[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
U.S. ENERGY ABUNDANCE: MANUFACTURING
COMPETITIVENESS AND AMERICA'S ENERGY
ADVANTAGE
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
AND THE
SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JUNE 20, 2013
__________
Serial No. 113-58
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
STEVE SCALISE, Louisiana BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania PAUL TONKO, New York
LEE TERRY, Nebraska EDWARD J. MARKEY, Massachusetts
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
ROBERT E. LATTA, Ohio GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington LOIS CAPPS, California
BILL CASSIDY, Louisiana MICHAEL F. DOYLE, Pennsylvania
PETE OLSON, Texas JOHN BARROW, Georgia
DAVID B. McKINLEY, West Virginia DORIS O. MATSUI, California
CORY GARDNER, Colorado DONNA M. CHRISTENSEN, Virgin
MIKE POMPEO, Kansas Islands
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California (ex
FRED UPTON, Michigan (ex officio) officio)
------
Subcommittee on Commerce, Manufacturing, and Trade
LEE TERRY, Nebraska
Chairman
JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey Ranking Member
Vice Chairman G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee JOHN P. SARBANES, Maryland
GREGG HARPER, Mississippi JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas JOHN D. DINGELL, Michigan
DAVE B. McKINLEY, West Virginia BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas JIM MATHESON, Utah
ADAM KINZINGER, Illinois JOHN BARROW, Georgia
GUS M. BILIRAKIS, Florida DONNA M. CHRISTENSEN, Virgin
BILL JOHNSON, Missouri Islands
BILLY LONG, Missouri HENRY A. WAXMAN, California, ex
JOE BARTON, Texas officio
FRED UPTON, Michigan, ex officio
C O N T E N T S
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Page
Witnesses
Paul Cicio, President, Industrial Energy Consumers of America.... 2
Prepared statement........................................... 4
Dean Cordle, President and CEO, AC&S Incorporated................ 17
Prepared statement........................................... 19
Phyllis Cuttino, Director, Clean Energy Program, The Pew
Charitable Trusts.............................................. 28
Prepared statement........................................... 30
Drew Greenblatt, President, Marlin Steel Wire Products........... 58
Prepared statement........................................... 60
Andre De Ruyter, Senior Group Executive, Sasol Limited........... 67
Prepared statement........................................... 69
Submitted Material
Article entitled, ``Exelon blames `subsidized' wind, markets for
derailing nuclear projects,'' 2013, by E&E Publishing,
submitted by Mr. Terry......................................... 96
U.S. ENERGY ABUNDANCE: MANUFACTURING COMPETITIVENESS AND AMERICA'S
ENERGY ADVANTAGE
----------
THURSDAY, JUNE 20, 2013
House of Representatives,
Subcommittee on Energy and Power,
joint with the
Subcommittee on Commerce, Manufacturing, and Trade,
Committee on Energy and Commerce
Washington, DC.
The subcommittees met, pursuant to call, at 11:27 a.m., in
room 2123, Rayburn House Office Building, Hon. Ed Whitfield
(chairman of the subcommittee) presiding.
Present from the Subcommittee on Energy and Power:
Representatives Whitfield, Scalise, Shimkus, Terry, Cassidy,
Olson, McKinley, Gardner, Kinainger, Griffith, Rush, McNerney,
Tonko, Green, Matsui, and Waxman (ex officio).
Present from the Subcommittee on Commerce, Manufacturing
and Trade: Representatives Terry, Lance, Guthrie, Olson,
McKinley, Kinzinger, Bilirakis, Johnson, Schakowsky, Sarbanes,
McNerney, Rush, Barro, and Waxman (ex officio).
Staff Present: Charlotte Baker, Press Secretary; Matt
Bravo, Professional Staff member; Allison Busbee, Policy
Coordinator, Energy & Power; Tom Hassenboehler, Chief Counsel,
Energy & Power; Kirby Howard, Legislative Clerk; Jason Knox,
Counsel, Energy & Power; Nick Magallanes, Policy Coordinator,
CMT; Brian McCullough, Senior Professional Staff Member, CMT;
Brandon Mooney, Professional Staff Member; Gib Mullan, Chief
Counsel, CMT; Andrew Powaleny, Deputy Press Secretary; Shannon
Taylor Weinberg, Counsel CMT; Michelle Ash, Minority Chief
counsel, Commerce, Manufacturing and Trade; Alison Cassady,
Minority Senior Professional Staff Member; Caitlin Haberman,
Minority Policy Analyst; and Bruce Ho, Minority Counsel.
Mr. Whitfield. I would like to call this hearing to order,
and certainly want to thank those of you who are serving as our
witnesses today. And I do apologize that we are, I guess, over
an hour and a half late, or close to it, so thank you for your
patience.
And as you know, we do have difficulty with controlling
time up here, and we were voting on the floor. So we do value
your being here, and we look forward to your testimony on this
important subject.
Today's hearing is entitled, ``U.S. Energy Abundance:
Manufacturing Competitiveness and America's Energy Advantage.''
So I know that this is going to be extremely disappointing
for you all, and I am sorry to say this, but we are not going
to have any opening statements up here. So we are going to go
right directly to you and listen to your opening statements. So
each one of you will be given 5 minutes.
And this is a joint hearing. Mr. Terry and I are both--our
committees are hosting this hearing, our subcommittees.
STATEMENTS OF PAUL CICIO, PRESIDENT, INDUSTRIAL ENERGY
CONSUMERS OF AMERICA; DEAN CORDLE, PRESIDENT AND CEO, AC&S
INCORPORATED; PHYLLIS CUTTINO, DIRECTOR, CLEAN ENERGY PROGRAM,
THE PEW CHARITABLE TRUSTS; DREW GREENBLATT, PRESIDENT, MARLIN
STEEL WIRE PRODUCTS; AND ANDRE DE RUYTER, SENIOR GROUP
EXECUTIVE, SASOL LIMITED
Mr. Whitfield. So Mr. Cicio, we will go with you. You are
recognized for 5 minutes for an opening statement.
STATEMENT OF PAUL CICIO
Mr. Cicio. Thank you, chairmen Whitfield and Terry, Ranking
Members Rush and Schakowsky. Thank you for the opportunity to
be here.
The shale gas revolution and lower natural gas and feed
stock costs have launched the start of the manufacturing
renaissance with announced manufacturing investments of over
$110 billion. This is the first wave of investment. The second
wave will be from our downstream customers who will relocate to
be near their suppliers and reduce their costs. The Boston
Consulting Group estimates that 5 million new jobs will be
created in manufacturing by 2020. Every dollar's worth of
natural gas run through our manufacturing economy creates up to
$8 in added value. This is a superior economic use of natural
gas than exporting LNG.
The $110 billion investment will also create new natural
gas demand between 7 and 9 Bcf a day, about an 11 percent
increase. This is all good news.
The most significant threat to the fulfillment of the
manufacturing renaissance will be determined by the speed of
LNG export terminal approvals and the volume of its shipments,
which brings me to the key points of my testimony.
Doing it right can be a win-win for producers and consumers
of natural gas. Doing it wrong will result in spiking natural
gas and electricity prices and an end to the manufacturing
renaissance. We need to avoid what happened in Australia.
IECA is not opposed to LNG exports but warns policymakers
that careless due diligence by the DOE on the public interest
determination of LNG export applications to non-free-trade
countries is a real concern. LNG terminal approvals are for 30
years. A lot can happen in 30 years.
In this regard, we are asking members of these two
committees to support your natural gas consumer constituents
back home by urging the DOE to do a rulemaking to establish
transparent criteria for decision-making for LNG export
facilities. The public trust--just as the DOE did as they dealt
with LNG imports a decade ago.
Domestic demand is accelerating and LNG export demand is
additive to that demand. For example, just six of the most
likely export terminals would increase demand by 16 percent.
The export demand would be on top of the AEO 2013 demand
increase of 6 percent by 2020. Neither demand number includes
the manufacturing renaissance of an 11 percent demand.
Combined, this is a 33 percent increase. This is a huge
increase in a very short time frame, and this does not include
new demand that will occur from the EPA's utility mat and EPA's
greenhouse gas regulations.
The public interest determination for approval of LNG
exports to non-free-trade countries is the law. The public
interest test is really important, because it is a safeguard to
ensure that decisions are being made correctly and with up-to-
date information.
The responsibility for review of LNG export applications
resides with the Department of Energy. In this regard, the DOE
decision raises questions. On May 17th, in our opinion, the DOE
failed in their judiciary responsibility under the Natural Gas
Act in the implementation of the public interest determination
for the Freeport facility. DOE cites three studies in approving
the Freeport LNG export facility. All three use demand
assumptions that are 2 and a half years old.
However, we do agree with the comments in the conclusion
portion of the approval. This is a quote: ``The reasons in
support of proceeding cautiously are several. Number one, the
LNG export study, like any study based on assumptions and
economic projections, is inherently limited in its predictive
accuracy. Number two, applications to export significant
quantities of domestically produced LNG are a new phenomenon
with uncertain impacts. And number three, the market for
natural gas has experienced rapid reversals in the past and is
again changing rapidly due to economic, technological and
regulatory developments. The market of the future very likely
will not resemble the market of today,'' unquote.
Mr. Chairman, no one in your congressional district wants
higher natural gas and electricity prices. We ask for your help
in this matter.
Lastly, decisions on LNG export applications need to be
done on a case-by-case basis and sequenced to avoid price
spikes. These are not unreasonable requests. Thank you.
Mr. Whitfield. Mr. Cicio, thank you.
And I neglected to say who Mr. Cicio is, but he is the
president of the Industrial Energy Consumers of America.
And we thank you for your testimony.
[The prepared statement of Mr. Cicio follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Our next witness is Mr. Dean Cordle, who is
the president and CEO of AC&S, Incorporated, a chemical
company.
And we are delighted that you are here, and you are
recognized for 5 minutes. Mr. Cordle.
STATEMENT OF DEAN CORDLE
Mr. Cordle. Good morning, Chairman Whitfield and Terry,
Ranking Members Rush and Schakowsky, and members of the
Subcommittee on Commerce, Manufacturing, and Trade, and of the
Subcommittee on Energy and Power. Thank you very much for your
leadership in holding today's joint subcommittee hearing on
United States energy abundance and its tie to our manufacturing
competitiveness and advantage.
My name is Dean Cordle, president, CEO of AC&S, a chemical
manufacturing facility located in Nitro, West Virginia,
appearing on behalf of the American Chemistry Council.
I am pleased to comment on the critical role that abundant
and affordable oil and natural gas is playing in revitalizing
the competitiveness of the U.S. chemical industry, driving
enormous new investments in chemical manufacturing and creating
hundreds of thousands of new jobs in the process.
We are a very small company. We have over 40 employees. We
started from humble beginnings back in 1988 as a railcar
cleaning facility. Over the years, we have added chemical
manufacturing, and today, we serve the refining, pharmaceutical
and agricultural industry in producing intermediates and
finished products for them.
This shale gas revolution has transformed our company. We
are putting steel in the ground, as we speak, we are nearing
completion of a new production unit, and my focus right now on
growth opportunities is certainly centered in the oil and gas
industry and the downstream derivatives.
The U.S. chemical industry is highly energy intensive. We
use energy inputs, mainly natural gas and natural gas liquids
as both our major fuel source and feed stock. About 75 percent
of the cost of the producing petrochemicals and plastics is
related to the cost of energy-derived raw materials.
Consequently, our ability to compete in global markets is
largely determined by the price and availability of natural gas
and gas liquids.
The consulting firm IHS forecasts that the U.S. has a 100-
year supply of natural gas. This abundant and affordable supply
of natural gas has transformed the U.S. chemical industry from
the world's high-cost producer 5 years ago to the world's low
cost producer today. As a result, the U.S. enjoys a decisive
competitive advantage in the cost of producing basic
petrochemicals. For example, it costs less than $400 a ton to
produce ethylene in the United States, whereas it compares
$1,000 a ton in Europe and even more in Japan. As a result of
this cost advantage, dozens of companies are making plans to
invest in new U.S.-based chemical production capacity.
ACC estimates that more than $72 billion in new capital
expenditures will be invested in the U.S. between 2012 and
2020. Roughly half of those investments will come from firms
that are based outside of the U.S. The U.S. is emerging as the
place to manufacture chemicals now. The supply response from
shale gas will directly create tens of thousands of new jobs in
the U.S. chemical industry.
Policy will play an important role if we are to optimize
our competitive advantage. These policies include implementing
a true all-of-the-above energy policy that enables all energy
sources, including energy efficiency, to fairly compete in the
market. Second, we need to keep oversight of the unconventional
oil and gas production in the hands of the States. In addition,
we also need to expedite permitting and construction of
infrastructure needed to move that gas and gas liquids to
market.
In closing, I want to thank this subcommittee for the
opportunity to describe how abundant and affordable quantities
of natural gas and natural gas liquids are creating a
manufacturing renaissance in the U.S. Chemical industry. In a
few short years, the U.S. chemical industry has moved from an
industry in contraction to an industry facing an era of
unprecedented expansion.
Thank you, Mr. Chairman.
Mr. Whitfield. Thank you, Mr. Cordle. We appreciate that.
[The prepared statement of Mr. Cordle follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. And our next witness is Ms. Phyllis Cuttino,
who is the director of the Clean Energy Program at the Pew
Charitable Trust.
And we thank you for being with us, and you are recognized
for 5 minutes.
STATEMENT OF PHYLLIS CUTTINO
Ms. Cuttino. Thank you, Mr. Chairman, and fellow members of
the committee. I am thrilled to be here to discuss clean energy
as it relates to the energy transformation in the United
States, advanced manufacturing and our competitiveness
globally.
Research by the Pew Charitable Trust has shown that clean
energy technologies have entered the mainstream of global
energy markets. In 2012, $269 billion was invested and clean
energy deployment was a record 88 gigawatts, spurred by
dramatic price declines.
Companies and countries are turning to clean energy because
it enhances energy security, protects the environment and
represents a tremendous economic opportunity. Indeed, there is
every reason to believe that private investment will continue
to grow significantly as countries prioritize clean energy. In
some markets, renewable energy systems are already the cheapest
and best options. Even in oil-rich Saudi Arabia, they set a
goal to obtain 30 percent of their electricity from solar
power.
The International Energy Agency predicts that clean energy
technologies will provide more than half of electric generating
capacity added over the next 25 years, and most forecasters
expect trillions of dollars to be invested over the next
several decades.
In short, clean energy is a significant economic
opportunity for U.S. manufacturers, but while the global future
of clean energy is bright, U.S. competitiveness in the sector
is cloudier. Although we lead in clean energy innovation, we
are not manufacturing, deploying or exporting these
technologies as we should be. Once the clear worldwide leader,
policy uncertainty in this country has had an adverse impact on
U.S. standing in the sector. China now leads the world in
attracting private investment: $65.1 billion in 2012. In the
same year, the United States, our investment fell to $35.6
billion. We are now in second place. Simply put, America is
underperforming in the clean energy sector.
Last year, Pew organized roundtable discussions in New
York, in Ohio, in Colorado, in Georgia, in Mississippi, and in
Washington, D.C., with clean energy industry leaders in the
areas of finance, manufacturing, innovation and deployment.
They identified three key challenges facing the industry and
six policies for overcoming them. These challenges are: policy
uncertainty. This was described as the overriding impediment to
clean energy investment and progress. The boom and bust nature
of U.S. clean energy programs makes it hard for companies to
succeed and develop the supply chains and business models they
need.
International competition was second. It is a tough time
for producers, with fierce competition and worldwide
oversupply. We should expect some bankruptcies and
consolidation to occur, just as they have characterized every
emerging sector, from automobiles to computers, but over the
long term, this will result in a stronger, more efficient and
cost-competitive industry.
Tight credit markets are a third challenge. While not
unique to clean energy, it is difficult to raise the capital
needed to grow businesses and scale up technologies.
Now, Congress has numerous options for addressing these
challenges and bolstering U.S. competitiveness. Our roundtable
participants identified six priorities for you all to consider.
First, set a clear, consistent and long-term goal for the
deployment of clean energy, thereby providing the certainty
needed for inventors to invent, investors to invest and
manufacturers to produce.
Second, support energy R&D at higher levels and continue
recent initiatives like ARPA-E and energy innovations hubs in
order to maintain the pipeline of ideas and innovations for
driving down the costs and ratcheting up the performance of
advanced energy technologies. This is critical to U.S.
competitiveness.
Third, renew the production and investment tax credits for
a few more years. Congress has provided incentives to incumbent
technologies. The four permanent tax incentives in the code are
for oil, gas and nuclear power. Our industry participants would
welcome a multiyear but time-limited extension of clean energy
tax credits to help ensure full market maturation.
Fourth, level the playing field by addressing the barriers
that impede industry progress. For example, pass the proposed
MLP Parity Act, which would allow clean energy to qualify for
the same tax treatment that is open to investments in the oil
and gas infrastructure.
Fifth, support manufacturing through advanced energy
manufacturing tax credit and the Department of Energy's clean
energy manufacturing initiative.
And finally, sixth, strengthen and expand trade promotion
for exports of American-made clean energy technologies to
growing and emerging markets.
In conclusion and in view of current and projected
investment trends, U.S. competitiveness in clean energy
warrants public and private sector priority and partnership.
Mr. Chairman, policy matters. Encouraging innovation,
deployment, manufacturing and trade of clean energy
technologies through policy will help ensure America
capitalizes on the substantial opportunity for the Nation's
economic, environmental and national security prospects.
We at the Pew Charitable Trust look forward to working with
you and Congress to pass these policies and realize these
goals.
Mr. Whitfield. Thank you very much.
[The prepared statement of Ms. Cuttino follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Our next witness is Mr. Drew Greenblatt, who
is the president of Marlin Steel Wire Products.
And we appreciate your being with us, and you are
recognized for 5 minutes.
STATEMENT OF DREW GREENBLATT
Mr. Greenblatt. Thank you. Good morning.
The USA has hit the lottery. This energy blessing will
create a lot of jobs. This is not controversial. This should be
a unifying thing for our country to get behind.
My name is Drew Greenblatt. I am the president of Marlin
Steel. We are based in Baltimore, Maryland. Marlin Steel is the
leading manufacturer of custom-made wire baskets, wire forms,
and precision sheet metal fabrications. We make 100 percent in
the USA in Baltimore City.
We are a fast growing company. We have grown 7 years in a
row, despite the recession. As a matter of fact, we are number
162 of all manufacturers, according to Inc. Magazine.
We use entirely recycled steel. And we export--and this is
pretty cool--to China. We make it all in Baltimore. We use
steel made in Illinois, made in Pennsylvania. And the thing I
am most proud about is that we have gone 1,650 days without a
safety incident. Twenty percent of my employees are mechanical
engineers. And we succeed through innovation, investment. We
have a wonderful team.
I am representing today the National Association of
Manufacturers. One in six private sector jobs are in
manufacturing. These are great jobs; $77,000 a year on average,
including benefits. And this is much better than most--than the
average American employee makes.
I bought Marlin Steel in 1998. We had $800,000 in sales and
18 workers. Last year was our most successful year ever. We had
over $5 million in sales, and now we employ over 29 people.
One of the primary reasons for this growth is because of
domestic energy production and these lower energy prices. There
has been a lot of talk about economic growth out in the shale
boom in North Dakota, Ohio, Pennsylvania, Texas, but this is
starting to impact and trickle down to places that are not
generating oil and petroleum, places like mine. Manufacturers
across the country are benefiting from these lower energy
prices and this increased industrial activity. We fulfill many
orders that ship to the gas industry.
How has the boom helped us specifically? Two ways. Number
one, lower costs. We are paying less money for the energy to
heat the factory, for example. We are paying less money for
powder coating, so we are more competitive when we compete head
to head against China, when we compete head to head against
Japan and Germany and Canada.
The second way is that it has increased our revenue; higher
revenue. Higher revenue means more jobs. We are selling
material handling solutions from steel wire baskets and sheet
metal products to Schlumberger, Halliburton, Timken, and
Caterpillar. This is what has propelled our growth.
We are also aware that recently President Obama visited one
of our colleagues a mile away: Ellicott Dredges. They are doing
great because of the boom as well. They are making dredges for
the Canadian oil sands.
Think about it. There is a new steel pipe plant being built
in Youngstown, Ohio. When was the last time a steel mill has
been built in Youngstown, Ohio? Something is going on, and it
is great, and we should be embracing this.
For us, what happens is we hire unemployed local steel
workers. We buy more robots. One of our robot makers is in
Chicago; a second one is in Connecticut. We buy our steel from
Illinois, from Indiana. We buy our steel from Pennsylvania. So
it is--we are all in it together, and we are all growing
together because of this wonderful fortune our Nation is
blessed with.
In conclusion, abundant low-cost energy is changing the
landscape of the global marketplace. It is well positioning us
U.S. manufacturers for years to come. We are increasing
production. We are expanding our employees. We are hiring more
people. And these workers are buying things, and this is having
a positive ripple effect throughout the economy. With continued
production and the right policies in place, U.S. manufacturers
will continue to be the drivers of economic growth and
prosperity. Thank you.
Mr. Whitfield. Thank you very much, Mr. Greenblatt.
[The prepared statement of Mr. Greenblatt follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. And our final witness today is Mr. Andre de
Ruyter, who is senior group executive for Sasol Limited.
And thank you for being with us, and you are recognized for
5 minutes.
STATEMENT OF ANDRE DE RUYTER
Mr. de Ruyter. Chairman Whitfield, Chairman Terry, Ranking
Member Rush, Ranking Member Schakowsky, members of the
committee, thank you very much for the opportunity to be here
today and present testimony. It is an honor.
Sasol is an integrated international energy and chemicals
company. We employ about 34,000 people in 38 countries
worldwide. We operate large-scale fuel and chemical plants
throughout the world, and we are listed on the Johannesburg and
New York stock exchanges.
We are not a stranger to the U.S. We have been doing
business here for the past 20 odd years. We have headquarters
based in Houston. We have also operations in that city, and
furthermore, operations, plants in Arizona, in Louisiana, and
also in the State of California.
The U.S., and Louisiana, in particular, offer a business-
friendly climate with a predictable regulatory structure. More
importantly, though, the U.S. shale gas revolution has created
attractive opportunities for Sasol's investment into the U.S.
market.
Sasol is uniquely positioned to monetize U.S. natural gas
through our gas-to-liquids, or GTL, technologies, and
consequently, Sasol announced in December 2012 that it was
going to move forward with the next phase of investing in a
world scale ethane cracker and gas-to-liquids facility in
Westlake, Louisiana. It is estimated that the combined
investment comprised by these two projects will amount to
between 16 and 21 billion U.S. dollars. This will make it one
of the largest foreign direct investments into manufacturing in
the U.S. in history.
The ethane cracker is anticipated to produce some 1.5
million metric tons of ethylene per annum, with associated
downstream ethylene products produced, and the GTL plant will
be producing gas-to-liquids diesel as well as associated
chemical products.
While natural gas is a major energy source for global power
generation, it has up to now lacked the versatility to embrace
transportation needs. With our proven GTL technology, we can
fundamentally alter the chemistry of natural gas so that we can
convert it to approximately 100,000 barrels per day of gas-to-
liquids diesel for use in transportation, thereby maximizing
in-country value add. And this contrasts with the technology of
LNG, which essentially repackages natural gas for export to
other countries as a form of energy.
Unlike other alternative fuels, GTL diesel is fully
fungible with conventional diesel and requires no adjustment to
engine technology or to distribution infrastructure. GTL
diesel's high quality makes it highly suitable for use as a
blend stock by crude oil refineries to upgrade their products
into high quality fuels; however, when gas-to-liquids diesel is
used neat, it has the added benefit of leading to lower
emissions of particulates and other pollutants as a result of
the fact that it contains essentially zero sulfur and very low
aromatic compounds. And this helps to improve air quality and
meet emission mandates.
Although this GTL gas-to-liquids facility will be the first
of its kind in the U.S., it is important to emphasize that this
is not an experimental technology; this is not new. Sasol has
been manufacturing fuel using essentially the same technology
for more than 60 years. And together with our partner, Qatar
Petroleum, we have produced more than 45 million barrels of
diesel fuel for export into the international market since the
commissioning of our ORYX gas-to-liquids facility in Qatar in
2007.
When we proceed with these projects, it will have a very
substantial impact on the U.S. economy. We anticipate that we
will create more than, 200 direct jobs, with an average annual
salary of $88,000; 7,000 construction jobs will be created
during peak construction. And this will in turn lead to
thousands of indirect jobs.
Our commitment, however, goes beyond these projects and
extends into the local communities, where we intend to continue
to be a good neighbor and to conduct our business in a safe and
socially and environmentally responsible manner.
The U.S. will also see increased tax revenues and GDP and
an improved balance of trade.
Sasol's U.S. projects are a compelling example of how
bilateral trade between Africa and the U.S. can yield
substantial foreign direct investment into the U.S., which
represents a win-win for both the U.S. and also the South
African economies, and we are proud to be driving the next
phase of our growth into the U.S. And we encourage Congress to
continue to promote policies that stimulate the development of
natural gas, and we really look forward to taking advantage of
this opportunity.
Thank you, Mr. Chairman. I will take any questions.
Mr. Whitfield. Mr. de Ruyter, thank you very much.
[The prepared statement of Mr. de Ruyter follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. And thank all of you for your testimony.
We have the farm bill on the House floor today, and we are
going to be going to vote again soon, so we are going to
allocate to every member 3 minutes for questions only. And so I
would like to start my 3-minute time now. I am going to
recognize myself for 3 minutes, but I am--before I--and on my
questioning time, I am just going to make a few comments.
First of all, this is a very important hearing. We are
seeing this renaissance of manufacturing in America, and we
know that it is caused primarily because of low cost energy
that has come about of the shale gas and shale oil finds that
we have recently had. So, in order to keep this going and to
address the job and the sluggish economy we have in the U.S.,
and I notice today the Federal Reserve board yesterday, I
guess, said they are going to kind of stop our easy money
policy, so we may see interest rates start edging up soon.
So the policies that the U.S. Government adopts are going
to have a dramatic impact on the cost of energy. And energy
costs are a key component for continuing to grow our
manufacturing base and create jobs. And so when we talk about
that, we are talking about the regulations, we are talking
about an all-of-the-above energy policy, which many of you
talked about specifically in your testimony, but I would remind
everyone once again that the Obama administration says an all-
of-the-above, but they systematically are trying to eliminate
some fossil fuels, particularly coal.
And I notice--I was reading the Federal Register footnotes
on the proposed greenhouse gas new source performance standard
for new electric generating units. And in the register, it says
the Department of Energy National Energy Technology Laboratory
estimates that when that rule becomes final, that the
technology that the coal industry would have to use to meet the
emissions standards would add 80 percent to the cost of
electricity; that one standard, 80 percent increase.
So we are all excited now and we feel good about these low
energy costs, but as we move forward, we have to think about
the policies and the impact, because I, for one, as many of you
said in your testimony, do believe we need all of the above.
Green energy alone is not going to get it done.
So thank you very much for your testimony. I look forward
to working with all of you as we move forward.
And at this time, I would like to recognize the gentleman
from Illinois, Mr. Rush, for 3 minutes.
Mr. Rush. I want to thank you, Mr. Chairman.
We do have an incredible opportunity here to address both
the threat of climate change and to secure U.S. leadership and
U.S. jobs in a clean energy industry worth trillions of
dollars.
Today's witnesses testified about how low-cost natural gas
benefits the economy and is leading to a manufacturing
renaissance in the U.S., but natural gas, Mr. Chairman, is not
the only domestic energy source creating good manufacturing
jobs in this country. Last year, the U.S. wind industry
employed more than 80,000 Americans, including more than 25,000
in manufacturing jobs. The solar industry employed more than
119,000 U.S. workers, including more than 29,000 in
manufacturing sectors. Many predict that the clean energy
sector will be the most important energy industry of this
century.
And my question is directed to Ms. Cuttino.
Ms. Cuttino, how large is the global clean energy market,
and how much is it anticipated to grow in the future?
Ms. Cuttino. Well, thank you, Mr. Ranking member. Mr. Rush,
most forecasters are saying that there will be between $5.9
trillion and $7 trillion that will be invested over the next 10
to 15 years in the sector. The International Energy Agency
predicts that 50 percent of all new capacity additions across
the world are going to be renewable. Other estimates are that
it is as much as 70. Here in the United States, last year, 49
percent of the new installed capacity was renewable; 30 percent
was gas. So together, these two things actually work very well.
So I think it represents a very significant opportunity,
particularly as a country that has invented these technologies
and can ship and export them and sell them around the world.
Thank you.
Mr. Rush. What role should Federal funding for advanced
energy technology development play in rebuilding America's
competitive advantage in clean energies innovation, and where
should we focus our investment?
Ms. Cuttino. Well, Mr. Rush, that is a very good question.
We--in talking to clean energy leaders across the country,
business leaders, have said time and time again that policy
uncertainty is an impediment to their progress. It is the
single largest factor that chills greater investment and
deployment, export and manufacturing. This committee has heard
many times business talk about uncertainty as it relates to
regulations and policy, and clean energy is no different. It is
just another form of technology.
So if we want to support this sector, and we should, we
need to put together a long-term policy signal that will give
investors the signal they need to invest, to move capital off
the sidelines and for manufacturers to scale up and produce
those technologies that we can sell around the world.
Mr. Rush. Thank you.
I yield back.
Mr. Terry [presiding]. Thank you, Mr. Rush.
Now I recognize myself for my 3 minutes. I appreciate all
of you being here.
Since 2008, during the great recession, we lost over 5
million American manufacturing jobs. We are seeing an uptick.
We have had--500,000 new jobs were created within the last year
to 2 years, and a lot of them are in the industries that are
heavy energy users, particularly natural gas. So it is
interesting--or that is the purpose of having the hearing here.
We want to see, A, is it the low cost of natural gas that is
generating this resurgence in manufacturing jobs? Are there
other reasons? And so I am going to kind of flip it over, the
question here, and flip it over to the other side of the coin
and ask, we have had the testimony about pro natural gas. What
are the other obstacles that you have observed in your
expansion within your own industry of any barriers, speed
bumps, or whatever that maybe we can address?
Mr. Cicio, you go first, and then we will just go from my
left to right. And make it quick.
Mr. Cicio. Speed bumps for energy-intensive manufacturers
are many, including regulations. Regulations, for example, the
industrial boiler MATS. Hugely expensive. Manufacturers in
terms of the next speed bump are concerned about what happens
to electricity costs as a result of EPA regulations on the
electric utility sector that is forcing coal to gas, but the
costs of those environmental regulations all get pushed onto
us. In the future, regulations of greenhouse gases.
Mr. Terry. Mr. Cordle.
Mr. Cordle. Well, I will just echo the previous gentleman.
I think regulations are an important part of something that we
need to address. Drilling permits on Federal lands, onshore and
offshore, we need to make sure that those are expedited and
streamlined, as well as leaving the regulations of the
extraction to the States. Thank you.
Mr. Terry. Mrs. Cuttino, do you have anything? It is a
little bit out of----
Ms. Cuttino. Well, I would offer something positive, which
is I think everyone on the panel and I would agree that one
thing that our manufacturers need is support for industrial
energy efficiencies, such as combined heat and power or waste
heat recovery. This, as you know, reduces the cost of energy,
and they are installed here in America by American labor, and
they spur tremendous private investment as well as making all
the products more competitive around the globe. So I think that
is something that this committee could certainly support, is
combined heat and power industrial energy efficiency.
Mr. Terry. Mr. Greenblatt.
Mr. Greenblatt. I agree with all the impediments that were
just mentioned. Another big impediment is that it is a global
economy, and we are competing against Canada. We are competing
against Germany and Japan, and our tax rates are not
competitive. We are in the 40 something percent, 70--40 percent
tax bracket, and we are competing against Canada, which is at
15 percent. That is hard to welcome. We need your help to get a
level playing field so we can grow jobs in Baltimore.
Mr. Terry. Mr. de Ruyter, I am going to cut you off,
because my time is gone, but I am only doing so because I know
Mr. Scalise is very anxious to just talk to you.
At this time, I recognize the gentlelady from Illinois for
her 3 minutes.
Ms. Schakowsky. Thank you, Mr. Chairman.
I wanted to ask you, Ms. Cuttino, there has been a lot of
talk about all of the above, but in terms of Federal
investment, how does, how do clean energy technologies compare
to fossil fuel investments?
Ms. Cuttino. Well, we have seen that certainly for
incumbent technologies, there are permanent tax incentives in
the code, some more than 100 years old, some more than 50 years
old. By contrast, the investments or the tax incentives we have
seen for clean energy technologies have been episodic at best,
uncertain. And, you know, certainty is a word that everyone on
this panel has said is critically important, leveling the
playing field, reducing barriers. All of these issues apply for
clean energy as well. So we need to have the same assurances
for clean energy as we do for the incumbent energy
technologies.
Ms. Schakowsky. Thank you. I just want to use my remaining
time in saying that this panel actually frightens me a bit and
the discussion frightens me a bit. There will come a time in
the future history not yet written of our planet where we say,
whoa, when we had an opportunity to move toward clean energy,
not just for the competitiveness of the United States or for
the advantages of manufacturing, but for the ability of human
life to survive on our planet, that we had an opportunity to
really do something about this in a significant way.
The world can afford to burn, we are told, about 565
gigatons of carbon dioxide over the next 50 years before we
reach 2-degree Celsius increase and disaster that could follow.
And we already have, in terms of proven coal and oil and gas
reserves, about 2,795 gigatons of carbon dioxide; in other
words, about five times as much as we can actually afford to
put into the atmosphere.
And I feel an obligation at this moment in history to my
children and my grandchildren and future people on this planet
that we need to shift toward clean energy technologies to
prevent calamitous consequences in this world.
So, Mr. Greenblatt, I am happy that you have the jobs in
Illinois, and I am happy that you embrace the idea that Ms.
Cuttino talked about that we could be more energy efficient,
but this idea now, hooray, we have got all of this, you know,
natural gas, this abundance, we can be an exporter of fossil
fuels to the world; we can be an exporter, make a lot of money
by developing and exporting clean technologies, which are the
technologies of the 21st century, I hope.
And I yield back.
Mr. Terry. Thank you.
And now we recognize the--Mr. Scalise, you are recognized
for 3 minutes.
Mr. Scalise. I am sure you meant to say the gentleman from
Louisiana, right, Mr. Chairman?
Mr. Terry. The gentleman from----
Mr. Scalise. I appreciate you yielding. And let me start by
saying this panel excites me. I think the fact that we are here
in a committee hearing in Congress talking about how technology
and energy is revolutionizing our country, and not only
creating tens of thousands of really good high-paying jobs,
which is something that we ought to be focused on every single
day, but also allowing our country to be energy independent.
Here is one case where we have got the opportunity to reduce
our dependence on, in many cases, Middle Eastern countries who
don't like us, where we are spending billions of dollars to
countries who use that money against us, to kill Americans in
many cases. And so the revolution in energy is, I think, one of
the most important things if we want to get our economy back on
track, get our country moving again, create jobs and create the
energy security I think that Americans expect and deserve. And
so I think it is important that we talk about just what is
happening in the real world with some of these new technologies
in energy.
And, again, it is exciting to see what has happened. I know
in my State of Louisiana, we have seen it in these shale plays
and up at Haynesville shale, up in--north Louisiana, you drive
up and down the interstates and you see trucks moving pipe, you
see people working, you see very low unemployment, and we are
creating American energy.
And again, I mean, if we want to have an economy--if we
want everybody to live in squalor and poverty, you know, then
we go with the old economy. If we actually want to create jobs
and manufacture, make things in this country so that we can
create jobs and increase everybody's lifestyle, not just in
America, but in other countries, it starts with energy, and
safe and secure energy, and that is what this is all about.
And so I want to shift it over to you, Mr. de Ruyter. You
know, following the lead from my distinguished chairman, Mr.
Terry, and he knew I had a number of questions, but I want to
first thank you for the commitment that you have made to
Louisiana and to America, because you could have put this
plant, this liquefaction plant, the cracker in another country,
too. You decided to do it in America; $21 billion of
investment; those are great jobs, over a thousand jobs. And
when you see what this all can do for our country, I want to
ask you about the process right now. How is it going, and are
there any impediments that are placed before you in the
regulatory process that Congress can help remove so that you
can get these jobs created quicker, so you can create this
energy in America quicker?
Mr. de Ruyter. Thank you, Mr. Scalise.
I think the two potential impediments that we see is, as
some of the other panelists have remarked, is the need for
regulatory certainty. We need to have a stable regulatory
regime that is predictable and that we can anticipate to remain
stable for the long term. Once we have that, I think we will be
in a very good position to make these very large investment
decisions.
I think as well what would be very useful is to the extent
that we are dependent on various authorities for the granting
of permits, we would like our applications--and I must stress
that we are not asking for any waivers or exemptions. We intend
to fully comply with all the environmental legislation, but we
would like our permits to be considered and approved, to the
extent that they comply, in an expeditious manner.
Mr. Scalise. I think those are very reasonable requests,
and we are fighting in this committee to try to create that
certainty so that your company and so many others throughout
this country can go and create those jobs and create that
American energy. So thanks for what you are doing, for all of
you on the panel.
And I yield back the balance of my time.
Mr. Terry. Thank you, Mr. Scalise, or the gentleman from
Louisiana.
At this time the chair recognizes the full committee
ranking member, Mr. Henry Waxman. The gentleman from California
is recognized for 3 minutes.
Mr. Waxman. Thank you very much, Mr. Chairman.
The United States pioneered many of the clean energy
technologies being deployed around the world today, but in
2012, China attracted more clean energy investment than any
other country. In the United States, private investment in the
clean energy market actually fell.
The clean energy technology market will be pivotal as the
world moves toward a lower carbon global economy. It seems like
the United States, once a leader in this market, is losing
ground.
And Ms. Cuttino, your organization held a series of
roundtable discussions with industry and experts that discussed
impediments to clean energy investment in the U.S. What did
these experts identify as the overriding impediment?
Ms. Cuttino. Thank you, Mr. Waxman.
Their overriding concern was the policy uncertainty that
they face in the current policy environment. They talked about
a number of things, but that really was the biggest impediment
to them being able to raise private capital, being able to
scale up to manufacture. And, frankly, they have said, look,
energy is a place where Congress has set goals in the past
and----
Mr. Waxman. What makes China a safer bet than the United
States right now in terms of clean energy investment?
Ms. Cuttino. China leads the world in not only installed
capacity, sir, but they also lead the world in terms of
attracting private investment. This is--America used to lead
the world, frankly. We created many of these technologies. And
in a study that we conducted looking at the U.S.-China trade
relationship, there are clear advantages that the United States
has, advanced manufacturing, innovation, while China's
advantages are really low cost assembly.
Mr. Waxman. But it all comes down to the uncertainty, the
lack of consistent clean energy plan, and investors can't rely
on policy to provide direction? Is that----
Ms. Cuttino. Yes, sir.
Mr. Waxman [continuing]. What you found? Now, in your
roundtable discussions with industry, did the participants
identify EPA regulations as an impediment to investment in the
United States?
Ms. Cuttino. They did not.
Mr. Waxman. What about setting a carbon cap or putting a
price on carbon? Would that provide clean energy investors with
greater certainty about the purpose and direction of our energy
policy? What were their views on that?
Ms. Cuttino. That is certainly one policy that would
provide certainty, sir.
Mr. Waxman. That is one. What else?
Ms. Cuttino. Well, setting some kind of a clean energy or
renewable energy standard. Opening up private pools of capital
to clean energy the way that oil and gas can capitalize on
them. This is Master Limited Partnerships, a real estate
investment trust. Certainly providing longer term tax
incentives to the production tax credit or the investment tax
credit, the same kind of certainty that we have given to other
incumbent technologies. And then investing, frankly, in energy
R&D. As you know, this country has invested significantly in
defense and health, but energy R&D is woefully low.
Mr. Waxman. Thank you very much.
Thank you, Mr. Chairman.
Mr. Terry. Thank you, Mr. Waxman.
Now the chair recognizes the gentleman from Kentucky, Mr.
Guthrie.
Mr. Guthrie. Thank you, Mr. Chairman.
First of all, as to the carbon cap, I think there would be
more certainly for clean energy, because it would make
incumbent energy more expensive, which is kind of what we are
discussing here today, how America's energy boom has helped in
manufacturing.
My family is in manufacturing, and I can tell you from
firsthand experience, my father walked into a Ford plant as a
union operator and ended up owning his own business. The
pathway to the middle class for our family and for most
families is right through the manufacturing floor. I mean, we
have seen it throughout.
And in Kentucky, we have seen two--we are the number one
aluminum State in the country and we used to be one of the top
textile States in the country. And textiles in the 1990s moved
offshore because it was high labor intensive. Aluminum has
stayed in Kentucky, because it is high energy intensive. So our
competitive advantage is, for the aluminum industry anyway,
which is what my family is a part of, is that fact that we have
cheap energy rates. Particularly in Kentucky, as a coal state.
So I don't have coal in my district. I don't think I have a
lump of coal in my district, but 94 percent of Kentuckians get
their power from coal, and that has attracted the investment
and jobs that pay $65,000 to $70,000 a year for hourly workers
in the aluminum industry. And so it is very serious when we
talk about raising the price.
And I would love to see clean energy be as competitive. And
equalizing the tax and incentives, if one group gets it, I
think that is a fair point to make. But raising the price of
incumbent energy to get some other type of energy to be
competitive is something that would concern me.
And I don't know if anybody wants to talk on specific
regulations that you have dealt with, I know we had kind of in
general with Mr. Terry, that you have dealt with that has
actually--the EPA has done this, and it has raised the cost of
your energy and made you less competitive.
Mr. Cicio. As a matter of fact, aluminum, about 35 percent
of the cost of producing aluminum is the cost of electricity or
energy. Relatively small changes to the price of electricity
has an immediate impact on their competitiveness. And in
Kentucky, for example--well, Kentucky or anywhere else, you
find coal-fired power plants, you will find lots of
manufacturers. Why? Because coal provides low cost BTU power.
And we compete globally with all types of companies, including
companies that are owned by sovereign states. So costs are
everything. And EPA regulations on these coal-fired power
plants and the proposed regulations, greenhouse gas regulations
on new and existing facilities are of great concern.
Mr. Guthrie. And I know companies that looked at Mexico to
invest, but the difference in energy did not make up for the
differences in labor. So they are able to pay people higher
wages because they are driven more by energy costs than they
are by labor costs. And that is--anybody else have--I have only
got 7 seconds. I guess I will yield back.
Mr. Terry. The gentleman yields back. And we recognize Mr.
McNerney, the gentleman from California, for 3 minutes.
Mr. McNerney. Thank you, Mr. Chairman.
Mr. Cordle, briefly, if you would, just to satisfy my
curiosity, how is the natural gas mostly used? Is it used as a
chemical, as a solute? Is it used to create heat through
burning, or is it used to create electricity? Just curiosity,
so if you could give a brief answer, I would appreciate it.
Mr. Cordle. In two primary ways. We use natural gas to fire
our steam boilers in our chemical production facility.
Mr. McNerney. Right.
Mr. Cordle. And the overall lowering of that cost has
certainly helped us dramatically. In the overall chemical
manufacturing industry, it is a raw material, it is an
ingredient in what we make in terms of our products.
Mr. McNerney. So is that what most of the natural gas is
used, as an ingredient in the product?
Mr. Cordle. Well, the natural gas, when it comes out of the
ground, it has several components. It has ethane, propane, and
a few other things. And the ethane is the key raw material that
is cracked and turned into ethylene, ethylene oxide, and then
eventually it comes into polyethylene in the plastics that we
use every day.
Mr. McNerney. Thank you.
Ms. Cuttino, I am very sympathetic to your comment about
predictability. I was in the industry for many years and I saw
boom and bust cycles because the production tax credit and so
on. We would lay off people and our suppliers would go away,
and you would have to rebuild every cycle, all your suppliers.
It is a very difficult--so I sympathize with that. I think we
need to be sensitive to that here in the committee.
Could you tell me what advantages, what policy advantages
that the fossil fuel industry has that the renewable industry
does not have?
Ms. Cuttino. Certainly. A couple of things. One, they have
enjoyed the benefits of permanent tax breaks in--or tax
incentives in the Tax Code.
Mr. McNerney. Specifically?
Ms. Cuttino. Oil and----
Mr. McNerney. Specifically.
Ms. Cuttino. Specifically? Oil and gas.
Mr. McNerney. Tax breaks, which ones.
Ms. Cuttino. Tax incentives. For oil and gas, it has been
more than 100 years, for nuclear power----
Mr. McNerney. What do the incentives look like? What
specifically do the incentives look like?
Ms. Cuttino. In total? More than $500 billion----
Mr. McNerney. Let me----
Ms. Cuttino [continuing]. Or what some estimates have been.
Mr. McNerney. What do they look--what form do they take?
What do the incentives look like?
Ms. Cuttino. They take the form of tax incentives. I am
sorry.
Mr. McNerney. Right. Are they production tax incentives, or
are they depletion----
Ms. Cuttino. Yes. Yes. I am sorry. Exploration for
extraction, yes.
Mr. McNerney. Andre de Ruyter, on the GTL process, what is
the energy balance of the GTL liquids; that is, energy in your
product, divided by energy into the process and energy in the
natural gas? What does the balance look like?
Mr. de Ruyter. Thank you, sir. We use about 9.5 Bcf per day
to produce 100,000 barrels of diesel per day. So you could work
out the balance from that.
Mr. McNerney. You don't have a number--a balanced number.
Mr. de Ruyter. It is a ratio between gas--natural gas in
and diesel out on the other side of the process.
Mr. McNerney. Plus, energy into the process.
Mr. de Ruyter. Well, that includes the consumption of the
energy.
Mr. McNerney. Mr. Chairman, I ran over already.
Mr. Terry. Thank you.
Now the chair recognizes the gentleman from West Virginia,
Mr. McKinley.
Mr. McKinley. Thank you, Mr. Chairman.
In 3 minutes, we are going to have to run pretty quickly
through this.
Ms. Cuttino, just quickly, with a question to you--and I
like your comments about the clean energy technology and
research. And you know, with National Energy Technologies
Laboratories, they have been very focused on trying to get that
accomplished. Yet you are aware that their research budget was
cut by 41 percent. So when the President did that, would you
agree with that?
Ms. Cuttino. I think it is our opinion and the opinion----
Mr. McKinley. It is a yes or a no.
Would you agree with the President to slash research, R&D,
on fossil fuels?
Ms. Cuttino. On fossil fuels or clean energy? We think----
Mr. McKinley. Well, it is all one in the same. I am going
to take that as a no.
Mr. Cicio, if we could run down with you quickly with this.
In the 112th Congress, the EPA continually talked about during
their hearings that they thought that more regulations were
actually going to help the manufacturing industry. They
suggested that for every million dollars spent in more
comprehensive regulations, for each million, it created 1 and a
half jobs. Would you agree that there are 1 and a half jobs
created for every million dollars in new regulation?
Mr. Cicio. No. And I don't think any manufacturer would.
Mr. McKinley. Mr. Cordle, your thoughts.
Mr. Cordle. No, I wouldn't agree with that.
Mr. McKinley. From yours, from Marlin Steel.
Mr. Greenblatt. It would be a big job loser.
Mr. McKinley. Thank you.
How about from Sasol?
Mr. de Ruyter. I can't support that statement.
Mr. McKinley. I am sorry?
Mr. de Ruyter. I cannot support that statement that it will
create more jobs.
Mr. McKinley. Back also on uncertainty, we are trying to
find a level of certainty. I agree. As a small business owner
myself, we were always searching for that. But now we have the
issue of Obamacare coming upon us in our manufacturing.
Mr. Cordle, with 40 employees, you are faced with if you
cross over 50, you are going to be meeting new guidelines or
new requirements. How is your company adjusting to Obamacare?
Mr. Cordle. Well, certainly, the cost of health care has
gotten to the point it has been very difficult to make ends
meet. I think right now a family plan costs over $3,000, and
our company carries about 80 percent of that on behalf of the
employee. And we have been seeing anywhere from 10 to 30
percent increases on an annual basis. I met last week with our
insurance company for our union side--we employ steelworkers--
and they are frustrated because they don't even have the rates.
Mr. McKinley. Weren't you told it was going to decrease
insurance costs?
Mr. Cordle. I don't know how that relates to Obamacare, Mr.
Congressman, but I can just tell you from my experience that
health care costs in general are going to become very difficult
on a small business.
Mr. McKinley. My time is expired. I am sorry. Thank you
very much.
Mr. Terry. Thank you.
The chair recognizes the gentleman from Maryland for his 3
minutes.
Mr. Sarbanes. Thank you, Mr. Chairman.
I want to thank the panel. I want to acknowledge Drew
Greenblatt, who has a very successful business that he has
described in Baltimore, and we are very proud of the work he
has done in manufacturing.
There are a lot of issues that are packed in here. And, of
course, we have less time than usual to address them all.
But the boom in natural gas exploration and production, of
course, is presented as a real opportunity. Everything is
relative when it comes to energy and the impact it has on our
economy and on our public health and so forth. I had embraced
the idea that natural gas is an important bridge from
traditional fossil fuels, dirtier fossil fuels, toward a clean
energy, renewable energy future.
The challenge is that the boom has produced now a scenario
that is being embraced by many that this is sort of the end of
our problems. That it will allow for ultimate energy
independence for the country, and we may be less motivated to
get across that bridge now to the other side in terms of a
renewable energy portfolio in the future.
So I think that is where some of the anxiety from the boom
comes from. Having said that, I certainly appreciate that the
manufacturing sector sees a real benefit in the lower prices
that are being generated from this and maybe as between having
those prices increase, because we turn to an export strategy
for that versus having them increase maybe because we move to
some better way of capturing the impact of that on our
environment, or we put more safety standards in place with
respect to the industry. I guess most would choose the former.
But let me ask you, Mr. Greenblatt, you are certainly
benefiting from the natural gas boom and the impact that is
having. But I would imagine you also over the long term aspire
to take advantage of clean energy and renewable energy
opportunities that may be able to be inputted into your
operation. Maybe the pricing isn't there yet. But you are
innovative enough and creative it. I imagine you have got that
on the horizon. I thought you might want to talk about that.
Mr. Greenblatt. We have explored it. It is something we
would love to do. We have looked at putting solar panels on our
roof. The math isn't there yet. It would be a wonderful thing
for it to occur. But we are not there yet.
Mr. Sarbanes. My hope, as I yield back my time, is that we
can strike the right balance so that it is cost effective to
pursue a number of these different opportunities and that we
can safeguard, as I said, public health and other concerns that
we have.
With that, I yield back.
Mr. Terry. Thank you.
The chair recognizes the gentleman from Ohio, Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman. I am going to move
quickly here because I have got several topics I would like to
address.
Mr. Cicio, I notice that you have a list of new projects
listed in your testimony that could be at risk if the U.S.
approves applications to export liquid natural gas to non-free-
trade agreement countries. I was surprised by some of these
companies that you listed, but one in particular caught my eye,
and that is the Vallourec and Mannesmann factory, or V&M Star,
expansion in Youngstown, Ohio. So my first question is, do you
know what they make there?
Mr. Cicio. Of course.
Mr. Johnson. OK. They make the very steel and the tubes
that are going to be used to transport liquid natural gas to
market. They are going to benefit from the exporting of liquid
natural gas. Why would you suggest that they are going to be
hurt by the exporting of liquid natural gas?
Mr. Cicio. Well, my testimony, I guess, is not clear
enough, but it says we are not opposing exports. It is how the
DOE----
Mr. Johnson. Why do you list that company as one that is
going to be hurt by the exporting of liquid natural gas?
Mr. Cicio. Because if you export a lot of natural gas, it
increases the price of domestic natural gas and electricity.
Mr. Johnson. But the companies that make the materials that
export the natural gas, they are going to benefit from this.
Let me move on. Because I don't want to get into a debate
here. We have a fundamental disagreement.
Let me ask you this. You list a number of chemical projects
that will actually benefit from increased natural gas
production in your testimony. A recent ICF study projected that
employment in the chemical sector would actually increase with
LNG exports due to the need to process greater natural gas
liquids. Do you agree or disagree with the ICF study and
conclusions?
Mr. Cicio. We disagree.
Mr. Johnson. You disagree.
There are a lot of ethane cracker plants being planned all
across the country. If all of the cracker plants get built,
wouldn't the rest of the natural gas users see increased prices
for natural gas and ethane?
Mr. Cicio. If there is increased production of ethane, it
doesn't--you will get residual increases of supply of natural
gas, but not necessarily higher prices.
Mr. Johnson. I will take that as a yes.
There is a nearly an almost limitless supply of natural
gas, if the Federal Government doesn't mess up the opportunity,
and from a manufacturing perspective, if we aren't forced to
use gas for power generation instead of cheaper coal. You
mentioned that a little earlier. I would just suggest that your
time and the time of your members would be better spent helping
us make sure that the administration doesn't stamp out the coal
industry, which is the most cost affordable, reliable form of
energy on the planet.
With that, I yield back.
Mr. Terry. Thank you, Mr. Johnson.
At this time, I ask unanimous consent that each side has
one more set of questions. So the next person on both sides
will be the last. Then we will close, gavel the hearing.
One more each side. Unfortunately, you got beat out by one,
Gene.
Unless Ms. Matsui wants to split it with you.
Mr. Green. No, I don't want to take Doris' time. But I also
know some of us have been here, and obviously, it is an
important panel.
Mr. Waxman. Mr. Chairman, I object to the unanimous
consent.
Mr. Terry. The alternative is we will come back at 2:30.
Mr. Waxman. Let's go with the questions and see if we can
get it done.
Mr. Terry. Ms. Matsui, you are recognized.
Ms. Matsui. Thank you, Mr. Chairman, and thank the
witnesses for being here today.
As we continue the broader debate on energy exports, we
must not overlook clean energy technologies and the strong role
they will play in transitioning our country to a clean energy
economy, mitigating climate change, and strengthening our
national security. While exporting LNG is certainly an issue
worth delving further into, I want to assure that it is just
one piece of a larger export strategy, a strategy that also
includes clean energy technology exports.
My home district of Sacramento is home to over 220 clean
technology companies, many of which are small and medium-size,
who are exploring ways to expand their businesses by exporting
their products to foreign markets. However, unlike large
companies, small businesses simply do not have the resources,
time, and manpower to effectively promote their products
abroad. They need proper assistance to compete in the
international marketplace.
To this end, I have introduced the Clean Energy Technology
Manufacturing and Export Assistance Act. This legislation would
create an export assistance fund to help clean technology
manufacturers navigate foreign markets. Additionally, it would
develop and implement a national clean energy technology export
strategy.
Ms. Cuttino, included in your testimony is a policy
recommendation to expand markets to U.S. clean energy goods and
services. Do you believe developing a national clean energy
technology export strategy would help achieve this goal, and
what do you believe are factors that should be considered in
any sort of export strategy and why?
Ms. Cuttino. I absolutely think we ought to have a national
strategy to export clean energy goods. Mr. Scalise earlier
talked about American-made energy in Saudi Arabia or countries
in the Middle East. We can export to these countries. Saudi
Arabia is going to spend a hundred billion dollars on solar.
And they ought to buy American-made solar. So there is a huge
opportunity to do that. And I think any strategy ought to be to
open up markets and to ensure that small businesses have the
same access that large businesses do.
Ms. Matsui. Thank you. So do our international competitors
help their small- and medium-sized clean tech businesses
facilitate exports to the United States?
Ms. Cuttino. Yes, they do.
Ms. Matsui. How can U.S. clean energy exports benefit the
quality of life for people in emerging economies?
Ms. Cuttino. One-third of the world's population is without
electricity. And we are seeing a very aggressive push in many
areas around the world. Distributed energy is already the best
and cheapest option in many of these locations. We know that
there is going to be a compound growth in areas of Africa,
Latin America, and Asia, in terms of energy growth and clear
energy investment. So we should be there and exporting to these
emerging markets.
Ms. Matsui. Thank you.
I think I yield back whatever I have.
Mr. Terry. Thank you.
At this time the chair recognizes the gentleman from
Colorado.
Mr. Gardner. Thank you, Mr. Chairman.
Mr. Cicio, emerging reports from nonpartisan think tanks
like BPC and Brookings are talking about and suggesting that it
is domestic natural gas prices that will drive exports and not
exports driving natural gas prices. So it is actually the
natural gas prices will drive exports, not exports driving
natural gas prices. Do you agree with that?
Mr. Cicio. Well, low natural gas prices relative to foreign
markets, yes, will drive exports. Of course.
Mr. Gardner. So, Mr. de Ruyter, do you agree with that?
Mr. de Ruyter. Absolutely, I agree.
Mr. Gardner. I just wanted to get that cleared up. And I
would yield my time to Mr. Olson.
Mr. Olson. I thank my colleague from Colorado.
Welcome to the witnesses. With the short time, I will
attempt to curb my instincts as a Texan and brag about the Lone
Star State. But here it goes.
I represent a suburban Houston district. We have 125
companies operating in the refining and petrochemical
industries in Houston. The region is expecting $35 billion in
new capital investments over the next 3 years. The construction
from these investments will create over 100,000 jobs and
contribute over $800 million in taxes. Those are big numbers,
even for Texans.
I have a few questions about cheap natural gas bringing
competitors, foreign companies, to our soil.
Mr. Greenblatt, I am thrilled to hear about the growth of
your company in Baltimore because of increased shale gas
production. I am wondering how to bring your business to Texas.
But I love the fact, too, you are exporting to China. Do
you think foreign competitors, maybe one from China, will come
and bring their operations to the United States due to lower
energy costs and probably some favorable tax treatments from
home countries?
Mr. Greenblatt. I think lower energy costs is going to be a
boon to, is going to create a boom in foreign direct
investment. I think many companies will reposition and look at
the globe and think of us differently and in a very positive
way because of our cheap energy prices.
Mr. Olson. Thank you.
Mr. Cordle, sir, could you discuss in a little bit of
detail here, with the limited time, what the shale revolution
means for foreign manufacturing here in the United States?
Foreigners come to our country to manufacture.
Mr. Cordle. Certainly. It has been a tremendous increase in
investment in the United States. I believe BASF TOTAL are
investing in your State, in Port Arthur, a billion dollar
project. And we have had almost $70-plus billion in capital
announcements in the last couple of years. This really is a
game changer. Never before has the competitive playing field
been tilted in our favor. It has always been the other way. And
we need to put in the policies that will ensure that this is
long-lived, it is real, it is here, and we appreciate what you
are doing today, and the rest of the committee, regarding this
issue.
Mr. Olson. I am out of time. One final comment. Go Spurs.
Mr. Terry. Object.
The gentleman from Texas, another prideful Texan.
Mr. Green. Well, thank you, Mr. Chairman.
Unlike my neighbor and colleague, it doesn't take a Texan
too much time to brag about Texas.
I represent a district in the Houston area, and it at one
time had the largest petrochemical complex in the country.
Every one of our chemical plants in our district in East Harris
County are announcing expansions.
I know one on the list that Mr. Cicio had was
PetroLogistics. It took a mothballed chemical plant in our
district and because of the propane coming off the Eagle Ford,
and they were serving literally the market in the Houston area.
But last year, they contacted me and wanted to know what they
could do to get a carbon permit because States are not issuing
them in Texas. You have to go to EPA. Because they wanted to
double their capacity and get in the international market. So
we are seeing that literally all over the petrochemical
complexes, from the Mississippi River down to Corpus Christie,
Texas.
I know, Ranking Member Waxman, I know China is expanding on
their greener energy production. But they are also, they and
India, are building 76 percent of the coal plants in the world.
So China is doing everything. They are somewhat free
enterprise. But we also know they are a command economy. So
they can do things that we have to deal with typically with
free market or with government assistance on a limited basis.
Although some of my plants think the EPA orders them around,
but we do know there is an appeals process for that. And in
China, there may not be that.
Mr. Cordle, are you seeing similar expansion in West
Virginia like I am seeing in East Harris County?
Mr. Cordle. Not to the scale that you are seeing, but we
are very hopeful. We are working very hard as a State in an
industry to attract foreign and domestic investments in the
region. In the Kanawha River Valley we do, as you know, we have
a rich tradition in chemical manufacturing.
Mr. Green. I noticed--in fact, I got to visit some of the
chemical plants along the Ohio River, both in Ohio and in West
Virginia. You mentioned the supply response for shale gas has
directly created 46,000 jobs in the chemical industry due to
expanded chemical production. What is the average salary for
those jobs?
Mr. Cordle. I believe we are around $77,000, $78,000 for
those jobs.
Mr. Green. Must be nationwide. Because I know in my area,
our work source talks about the average salary is about $86,000
for those chemical plant jobs and refinery plant jobs. Because
they are also expanding.
What policies are needed to maintain the long-term, low-
cost energy advantage? I understand that I have that industrial
complex, but I also have a lot of service companies who
actually continue to work, like Eagle Ford and all over the
country, literally. But, for example, has the Federal
Government made it difficult to use hydrofracking? What would
that mean to some of your businesses?
Mr. Cordle. In terms of hydraulic fracturing, I think the
States are best suited to handle the regulation of that
activity on the extraction side.
Mr. Green. Are we close to the time?
Mr. de Ruyter, one last question. You talked about the link
to the gas-to-liquids facility that you are building in
Louisiana. You also talked about Sasol currently operating, and
you estimated the greenhouse gas savings associated with
blending GTL diesel in U.S. Refineries. Has GTL technology ever
been used here, and would our refineries have to add or update
their equipment to handle it?
Mr. de Ruyter. The refineries would not have to update or
change their equipment. They can use it straight as a blend
stock. In fact, it would improve the quality of traditional
crude-derived diesel by blending in gas-to-liquids diesel.
Mr. Green. Has it ever been used in the United States?
Mr. de Ruyter. Yes. We have in fact exported diesel to the
U.S., and we have also supplied GTL jet fuel to the Department
of Defense, who uses it for experimental purposes.
Mr. Green. I appreciate it. I appreciate the opportunity.
Mr. Terry. Thank you, Mr. Green.
You have to say. I have a unanimous consent request to
submit an article from E&E on ``Exelon Blames Subsidized Wind
Markets,'' article.
Hearing none, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Terry. Now your job is done.
I want to thank our entire panel here. All of you were
awesome and your testimony very informative.
Members have 10 days to submit their questions.
Panel, I would appreciate if we submit questions to you,
that you answer them within a timely manner. Timely is not
several months.
With that, we are adjourned.
[Whereupon, at 12:45 p.m., the subcommittees were
adjourned.]
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