 
will introduce a bill that will give the power to Congress to 
deem the permit.
    Now, while the State Department is working through their 
process, I want to go on record by stating to this committee 
that I have zero confidence that the State Department will act 
in a timely fashion with regards to the DEIS issued on March 
1st, 2013.
    So, Mr. Chairman and Mr. Ranking Member, I appreciate this 
opportunity to testify in front of your committee.
    [The prepared statement of Mr. Terry follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                              ----------                              

    Mr. Salmon. Mr. Terry, thank you very much for your 
testimony. We greatly appreciate it.
    Pursuant to Committee Rule 7, the members of the 
subcommittee will be permitted to submit written statements to 
be included in the official hearing record. And without 
objection, the hearing record will remain open for 7 days to 
allow for statements, questions, and extraneous materials for 
the record, subject to the length of limitation in the rules.
    So, Mr. Terry, thank you very much. We greatly appreciate 
all your work and your wonderful testimony. Thank you.
    Mr. Terry. I appreciate that.
    Mr. Salmon. We will take time now to seat the next panel.
    Thank you very much, gentlemen.
    I would like to introduce our second distinguished panel of 
witnesses.
    The first is Dr. Duncan Wood. Dr. Wood is the director of 
the Mexico Institute at the Woodrow Wilson International Center 
for Scholars. For 17 years, Dr. Wood was a professor and the 
director of International Relations Program at the Autonomous 
Institute of Technology in Mexico City. He has been a senior 
associate with the Simon Chair and the Americas Program at the 
Center for Strategic and International Studies (CSIS) in 
Washington, DC. His research focuses on Mexican energy policy, 
including renewable energy, and North American relations. He 
studied in the UK and Canada, receiving his Ph.D. in political 
studies from Queens University, Canada, in 1996.
    The next distinguished member is Mr. Daniel Simmons. He is 
the director of Regulatory and State Affairs at the Institute 
of Energy Research. Before joining IER, Mr. Simmons served as 
the director of the Natural Resources Task Force at the 
American Legislative Exchange Council (ALEC). Those of us that 
are former State legislators know ALEC well and we appreciate 
all the great work that body does. Prior to working for ALEC, 
Simmons was a research fellow at the Mercatus Center at George 
Mason University. Previous to working at the Mercatus Center, 
Simmons served on the legislative staff for the Committee on 
Resources in the U.S. House of Representatives, where he 
handled endangered species and forestry issues.
    Glad you haven't had to do any controversial stuff. That's 
good.
    Simmons holds a B.A. in economics from Utah State 
University and a J.D. from George Mason University School of 
Law. He is a member of the Virginia State Bar.
    And we appreciate you being here today.
    I am a graduate myself of BYU. So, nice to meet somebody 
that studied in Utah as well.
    Mr. Kyle Isakower, he serves as the vice president for 
Regulatory and Economic Policy at the American Petroleum 
Institute. He oversees API's programs that review proposed 
environmental rules and advocate for reasonable regulations. 
Mr. Isakower possesses 27 years of energy and environmental 
policy experience, including work in consulting and government 
positions. Mr. Isakower holds an M.S. in earth science from 
Adelphi University and a B.S. in biology/geology from the 
University of Rochester.
    Dr. Michael Levi--is it ``Levee'' or ``Levie''? I want to 
get it right.
    Mr. Levi. Levi.
    Mr. Salmon. Levi. I apologize.
    Okay. Dr. Michael Levi is the David M. Rubinstein senior 
fellow for Energy and Environment at the Council on Foreign 
Relations (CFR) and the director of the CFR Program on Energy 
Security and Climate Change. Before joining CFR, Dr. Levi was a 
non-resident science fellow and a science technology fellow in 
foreign policy studies at Brookings Institution. Prior to that, 
he was director of the Federation of American Scientists' 
Strategic Security Project. Dr. Levi holds a B.S. in 
mathematical physics from Queens University-Kingston and an 
M.A. in physics from Princeton University, where he studied 
string theory and cosmology. He holds a Ph.D. in war studies 
from the University of London, Kings College.
    Let me just explain briefly the lighting system. I am sure, 
with all your education, it won't be difficult to figure it 
out, but I have to explain it anyway. Before I recognize you to 
provide your testimony, I am going to explain this system.
    You will each have 5 minutes to present your oral 
statement. When you begin, the light will turn green. When you 
have 1 minute left, the light will turn yellow. And like my 
kids think, yellow means speed up; I think that is probably a 
good thing. Speed up at that time. And when your time has 
expired, the light will turn red. I ask you to conclude your 
testimony when the red light comes on.
    After our witnesses testify, all members here on the 
subcommittee will have 5 minutes each to ask questions. I urge 
my colleagues to stick to the 5-minute rule to ensure that all 
members get the opportunity to ask questions.
    Dr. Wood, you are recognized.

 STATEMENT OF DUNCAN WOOD, PH.D., DIRECTOR, MEXICO INSTITUTE, 
                         WILSON CENTER

    Mr. Wood. Thank you. Chairman Salmon, Ranking Member Sires, 
members of the committee, it is a privilege to join you today. 
I really appreciate the invitation.
    I have been asked to talk to you all today about the 
opportunities for energy cooperation between Mexico and the 
United States. For the past 17 years, as the chairman said, I 
lived and worked in Mexico as a university professor. And for 
the past 6 years, I have worked intensively on policy research 
relating to Mexico's energy sector. I have worked closely with 
the government, with Pemex, and with the private sector on 
multiple issues relating to the Mexican energy industry. 
Between 2007 and 2009, I ran the Red Mexicana de Meija, a group 
of leading Mexican energy experts who advocated for a more open 
and inclusive discussion of energy reform in the country.
    Last year I was fortunate enough to lead a group of experts 
which produced an influential report that lays out the guiding 
principles for the oil industry reform that is expected later 
this year under the Pena Nieto government.
    Looking ahead to the next 4 years of interaction between 
the governments of the U.S. and Mexico, there is potential for 
an enormously fruitful relationship in energy affairs. Much of 
this depends on two key factors: Political will and the 
internal changes that are underway in Mexico's energy sector.
    In the past, political sensitivities concerning U.S. 
involvement in the Mexican hydrocarbons industry have limited 
the extent of collaboration in the oil and gas sectors. This 
continues to be a cause for concern in any U.S.-based 
discussion from either public or private sectors of Mexican 
energy policy and the potential for collaboration. But in 
recent years there has been a notable relaxation of sensitivity 
in this area.
    Partly in response to the perceived need for international 
assistance in resolving Mexico's multiple energy challenges and 
partly as a result of a productive bilateral institutional 
relationship between Federal energy agencies, there is now a 
greater potential for engagement than at any time in the recent 
memory.
    I have identified three main areas in which bilateral 
energy cooperation holds great promise in the short- to medium-
term.
    First, given the importance of the theme for both 
countries, there is great potential in developing collaboration 
through the Trans-Boundary Hydrocarbons Agreement signed in 
early 2012.
    Second, the two countries should work together toward the 
creation of a truly-integrated market for electric power at the 
regional level, and that should be a priority for both 
countries, with a special emphasis on the question of a more 
complete cross-border transmission network.
    Third, in the area of natural gas, where Mexico's 
impressive potential for shale gas can only be realized after a 
significant reform of the sector to allow for greater private 
participation, U.S. firms have the opportunity to be leaders in 
the development of the resource, building on their experience 
in the Eagle Form Formation. In the meantime, major investments 
are needed in pipeline infrastructure, both to bring gas across 
the border from the United States into Mexico and within Mexico 
to bring the gas to the millions of potential customers who are 
currently without access to natural gas.
    Underlying all three of these areas are broader concerns 
about regional economic competitiveness and the consolidation 
of economic development in Mexico. The first of these concerns 
derives from the hugely important comparative advantage that 
the North American Economic Region has derived in recent years 
from low-cost energy, driven by the shale revolution.
    In order to maintain this comparative advantage and to 
ensure that the integrated manufacturing production platform in 
all three countries benefits from low-cost energy, the gains of 
recent years must be consolidated by fully developing Mexico's 
energy resources.
    With regards to the second concern, economic development, a 
number of commentators, analysts, and political figures in 
Mexico have identified energy reform as a potential source for 
driving long-term economic growth and job creation, and the 
potential opportunities for foreign firms are considerable.
    While the United States cannot play an active role in 
driving the reform process itself, the implementation of any 
future reform will benefit from technical cooperation with the 
U.S. in areas such as pricing, regulation, and industry best 
practices.
    In the time that remains, I would like to focus my 
attention on the Trans-Boundary Hydrocarbons Agreement. While I 
understand that there have been delays in presenting the treaty 
for ratification and that last year's electoral cycle was 
partly responsible for this, it is now important to focus on 
the implications and optimal timing of the ratification 
process.
    In terms of the implications, we should consider two 
points. First, that approving the treaty will create new levels 
of legal certainty for U.S. and Mexican firms operating in the 
Gulf border regions, encouraging them to engage in the risk-
taking required to produce oil from deep waters. Second, the 
agreement has far-reaching implications in terms of regulatory 
cooperation between the two countries that is fundamentally 
necessary in the aftermath of the Macondo disaster and crucial 
for boosting Mexican standards.
    In terms of timing, I would argue that ratifying the 
agreement before the Mexican energy reform debate begins in 
earnest will encourage the process forward. However, a 
ratification that occurs during the reform process may be 
viewed in such a way in Mexico that it actually complicates the 
debate.
    I would be happy to elaborate on any of these or other 
points of interest in the bilateral energy relationship in the 
Q&A that follows.
    And once again, I would like to thank you for the 
opportunity to be here today. I consider it a singular honor.
    [The prepared statement of Mr. Wood follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                              ----------                              

    Mr. Salmon. Thank you very much, Dr. Wood.
    Mr. Simmons?

STATEMENT OF MR. DANIEL R. SIMMONS, DIRECTOR OF REGULATORY AND 
          STATE AFFAIRS, INSTITUTE FOR ENERGY RESEARCH

    Mr. Simmons. Mr. Chairman, Ranking Member Sires, and 
members of the subcommittee, thank you for the opportunity to 
talk today about energy security and enhancing partnerships 
with Mexico and Canada.
    The United States, Canada, and Mexico are energy-rich 
countries. Total recoverable oil in North America exceeds 1.7 
trillion barrels. For comparison's sake, the U.S. uses roughly 
7 billion barrels of oil annually. Total recoverable North 
American natural gas is approximately 4.2 quadrillion cubic 
feet. That is 4200 trillion cubic feet. And the U.S. uses about 
24 trillion cubic feet annually.
    And North America has about 500 billion short-tons of 
recoverable coal. The U.S. uses about 1 billion short-tons of 
coal annually. So, North America is not limited by our energy 
resources, but, instead, by access to those resources. Trade 
between the U.S., Canada, and Mexico only makes our nation 
stronger and raises our combined economic welfare. Canada and 
Mexico are not only America's closest neighbors, but also very 
important trading partners and America's closest energy allies. 
In 2011, Canada and Mexico were the largest sources of oil 
exports to the U.S., and Mexico is the largest recipient of 
U.S. gasoline exports. Mexico's heavy oil production is 
falling, but that means more spare refining capacity in the 
Gulf Coast if Canadian oil can be transported to the Gulf 
Coast.
    The Trans-Boundary Hydrocarbons Agreement and Keystone XL 
pipeline will work to tie our countries together and grow our 
economies. The Trans-Boundary Agreement could lead to oil and 
natural gas production of 1.5 million acres in the Gulf of 
Mexico that was previously off-limits due to border issues. 
This production alone will not lead to a revolution in 
hydrocarbon production for the United States and Mexico, but 
more important than the oil and natural gas resources along the 
border is the potential for greater cooperation between Mexico 
and the United States.
    Mexico has long been a leading oil producer, but oil 
production in Mexico has fallen. Again, this is not because of 
a lack of resources. Mexico has an estimated 10.5 billion 
barrels of proven oil reserves. But that amount could double 
when unconventional and deepwater resources become proven 
reserves.
    The United States is a leader in accessing unconventional 
and deepwater resources, as seen by huge new oil discoveries in 
places like offshore Brazil that were made using technology 
developed in the U.S. Working together, we can increase 
Mexico's oil production and reverse their oil production 
decline. This is especially true if U.S. hydraulic-fracturing 
technologies are used to access Mexico's oil shale and gas 
resources. For example, one of America's most prolific shale 
fields, the Eagle Ford, extends into Mexico from Texas, but all 
the activity so far is on the U.S. side of the border.
    The Obama administration successfully finalized 
negotiations on the Trans-Boundary Hydrocarbons Agreement, but 
now needs to follow through and submit the agreement to 
Congress for approval, hopefully quickly.
    Much has been said about the Keystone XL pipeline. The 
fundamental question under Executive Order 13337 is simple: Is 
the pipeline in the national interest? After 4 years of study, 
I believe it is clear that the pipeline, indeed, is in the 
national interest, just as all the trans-border energy 
pipelines are.
    More oil from Canada, instead of from overseas, seems to 
obviously be in our national interest. We actually benefit more 
financially from a barrel of oil from Canada than from any 
other foreign source. Canada is America's largest trading 
partner and the largest source of oil imports.
    The Keystone XL will create thousands of jobs and oil 
supplies at a lower cost to Americans and improve our energy 
security. Lastly, the State Department studies have not shown 
that it would have a detrimental impact on the environment. It 
is clear the pipeline is in our national interest.
    There is much more that could be done to benefit our 
continent, which happens to sit on the largest sources of 
hydrocarbons in the world. Affordable, reliable, and secure 
energy is our common bond, and the U.S., Canada, and Mexico can 
all benefit from its development.
    The administration has been too slow on approving the 
Keystone XL and on submitting the Trans-Boundary Hydrocarbons 
Agreement to Congress. Positive movement on these fronts would 
help other energy projects move forward, to the benefit of all 
of our people.
    Thank you for your time. I will gladly answer any 
questions.
    [The prepared statement of Mr. Simmons follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                              ----------                              

    Mr. Salmon. Thank you, Mr. Simmons.
    Mr. Isakower?

STATEMENT OF MR. KYLE ISAKOWER, VICE PRESIDENT, REGULATORY AND 
         ECONOMIC POLICY, AMERICAN PETROLEUM INSTITUTE

    Mr. Isakower. Good morning, Chairman Salmon, Ranking Member 
Sires, and members of the subcommittee.
    My name is Kyle Isakower, Vice President, Regulatory and 
Economic Policy at the American Petroleum Institute.
    API represents all segments of America's technology-driven 
oil and natural gas industry. In total, that is close to 550 
companies. Our industry directly and indirectly supports 9.2 
million American jobs and almost 8 percent of the U.S. economy. 
And that is what I want to talk to you about today, spurring 
job creation and economic growth in cooperation with our North 
American neighbors, Canada and Mexico, specifically, the 
contribution of the long-awaited and much-studied Keystone XL 
pipeline project and the Trans-Boundary Hydrocarbons Agreement.
    First, Keystone XL. In the past month, the administration 
seems to be inching closer to finally approving the Keystone XL 
pipeline. That is encouraging because it is good economic 
policy.
    At a time of persistent high unemployment, the tens of 
thousands of jobs created by the pipeline would be a welcome 
relief to families across the country. Trans-Canada, the 
company responsible for building the pipeline, estimates that 
construction of the full Keystone XL pipeline would create 
20,000 jobs, with even more jobs created over the long-term. 
According to the Canadian Energy Research Institute, expanding 
oil sands production by 830,000 barrels per day, the equivalent 
capacity of the Keystone XL pipeline, could support 117,000 new 
American jobs by 2035.
    More broadly, the economic benefits of development of 
Canada's vast oil sand energy resource, to which the pipeline 
is vital, would be felt in every state except Hawaii. There are 
at least 2,400 American companies in 49 states already involved 
in the development of Canada's oil sands.
    In short, the Keystone XL project is a job-creator and a 
catalyst for economic growth nationwide. The good news is that 
the public understands and supports the project. According to a 
poll API sponsored last month, 69 percent of registered voters 
support building the pipeline, with strong majorities among 
Democrats, Republicans, and Independents. What's more, 83 
percent believe the pipeline will strengthen our energy 
security, and fully 92 percent agree jobs are important when 
considering the project.
    Further, strengthening our energy partnership with Canada 
is a clear economic winner because roughly 90 cents of every 
dollar used to purchase Canadian goods and services, including 
oil, are returned to our economy by Canadians buying American 
goods and services.
    In addition, the Keystone XL pipeline will provide a 
significant boost to U.S. energy security by increasing our 
capacity to import oil from a friendly, reliable neighbor, 
bringing more than 800,000 barrels of oil per day to U.S. 
refineries. With the pipeline, our crude imports from Canada 
could reach 4 million barrels a day by 2020, twice what we 
currently import from the Persian Gulf, and at a time when the 
U.S. is facing reduced imports from countries like Venezuela.
    And in spite of the erroneous rhetoric from opponents, 
according to the Department of State, the Keystone XL pipeline, 
when completed, would ``have a degree of safety over any 
other'' due to its 57 special additional safety measures 
approved by the Pipeline and Hazardous Materials Safety 
Administration.
    I want to conclude by briefly touching on the Trans-
Boundary Hydrocarbons Agreement with Mexico because it, too, 
could create jobs and enhance our energy security. The 
agreement establishes a cooperative process for managing oil 
and gas reservoirs along the boundary region in the Gulf of 
Mexico and encourages cooperative agreements between U.S. 
independent oil companies, or IOCs, and Mexico's state-owned 
oil company, Pemex, to jointly develop oil resources along 
boundary areas in the Gulf of Mexico.
    Importantly, this agreement will provide legal certainty to 
U.S. IOCs, which will encourage investment in new energy 
development, creating jobs and spurring economic growth. It is 
our view that the President should resolve the lingering 
uncertainty over whether he intends this agreement to be a 
treaty or an executive agreement. Appropriate legislative 
action should, then, quickly be taken to ratify the treaty, if 
applicable, or pass implementing legislation. While API has no 
preference regarding how this agreement moves forward, we urge 
action on this important agreement as soon as possible.
    Both issues, the Keystone XL pipeline project and swift 
implementation of the Trans-Boundary Hydrocarbons Agreement, 
are important to our nation's energy security and long-term 
economic growth and highlight how important national leadership 
is to promoting a positive, forward-looking energy policy that 
will ensure that in the 21st century Americans are energy-
secure, which I believe is the true goal of today's hearing.
    Thank you for your time and attention.
    [The prepared statement of Mr. Isakower follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                              ----------                              

    Mr. Salmon. Thank you.
    Dr. Levi?

 STATEMENT OF MICHAEL A. LEVI, PH.D., SENIOR FELLOW FOR ENERGY 
  AND THE ENVIRONMENT, AND, DIRECTOR OF THE PROGRAM ON ENERGY 
   SECURITY AND CLIMATE CHANGE, COUNCIL ON FOREIGN RELATIONS

    Mr. Levi. Chairman Salmon, Ranking Member Sires, members of 
the subcommittee, thank you for inviting me to speak with you 
this morning.
    The United States has a historic opportunity to capitalize 
on changes unfolding across the energy landscape. In doing so, 
U.S. strategy needs to treat economic prosperity, national 
security, and the environment and climate change all with care.
    The Keystone XL pipeline would not deliver the massive 
economic and security gains that some have claimed, but 
allowing the pipeline to proceed would not be the climate 
catastrophe that many have predicted, either. Ultimately, 
allowing the pipeline to proceed would likely yield benefits 
that outweigh the associated costs.
    I have provided the committee with a study I published on 
the Canadian oil sands that focused on six areas in which 
analysts have claimed that oil might affect U.S. security. The 
study concluded that many of those have been exaggerated. 
Buying our oil from Canada would not starve petro-dictators of 
cash, protect the United States against cutoffs from hostile 
producers, or do much to shield the U.S. economy from the 
impacts of the most destructive oil price spikes.
    But greater Canadian oil production does create real 
benefits for the United States. If oil production facilitated 
by Keystone increases total world oil supplies, that will 
moderate the global price of oil. And while the impact on each 
gallon of gasoline would be tiny, the savings would add up.
    At the other extreme, if Canadian production were fully 
offset by cuts elsewhere, the price of oil would not change. 
But, in that case, the pipeline's climate damages would also be 
largely mitigated.
    In all cases, expanded Canadian oil sands production would 
create commercial opportunities for U.S. firms. Approving the 
pipeline would also create several thousand temporary jobs. 
This should not be dismissed, but it should not be exaggerated, 
either. The pipeline would not be a large job-creator. 
Opponents are right to highlight opportunities for job creation 
in clean energy as well, but this need not be an ``either/or'' 
decision.
    Those who have raised climate concerns about the pipeline 
are right to be worried about climate change and to assert that 
we have not yet done enough to deal with it. But blocking the 
pipeline would do little to rein-in greenhouse gas emissions. 
In an extreme case, blocking the pipeline would cut global 
emissions by less than half of 1 percent. The real-world impact 
would be lower.
    Any project in isolation, of course, has limited climate 
impacts, which makes what I have just told you a poor reason 
alone to let the pipeline proceed. More important is that the 
overall benefits that would result from approving the pipeline 
would likely exceed the resulting climate costs.
    You have also asked me to discuss the U.S.-Mexico Trans-
Boundary Hydrocarbons Agreement. The United States benefits 
from a more robust Mexican economy. U.S. national security also 
gains from greater Mexican petroleum production. Mexico still 
relies heavily on the industry for a large part of its 
government revenues, and a healthy Mexican Government is better 
able to deal with social challenges that spill over to the 
United States.
    The Trans-Boundary Hydrocarbons Agreement is of relatively 
little direct consequence to U.S. oil production. It would, 
however, boost opportunities for U.S.-Mexico cooperation on 
environmental supervision of offshore drilling. The agreement 
also comes at a critical time for the Mexican oil industry. The 
new Mexican President has made constitutional reform that would 
create opportunities for foreign investment in Mexican oil and 
gas a priority. U.S. failure to move forward with the agreement 
could only sour the environment in which these changes will be 
debated. More consequentially, if opening of Mexico's 
hydrocarbon sector creates new investment opportunities, a U.S. 
Government with a credible record of deal-making will be more 
capable of advocating U.S. interests.
    The United States also has important opportunities to 
cooperate with Canada and Mexico in ways that go beyond the 
decisions at the center of this hearing. Congress could 
investigate shale gas cooperation, expansion of clean energy 
markets, and harmonized emissions standards.
    Moreover, while today's discussion is valuably focused on 
important opportunities for enhanced oil and gas production, 
the United States ultimately needs to reduce its oil use and 
curb its greenhouse gas emissions, too. Putting together strong 
policy on these fronts with gains in oil and gas production 
would be a win for the economy, security, and environment.
    Thank you very much for your time. I look forward to 
answering any questions you have.
    [The prepared statement of Mr. Levi follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                              ----------                              

    Mr. Salmon. I would like to thank our distinguished 
witnesses for their wonderful testimony. Both of these issues 
are of extreme importance to the American people.
    I would like to also state for the record that yesterday we 
were able to meet with folks from the administration. We did 
invite them to testify before this hearing today, but, on the 
advice from their counsel, legal counsel, they declined to 
testify today. But they did meet with me last night, and we had 
a very meaningful briefing.
    Especially on the Trans-Boundary Hydrocarbons Agreement, 
they signaled that the administration, the White House, is very 
supportive of moving forward. And we looked at language which 
would need to be instituted, passed here in the Congress, 
regarding implementing legislation for the agreement. And it is 
quite simple language, nothing real complicated about it.
    I believe--I have talked with the ranking member--that we 
are very interested in drafting that language and moving it 
forward. I intend to speak with the chairman of the Committee 
on Jurisdiction, Congressman Doc Hastings, and try to move that 
legislation, at least get it started within the next couple of 
weeks.
    So, our hope is we will get that implementing legislation 
done post haste and we can get to that great partnership with 
Mexico, more specifically, with Pemex, and go after all that 
wonderful, luscious oil that is waiting at our beck and call. 
So, we are excited about that.
    I would like to ask my first question of Dr. Levi. You made 
a statement, Dr. Levi, that the costs that would result from 
blocking the pipeline would likely exceed the accommodating 
climate benefits. It is interesting to note, yesterday 
President Obama came to the Republican Conference and he said 
exactly the same thing, in essence. He said, very similar to 
what you said, that he believed that the number of jobs may be 
a little bit overblown, but he also said that the impact on 
climate change is extremely overblown as well.
    And when asked by the Conference what they were planning to 
do with the agreement, he said that there would be a decision 
within the next couple of weeks. So, we can all cross our 
fingers that that decision is going to be in the affirmative 
and we can move forward and get those jobs and work on a great 
oil policy here in the Western Hemisphere.
    But, anyway, I just would like to ask you, can you give any 
rationale, given the fact that it does appear that the benefits 
far outweigh the cost--some were speculating that maybe this 
stall-and-drag-the-feet tactic is kind of beating up on big 
oil. We are wondering if you have any thoughts as far as why, 
if it is a good idea and the costs outweigh the benefits, why 
are we dragging our feet?
    Mr. Levi. Congressman, I don't want to speculate on the 
administration's decisionmaking.
    Mr. Salmon. We will let you.
    Mr. Levi. There are certainly local environmental issues 
that have had to be confronted over the last year or two, 
particularly around the pipeline route in the State of 
Nebraska. Once the pipeline route was shifted, a new 
Environmental Impact Assessment was necessary. These things 
take a long time.
    I would encourage Congress to combine stronger funding for 
those that need to handle these sorts of applications with 
reformed rules that retain environmental safeguards, but 
streamline the processes, not just for pipelines, but for oil 
and gas development, clean energy development, energy 
development in general.
    For those who are opposing the pipeline, I think that their 
assessments of the costs and benefits are often different. They 
may judge security through a different lens. They may have 
different assumptions about the economy, but in a lot of cases 
they weigh climate more strongly in their calculations. That is 
not unreasonable to do. When I make my net judgment, I am 
weighing the economy, security, and climate equally and coming 
to that conclusion.
    Mr. Salmon. Thanks, Dr. Levi.
    I would like to ask my next question of Mr. Isakower. We 
have good reason to believe that the Mexican President, Pena 
Nieto, is very serious about instituting reforms in Mexico, 
especially including their energy sector, including Pemex, 
which is the world's most close oil regime. Do you get a sense 
from the companies you represent that there is an optimism in 
terms of the degree to which the reforms can have an effect on 
increased partnerships beyond the Trans-Boundary Agreement 
between the U.S. energy sector and Mexico?
    Mr. Isakower. Yes, Mr. Chairman. Excuse me, Mr. Chairman. 
Thank you for the question.
    And, yes, I do believe that my members do see tremendous 
opportunity working with Pemex going forward. The Trans-
Boundary Hydrocarbons Agreement really is just the first step. 
It is a foot in the door, so to speak.
    In working with Pemex on the Trans-Boundary plays, if that 
establishes a relationship with Pemex with the IOCs that I 
represent, we absolutely see that as a very significant step to 
a regime in a country that has not, as you have said, allowed 
IOCs to work with them in the past. And this is a tremendous 
opportunity. Really, this is really just a first step and the 
real benefit to this is the potential for us working with Pemex 
long-term on other plays.
    Mr. Salmon. Thank you very much.
    My time has expired. I recognize Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman, and thank you for the 
panel for being here today.
    Dr. Wood, maybe I didn't hear you correctly, but did you 
say that the Trans-Boundary Hydrocarbons Agreement would 
complicate things? Did you say something to that effect? Can 
you just elaborate a little bit on that?
    Mr. Wood. Thank you for the question. So, the question is 
on timing. I think that if, as Chairman Salmon has just said, 
this goes through in the next couple of weeks, that is fabulous 
news. People in Mexico are beginning to ask questions about, so 
why is taking so long? And so, this would be seen as a very 
positive step forward, and it would encourage, I think, the 
process of energy reform in Mexico. It would be a feather in 
the cap of the new administration of Pena Nieto to say that we 
were the ones that actually managed to get this finally onto 
the books, even though recognizing this is an internal decision 
of the United States.
    The timing question is sensitive, though. If Mexico begins 
its energy reform debate in earnest, which we expect to happen 
at some point during the summer, maybe August-September time, 
and if at that time the U.S. Congress passed or ratified the 
agreement, that would be seen as almost being, well, isn't this 
serendipitous; isn't this kind of a strange coincidence, the 
United States doing it exactly at this moment?
    And it could complicate the discussions in a sense that 
those people who are opposed to an opening of the sector in 
Mexico would be able to look at this and to say, you see, the 
United States, again, all they want is access to our oil; it is 
not about what is good for Mexico.
    And so, that is why I try to nuance that a little bit, to 
say that it is the timing that is really key. Do it now; it is 
a good thing. Do it in August-September, and it becomes a lot 
more complicated.
    Mr. Sires. Now I know you taught in Mexico for what, 17 
years? Have you seen a shift in attitude toward the United 
States' involvement in the energy business in Mexico?
    Mr. Wood. Yes. It is very difficult to back this up with 
any kind of data. There are some private opinion polls that are 
out there that suggest that Mexicans are more in favor of a 
meaningful energy reform--by meaningful, I mean opening of the 
sector to private participation--than at any time in the past.
    One of the little pieces of information, trivia, that I 
like to put forward is that, back in 2006, there was an opinion 
poll that was taken on Mexican attitudes toward the world. 
Mexicans were asked lots of questions, but two stood out. One 
was, if you believe that it would result in a significant 
improvement in your standard of living, would you agree to full 
integration with the United States of America? Now a small 
majority of Mexicans actually said yes on that, which is an 
extraordinary result.
    A couple of pages down on the opinion poll, there was 
another one. Mexico's energy production is in trouble. Our oil 
production is declining. Do you believe that it is okay to 
allow foreign and private firms into our oil sector? Eighty 
percent of Mexicans said no. So, they are more likely to sell 
their country than their oil.
    That attitude has changed dramatically, largely because of 
what happened over the past few years in terms of getting the 
idea of the problems facing the oil sector into the public 
consciousness. This process began in late 2007, continued 
through the energy reform process in 2008. And now, perhaps 
more than ever, Mexicans are actually willing to accept that we 
need to make a fundamental change. That will involve increasing 
private participation, and private participation means foreign 
participation.
    Mr. Sires. Thank you.
    Anyone who wants, you know, who would like to answer the 
question: One of the biggest negatives that the people who are 
against this pipeline say is that, if this oil comes from 
Canada and is going to the refineries in Texas, that it is 
going to be shipped out, that it is not going to be consumed in 
this country. Can anyone answer? Can anybody address that a 
little bit?
    Because, to me, you know, I support this pipe 
wholeheartedly, but I would hate to see this pipe being built 
and, then, have the oil being shipped to some other country and 
not relieve the people of this country, pressure in this 
country.
    Mr. Isakower. Actually, what we have in the Gulf region is 
the largest heavy oil refining complex on the planet. So, if 
you are bringing in heavy oil--and again, these refineries have 
been----
    Mr. Sires. I don't mean to interrupt, but this is the same 
situation that we have with Venezuela? The heavy oil comes 
into----
    Mr. Isakower. Exactly.
    Mr. Sires. Okay.
    Mr. Isakower. And as those Venezuelan supplies are 
dwindling, those refineries in the Gulf of Mexico which have 
been optimized to run on heavy oil and to process heavy oil, 
they need a new supply of heavy oil. So, the pipeline would 
actually bring down another supply of reliable, a reliable 
supply of heavy oil that those refineries would, then, process. 
So, there is a very strong economic incentive to keep that oil 
here in the United States rather than export.
    Mr. Sires. Thank you.
    Mr. Radel [presiding]. Thank you, Mr. Sires.
    I recognize myself next, not because I am in this chair, 
but it actually is my turn.
    To me, this is so simple. National security and jobs. 
National security. Who would we rather deal with here in the 
United States, Canada and Mexico, our friends to our north and 
south, or with other countries that might not have our best 
intentions in mind thousands and thousands of miles away from 
us?
    In terms of jobs, jobs, jobs, jobs; we need them right now 
right here in the United States. And, yes, this is an answer 
for real private sector jobs here. But I would say that it also 
means jobs in Mexico.
    We are in a day and age when we know the reality is we 
still have undocumented workers, undocumented immigrants, 
coming to our country. Perhaps one of the best ways to solve 
that issue is to improve the economy in a country like Mexico, 
which is next to us.
    So, for me, again, it is just so simple, national security 
and jobs. And the President was very kind to come to our 
Conference yesterday and speak with us, take questions from our 
caucus. If he is listening now, if his administration is 
listening now, please send us this agreement.
    Now, that said, not being any kind of an expert on Mexico, 
I would refer to you, Dr. Wood. What would this mean for our 
economic relationship with Mexico, and perhaps more 
importantly, what would it mean for Mexico itself?
    Mr. Wood. Thank you.
    So, the estimates that we are currently seeing in Mexico 
are that a meaningful energy reform that will take place there 
could result in a huge jump in GDP. In terms of the Trans-
Boundary Hydrocarbons Agreement, in and of itself, I don't 
think that is going to actually be the major detonator of jobs 
in Mexico, but seen as being a step on the path toward energy 
reform and an opening of the sector. Because I think it is a 
positive sign, if done right, then we are looking at a big 
impact.
    So, the estimates that we have of a reformed Mexican energy 
sector are between 2 and 4 percent GDP growth per year extra on 
top of what they have got right now. That fits in very, very 
nicely with what the Pena Nieto administration has set as their 
goal, which is somewhere between 4 and 6 percent GDP growth per 
year. I mean, that is ambitious. Mexico, over the past 12 
years, has been stuck around sort of the 2.5-3 percent GDP 
growth per year mark.
    In terms of what that means for jobs, it is difficult to 
actually work out. But if we see a meaningful reform of the 
Mexican energy sector, we are looking at not just new jobs 
involved in the exploration, production, and refining process, 
but the real possibility of building up a full oil industry in 
Mexico that is not just about getting the oil out of the 
ground, refining it, and sending it on, but all of the other 
services industry that is built around that. And that is an 
incredibly exciting prospect for those of us who really care 
about Mexican economic development.
    And I think that, if we look at it in those terms, that is 
one thing. But if we look beyond that even further, and we say 
this has a knock-on impact upon the rest of the economy--and I 
think the best example of this is to see how energy prices have 
the opportunity to come down significantly, largely because of 
questions like the shale gas resources that exist in Mexico 
and, of course, on the U.S. side. Those lower costs for energy 
for Mexicans, not for the consumer so much, but for Mexican 
companies, many of which, of course, are owned by U.S. 
companies, that is a hugely exciting prospect.
    We are looking here not just about Mexico, not just about 
the United States, but really a North American regional 
economic competitiveness agenda. And integrating energy markets 
across the region I would say is one of the best ways to 
actually get that going. So, clearly, jobs here in the United 
States depend upon Mexico becoming more competitive, and vice 
versa.
    Mr. Radel. Dr. Wood, I thank you for your time.
    I yield my remaining 1 minute, 15 seconds to Mr. Weber from 
Texas.
    Mr. Weber. Thank you, Mr. Chairman.
    This pipeline terminates in Port Arthur, Texas, which just 
happens to be my district. And so, it is of grave concern.
    Trey, can you yield me more than 1 minute, 15 seconds?
    Mr. Radel. Sure.
    Mr. Weber. Great. So, around lunchtime I will be done. 
[Laughter.]
    Let me start with you, Dr. Levi, did you say?
    Mr. Levi. Yes.
    Mr. Weber. Okay. You made the statement that--well, let me 
back up. The witness before you, Lee Terry, had an interesting 
testimony. He said there have been five applications for 
Canada-American import pipelines. Three have been approved; one 
has been denied, and one is in review. Guess which one that is? 
It has taken 1,600 days for this review process.
    Now you made an interesting analysis, Dr. Levi, in your 
statements. And you said that, basically, even though climate 
change needed to be paid attention to, that this had 
negligible, if any, effect on that discussion, and had a 
positive effect, no matter how slight, in your opinion. In 
essence, I took that to mean you felt like it should be going 
forward. How long did it take you to come to that conclusion?
    Mr. Levi. It took me--I couldn't pinpoint how long it took 
me to come to that conclusion. I didn't have the same 
processes----
    Mr. Weber. Did it take you 1,600 days?
    Mr. Levi [continuing]. To go through as the administration.
    Mr. Weber. Did it take you 1,600 days?
    Mr. Levi. It did not.
    Mr. Weber. Okay. Have you thought about maybe hiring out to 
the administration to advise them?
    Mr. Levi. If you would like to provide a recommendation, I 
would be happy to pass it along.
    Mr. Weber. Okay. I am just saying, you know, the President 
was gracious and did come to our Republican Conference 
yesterday, but he made the statement that this all would simply 
be sent overseas. And I had a chance to have some one-on-one 
face time with him, and I reminded him, of course, it came to 
my district and that it created construction jobs. And it 
doesn't matter whether you believe the numbers, that it is 
2,000 or 20,000 jobs, it is 2,000 jobs or 5,000, or whatever 
the low estimates are. It is going to provide construction 
jobs. It is going to provide maintenance jobs. We are going to 
move a product through a pipeline. It would buy up some 
property, bought at fair market value, that might otherwise be 
sitting fallow, so to speak.
    It would provide quite a stir in our economy. It would 
provide operation jobs at the ports. I have ports in my 
district. It would provide offloading longshoremen jobs, 
maintenance jobs, operations jobs, harbor and ship maintenance 
fees when foreign ships came in and docked on our ports.
    So, I can't, for the life of me, see how whether it 
provides 2,000 jobs or 20,000 jobs seems somehow to be a 
deterrent, No. 1. And, No. 2, is it not true that it is the 
safest way to transport oil as opposed to rail or truck? The 
environmentalists were concerned about an oil spill. But if 
they transport it by rail or by 18-wheeler, there are a lot 
more accidents that occur. No. 3, to what company would we say, 
``Just because you have a product that is moving through our 
United States''--and it doesn't matter whether you are Apple 
Computer or whether you are Nike tennis shoes or Toyota--``you 
are going to build or produce or move a product in our country. 
We don't want you to send it overseas.''? That is insanity.
    This is a positive impact for my district, for our State, 
for our country. I think that, without exception--and I am not 
sure about you, Dr. Wood--but I think all four of you at the 
table are basically saying you have come to the same 
conclusion. Do I misspeak?
    Thank you. I yield back.
    Mr. Radel. Thank you.
    And I would ask if the witnesses could provide any written 
response to that.
    [The information referred to follows:]
  Written Response Received from Michael A. Levi, Ph.D., to Question 
      Asked During the Hearing by the Honorable Randy K. Weber Sr.
    The Keystone XL pipeline would have mixed impacts on the United 
States. Most would benefit from (very marginally) lower gasoline 
prices; businesses connected to pipeline construction, and refineries 
in Texas, would benefit too. Those near the pipeline route (and 
possibly near some refineries) would be exposed to additional 
environmental risks; all would also be exposed to (very marginally) 
higher climate change risks.

    Mr. Radel. The Chair recognizes now Mr. Meeks from New 
York.
    Mr. Meeks. Thank you, Mr. Chairman.
    I happen to be--I don't know how many hours it has been--
but I am one that has been on the fence, trying to decide what 
is the right thing. There are a lot of things that I heard the 
chairman talk about that I agree with. Generally, when you talk 
about trade, if you are talking about better relationships, 
particularly with Canada and Mexico, I think that is extremely 
important.
    Dr. Levi, I was listening intently--well, to all of you 
witnesses, Dr. Wood, Dr. Isakower, and Mr. Simmons, too, very 
intently. I came to this hearing because I wanted to learn.
    I should say quickly, Dr. Isakower, it is always good to 
see someone who has a degree from Adelphi University, since I 
am an Adelphi graduate myself.
    But let me just start with Dr. Levi because those issues 
that you talked about are the issues that have caused me to be 
trying to decide which way to go, which way to lean, because I 
have some inclinations. But I wanted to make sure that we have 
the proper rules in place, et cetera.
    For example--I will use this as an example--coming from New 
York City, and also sitting on the Financial Services 
Committee, I saw the crash in 2008 and I witnessed potential 
catastrophe, for the inaction of Congress and all the failures 
of some of the regulatory bodies to move, et cetera.
    And I know that we have got to make sure that we have 
regulations in place to protect the consumers and the 
environment, but we have also got to make sure that we are not 
impeding progress in the private sector because of being 
overregulated. You know, so we have got to find that balance.
    Given your expertise in examining trends in future oil 
sands, what do you think the future will be for oil sands 
production, given the current political landscape in Congress, 
the current global oil prices, and the availability of oil 
worldwide? And from a safety standpoint, have we properly 
assessed the safety risk of--and I think the question that the 
gentleman from Texas, that is something interesting to me--the 
safety risk of transporting oil through the Keystone pipeline 
to the other oil properties, because that is a concern? If we 
have addressed those issues, my inclination is to lean that 
way. And I appreciate the gentleman's comments because they are 
important to me.
    Mr. Levi. Thank you, Congressman.
    It is important to be looking at these different dimensions 
at the same time and weighing them. To take your last question 
first, the State Department has thoroughly studied the local 
environmental consequences of the different options for 
transporting oil from Canada to the Gulf of Mexico, whether 
that is by road, by rail, by pipeline. And they have concluded 
that pipeline is the safest option.
    We can debate fine details forever. What is critical is to 
have those protections put in place. And my understanding is 
that a wide range of protections have been implemented or would 
be implemented, if the pipeline went forward.
    At prevailing oil prices, and given current Canadian 
policy, if there are ways to sell the oil from the oil sands, 
whether by transporting it to the United States or to the East 
Coast or West Coast of Canada, we will see substantial growth 
in the Canadian oil sands, on the order of several million 
barrels a day, which would require pipeline transport beyond 
the Keystone XL pipeline.
    When you think about the broader challenges of dealing with 
our economic and security goals and with our climate 
objectives, what I would urge is that we focus on expanding 
opportunities on the production side, including by providing 
sustainable environmental protections, but really focus our 
climate efforts on how we use energy, on reducing our oil 
consumption, and shifting to lower carbon energy sources. To 
me, that is the basic way that we capture the benefits from 
increased production while still dealing with our broad energy 
challenges.
    Mr. Meeks. Thank you.
    Let me ask, I guess I can't let an Adelphi degree graduate 
get away without me asking him a question. [Laughter.]
    You know, some economists will say, for every $10 increase 
in the price of a barrel of oil, the U.S. economy slows down by 
0.2 percent and potentially eliminates 120,000 jobs. Now, with 
the increased oil production here in the United States and the 
existing capacity, how do you see the market dictating the 
demand for the Keystone pipeline, and how do you see global oil 
prices changing in the product's viability or helping its 
viability?
    Mr. Isakower. Thank you, Mr. Meeks. And it is good to see 
another Adelphi graduate.
    In terms of global oil price, I can't predict price. No one 
really can. It is the market that is going to dictate it. 
However, the Canadian Government has certainly indicated that 
they are going to produce oil sands crude from Alberta with or 
without the Keystone XL pipeline. So, this is a project that is 
going to go forward. And putting additional product on the 
global market, additional crude on the global market will only 
have a downward effect on global price.
    Mr. Meeks. Thank you. I yield back.
    Mr. Radel. Thank you, Mr. Meeks.
    The Chair now recognizes Mr. Duncan from South Carolina.
    Mr. Duncan. Thank you, Mr. Chairman.
    Let me just touch on Keystone pipeline first. It has been 
over 1,600 days, we heard earlier, since the first application 
for Keystone pipeline was submitted. Hopefully, we are going to 
see some movement. Of course, it has been 1,415 days since the 
United States Senate has passed a budget for our nation, and we 
saw them present a budget yesterday, and maybe they will pass a 
budget. So, there is some hope that we can get a Keystone 
pipeline approved before it goes too much further.
    The former Ambassador to Canada from the United States is a 
personal friend of mine, the former Speaker of the House in 
South Carolina, David Wilkins. He has introduced me to a lot of 
the folks from Canada, not only in the oil sands production, 
but also in the government. And you are right, Mr. Levi, they 
are moving forward with production of oil and the oil sands. 
And that oil is going somewhere. It is either coming here 
through the Keystone pipeline to provide the jobs in Texas and 
Oklahoma in the refineries, where we have the capacity, or it 
is going west and it is going to the Pacific Ocean, it is put 
on boats and it is going to China to be refined. It is going to 
be refined somewhere.
    We need an all-American energy security solution in this 
country that includes Canada and it includes Mexico, allies and 
friends. It is time for the Keystone pipeline. And so, I urge 
the administration to move forward with that, and let's put 
those guys in Texas back to work in the refineries where the 
capacity is available.
    I want to shift gears to Mexico real quick and just say 
that Secretary Salazar spoke on April 24th, 2012 in his now 
infamous ``do something'' speech. And he said, he listed three 
things that Congress should do, but he said this: ``We are 
working''--and this is a quote--``We are working with the 
Congress on legislation needed to implement an agreement 
reached with Mexico to open trans-boundary oil and gas 
reservoirs for development.'' Really? You are working with 
Congress?
    I sit on the Natural Resources Committee. I am on the 
Energy and Minerals Subcommittee on Natural Resources. For the 
past year and a half, the Committee on Natural Resources has 
repeatedly requested the Interior to send over draft 
implementation language for the U.S.-Mexico Trans-Boundary 
Agreement, and we haven't seen that yet. It is going to come 
through the committee. I would have intimate knowledge of 
whether we voted on something to send to the Floor to approve 
that language. Send it over. Let's get started with this, and 
let's deal with this issue.
    The question I have--and I would just like to ask the panel 
as a whole--considering that it has been nearly a year and a 
half since the administration signed the agreement, don't you 
believe that it is adequate time for them to have reviewed the 
agreement, submit to Congress any enacting legislation 
necessary to implement it? And I will start with Dr. Wood.
    Mr. Wood. I agree 100 percent. It is absolutely time. Any 
further delay I think is risky. It also sends exactly the wrong 
message. There is very, very important work that could be 
happening right now, not just in terms of getting the 
production process going, but in terms of regulatory 
cooperation, which is one of the issues that brings to mind a 
nightmare scenario where you get deepwater exploration in the 
border region there, and the Mexican regulators don't really 
know how to control what is going on in E&P and we get another 
kind of a major leak that they wouldn't know how to handle. 
That is one of the aspects of the Trans-Boundary Agreement 
which is very, very important and which we need to work on.
    Mr. Duncan. Well, let me just expand on that. Other than 
the opposition of this administration to oil and gas 
development, why wouldn't they have submitted the agreement to 
Congress? What do you think? Policies? Politics?
    Mr. Wood. My own interpretation is that--and I have heard 
encouraging words from the administration throughout the 
lifetime of this agreement--my feeling is that last year was a 
complicated year in terms of politics, but there were a lot of 
other issues. And I understand that there were discussions at 
the end of the year.
    Mr. Duncan. I have heard a lot of encouraging words----
    Mr. Wood. Yes.
    Mr. Duncan [continuing]. Out of this administration on a 
lot of fronts, and they talk a good game.
    Mr. Wood. Yes.
    Mr. Duncan. But there is more to governing than talking, 
and it is walking the walk. And so, I want to see some action 
out of this administration.
    My time is limited here, but I want to just make a note to 
the committee here that the U.S. Energy Information 
Administration put out a report, and this was ``The Annual 
Energy Review of 2011.'' And it says, ``Energy consumption per 
capita in the United States.'' The graph shows 1949 to 2011, 
but I want to move forward to about, what it looks like, 1988-
89. From that point until now, the graph is fairly flat. 
Actually, it decreases on the latter years; you are exactly 
right. So, it did go down.
    So, the energy consumption in this country is actually 
down, but the energy expenditures per capita, what we as 
Americans are paying for energy, has gone up--maybe they can 
see that on TV; it goes up like this; it is a true hockey 
stick--for what it is costing Americans to meet their energy 
needs. That is not only to heat their home and cool their 
homes, but that is also gasoline prices.
    When the administration took over, gasoline price was what, 
$1.86, $1.87 a gallon? Diesel fuel is what I buy. It is $4.00 a 
gallon in South Carolina, $4.00 a gallon for diesel fuel. Can 
you imagine that those costs are transferred down to the 
consumer because the 18-wheelers are paying $4.00 a gallon for 
diesel fuel?
    It is time to approve a Keystone pipeline, a Trans-Boundary 
Agreement, and let's have truly all American energy security 
dealing with our neighbors to the north and our neighbors to 
the south.
    Thank you for the leeway, Mr. Chairman.
    Mr. Radel. Thank you, Mr. Duncan.
    The Chair now recognizes, and this is my first time saying 
this outloud, Mr. Faleomavaega from American Samoa.
    Mr. Faleomavaega. Actually, Mr. Chairman, I thought you 
were going to call me John Wayne, but that is all right. 
[Laughter.]
    Thank you very much, Mr. Chairman.
    I want to offer my apologies. I missed the actual testimony 
of my good friend and colleague, Congressman Terry from 
Nebraska, who was here earlier.
    And I do want to thank the members of the panel for their 
excellent testimonies this morning.
    I think, based on the testimonies, we have come to realize 
how important this issue is in providing jobs, creating 
stronger relations between our country and Mexico and Canada, 
lessening our dependence on foreign oil reserves, and creating 
opportunities for cleaner energy development an overall boost 
in our economy, to name a few.
    But I have to share with my colleagues, and maybe the 
members of the panel could help me with this, a question that 
is perhaps rarely asked. What impact does this have on the 
indigenous peoples who reside in the geographical areas that 
will be affected by these two monumental projects? Allow me to 
highlight a few points.
    The existing Keystone pipeline is located within 50 
kilometers of over 150 indigenous communities in Canada. Trans-
Canada Corporation has facilities on a dozen First Nations 
reserves. Over 100 miles of the pipeline passes through Native 
American reservations. Many Native Americans and indigenous 
Canadians are opposed to the Keystone pipeline project for 
various reasons, including possible damage to sacred sites, 
pollution, and water contamination which could lead to health 
risks among their communities.
    Indigenous communities are also concerned with health risks 
passed by the extension of the Keystone pipeline project. 
Locally-caught fish and untreated surface water, which would be 
at risk for contamination through tar sand oil production, are 
central to the diets of many indigenous communities.
    While the list goes on with regard to these two monumental 
projects, as I said earlier, only within the last 2 weeks I 
have received requests for support from leaders of two of the 
largest indigenous groups in Guatemala, who have appealed to 
the Inter-American Commission on Human Rights for the 
protection of their tribal lands from encroachment of clean 
energy advocates.
    The difference between Mexico and Guatemala is just 
geography. The similarity is in the trend--that indigenous 
rights are constantly being pushed aside for the increased 
expansion and benefit of our modern society, at the expense--at 
the expense--of the lives of these indigenous communities.
    And I would like to ask for your comments on this. Anybody?
    Mr. Levi. You raise an important set of challenges. We have 
national energy goals that require changes in infrastructure. 
And you aptly point out that, whether you are focused on oil 
and gas development or clean energy development, change in our 
system requires construction, and that creates challenges for 
different communities.
    I would argue that when it comes to the Keystone XL 
pipeline, we should focus on those aspects of that challenge 
that are within the United States. This is an issue that is 
thoroughly debated in Canada, in Alberta, and in the affected 
communities. We have our fair share of challenges, and I would 
urge us to focus on those.
    Mr. Faleomavaega. And I want to make it clear, I cannot be 
a greater advocate and supporter of what my colleague, Mr. 
Weber, has said, in providing jobs in Port Arthur, Texas, and 
an economic benefit to the American people.
    But, on the other side of the coin, have we taken into 
consideration the problems affecting the rights of tribal 
communities who may be affected by this?
    Mr. Simmons?
    Mr. Simmons. One quick note. The issue of energy is one 
that is very important, obviously, on reservations around the 
country. And it is one more reminder that at times the Federal 
Government has not ceded enough authority to the reservations. 
It happened in North Dakota with some of the leasing that 
occurred there, where the leasing was leased at a very low 
rate.
    And it is the issue of the pipeline, the issue of energy in 
general is just one more example of how aboriginal Americans 
need to have a greater right to control their own lands than 
they currently have.
    Mr. Faleomavaega. Mr. Isakower?
    Mr. Isakower. Yes, I would second. You identified the 
greater economic opportunity that is available to indigenous 
peoples, both in Canada and Mexico, as a result of energy 
development. But I would also note that the Canadian Government 
has continually increased and upgraded its regulation, its 
environmental regulations, regarding development of its oil 
sands. So, I know that the environmental protections there are 
increasing.
    I would also note that in Mexico, with Pemex operating in 
joint ventures with IOCs, the IOCs operate with U.S.-based 
standards. And those standards would actually increase, again, 
the environmental protections and the safeguards that the 
industry would operate in in Mexico.
    Mr. Faleomavaega. I think my time is just about up. I had 
100 more questions to ask, Mr. Chairman, but, unfortunately, 
there isn't enough time.
    I do want to thank our witnesses for their fine testimony.
    Thank you, Mr. Chairman.
    Mr. Duncan [presiding]. You are welcome. Thanks, Mr. 
Faleomavaega.
    Well, okay, gentlemen, that concludes the hearing today. I 
will thank each of you for coming. Your remarks were--oh, Ms. 
Jackson Lee has shown up. So, we will hold off on that, and the 
Chair will now recognize Ms. Jackson Lee from Texas.
    Ms. Jackson Lee. The chairman and the ranking member are 
enormously gracious. I just came from a Judiciary Committee 
hearing. So, please accept the fact that I did not delay 
because of lack of interest.
    And I guess it is clear that they pointed me out as someone 
from Texas who has had a longstanding relationship, just by a 
geographical relationship to the State, from Mexico.
    So, let me just ask some broad questions, because of the 
courtesies of the chairman and the ranking member, to talk 
about where we are.
    We just had a discussion earlier about some of the assets 
that Venezuela, for example, has in contrast to some of our 
resources and allies and friends in the Mid-East. I would like 
to project, we have a difficult dilemma in the United States in 
accepting the ``all of the above'' energy policy with respect 
to real serious issues. I cede the point that the environment 
is extremely important. I am always convinced that we must have 
a balance. Mexico has, likewise, had concerns with the 
environment in the production of fossil fuel.
    My question is that we know that it is a job-creator. It is 
an economy booster. If I can ask each of you, so that I can 
have a generic question--one, let me say to my good friends 
that we are introducing the 21st Century Energy Caucus that we 
hope will be a forum for these kinds of discussions where 
people of like minds and those who disagree come and focus on 
the economic engine of energy.
    And so, from a diplomatic perspective, what can we do 
together to make energy in the 21st century, one, an energy 
booster for the most vulnerable? You see that in Mexico. But, 
two, how do we collectively work, when we talk about the 
Keystone pipeline, to balance energy with the environment? What 
should we be saying, because it is a diplomatic question on 
both sides of our border? We have activists and interested that 
are rightly so on both sides of the border.
    I will start with you, Dr. Levi, I guess, and go forward. 
And again, I thank my colleagues for their courtesy.
    Mr. Levi. Thank you, Congresswoman.
    What I would argue is that we need something a bit more 
like a ``most of the above'' energy strategy. A ``most of the 
above'' energy strategy. Not every energy development is good 
for us, but we do have opportunities across the board. We need 
to take advantage of those while protecting the local 
environment, dealing with our oil dependence, and confronting 
climate change.
    And the best way to do that is to expand opportunities to 
produce energy while having good local protections, but, then, 
really focusing on how we use energy in order to tackle our oil 
dependence and the risk from climate change. So, that is 
roughly how I would separate it. It is not always clean, and 
you need to make decisions on individual issues, but pushing 
forward on both fronts at the same time, and weeding out the 
really dangerous developments, I think allows us to take 
advantage of as wide a range of opportunities as possible.
    Ms. Jackson Lee. So, not be afraid of confronting the 
conflict?
    Mr. Levi. What I would say is not every single development 
has to be good for everything. What we need is a package of 
developments, a suite of developments, that on the whole help 
us on the economy, on security, on the environment. If we 
expect every little aspect of every project to help on all 
fronts, we will end up doing very little on any of them.
    Ms. Jackson Lee. Thank you.
    Sir?
    Mr. Isakower. I do think that the ``all of the above'' 
strategy is the correct approach. Obviously, we need to balance 
our energy needs with our environmental protections. The fact 
of the matter is, globally and within this country, our energy 
needs are going to continue to increase as the population 
grows, and we are going to need all forms of energy going 
forward.
    The growth in renewables, while much of that investment is 
actually coming from my industry, the oil and gas industry, the 
growth in renewables overall is not going to be enough to 
displace the traditional forms of energy. Therefore, we need to 
continue to utilize the traditional forms of energy like oil, 
gas, et cetera, do so in a responsible manner. And again, we 
believe that the oil sands in Canada, as well as energy 
production in Mexico, can be done in a responsible manner. 
Obviously, we are doing so here in the United States. We need 
to continue to develop resources in a responsible manner to 
meet our energy needs.
    Ms. Jackson Lee. Thank you.
    Mr. Simmons?
    Mr. Simmons. Affordable, reliable energy is critical. The 
poorest among us spend the most of their limited resources on 
energy. Therefore, for me, one of the most important things is 
that we have affordable energy for all, and low-cost energy. If 
we look at what the hydraulic-fracturing revolution has done, 
it means that now the U.S. has some of the lowest natural gas 
prices in the world. Sure, that is nice for, it is great for 
industry that uses a lot of natural gas to produce things. That 
produces jobs. But it also means that, for consumers, that we 
have lower natural gas prices. And that is fantastic news for 
everyone, and that I believe needs to continue.
    And one little piece of also good news is that over the 
past, since 1970, we have almost doubled our use of oil, coal, 
and natural gas combined, and total pollution emissions have 
decreased by nearly 70 percent. So, we have used more of these 
resources. At the same time, our environment is getting 
cleaner, and that is great news.
    Ms. Jackson Lee. Thank you.
    Mr. Wood. Thank you.
    Three very, very quick things. First of all, there is an 
active discussion between the United States and Mexico on 
questions of energy efficiency. Mexico has been committed to an 
energy efficiency agenda over the past 6 years. It is very 
important that that conversation continues. And I believe the 
United States and Mexico have a lot to talk about on that. 
There are positive experiences here that can be shared with 
Mexico, and vice versa.
    Secondly, on the question of renewable energy, there is a 
region of northern Baja, California called La Rumorosa, which 
has a huge potential for developing wind energy. That is not 
happening at the moment because we haven't been able to move 
forward on the question of cross-border transmission in that 
area. That energy has a natural marketplace in California to 
meet their RPS requirements. We can't move ahead until actually 
the cross-border transmission question is resolved, and that is 
something that has to take place between the two Federal 
Governments. That is a priority from my point of view.
    And thirdly, I would say, we are looking here at the 
integration of energy markets in the North American region. 
Integrating energy markets, which means building 
infrastructure, pipelines, transmission lines, et cetera, is a 
crucial element. If you think about, in particular, with 
regards to shale gas or to natural gas, natural gas being a 
cleaner fuel, one that can dramatically reduce emissions in the 
short-term, that is something that we have to work a lot on, to 
get more natural gas into countries like Mexico, to help them, 
in turn, to build up their own natural gas production, so that 
they begin to reduce their emissions as they go through the 
development process.
    Ms. Jackson Lee. Let me thank you, Mr. Chairman. If I could 
just say one point, and I will yield back, and I thank you for 
your courtesies.
    First of all, these were excellent answers. I think I am 
going to pull the transcript, so I can reread them. I don't 
think we should run away from environmental concerns. I think 
we should jump right into it, jump right into climate change, 
and find that balance.
    But this is a personnel manner, very quickly, because of 
your work within the American Petroleum Institute. I ask you to 
take this back. I ask you to join me in the roundtable 
discussions. This happens to be Foreign Affairs, and this is an 
important hearing on the Keystone pipeline. It impacts Texas 
and other areas in the U.S.-Mexico Trans-Boundary Hydrocarbons 
Agreement.
    But, Mr. Chairman, I think it also is a jobs question as 
well. And so, if you can just give a quick answer. One of your 
deficiencies is the level of diversity of your personnel and 
the lack of partnership with minority companies. Does the 
industry see, as you grow and we find more supporters of all 
the above or most of the above, that you will have to diversify 
and reach out to Hispanic, historically-Black, and redo your 
workforce? One, you will have to build up a workforce because 
you are losing senior leaders who are retiring and diversify 
more. What are you doing about that?
    Mr. Isakower. That is a very interesting question because 
we actually have just initiated an effort reaching out with 
communities of color, with a number of organizations from 
communities of color, looking at the opportunities for minority 
employment within the oil and gas industry.
    I would be happy offline to discuss what we are doing with 
you and look at a path forward.
    Ms. Jackson Lee. I think, with that very genuine offer, let 
me accept it publicly, and I would like to work with you. I 
would like to think that Members of Congress should be included 
who have this great interest in an organization that is an 
institute----
    Mr. Duncan. The gentlelady's time has expired.
    Ms. Jackson Lee. And I thank the gentleman. So, let me 
thank the chairman. And thank you for the offer. And I look 
forward to working with you, Mr. Chairman. You have been very 
courteous. Thank you.
    Mr. Duncan. Yes, ma'am. You were the last one.
    And it has been a great hearing. I want to just say that 
this hearing has highlighted a number of opportunities of the 
Trans-Boundary Hydrocarbons Agreement. I think you have heard 
members express frustration with the administration's delay in 
choosing to ratify this process.
    Also, we heard today that we have got tremendous 
opportunity and the importance of a bilateral agreement with 
our neighbors to the north in Canada for the Keystone pipeline, 
1,600 days since the application was submitted, the number of 
jobs that could be created in states like Texas and Oklahoma as 
well as the significance of U.S. and North American energy 
security.
    So, I want to thank you, the witnesses, and all the 
committee members for their participation here today.
    I know that any comments that the committee wants to make 
can be submitted to the record.
    And with that, we will just stand adjourned. Thank you.
    [Whereupon, at 11:09 a.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

                              ----------                              


     Material Submitted for the Hearing RecordNotice deg.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


   Material submitted for the record by the Honorable Matt Salmon, a 
  Representative in Congress from the State of Arizona, and chairman, 
                 Subcommittee on the Western Hemisphere


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 
