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





EXAMINING THE EFFECTS OF LIQUEFIED NATURAL GAS EXPORTS ON U.S. FOREIGN 
                                 POLICY

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

                                HEARING

                               before the

                     SUBCOMMITTEE ON ENERGY POLICY,
                      HEALTH CARE AND ENTITLEMENTS

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 30, 2014

                               __________

                           Serial No. 113-109

                               __________

Printed for the use of the Committee on Oversight and Government Reform



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington             ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming           DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia                 PETER WELCH, Vermont
THOMAS MASSIE, Kentucky              TONY CARDENAS, California
DOUG COLLINS, Georgia                STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina         MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan        Vacancy
RON DeSANTIS, Florida

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                    Stephen Castor, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

      Subcommittee on Energy Policy, Health Care and Entitlements

                   JAMES LANKFORD, Oklahoma, Chairman
PATRICK T. McHENRY, North Carolina   JACKIE SPEIER, California, Ranking 
PAUL GOSAR, Arizona                      Minority Member
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
JASON CHAFFETZ, Utah                     Columbia
TIM WALBERG, Michigan                JIM COOPER, Tennessee
PATRICK MEEHAN, Pennsylvania         MATTHEW CARTWRIGHT, Pennsylvania
SCOTT DesJARLAIS, Tennessee          TAMMY DUCKWORTH, Illinois
BLAKE FARENTHOLD, Texas              DANNY K. DAVIS, Illinois
DOC HASTINGS, Washington             TONY CARDENAS, California
ROB WOODALL, Georgia                 STEVEN A. HORSFORD, Nevada
THOMAS MASSIE, Kentucky              MICHELLE LUJAN GRISHAM, New Mexico



















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 30, 2014...................................     1

                               WITNESSES

Mr. Christopher A. Smith, Principal Deputy Assistant Secretary 
  for Fossil Energy, U.S. Department of Energy
    Oral Statement...............................................     5
    Written Statement............................................     8
Mr. Amos J. Hochstein, Deputy Assistant Secretary for Energy 
  Diplomacy, Bureau of Energy Resources, U.S. Department of State
    Oral Statement...............................................    14
    Written Statement............................................    16

                                APPENDIX

Statement by Ambassador-at-Large for Energy Security, Dr. Anita 
  Orban from the Ministry of Foreign Affairs in Hungary submitted 
  by Rep.James Lankford..........................................    54
Opening Statement by Rep. Michael R. Turner......................    57
Opening Statement by Rep. Matt Cartwright........................    62
Supplemental Information: Admin. Officials Recognize the Benefits 
  of U.S. Natural Gas Exports submitted by Rep. James Lankford...    64

 
EXAMINING THE EFFECTS OF LIQUEFIED NATURAL GAS EXPORTS ON U.S. FOREIGN 
                                 POLICY

                              ----------                              


                       Wednesday, April 30, 2014

                   House of Representatives
      Subcommittee on Energy Policy, Health Care & 
                                      Entitlements,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 9:35 a.m., in 
Room 2154, Rayburn House Office Building, Hon. James Lankford 
[chairman of the subcommittee] presiding.
    Present: Representatives Lankford, Jordan, Walberg, 
DesJarlais, Farenthold, Woodall, Massie, Speier, Norton, 
Duckworth, Cardenas, and Lujan Grisham.
    Staff Present: Melissa Beaumont, Majority Assistant Clerk; 
Molly Boyl, Majority Deputy General Counsel and 
Parliamentarian; David Brewer, Majority Senior Counsel; Caitlin 
Carroll, Majority Press Secretary; Drew Colliatie, Majority 
Professional Staff Member; John Cuaderes, Majority Deputy Staff 
Director; Adam P. Fromm, Majority Director of Member Services 
and Committee Operations; Linda Good, Majority Chief Clerk; 
Tyler Grimm, Majority Senior Professional Staff Member; Ryan M. 
Hambleton, Majority Senior Professional Staff Member; 
Christopher Hixon, Majority Chief Counsel for Oversight; Matt 
Mulder, Majority Counsel; Laura L. Rush, Majority Deputy Chief 
Clerk; Jessica Seale, Majority Digital Director; Jaron Bourke, 
Minority Director of Administration; Courtney Cochran, Minority 
Press Secretary; Jennifer Hoffman, Minority Communications 
Director; Adam Koshkin, Minority Research Assistant; Elisa 
LaNier, Minority Director of Operations; Juan McCullum, 
Minority Clerk; Dave Rapallo, Minority Staff Director; and 
Katie Teleky, Minority Staff Assistant.
    Mr. Lankford. The committee will come to order.
    I would like to begin this hearing by stating the Oversight 
Committee mission statement.
    We exist to secure two fundamental principles: first, 
Americans have the right to know the money Washington takes 
from them is well spent and, second, Americans deserve an 
efficient, effective Government that works for them. Our duty 
on the Oversight and Government Reform Committee is to protect 
these rights. Our solemn responsibility is to hold Government 
accountable to taxpayers, because taxpayers have a right to 
know what they get from their Government. We will work 
tirelessly in partnership with citizen watchdogs to deliver the 
facts to the American people and bring genuine reform to the 
Federal bureaucracy. This is the mission of the Oversight and 
Government Reform Committee.
    Today we are here to discuss the role of liquefied natural 
gas, the exports and how we are handling that, and national 
security policy and foreign policy. This hearing builds on 
another hearing held by this subcommittee last year that 
focused on the Department of Energy's strategy and process in 
reviewing applications to export LNG, specifically to non-Free 
Trade Agreement countries. At that hearing we were joined by 
Mr. Christopher Smith of DOE, who is here again with us today. 
Thank you. We would also like to welcome Deputy Assistant 
Secretary Hochstein from the U.S. State Department's Bureau of 
Energy Resources. Thank you both for coming.
    By now it is obvious the United States is in the middle of 
an energy production revolution. This is due almost entirely to 
advanced drilling techniques, such as hydraulic fracturing, 
horizontal well drilling that gives us access to resources that 
were not previously recoverable. Prior to 2005, it was 
estimated there was less than 200 trillion cubic feet of dry 
natural gas proved reserves in the United States. As of 2010, 
that number had risen to over 300 trillion cubic feet, an 
increase of over 50 percent in just five years.
    Economic studies such as the NERA study commissioned by the 
DOE to inform its decision-making on LNG exports indicate the 
United States will see a net economic benefit from LNG exports.
    Energy exports could also be a powerful and much-needed 
foreign policy tool should we choose to wield it. Many of our 
friends and allies are forced to buy their oil and gas from the 
resource autocracy of Russian President Vladimir Putin. In 
order to meet its domestic power needs, Ukraine imports over 60 
percent of its natural gas. All these imports are from Russia. 
This gives Russia an immense amount of power over Ukraine. This 
is also the case for several other Eastern European countries, 
such as Hungary and Lithuania. Russia has a habit of squeezing 
its neighbors' energy supplies when it wants to influence their 
actions.
    The United States has the resources to counter this and to 
come to the aid of our Eastern European allies; what it needs 
is the political will. As mentioned in our previous hearing, 
this subcommittee is familiar with the DOE process for 
improving LNG export licenses. For countries with which we have 
a Free Trade Agreement covering natural gas, the natural Gas 
Act of 1938 requires DOE to grant applications to export LNG. 
Such export is deemed to be consistent with the public 
interest, and the authorization must be granted without 
modification or delay. For countries with which we do not have 
a Free Trade Agreement covering natural gas, the Natural Gas 
Act still presumes that DOE will grant the application to 
export LNG unless the Department finds the proposed exportation 
will not be consistent with the public interest.
    The United States has exported natural gas via pipeline to 
Canada and Mexico since the 1930s. Furthermore, the U.S. has 
exported LNG from the Kenai Peninsula in Alaska since 1969. For 
the lower 48 States, in May of 2011, the Department of Energy 
granted the first permit to export LNG to non-FTA countries. 
That facility is currently under construction in southwest 
Louisiana and will begin exporting LNG very soon.
    When we had our last hearing on this topic, this was the 
only facility approved for non-FTA export. I am pleased to see 
that number is now seven. However, there are still 24 
applicants waiting for DOE approval. I encourage DOE to process 
these applications expeditiously. The process to determine that 
exporting excess American product is in our national interest 
has stretched on for months.
    In December 2012, President Obama said to TIME Magazine, 
``The United States is going to be a net exporter of energy 
because of new technologies and what we're doing with natural 
gas and oil.'' The President also recognized that these 
``energy [developments] could have a huge geopolitical 
consequence.''
    It would seem that the President's remarks are embodied in 
the State Department's Bureau of Energy Resources. This Bureau, 
set up only a few years ago, states as one of its goals ``To 
manage the geopolitics of today's energy economy through a 
reinvigorated energy diplomacy with major producers and 
consumers.''
    One objective that I hope to accomplish with this hearing 
is to get a sense of how the Administration is taking advantage 
of this national security and diplomatic opportunity afforded 
by the export of LNG. It seems clear to me this Administration 
has identified LNG exports as a valuable, if not crucial, part 
of U.S. diplomacy and strategic relations. I would like to make 
sure that the different parts of our Government are 
communicating effectively and efficiently. Is DOE aware of the 
foreign policy objectives pushed by the State Department? Are 
these agencies working harmoniously to advance the 
Administration's goals? Are there any intra-governmental 
barriers that we can help fix to move this along?
    Allowing more exports of this domestic commodity will have 
a clear effect on the fulfillment of our foreign policy agenda. 
We need to ensure that we have a strategy in place that 
safeguards our allies from political volatility outside their 
borders, and we must have the cross-agency coordination to 
carry it out.
    I thank the witnesses for appearing and I look forward to 
your testimony.
    With that, I recognize the distinguished ranking member, 
the gentlelady from California, Ms. Speier, for her opening 
statement.
    Ms. Speier. Thank you, Chairman Lankford, for today's 
hearing. I look forward to what I hope will be an informative 
discussion.
    First, I certainly agree that Russian control of the 
natural gas supplies into and through Ukraine is a critical 
issue. The OPN Union gets 24 percent of its gas from Russia. 
But some countries, such as Lithuania, Finland, and Latvia, are 
dependent on Russia for the entirety of their supply. 
Considering President Putin's obvious imperial ambitions, the 
United States must help our European allies lessen their 
dependence on Russian gas as much as possible.
    Unfortunately, at least in the short-term, proposals to 
help Ukraine by fast-tracking approvals of new LNG export 
terminals will not meet the goal intended of quickly getting 
U.S. LNG to Europe, and Ukraine in particular. Currently, the 
U.S. has only one LNG export terminal, in Alaska, with another 
terminal in Louisiana scheduled to start operation in 2015. 
Building more terminals and finding the private investment to 
fund them will take several years.
    I am all in favor of giving the Department of Energy and 
the Federal Energy Regulatory Commission the resources they 
need to speed the permitting process. FERC, in particular, has 
a complex and slow process which could benefit from additional 
resources. However, we shouldn't pretend that faster permitting 
alone is a panacea.
    In addition, the main barrier to the U.S. export to Europe 
is not the permitting process; it is the fact that U.S. gas 
shipped to Europe would be substantially more expensive than 
cheap Russian gas. Most experts agree that LNG exports from the 
U.S. would be far more likely to go to Asia, where prices are 
higher than in Europe. This is not to say that the U.S. should 
not aim to market gas to Europe. But taking note that 
conducting foreign policy via energy export is complex.
    So how can we help Ukraine, given these practical 
constraints? A number of efforts are already underway. The U.S. 
is working with the EU and the International Monetary Fund on a 
number of efforts to move Europe towards a greater diversity of 
energy sources, such as reversing flows of natural gas from 
existing pipelines into Ukraine and further developing 
Ukraine's own natural gas resources.
    Encouraging energy efficiency rarely makes headlines, but 
in Ukraine it could be a game-changer. Ukraine produces nearly 
as much gas as it uses, but Ukrainians are notoriously 
profligate energy users thanks to government energy subsidies. 
By implementing the same efficiency measures that other 
European countries already use, Ukraine could be nearly self-
sufficient.
    Mr. Chairman, I think these efforts to use America's 
resources to bolster our foreign policy are admirable and will 
become increasingly important over the next decade. However, we 
must not lose sight of the economic and environmental side 
effects of our current energy boom. A Brookings Energy Security 
Initiative study found that U.S. LNG exports would have a 
modest upward impact on domestic prices. Even this modest 
increase, estimated to be around $50 per family, would be 
damaging to low-income consumers, who must often choose between 
heating their homes and buying food. That means that an 
increase in LNG exports should go hand-in-hand with full 
funding of the Low Income Home Energy Assistance Program.
    We must also not forget the businesses and manufacturers 
that have built business plans around plentiful low-priced 
natural gas. Creating jobs through LNG export could be offset 
by the loss of jobs elsewhere in the economy.
    Increasing LNG exports would also increase the 
environmental risks associated with drilling and gas 
liquefication. A strong foreign policy cannot come at the cost 
of polluting Americans' drinking water with unknown chemicals 
from fracking fluid or drowning the coasts, including my 
district, with uncontrolled sea level rise. U.S. LNG exports 
can provide substantial benefits, but we must be realistic 
about what is feasible and control for the costs.
    Thank you again, Mr. Chairman, for holding this hearing, 
and to our witnesses for being here today.
    Mr. Lankford. Members will have seven days to submit 
opening statements for the record.
    We will now recognize our first and only panel.
    Mr. Christopher Smith is the Principal Deputy Assistant 
Secretary for Fossil Energy at the U.S. Department of Energy.
    Mr. Amos Huchstein is the Deputy Assistant Secretary for 
Energy Diplomacy in the Bureau of Energy Resources, the U.S. 
Department of State.
    Pursuant to committee rules, all witnesses are sworn in 
before they testify. If you would please stand and raise your 
right hand.
    Do you solemnly swear or affirm that the testimony you are 
about to give will the truth, the whole truth, and nothing but 
the truth, so help you, God?
    [Witnesses respond in the affirmative.]
    Mr. Lankford. Thank you. You may be seated.
    Let the record reflect the witnesses have answered in the 
affirmative.
    In order to allow time for discussion, I would ask you to 
limit your oral testimony to five minutes. We will have plenty 
of time for oral discussion and questions after your testimony 
is finished. Obviously, your written statement will be made a 
part of the permanent record as well.
    Mr. Smith, you are recognized first.

                       WITNESS STATEMENTS

               STATEMENT OF CHRISTOPHER A. SMITH

    Mr. Smith. Well, thank you very much, Chairman Lankford and 
Ranking Member Speier, and members of the subcommittee. I 
appreciate the opportunity to discuss the Department of 
Energy's program regulating the export of natural gas, 
including liquefied natural gas.
    The incredible abundance we are experiencing in our 
domestic natural gas supply provides unprecedented 
opportunities for the United States. Over the last several 
years, domestic and natural gas production has increased 
significantly, outpacing consumption growth, resulting in 
declining natural gas imports. Production growth is primarily 
due to the development of improved drilling technologies, 
including the ability to produce natural gas trapped in shale 
formations.
    Production from these sources made up less than 2 percent 
of the U.S. supply in 2000 and rose to 40 percent of that total 
in 2012, a dramatic change.
    Historically, the Department of Energy has played an 
important role in development of technologies that have enabled 
the United States to expand development of these energy 
resources. Beginning in the late 1970s, research investments by 
the Department contributed to the development of hydraulic 
fracturing and extended horizontal lateral drilling 
technologies that were later refined and commercialized through 
private sector investments and continued industry innovation, 
unlocking billions of dollars in economic activities associated 
with shale gas production.
    Thanks to American ingenuity and know-how applied to our 
abundant domestic natural gas resources, the United States is 
now the world's number one natural gas producer and is poised 
to become a net exporter of natural gas by 2018, according to 
the Energy Information Administration.
    Today, domestic natural gas prices are lower than 
international prices of delivered LNG to overseas markets. As 
in the United States, demand for natural gas is growing rapidly 
in foreign markets. Due primarily to these developments, the 
Department of Energy has received a growing number of 
applications to export domestically produced natural gas to 
overseas markets in the form of liquefied natural gas.
    The Department's authority to regulate the export of 
natural gas arises from the Natural Gas Act, which provides two 
statutory standards for processing applications to export LNG 
from the United States. By law, applications to export natural 
gas to nations with which the United States has a Free Trade 
Agreement that provides for natural treatment of trade in 
natural gas are deemed to be consistent with public interest 
and the Secretary of Energy must grant authorization without 
modification or delay. As of March 24th, the Department of 
Energy has approved 35 such applications.
    For applications to export natural gas to non-FTA nations, 
the Secretary must grant the authorization unless, after 
opportunity for hearing, the proposed export is found to not be 
consistent with the public interest. In executing that 
requirement, the Department of Energy established a robust 
process to assess the public interest, a process that affords 
the opportunity for the public comment and transparency, and 
also allows balance of the many aspects of public interest that 
are potentially affected by the export of natural gas.
    While section 3(a) of the Natural Gas Act establishes a 
broad public interest standard and presumption favoring export 
authorizations, the statute neither defines public interest nor 
identifies criteria that must be considered. In prior 
decisions, however, the Department has identified a range of 
factors that it evaluates when reviewing an application for 
export authorization. These factors include economic impacts, 
international considerations, security of natural gas supply, 
environmental considerations, and others.
    To conduct its review, the Department looks to record 
evidence developed in the application proceeding. Applicants 
and interveners are free to raise new issues or concerns 
relevant to the public interest that may not have been 
addressed in prior cases. To date, the Department of Energy has 
granted seven conditional authorizations for long-term 
applications to export domestically produced lower 48 LNG to 
non-FTA countries, equivalent to 9.3 billion standard cubic 
feet per day. As of today, 24 applications are pending to 
export LNG to non-free trade agreement countries.
    The Department will continue processing the pending non-FTA 
LNG export applications on a case-by-case basis following the 
order of precedence previously established and set forth on the 
Department's Web site. During this time, the Department will 
continue to monitor any market developments and assess their 
impact and subsequent public interest determinations as further 
information becomes available.
    Given the topic of this hearing, I would also like to note 
that, as I mentioned earlier, the Department considers 
international factors as part of the public interest 
determination, among many other domestic factors. Of course, we 
are monitoring the situation in Europe very closely, and we 
certainly take energy security of our allies very seriously. We 
have taken recent global events into account in making 
decisions in recent applications.
    The United States' commitment to free trade is another 
factor in our reviews. An efficient, transparent international 
market for international gas with diverse sources of supply 
provides both economic and strategic benefit to the United 
States and our allies. Indeed, increased production of domestic 
natural gas has already significantly reduced the need for the 
United States to import LNG, and global trade LNG shipments 
that would have been destined for United States markets have 
been redirected to Europe and Asia, improving energy security 
for many of our key trading partners.
    To the extent United States exports can diversify global 
LNG supplies and increase the volumes of LNG available 
globally, it will improve energy security for many U.S. allies 
and trading partners.
    In conclusion, Mr. Chairman, I would like to emphasize that 
the Department of Energy is committed to moving forward on LNG 
applications as expeditiously as possible. We understand the 
significance of this issue, as well as the importance of 
getting it right. And I would be happy to answer any questions 
that you may have.
    [Prepared statement of Mr. Smith follows:]


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    Mr. Lankford. Mr. Hochstein.

                 STATEMENT OF AMOS J. HOCHSTEIN

    Mr. Hochstein. Mr. Chairman, thank you for having me appear 
before this committee. Ranking Member Speier, thank you and the 
members of the subcommittee. It is always good to be back here. 
As someone who served on the House Foreign Affairs Committee 
staff, it is good to be able to be back in the House, so I 
appreciate the opportunity, especially on this critical topic.
    The hearing comes at a critical time. Today, the 
relationship between security and access to energy is drawn in 
sharp relief. With the illegal annexation of Crimea by Russia 
and its role in the unrest in Eastern Ukraine, we are 
witnessing the unacceptable and, frankly, shocking violation of 
the sovereignty and territorial integrity of one country by 
another.
    The Department of State is not the agency responsible for 
the process of approving natural gas export licenses, and my 
colleague Chris Smith, from the Department of Energy, has just 
addressed that issue. But the crisis led many to argue that 
accelerated approval of LNG exports is the magic bullet to 
provide energy security to our European allies and partners.
    While critically important, U.S. energy resources, 
including LNG exports, are just one tool among many that we can 
and are utilizing to address the energy security challenges in 
Europe and elsewhere. We have been working in many ways around 
the world to contribute to that energy security, and we will 
continue to do so in the weeks, months, and years to come.
    There are renewed fears that Russia will use energy as a 
political tool, as it did in January 2009, when Russia cut off 
gas supplies to Ukraine. All Russian gas flows through Ukraine 
were halted, cutting off supplies to Southeastern Europe 
completely for 13 days. A shocked European Union began the 
process of moving towards diversifying its resources of energy 
and the routes by which the energy is delivered. The EU began 
to implement regulations and build infrastructure toward a 
common integrated and transparent energy market.
    The U.S. has been working closely with the EU to prevent a 
repeat of the 2009 crisis. We established that year the US-EU 
Energy Council, an annual meeting co-chaired by the Secretaries 
of State and Energy to address strategic energy issues and 
forms of collaboration. The first meeting was held that year, 
in November of 2009; the fifth meeting was held just a few 
weeks ago.
    What we have to take into consideration as we look at these 
issues is the global context in which we are living, and the 
supply-demand changes that have occurred around the world. 
First, the supply mechanism has changed from a small number of 
countries supplying the world to a much larger number of 
countries around the world supplying energy, both oil and gas. 
And in demand, while OECD countries were driving the demand 
until now, for the decades to come that demand will be driven 
by non-OECD countries, principally China, India, and Asia.
    As we have worked with Ukraine and with Europe to address 
the energy security of Ukraine and of Europe as the downstream 
countries, we are looking, as Ranking Member Speier said in her 
opening testimony, at not just the issue of LNG exports, but 
the issues that would require Europe to be able to address 
their own needs, and that means addressing the infrastructure 
shortages and shortfalls that Europe suffers from. With 
pipelines that go from Russia down south into Europe, to make 
sure that those are able to reverse flow so that they can 
supply Ukraine. The fact that Poland and Hungary have already 
been able to reverse their flows, and I am pleased to announce 
that two days ago a major deal was reached between Slovakia and 
Ukraine to reverse the flow, these are steps that could not 
have happened had we not learned the lessons from 2009 and have 
spent the last four to five years working with our EU partners 
to make those changes available and capable.
    For example, the UE passed theirs, as a result of 2009, the 
Third Energy Package, which changed the regulatory framework. 
Without that, today the reverse flows into Ukraine would not 
have been possible.
    But it is not enough to look at this from Russia to Ukraine 
and into Europe; we have to look at pipelines that go not just 
north-south, south to north, but east-west and west to east so 
that gas can flow. We have to make sure that there are LNG 
receiving terminals so that there is capacity to receive the 
LNG and that it is done in a way that is bankable and 
financeable.
    But as we look at this, this is not just about the United 
States and its exports that will come in the years to come. 
This is, as I talked about before, the supply change. And I am 
going to get to what Ranking Member Speier said in her opening 
testimony. We are looking at Australia coming online with 
enormous amounts of natural gas over the next several years. 
Mozambique and Tanzania have made impressive discoveries, and 
they too will come online in the coming decade. Offshore, 
Israel is already delivering new gas to its domestic market, 
and is poised to become an exporter in 2017 or 2018. Same for 
Cyprus. Potentially, Lebanon, Egypt, and the rest of the 
Eastern Mediterranean. North Africa, South America, and other 
areas are all looking to become new producers.
    So as we look at this, this is a global context that we 
have to understand how to address, and we are doing so today, 
together with the Department of Energy, Department of State, 
and the rest of the Administration, to ensure that we can be 
there to allow and to make sure that not only Europe is 
supplied, but that energy is used as an energy resource for 
cooperation, and not resource for conflict.
    In conclusion, Mr. Chairman, LNG exports may become an 
important factor in assisting our allies and friends, but it is 
only that one factor, that one tool. And we have to work on all 
these other areas that I just mentioned in order to make sure 
that our commitment to energy security, as we did with the 
Baku-Tbilisi Ceyhan pipeline in the 1990s and as we are doing 
now with the southern corridor from Azerbaijan and other 
projects, to make sure that that energy security is achieved.
    We are strongly committed to Europe's energy security and 
we will continue our joint efforts with the EU to make that a 
reality.
    Thank you very much for allowing me to testify before you 
today.
    [Prepared statement of Mr. Hochstein follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Lankford. Thank you.
    I will begin with five minutes of questioning. We will go 
around the dais and then we will do a second round in just a 
moment.
    I would like to first enter, without objection, Ambassador-
at-Large for Energy Security, Dr. Anita Orban from the Ministry 
of Foreign Affairs in Hungary, a statement that she has written 
about this same hearing and some of the issues. Without 
objection, so ordered.
    It shows a statement in this that I want to just be able to 
read to you quickly. She testified on the Hill March the 25th. 
She said, I used $400 as an example of how unrealistically high 
Russia may raise the price of 1,000 cubic meters of gas 
delivered to Ukraine if it chooses to use gas as an economic 
weapon. This was before they invaded Crimea. In fact, Moscow 
went above that number with a wild number and now quotes $485. 
Now, the current price is around $268. Four times the amount 
that is the Henry Hub Price.
    Given that Ukraine had difficulty setting its invoices even 
when the price was 268, the new price seems well beyond what 
Kiev will be able to cover. Ukraine may face a winter without 
gas supplies from the east and will have to either buy gas from 
the west or cave in politically. This is the reality that is on 
the ground.
    One other statement that she makes I think is pertinent. On 
April 11th, Russian President Vladimir Putin sent a letter to 
18 European countries, warning them about potential supply 
disruptions in the winter. This is hardball and this is one of 
the situations that we have to be able to respond to, and 
respond to with clarity in the process.
    I say one final statement. Let me read one final statement, 
as well, as she makes this. She said U.S. LNG export 
liberalization is no panacea in the short-term. The gas could 
not be delivered in large volumes to Ukraine immediately. It 
will not save Ukraine and possibly other parts of Central 
Eastern Europe from a very cold winter in 2014. Yet, it makes 
the medium-term solution very clear and this prospect would 
have immediate impact on pricing and maybe even availability.
    Her request is interesting. Her request is if we will begin 
to act, it at least sets a marker out there that shows Russia 
that we are serious and they know that we are moving.
    Two years ago, when we started the process of these 
conversations, I had two different individuals internationally 
that came to visit my office immediately, the Japanese and 
members of Parliament from Ukraine. Two years ago. And their 
question was the same, how quickly could we get American 
natural gas. Since that time period multiple other countries 
have come to be able to visit with me with the same question, 
how quickly could we get American natural gas.
    This is one of those conversations that we need to be able 
to determine. I understand full well we have the first 
responsibility to take care of America and Americans. That is 
in our national interest. That is our first responsibility. But 
when there is economic benefit and there is also diplomatic 
strength that comes from the export of energy, this is one of 
those issues I continue to ask why is it taking so long in the 
process.
    So I know that was a long statement for me to make as well.
    Mr. Smith, let me start this conversation. It has taken, 
depending on the different permit, sometimes it has taken 11 
weeks, sometimes it has taken 8 weeks, sometimes it has taken 
different times to be able to actually get a permit one after 
another here. So the initial one, obviously, the Sabine Pass 
approval, took approximately 8 months after the application. 
Well, we have had some now that are 29, 27, 23 months after the 
application. Is this process getting faster? I know you are 
working through the process. Is it getting faster? Is the 
Department of Energy getting more efficient in the approval 
process?
    Mr. Smith. Thank you for the question, Mr. Chairman. First 
of all, as you note, we are working through the queue on a 
case-by-case basis. The first application we did obviously took 
some more time because we had to do the full study to look at a 
cumulative impact. Since then a lot of scrutiny has been made 
on the time between each application. One might be 9 weeks, one 
might be 11 weeks, one might be 7 weeks.
    What I can say to that is that we have a great team of 
people working to write these orders. Our focus is on making 
sure that we get the public interest appropriate and we get it 
right and that we get an order that is going to withstand the 
scrutiny that is it sure to receive. So our task is to make 
sure that we keep moving forward as expeditiously as possible. 
There is not a time line that we are on; there is not a clock 
that we follow. Essentially the team looks at each issue. Each 
of the orders is different, so they are going to take different 
amounts of time because they will require different analyses. 
But once each order is done, it is released by the team and we 
move on to the next order. So that is the process that we have 
been on, and we are moving through the queue.
    Mr. Lankford. Let me interrupt real quick because I want to 
be able to transition and let other folks speak. So at this 
point you don't have a requirement on your team whether they 
take two years or two weeks to work through the next permit? It 
is just whenever they get done at whatever speed?
    Mr. Smith. The requirement is to move forward as 
expeditiously and professionally as possible, but to make sure 
that they get the analysis right.
    Mr. Lankford. But it may take two weeks or it may take two 
years.
    Mr. Smith. It takes the time that is required, Mr. 
Chairman. It is not a time-bound requirement; it is a 
requirement bound on the necessity to make sure we make a good 
public interest determination.
    Mr. Lankford. I am very aware there is not a time bound on 
it, but the issue is the clock is ticking internationally. That 
is part of the issue; it is not only domestically, but 
internationally.
    Let me move on. I want to be able to honor everyone's time 
today with that.
    Ms. Speier.
    Ms. Speier. Thank you, Mr. Chairman.
    Let's just address the likelihood that liquefied natural 
gas will go to Europe if it is manufactured here in the United 
States. Most of these companies are domestic companies with 
shareholders, correct? And do they not have a responsibility to 
acquire the highest price for their gas in order to maintain a 
profit that is appropriate? Let's ask Mr. Smith and Mr. 
Hochstein.
    Mr. Smith. Thank you for the question. Certainly, I think 
you raise the point that once approved by the Department of 
Energy, the Department of Energy does not determine where the 
gas will go; it is going to be determined by the companies that 
receive the authorizations. And, indeed, those companies will 
certainly move to send the gas to the place that has the best 
return for orders.
    Ms. Speier. What is the price differential between Europe 
and Asia?
    Mr. Hochstein. The price of natural gas, as you state, is 
not like crude oil, where there is more or less of a balanced 
price around the world; there is a difference. So whole people 
talk about Henry Hub as the American price, Europe is about, 
let's see, 460 or so traded these days, and Europe is anywhere 
between $10 and $13, and Asia is anywhere between $16 and $18. 
Then you have different regions within that that probably are a 
little bit different.
    But I think it is important to note that you can't simply 
take one price in one area and make the transport of that 
equal. So if you take the price from the United States LNG 
exports that are approved here, you would have to add the cost 
of the liquefaction, the transport insurance, the re-
gasification. Probably the kind of increase in price that you 
would have to add on puts it right in the range of what prices 
are today in Europe. So it wouldn't be much above it, but it 
wouldn't be much below it, either.
    Ms. Speier. So the likelihood of it going to Europe is not 
nearly as great as it is to go Asia, in any case?
    Mr. Hochstein. I think as Mr. Smith said, we, as a 
Government, don't tell our companies who to sell it to.
    Ms. Speier. Exactly.
    Mr. Hochstein. But I think you are right that the companies 
are going to make a decision where to sell it to. But, if I 
may, I think the issue here is not where we send our gas. I 
think this is about a global market. And wherever our gas will 
go, and it is likely to go to wherever the traders feel that 
they need to put this gas based on a variety of factors, 
including price, it will make a difference in all other 
regions. So it will make a difference, as I think Mr. Smith 
said in his opening testimony. We have already made an enormous 
impact on the market by removing, if you look at the 
expectations of what we would be importing in 2014 just a few 
years ago, that delta is enormous.
    Ms. Speier. Okay, Mr. Hochstein, I want to try to get a 
couple more questions in.
    One of the points that I think hasn't been made well enough 
yet is that the infrastructure in Europe to receive the LNG is 
not yet robust, and that these import terminals need to be 
built. Do we know how many need to be built? Do we know how 
much that would cost? Is that something that the United States 
would or could invest in?
    Mr. Hochstein. We are working with the EU on that issue for 
the last several years. There is quite a bit of capability at 
the moment that is full. There is more that is being built. The 
EU has had some regulatory challenges in getting some of these 
through. There is one in Lithuania that is going to be built; 
there are some in Italy. But there has also been a sharp 
decrease in demand for LNG in Europe over the last couple years 
partly because the price of coal has come down quite a bit in 
the United States and made coal cheaper in Europe, so there has 
been a transition from gas to coal. There have also been very 
warm winters for the last couple years that have affected 
demand. So you are right. I don't know that we would be as 
investors, that is for the private sector to do, but we are 
working with the EU to figure out how to make these financeable 
and bankable so that they are more likely to be built.
    Ms. Speier. All right, according to the Center for 
Strategic and International Studies, saving Ukraine from its 
gas-related diplomatic disadvantage with Russia is both a 
matter of money and political reform. They say the only way to 
extract Ukraine from the immediate payment crisis is to provide 
money for Ukraine to pay down its debts. However, that does not 
address the fundamental problem that resulted in Ukraine's 
indebtedness in the first place: massive corruption, opaque 
markets, and poor pricings.
    Mr. Hochstein, do you agree with that view, and what do you 
think we should be doing about that?
    Mr. Hochstein. I do largely agree with that view. We have 
to look at this in a number of ways. The IMF package is 
hopefully going to be approved fairly soon. That will, with it, 
release American money that Congress has authorized, as well as 
European EU money. The need to pay down the arrears immediately 
is urgent so that additional supplies can come and we don't 
have a cutoff. But we have to address the reform of the 
industry. This is an opportunity, this crisis is an opportunity 
for Ukraine to open a new page and to address the reform that 
the sector desperately needs so that we don't end up in the 
same place that we are today a few years down the road, after 
paying the debt.
    Mr. Lankford. Mr. Walberg.
    Mr. Walberg. Thank you, Mr. Chairman.
    Mr. Smith, as I understand it, companies that are seeking 
to export LNG today are required to go to the Department of 
Energy seeking a determination on public interest. Could you 
tell us the criteria that the Department of Energy uses to 
determine that term, public interest?
    Mr. Smith. Thank you, Congressman, for that question. So 
the Natural Gas Act essentially creates a rebuttable 
presumption that exports are in the public interest unless the 
Department determines that approving such application would be 
deleterious to the overall public interest. The law, however, 
does not give a specific definition of the public interest; 
that has been left to the Department to interpret.
    So we have a wide range of criteria that we use when we are 
looking at public interest. We look at impact on the economy; 
we look at job creation; we look at energy security; we look at 
prices; impacts on consumers; foreign issues; issues of 
international affairs. So there is a very broad range of 
factors that we use.
    Mr. Walberg. Are any of the factors weighed differently?
    Mr. Smith. Well, one thing that we don't have is a formula 
or matrix that we plug numbers into and get an answer out. 
Essentially what we allow for is a period of public comment in 
which the public can opine on these, and we think that is a 
very important part of the process. We then have to make a 
qualitative decision on all the arguments that are made for and 
against LNG exports. In fact, when you see one of the orders 
that we have written , they are extensive documents. We are 
required to make very clear and transparent the reasoning that 
we make for each one of these applications, so we have to talk 
about the arguments that are made and either accept or rebut 
each of those individual arguments.
    Mr. Walberg. Are international considerations weighed in 
any different way? Are they more significant, less significant? 
Do you work with the Department of Energy on making 
international determinations?
    Mr. Smith. With the Department of State, certainly. Yes, 
Congressman, we work very closely with the Department of State 
on all issues. But in terms of international considerations, 
you will see in the most recent order that we put out there is 
a very specific reference to the importance of energy security 
for the United States allies and trading partners, and that is 
something that we do take into consideration, it is something 
that is very important to us.
    Mr. Walberg. But not heavier than any other factors?
    Mr. Smith. Well, Congressman, I think that all these 
factors are important. I mean, we care about impacts on 
American consumers; we care about prices; we care about 
international impacts. So all these are important.
    Mr. Walberg. Is the process working as well as you would 
like it to, in your determination?
    Mr. Smith. I think that the team is doing an excellent job 
of making very important long-term decadal energy decisions in 
terms of looking at public interest, so I think the team is 
going a good job.
    Mr. Walberg. How many are awaiting approval right now, the 
projects?
    Mr. Smith. Thus far we have approved 7 projects. I think we 
have more than 20 that are waiting in the queue. So to date we 
have approved 9.27 billion cubic feet per day of exports, and 
we are working through that queue on a case-by-case basis.
    Mr. Walberg. Thank you.
    Mr. Hochstein, if you could tell us about the 
Unconventional Gas Technical Engagement Program and the Energy 
Governance and Capacity Initiative. Give us a little background 
on that.
    Mr. Hochstein. For the last several years the Department of 
State and our offices have worked together with the Department 
of Energy and other agencies with friends and allies around the 
world who have sought to look into the possibility of 
addressing their unconventional and shale resources. What we 
have done is we don't encourage any country to do or not to 
pursue unconventional, but if they are going to do so, to offer 
them the support of understanding the regulatory mechanisms to 
make sure it is done in a safe and environmentally sustainable 
way. And for that we have a program that supports a number of 
countries. We worked very closely with Poland. We actually 
started working with Ukraine before the crisis, about a year 
ago, and we are looking at expanding that program now to be 
able to bring about more resources there.
    The EGCI program that you mentioned, Congressman, looks at 
the governance of oil and gas sector overall to make sure, 
again, that as we see new countries coming online as new 
producers, that they are not suffering from the same trap that 
some others have done before them, and to make sure that those 
resources are made available to all the people of that region 
and that country, and that it is done with a governance 
structure.
    Mr. Walberg. Are you achieving that goal, in your 
estimation, right now, like Ukraine and the situation?
    Mr. Hochstein. Yes. I think on the unconventional, yes, I 
do. It is a very difficult task, but I think that it is 
important that countries make the decision on unconventional 
based on science and not on emotions, and, if they are going to 
do so, that we support them in being able to develop and 
increase their production from conventional and unconventional 
resources.
    Mr. Walberg. Thank you.
    Mr. Lankford. Mr. Cardenas.
    Mr. Cardenas. Thank you very much, Mr. Chairman.
    In order to expedite LNG exports, environmental concerns 
and what is in the public interest, it is my understanding, are 
involved in the process. Section 3 of the Natural Gas Act 
requires companies seeking to export natural gas to obtain 
approvals from the Department of Energy, Office of Fossil 
Energy, and the Federal Energy Regulatory Commission. Under 
this section, no export of natural gas will be permitted unless 
it is consistent with the public interest.
    So, Mr. Smith, can you describe the various approvals that 
are required and what the roles of each agency are?
    Mr. Smith. Well, thank you very much for the question, 
Congressman. There are two primary agencies that are involved 
in this process, there is the Department of Energy, which 
essentially grants the authorizations to export the molecule, 
and then there is the Federal Energy Regulatory Commission that 
grants permission to actually build the plant. So those are two 
different processes. They are separate, but they are both 
critical and important to get a project up and running and 
exporting natural gas.
    Mr. Cardenas. Okay, thank you. Mr. Smith, what are the 
specific criteria for making the public interest 
determinations?
    Mr. Smith. Thank you for the question, Congressman. There 
is a wide range of criteria that we use when we are looking at 
each one of these applications on a kind of case-by-case basis. 
We have to look at a wide range of factors that are important 
for American consumers and American industry and our national 
security, so we look at energy security, we look at supply 
availability, we look at environmental impacts, we look at 
international effects, we look at prices, impacts on consumers, 
on industrial customers. So those are all things that we have 
to consider for each and every one of these applications.
    Mr. Cardenas. Okay, thank you.
    Mr. Hochstein, are you aware of any provision under the 
public interest determination for benefitting U.S. foreign 
policy?
    Mr. Hochstein. We at the State Department are not involved 
directly in the approval process, but, as Mr. Smith said, the 
Department of Energy and the Department of State work very 
closely together and I think we share information, and when 
they make their determination they have our views in mind.
    Mr. Cardenas. Okay.
    Mr. Smith, what, if any, environmental determinations does 
the Office of Fossil Energy make in determining the public 
interest?
    Mr. Smith. So that is going to be on a case-by-case basis 
depending on the application that we are looking at, but we are 
compelled to look at a wide range of issues; where the gas is 
coming from, how it might impact local communities. So those 
are things that are considered.
    Mr. Cardenas. And what about other agencies?
    Mr. Smith. Well, the Federal Energy Regulatory Commission, 
the FERC, also has to do an environmental analysis and, in 
fact, we are a core operating agency in their environmental 
process that looks at the impact of the terminal itself, the 
footprint of the terminal, and the impacts of actually 
constructing the facility itself. So we are a coordinating 
agency with FERC in that process, so we work together in that 
way.
    Mr. Cardenas. Okay. Mr. Smith, would you describe the 
involvement of these processes as very simplistic or 
complicated?
    Mr. Smith. I would certainly say it is an important and 
complicated decision, and we have processes that match the 
gravity of the decision we have to make.
    Mr. Cardenas. For example, if somebody were to put in an 
application in January of 2010 and then, all of a sudden, 
somebody puts in what looks to be, on the face of it, a similar 
application in January of 2014, would you say that there are 
some variables that may have changed between those two?
    Mr. Smith. There certainly would be variables that would 
change. Just temporally factors changes, and each of the 
individual applications will have factors that might be 
different. So we have to consider the comments that are made by 
the public in this public and transparent process, and we have 
to consider each of those on a case-by-case basis.
    Mr. Cardenas. For example, in a hearing like this, do you 
imagine that in 2010 somebody would have mentioned Ukraine, 
Ukraine, Ukraine; whereas, now they may be mentioning it quite 
often? Is that a variable that perhaps complicates it a little 
bit more?
    Mr. Smith. That certainly is something that has changed 
dramatically over the course of the past few months.
    Mr. Cardenas. Yes. One of the things that I find 
fascinating is that, a lot of times, when we have public 
hearings like this, people like to try to force the issue to be 
simplified more than it possibly can be. I mean, I got my 
degree in engineering, and the one class that I remember the 
most and that apply in almost everything that I have done since 
I have left college is something called feedback systems. 
Simply put, it is a class of every engineer of every kind takes 
as a freshman and it basically explains that what goes in and 
what comes out is very different based on what happens in 
between, and no feedback system is identical to another. And it 
seems like that is the kind of thing that departments have to 
deal with on a daily basis.
    I want to thank you very much for doing a very good job of 
simplifying it as much as possible so that we in the public can 
understand how complicated it is and how important it is. Thank 
you so much.
    I yield back my time.
    Mr. Lankford. Mr. Jordan.
    Mr. Jordan. Thank you, Mr. Chairman.
    Mr. Hochstein, when can we expect a decision on the 
Keystone pipeline?
    Mr. Hochstein. Sir, unfortunately, I can't answer that 
question.
    Mr. Jordan. Do you know when the application for the 
Keystone pipeline was filed?
    Mr. Hochstein. I don't have the date in front of me, sir.
    Mr. Jordan. Six years ago, September 2008. When do you 
think we can expect a decision?
    Mr. Hochstein. The process in the Department of State, as 
you know, is ongoing.
    Mr. Jordan. Are you involved in that decision?
    Mr. Hochstein. I am personally not involved in the process; 
my office is.
    Mr. Jordan. You are the Deputy Assistant Secretary for 
Energy Diplomacy. Big title. Diplomacy in the title and you are 
not directly involved?
    Mr. Hochstein. I think that we have different people 
working on a variety of different issues. Obviously, I am part 
of the leadership of the Bureau, so involved in that sense----
    Mr. Jordan. Mr. Hochstein, are you aware the EPA's final 
report was released clear back in 2011, three years ago, stated 
there were no significant impacts on the environmental side? 
Are you aware of that?
    Mr. Hochstein. Yes, I am, sir.
    Mr. Jordan. And the folks who are going to make the 
decision, are they aware of that at the State Department?
    Mr. Hochstein. I believe they are, sir.
    Mr. Jordan. Are they aware that, two and a half years ago, 
Congress sent the President a bill saying, hey, make a 
decision? The President delayed that and said we want to wait 
for the Sand Hill issue to be resolved. And you are aware that 
that has been resolved, Mr. Hochstein?
    Mr. Hochstein. I am, sir.
    Mr. Jordan. And the people who are making that decision are 
aware that it has been resolved?
    Mr. Hochstein. I believe people are aware of a variety----
    Mr. Jordan. Are they aware that the governor of the State 
was initially against it, now he is for it?
    Mr. Hochstein. If I may, Congressman, I think that as the 
process continues and we look at a variety of these different 
issues that are affecting this decision----
    Mr. Jordan. Do you think we can get a decision before this 
year is over?
    Mr. Hochstein. I can't answer that directly.
    Mr. Jordan. Then you would meet the six year time frame. If 
you get it done before September, you have done it in six 
years.
    Mr. Hochstein. Congressman, if I may, one sentence. I think 
I can give you what I think is happening at the moment, and 
that is that as we have new data coming in, such as the 
decision of the court in Nebraska, we are not stopping the 
process, we are not suspending the process, the process is 
ongoing.
    Mr. Jordan. Do you know The Washington Post said that 
waiting any longer--and this is not Jim Jordan, this is not The 
Washington Times, this is The Washington Post, said to not make 
a decision is absurd and laughable. Again, not Chairman 
Lankford, not members on the Republican side; The Washington 
Post. And it kind of is six years. And you are telling me you 
don't know if you can get it done before September of this year 
to meet the six-year time frame?
    Mr. Hochstein. What I am saying, Congressman, is as we are 
trying to make the process move as expeditiously as possible--
--
    Mr. Jordan. No, that cannot be true. That cannot be true. 
You are trying to make it move as expeditiously as possible. 
The Washington Post says it is absurd not to make a decision 
now. It has been almost six years. You can use any other 
adjective you want to use, but expeditious is probably the 
wrong one to use.
    Mr. Hochstein. We have a significant and overwhelming 
volume of public comments that we are going through. We have a 
court decision in Nebraska that just was announced just a few 
weeks ago that has to be addressed, as well, just on the root--
--
    Mr. Jordan. But my point is when. My point is when. Or 
maybe a better question is will you ever make a decision.
    Mr. Hochstein. Yes, we will make----
    Mr. Jordan. You will make a decision at some point? Okay, 
well, that is a step in the right direction, because there are 
some people who are starting to think there is never going to 
be a decision. Now, do you think it will happen--let's take 
this date. Do you think it will happen before the November 
elections this fall?
    Mr. Hochstein. Sir, I can't----
    Mr. Jordan. Is it likely to happen before the November 
elections this fall?
    Mr. Hochstein. As I was trying to say, sir, I can't----
    Mr. Jordan. Do you want it to happen before the November 
elections this fall?
    Mr. Hochstein. Did you want me to answer, sir?
    Mr. Jordan. I want you to answer that last one first, if 
you could.
    Mr. Hochstein. Okay.
    Mr. Jordan. Do you want it to happen before the November 
elections?
    Mr. Hochstein. I would like to be able to go through the 
process in the way that we are required to do, addressing all 
the issues that have come before us, including the recent data. 
Had you asked me this question a few weeks ago, before the 
court decision in Nebraska, we would have been in a different 
situation. I think what we are trying to do is----
    Mr. Jordan. The Washington Post used the terms absurd and 
laughable, knowing about the court issue, Mr. Hochstein. You 
are aware of that, correct?
    Mr. Hochstein. I am aware of what The Washington Post said. 
They don't speak for me and I don't always agree with what The 
Washington Post says.
    Mr. Jordan. Let me just ask you this. Will there be a 
decision before the November elections of this year?
    Mr. Hochstein. As I said, Congressman, I can't stick to a 
specific time line of when this decision will be made.
    Mr. Jordan. Yes or no, do you, as Deputy Assistant 
Secretary for Energy Diplomacy, want there to be a decision 
before the November elections this fall?
    Mr. Hochstein. I would like to be in the position where we 
have done all the work that we are required to do to be in a 
position in the time line that we can do. If that is before the 
election, then I hope that that is done. But what I cannot say 
is whether or not we are going to be able to make that time 
line. We are trying. We have a lot of people working on this. 
There are a number of factors that we are looking at, including 
the enormous volume of----
    Mr. Jordan. We want you to try harder. It has been six 
years. We want you to try harder. Frankly, we want a decision 
yesterday, but we know that is not going to happen. So, at a 
minimum, it makes sense the American people could know about 
this before an important mid-term election.
    With that, I yield back, Mr. Chairman.
    Mr. Lankford. It is becoming increasingly apparent that to 
stop any permit, you just flood the office with public 
statements and everything stops. At some point leaders have to 
make decisions.
    With that, I recognize Ms. Duckworth.
    Ms. Duckworth. Thank you, Mr. Chairman.
    Let's return back to the topic of today's hearing, which is 
liquefied natural gas. The crisis in the Ukraine is yet another 
reminder of how energy independence and our national security 
interests are closely tied. Countries like Russia have shown, 
obviously, that they are more than willing to use energy as a 
weapon. Natural gas exports have the potential to not only 
provide significant economic benefits to our Country's national 
security interests, but can also advance our national security 
interests and increase energy security.
    While this discussion of the international picture of 
energy security is important, I want to focus a little bit on 
the domestic side and what these effects can be for our 
domestic consumers of LNG.
    Mr. Smith, studies that the DOE has commissioned have found 
that the export of natural gas will have a net benefit on our 
economy and that there is significant potential here for 
bringing more wealth to our Country and creating more American 
jobs, something I think we all agree with. The Gas Technology 
Institute, a not-for-profit research lab that I am proud to 
have in my district, has been at the forefront of developing 
technologies that make natural gas development safer, more 
efficient, more environmentally sustainable, and in turn have 
really helped to make the natural gas success story one of our 
wins in our domestic industry.
    Mr. Smith, do you see that efforts and capital investments 
in exporting more natural gas will also help to develop greater 
use of natural gas domestically, for example, the use of LNG as 
transportation fuel or to meet its domestic demand for its use 
to generate electricity?
    Mr. Smith. Well, thank you very much for the question, 
Congresswoman. First of all, the Department of Energy has a 
long relationship with the Gas Technology Institute, and that 
relationship has actually been very instrumental in developing 
many of the technologies that have led to this increase in our 
domestic production of natural gas.
    In terms of the interaction between LNG exports and 
domestic use, if the United States does move forward to export 
additional quantities if these terminals are built by the 
private sector, it is essentially going to put greater demand 
on our domestic supply here domestically, and that is going to 
have impacts on a variety of things, and that is what we look 
at in a public interest determination.
    In terms of exporting LNG increasing the use of liquefied 
natural gas for transportation, I don't see a strong 
correlation between those two issues; I think they are driven 
by different factors. But, indeed, we are seeing a greater use 
of natural gas in the transportation sector. Particularly in 
fleet vehicles we are seeing that being picked up right now, 
and we think that is important; it creates greater options for 
American consumers and American businesses. It helps to reduce 
greenhouse gas emissions, so we see that as being very 
positive.
    Ms. Duckworth. I also represent, Mr. Smith, a lot of small 
manufacturers. I have the largest concentration of tool and dye 
manufacturers in the Nation in my district, for example, and 
many of the folks I have talked to in domestic manufacturing 
have expressed real concerns that increased exports will lead 
to price increases at home and, in turn, harm our businesses 
and consumers. What effect does DOE expect natural gas exports 
to have on the domestic manufacturing sector's consumption and 
the prices that we must pay domestically for natural gas?
    Mr. Smith. Well, thank you very much for that question, 
Congresswoman. We are certainly concerned about consumers in 
Poland and Ukraine, but we are also very concerned about 
consumers in Illinois and Ohio and Oklahoma. So we have to take 
both into consideration, which is why these public interest 
determinations are indeed complicated.
    The Department of Energy has commissioned a number of 
studies that have looked at price impacts significantly. The 
NERA study that was done before this had been passed export, so 
it showed, in most cases, a modest impact on industry; it 
showed a modest impact on consumers, but one that we do have to 
take into consideration and balance against the benefits of LNG 
exports, balance of trade, job creation in producing States, 
greater production, other things. So it is a balancing act that 
we have to show, but we certainly are interested and concerned 
about potential impacts on consumers and, importantly, on those 
businesses that use natural gas to create jobs. So that is a 
very important factor in our considerations.
    Ms. Duckworth. Thank you. I have real concerns that our 
foreign manufacturing competitors don't take advantage of our 
cheap natural gas prices at the expense of our domestic 
manufacturers. Thank you.
    I yield back.
    Mr. Lankford. Mr. Woodall.
    Mr. Woodall. Thank you, Mr. Chairman, and thank you for 
holding the hearing. I would like to focus a little bit more on 
the domestic side of that for a moment.
    I represent the State of Georgia, Mr. Smith, where I am 
told, depending on the day of the week, Southern Company, our 
utility down there, is either the number one, number two, or 
number three consumer of natural gas in the Nation; and yet 
Southern Company has come out in support of LNG exports as part 
of that national mix.
    But our pipes are full in our part of the world; we can't 
get any more gas in our infrastructure. I look at the map on 
the EIA Web site of where the natural gas is coming from and I 
am thinking, man, how in the world are they getting that stuff 
out of the Bakken. I listen to that conversation that Mr. 
Jordan just had here and I think what is the impact that prices 
have on domestic manufacturing is going to be dramatically 
different if we have an infrastructure that can get every 
diesel gallon equivalent of natural gas out of the Bakken and 
down into the great State of Georgia than if we don't have that 
infrastructure in place.
    Talk to me about what kind of infrastructure needs to be 
created, which I suspect will be dominantly pipeline 
infrastructure, in order for the American consumer and our 
exporters to be able to maximize the use of our natural 
resources.
    Mr. Smith. Thank you, Congressman, for that question and a 
lot of really big issues there. First of all, I will mention 
that the Department of Energy has a very important 
collaboration with Southern Company. One of the most important 
demonstrations of carbon capture and sequestration is being 
done in Kemper County in collaboration with Southern, so that 
has been a really important initiative that has the potential 
to benefit both the company here and internationally.
    In terms of the infrastructure question, that is actually a 
really big topic. When we look at the growth of shale gas and 
the success that we have had here in the United States versus 
the challenges that you have in Europe, the challenges that you 
have in China, one of the big factors that was in our favor 
here in the United States was the fact that there was already a 
very robust infrastructure in place such that, as fields were 
drilled, you had to wait to get that gas to market, and that, 
indeed, is built and expanded by the private sector as new gas 
is developed.
    There is the potential for infrastructure to lag. The 
resource in areas in which you have very rapid growth, and we 
have seen a bit of that in North Dakota, we have seen a bit of 
that in South Texas, but overall there is certainly a very 
direct profit motive to build these infrastructure facilities 
that are necessary to make sure that we get this energy to the 
consumers that are going to be using it, and we believe that is 
generally happening.
    Mr. Woodall. And do you believe that profit motive exists 
irrespective of the answer to the LNG exports question?
    Mr. Smith. Certainly. I mean, I do not see LNG exports as 
being the single factor that determines whether or not private 
industry builds the infrastructure that we need to get gas to 
markets.
    Mr. Woodall. So when I see natural gas being flared off 
around the Country due to a lack of infrastructure, clearly 
either the motivation is not there today because of low gas 
prices or the cooperation is not there today to go through the 
permitting process to get that infrastructure installed.
    Mr. Smith. Well, that is actually a big question, 
Congressman. I mean, there is a challenge when you have lots of 
associated gas being produced along with oil in places where 
the oil is valuable and the gas is a byproduct of the oil 
production. So if you are in a situation where the 
infrastructure would be expensive to build, sometimes it is 
difficult for companies to justify the expense of building that 
infrastructure when they have the option of glaring the gas 
instead of building infrastructure to take it to market. So 
there is a market inefficiency there somewhere, but certainly 
State regulators and industry are working together to try to 
make that work better.
    Mr. Woodall. But from a DOE perspective, DOE is just 
willing to let those market forces be at play if those market 
forces require that we flare off our natural resources to no 
benefit of the consumer, fair enough, and if those market 
forces require that we need to build a pipeline to get those 
resources to consumers, then they would be supportive of that 
as well?
    Mr. Smith. Well, I wouldn't characterize that as a matter 
of willingness. I mean, the Department of Energy has a mission, 
so we are the technology organization. I oversee the National 
Energy Technology Laboratory that does much of the R&D both 
intramurally and with industry and academia that leads to 
solutions for environmental sustainability and safety. I think 
we are working together with State regulators in some cases, 
but there is a question of oversight or some of these 
questions, and a lot of them are complex and involve multiple 
market actors in the private sector.
    Mr. Woodall. Speaking on behalf of the State that gave 
America the president who created the Department of Energy, we 
support your mission of creating a safe and sustainable 
structure here in the Country that hopefully will not only lead 
to the manufactures that Ms. Duckworth talked about, but really 
change our balance of trade with the world.
    Mr. Chairman, thank you again for holding the hearing. I 
yield back.
    Mr. Lankford. Thank you.
    Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman. You are holding this 
hearing at an interesting time when there is a lot of talk 
internationally about natural gas and perhaps new 
opportunities, new marketing opportunities here, where we see 
very low prices even given the technology and environmental 
challenges. So my question really is for Mr. Hochstein.
    Mr. Hochstein, I promise to give you time to answer my 
questions.
    You hear much of it off the top of the heads of people talk 
about our natural gas supplies being of aid to Europe and even 
Ukraine during the crisis that Ukraine is now experiencing. 
According to figures I have, Europe gets a quarter of its gas 
from Russia and half of that, and that was really news to me, 
half of that passes through Ukraine.
    We remember that in 2009, early in 2009, the pipelines were 
shut down through Ukraine. What was the reason for that again, 
please?
    Mr. Hochstein. There was a price dispute between--Ukraine 
had not paid debts and the Russians shut down the gas supply to 
Ukraine first, and then to the rest of Southeastern Europe 
through Ukraine a few days later.
    Ms. Norton. So they didn't have much of an effect on Europe 
at that time because of the short duration?
    Mr. Hochstein. It had actually a tremendous effect in both 
13 days of no gas in the dead of winter. And Europe uses gas 
primarily for heating, so the timing was not accidental.
    Ms. Norton. What did it do, increase the price?
    Mr. Hochstein. What it did----
    Ms. Norton. I mean, was there real scarcity going to 
Europe?
    Mr. Hochstein. It lasted 20 days in total, 13 days for most 
of Europe; and, as a result, what it really did was drove home 
the realization of the vulnerability that Europe has in its 
reliance on Russian gas and its need for diversification. 
Because it only lasted 13, the pain was short-lived.
    Ms. Norton. Well, does that mean that Europe is less 
dependent on Russia today? Did it diversify?
    Mr. Hochstein. Europe did a number of things and we worked 
very closely with Europe for the last five years to do that. 
They are less reliant today on Russia, while still are 
extremely reliant and they will be for a long time to come. But 
because they passed the Third Energy Package, which required 
that the destination clauses be gone, it meant that when Russia 
exports gas into the EU, the first country of transit, let's 
say Germany or Ukraine or other EU countries, could not say, 
they couldn't dictate you may not pass this on without my 
permission to another country. So what it allowed it to do is 
the minute the gas comes into the EU, it is now EU gas and can 
be transferred further.
    So as we talked before about reversing the flows from 
Poland, from Hungary, from Slovakia into Ukraine, that would 
not have been possible in 2009 because of the regulatory 
structure that was in place. So by working with Europe to get 
the regulatory structure there, making some investments, 
getting them to make investments in infrastructure, they are 
less reliant today. But as Russia will continue to be a 
supplier into Europe, there is more we can do together to make 
sure that that reliance is diminished, and quite significantly.
    Ms. Norton. Well, is it, and forgive the pun, a pipedream 
for Americans to see themselves in anything like the near 
future providing natural gas to Europe, and would that have any 
effect on our domestic market or do we have so much that it 
would simply mean a new market and a new, perhaps, reduction in 
the trade imbalance if we were able to do that?
    Mr. Hochstein. I think that the United States has a role to 
play in this and that our exports are an important factor----
    Ms. Norton. We are not exporting at all now, are we, 
natural gas?
    Mr. Hochstein. Today we are not exporting. We do not have 
any facilities to export that are ready yet.
    Ms. Norton. That is what I mean. When we hear people talk 
about our becoming a supplier, that would mean a large and 
immense effort to construct the infrastructure to do so.
    Mr. Hochstein. Yes, that is true, but some of that is 
already in train, and the first one will come online in about 
18 months from now. I just would mention that the gas that has 
already been approved by the Department of Energy is about half 
the amount of gas that Europe imports annually today. So it is 
an enormous amount of gas that has already been approved, but 
the market forces have to be there to build the facilities that 
have been approved.
    Ms. Norton. Thank you very much, Mr. Chairman.
    Mr. Lankford. Thank you.
    I am going to open this up for open conversation on this, 
so anybody can jump in on any point.
    I just need to get some clarification there. You had 
mentioned we are not exporting natural gas now. Would you 
include Canada, Mexico, or off the Kenine Peninsula of Alaska 
in that we are not exporting natural gas comment?
    Mr. Hochstein. I meant to say LNG of the ones that have 
been approved through this process. Clearly, Alaska and the 
pipelines to Canada and the narrow region----
    Mr. Lankford. Okay, so we are a net exporter already of 
natural gas, and we do LNG off the Kenine Peninsula at this 
point. But we are exporting, not importing, natural gas.
    Mr. Hochstein. We are also importing natural gas today. We 
are not a net exporter yet, but we are poised to become one.
    Mr. Lankford. Okay. So what was the time frame on that?
    Mr. Hochstein. I think as our exports--you know, it is hard 
to predict that. I can say that by 2018, which is the 
prediction that EIA has for becoming a net exporter, and I 
would let my colleague address that, but I think it is 
important to say we give permits for, as the Department of 
Energy gives permits, they have to be built and then decisions 
have to be made to actually sell it.
    Mr. Lankford. Right. We talk about it and we will come back 
to Mr. Smith on that. Mr. Hochstein mentions the amount that we 
have already permitted of the seven that are there. How many 
export terminals do you anticipate will actually be 
constructed?
    Mr. Smith. I can't really say, Mr. Chairman.
    Mr. Lankford. Give me your best guess. You are an expert at 
this; you have lived and breathed it all the time on both 
sides, of the import and export facility side of it. What is 
your best guess of how many you think will be built?
    Mr. Smith. Well, I can say a couple things on that, Mr. 
Chairman. First of all, certainly there are terminals that are 
being built right now.
    Mr. Lankford. Right.
    Mr. Smith. In terms of making predictions about what will 
happen subsequently, my experience is that I came to this job 
from industry; I spent 11 years at Chevron before I came to 
Government. And I actually worked on the Sabine Pass terminal 
when it was an LNG import terminals.
    Mr. Lankford. Right.
    Mr. Smith. So if you had asked me, at that point the 
question you would have asked me was how many terminals to 
import LNG would have been built and I probably would have made 
you an estimate because I was working that field. So I am going 
to demure from giving a numeric total because our collective 
faith in our crystal ball should be diminished. I mean, 
energy----
    Mr. Lankford. Okay, we have seven permits out there 
already; 24 permits that are still pending. Do you think we 
will build 31 terminals?
    Mr. Smith. I can safely say that I do not think 31 
terminals will be built.
    Mr. Lankford. Okay. Do you think we will build 15?
    Mr. Smith. I don't know.
    Ms. Speier. Mr. Chairman, let's kind of play this out a 
little bit. Mr. Hochstein, I think, or maybe it was Mr. Smith, 
said that what has already been permitted would generate about 
half the LNG that Europe already uses. Now, if we don't want to 
have--these companies are big boys, so they can make decisions 
as to whether or not to build or not to build. They made 
decisions to build import facilities and then got burned, and I 
would venture to say they are probably going to be reluctant to 
move too swiftly, because it appears that this particular 
market varies dramatically from time to time in short periods 
of time.
    So if, in fact, half of the natural gas that is being used 
by Europe today has already been permitted in the United States 
and we have the countries of Australia, Mozambique, Israel, 
Cyprus, and Lebanon coming online, I mean, what are we saying 
here? They are not going to come online and not try and provide 
that energy to Europe in many respects, so----
    Mr. Lankford. Which is actually my exact point on this, and 
Mr. Smith and I have had this conversation somewhat. If we 
already know all these terminals are not going to be built, we 
are giving a competitive advantage to people that filed a 
permit request a couple of days before or a couple of weeks or 
months before someone else, where they may have filed a--and 
some of these folks filed actually their permit request the 
exact same day, but they actually won't find out for maybe two 
or three years later than other people on it. So we are giving 
a competitive advantage to some companies and other companies 
just have to wait two or three years until DOE makes the 
decision and then start with FERC.
    I agree all these facilities are not going to be built. 
There will be a lot of competition worldwide, but we will lose 
the competition worldwide if we continue to delay. So basically 
we are saying to Australia and other countries you go compete 
worldwide, we are going to discuss it.
    Ms. Speier. But the flip side of that coin is part of our 
resurgence, part of our economic reinvigoration is the fact 
that companies are bringing manufacturing back to the United 
States because the cost of fuel is so expensive in China and 
elsewhere, and they see the net benefit. So we are creating 
jobs in that regard. So we don't want to cut off our nose to 
spite our face, either.
    Mr. Lankford. I totally agree. We are about four and a 
quarter right now for natural gas here in the United States; 12 
bucks in Europe for the same piece. So even at that point 
companies that are going to relocate are going to relocate. So 
my conversation is how do we balance this out? How do we use 
the economic engine? When you look at job growth over the last 
several years, the largest area of job growth in America has 
been energy. And how do we continue to maintain that engine to 
continue to work in a very difficult economy, to say the least? 
You continue to provide new markets for them to go to. So we 
have an economic benefit here in the United States and we have 
a geopolitical benefit worldwide, which I want to expand this, 
if I can, real quickly.
    Mr. Hochstein, as well, there is a lot of conversation 
between India and Iran right now dealing with natural gas, so 
we can continue to talk about Ukraine, but this is not just a 
Ukraine issue; this is a worldwide issue. Is the State 
Department comfortable with India's natural gas supplier being 
Iran? And, if not, what are we going to do about that?
    Mr. Hochstein. Thank you, Mr. Chairman, for that question. 
We have been implementing and my office has been leading the 
effort to implement the Iran sanctions on energy for the last 
two years, especially since Congress passed it in late 2011.
    First, let me say this. We do not believe there is any 
truth or likelihood to gas supplies from Iran to India at this 
time, or to Pakistan. Iran is a net importer of gas at the 
moment. They export some to Turkey on one side of the country 
and they import some other from Turkmenistan. And we have had 
very close and open and frank conversations with our Indian 
friends about their oil purchases from Iran, as well as how we 
would view Iran exports of gas. But currently Iran doesn't have 
the gas supply or the infrastructure, and that is due to 
sanctions; they sit on the largest reserves. But as a result of 
sanctions they have not been able to build out that 
infrastructure and there is no infrastructure in sight to be 
able to deliver that.
    If they do build it, Mr. Chairman, I assure you that our 
views are very well known to our friends and allies about how 
we feel about as long as sanctions are in place.
    Mr. Lankford. But are we in a position to be able to say, 
India, we will supply your natural gas needs? Or are they a 
spot to just say go in the market and find it?
    Mr. Hochstein. India will be one of the first that already 
has contracted for natural gas from Sabine Pass.
    Mr. Lankford. Okay.
    Other questions?
    Mr. Farenthold, this is the second round on this. Do you 
have questions you want to be able to ask?
    Mr. Farenthold. I do, and I apologize for not being here 
earlier.
    Mr. Lankford. Go right ahead.
    Mr. Farenthold. There is a Judiciary markup on human 
trafficking, so I am kind of bouncing between committees. But I 
do have some questions.
    Mr. Lankford. Go ahead.
    Mr. Farenthold. I would like to ask our State Department 
representative there have been some discussions they have told 
me about here today and I have read your testimony, and a lot 
of what we focused on is exporting U.S. source LNG to the 
Ukraine. U.S. LNG exports are an important foreign policy tool 
for assisting our allies, especially when dealing with Russia, 
and it would certainly benefit our economy at home. But I would 
like to talk to you a minute about the benefits of potentially 
assisting the Ukraine not with U.S. LNG, but with world source 
LNG.
    The State Department has repeatedly asserted that LNG 
exports are not a viable option for helping the Ukraine in the 
near term because U.S. LNG exports are such a long way away. I 
am going to have a conversation with Mr. Smith about that when 
I am finished talking to you, but I do want to know while this 
is unfortunately true, it is my understanding the Ukraine has 
been in discussions with at least one U.S. company about 
constructing an LNG terminal in the Ukraine and bringing world 
source LNG in until the U.S. supplies are available. It is my 
understanding that this could be done in as little as six to 
eight months. No one is saying they can get a plant built in 
six to eight months, I do point that out. However, Turkey is 
causing some potential problems by denying access to the 
Bosporus Straits for the passage of LNG tankers.
    What is the State Department's view of this? Are you aware 
of the world source LNG could be a viable solution in the 
Ukraine and what are your thoughts on this?
    Mr. Hochstein. Yes, Congressman, thank you for that 
question. You are right, when we talk about LNG as a solution, 
I don't think it is a comprehensive solution for all problems, 
and the U.S. is not, but we are not the only supplier; there 
are others and, in fact, some of the European countries that 
are building LNG terminals are in contact with other suppliers 
for more immediate gas.
    As far as Ukraine, we have had this conversation for quite 
a while about the interest in Ukraine to build an LNG facility 
on the--and it is not really to build a terminal, I will just 
say, and that is why it takes sort of--it is to bring in a 
floating LNG facility, a boat that will come online. So it is a 
little bit different.
    The concern and what is blocking it, as you said, in the 
Black Sea is exactly what you said: Turkey does not allow LNG 
tankers to cross through the Bosporus. They maintain that that 
is a national security issue. This has ben a longstanding 
position that came up several years ago----
    Mr. Farenthold. Are you guys working with them on it?
    Mr. Hochstein. I am sorry?
    Mr. Farenthold. Are you guys working to educate them on the 
fact these things probably aren't going to blow up the way they 
think they are?
    Mr. Hochstein. We have very frank, open, and honest 
conversations with our friends in Turkey about LNG trade and in 
general about what it means to have open access trade through 
the Bosporus. But their positions are theirs to have and they 
have concerns.
    Mr. Farenthold. Certainly we don't control Turkey, but 
Turkey has been a good friend and ally to this Country, and 
hopefully we can bring them along.
    Mr. Smith, in a previous hearing we have heard from the 
Department of Energy on the process for getting LNG export 
facilities permitted. One of the things that I have heard that 
the DOE considers is, all right, well, we don't want to get too 
many of these because we want them all to be profitable. It 
seems to me is that an appropriate role for the Government to 
decide how many to have so they are going to be profitable, or 
is that something that should be left up to the market? If the 
market has a demand for, let's say, 20 LNG export terminals and 
25 are built, well, that is not the Government's money that is 
going to be lost; that is those investors' money that is going 
to be lost for making a bad investment.
    Can you talk a little bit about that, how big of a 
consideration that is in the process?
    Mr. Smith. Well, thank you very much for that question, 
Congressman. That, indeed, is not a point of disagreement. The 
Department does not take into consideration whether or not a 
company is going to be profitable or not; it is not our job to 
protect companies from themselves.
    Mr. Farenthold. So why is it taking so long to get these 
permits out?
    Mr. Smith. Well, I think it was instructive to hear the 
dialogue between the ranking member and the chairman in terms 
of some of the issues that we are dealing with. There are very 
strong views on both sides of the equation about the need to 
balance the increased production and balance of trade and job 
creation and the places where the terminals are being built 
with the impact on consumers and prices and impact on 
manufacturing sector, environmental factors. So those are a 
balance that we have to make.
    Mr. Farenthold. I will concede some environmental factors 
to you, but it seems like when the Government starts regulating 
based on marketplace factors and such, I think we are getting 
out of line. We could have a debate about that between the 
sides on this dais and probably the Administration, but I am 
out of time on this. The potential is so much there and the 
delays are just frustrating to me, but I am out of time, so I 
will quit preaching.
    Mr. Lankford. You can get a second round as well.
    Ms. Lujan Grisham.
    Ms. Lujan Grisham. Thank you, Mr. Chairman. Well, maybe I 
can take on the preaching. Thank you very much for being here 
and thank you very much, Mr. Chairman, for the hearing. We are 
all looking for those investments and balances, wanting to move 
forward quickly enough that we experience the right kind of 
results from those investments.
    In my State, I am from New Mexico, the energy industry is 
certainly critical to our economic success; it is a significant 
component of our current economic base and, in fact, I think it 
is responsible for about 30 percent of our State's general fund 
revenue; and in a poor State like New Mexico, that is the only 
way we pay for education. It is also clear to me that the 
natural gas revolution has national security implications. 
According to the International Energy Agency, the U.S. has 
enough natural gas to meet all of its energy needs from 
domestic resources by 2035, and that allows us to be less 
reliant on the Middle East and other countries for energy.
    With that said, I know this has been discussed already, we 
have a responsibility to make sure that we manage the resources 
in a safe and responsible manner. We want to protect public 
health, wildlife, the environment, and our water resources. But 
I think it is important to explore ways to ensure that the 
Ukraine and our allies have access to reliable supplies of 
energy for their own national security reasons; and it is 
certainly all of our understanding that the Ukraine faces 
numerous energy security vulnerabilities, including a lack to 
an adequate energy infrastructure, which I just heard you talk 
about, which I appreciate, several times.
    But I would love it if you would elaborate. I know that we 
started that conversation with Representative Holmes Norton, 
but I do want to talk about specifically if you could elaborate 
on what those strategies are and give me a little bit more 
depth, please.
    Mr. Hochstein. In securing the energy security in Europe? 
We are working on a number of factors simultaneously. Number 
one is to make sure--and I am going to separate out what we are 
doing for Ukraine and there is the rest of Europe, and 
primarily the Baltics or South Central Eastern Europe.
    In Ukraine it is about making sure that, if there is a 
shutoff of gas in the near term, that we have reverse flow 
capability in Hungary, in Poland, and in Slovakia, and to 
expand that to the degree possible that it takes care of the 
portion of gas that they import.
    Number two, that we help them become a more efficient and 
more capable producers of their own gas. They are quite an 
impressive producer of natural gas, but a lot of that 
technology is 1970s Soviet technology that can be updated and 
they can be using and producing more natural gas on their own. 
We are also working with them on their interest in exploring 
their unconventional gas areas. We are working with them to 
make sure that the reform of the sector is such that they will 
be able to not end up in the same situation that they are in 
today, and to make sure that efficiency rates are there so that 
they can do more with less; that includes subsidy reform, 
etcetera.
    In Europe we have to make sure that the infrastructure is 
there, that the regulatory reforms that they have started 
continue. We are working very closely with them on that, and to 
look and make sure that there is no energy islands in Europe, 
which is a stated goal of the EU. So the Baltics are a good 
example of that. LNG is going to be a key factor in that. 
Lithuania has gone a long way.
    The chairman mentioned Anita Orbon, the Ambassador-at-Large 
for Hungary, who is a good friend and we work closely together 
as they represent and chair the V-4, the Vice Cred 4 countries, 
plus Romania and Bulgaria, to make sure that, as a southern 
corridor is established, that we have more infrastructure to 
supply Europe.
    So, as you can see, there is not one answer for any of 
these, and it is unfortunate that you can't fit it into a 
headline, here is what we do with Europe; it is a lot of 
different aspects of it.
    Ms. Lujan Grisham. And given that you have to have a broad 
approach so that it is sustainable over the long haul, I 
certainly can appreciate that and recognize, given that we have 
our own natural gas exploration issues in New Mexico, because 
we can't recapture the cost until a lot of this gets balanced, 
and I am very supportive of moving so that we have more export 
opportunities, because that is going to create an environment 
in my State to further that exploration and then do exactly 
what you said, which is looking at tertiary recovery that is 
cost-effective and that we have the infrastructure to do.
    But what of those strategies, in 15 seconds, are quick? So 
I am looking at some of the stability issues in Ukraine. Can 
you pick one or two that you think have more of an immediate 
relief?
    Mr. Hochstein. I think the reverse flow capability and 
making sure that Ukraine is able to pay the arrears so that gas 
continues to flow. But the reverse flows are very, very 
important, and we have made a lot of progress on that and we 
need to make more. If I had to say 15 seconds on one thing, 
that is what it would be.
    Ms. Lujan Grisham. All right. Thank you.
    Mr. Lankford. You can go ahead and extend that out. If you 
want to go ahead and answer that, that is fine, if you have 
additional responses.
    Ms. Speier. Why don't you speak about energy efficiency, or 
the lack thereof?
    Mr. Hochstein. Sure. As we discussed before, and I will 
finish the answer, Mr. Chairman, it is critical as we look at 
Ukraine, it is such a big problem, but if we look at the 
numbers and we look at the production rates and the import 
rates and what is in the system as made available by the 
regulatory changes in Europe, we can expand those reverse flows 
quite considerably so that maybe not fully for this winter, but 
in the years to come Ukraine can choose whether or not to 
import gas from Russia or to do it through other mechanisms. So 
it is very important.
    As far as the efficiency rates, ma'am, Ukraine is very 
inefficient, and the Department of Energy, together with us, is 
working on proposals to work with Ukraine to see what we can do 
to increase efficiency rates, and that means, as many have 
addressed, the subsidy issue, where a gas is so cheap that 
people have no incentive to conserve, but also to put in place 
the kind of mechanisms and structures that will allow for more 
conservation so that they can do far more with less or with the 
same amount. So that is a program that we have done in other 
countries. DOE and the Department of State work together on 
these issues, and I think we have a number of proposals that 
could work very well for Ukraine.
    Ms. Speier. Mr. Smith, can we talk about FERC and the 
process there, which my understanding is more cumbersome and 
takes longer? How does that interrelate with the process that 
you have ongoing?
    Mr. Smith. Well, thank you, Ranking Member Speier. I don't 
want to get too far into the details of the FERC process 
because I am not from FERC and I am afraid I would not be able 
to characterize it appropriately, but I would say in general 
terms the FERC has an important job of managing the 
environmental process of evaluating the environmental impact of 
the terminal itself, and they give the authorization to 
actually build the terminal. So they have a very detailed and 
important role to play in this process. Ours is kind of larger, 
bigger picture, looking at the impact of exporting the 
molecule, but they have to go through the very detailed process 
of looking at the specific impacts beside itself. So we work 
closely with them. We share information in terms of making sure 
that we know where the different projects are in the queue, but 
their process is separate from ours.
    Ms. Speier. No, I understand that, but I have been told 
that their process is cumbersome and long, and that they have a 
huge backlog. Is that true?
    Mr. Smith. I wouldn't characterize their process as 
necessarily cumbersome. I think it is appropriately detailed 
because it is a key part of the decision-making process.
    Mr. Lankford. Can I ask a question of that as well? Are 
some of the applicants in the FERC process, permitting process 
now, even before they have a DOE permit?
    Mr. Smith. Yes. We do see applicants going forward with the 
FERC process, which is also a significant expenditure of funds; 
you have to do a lot of work in terms of your initial 
engineering and your environmental studies. So we do see 
companies moving ahead.
    Mr. Lankford. We are obviously pretty serious with that. 
What happens when they get a FERC permit and the DOE process is 
not complete and they are in the queue? If they have a FERC 
permit in their hand, let's say they have gone through the 
whole process and they have completed that, but they don't have 
a DOE permit, what happens?
    Mr. Smith. Well, I mean, there are two types of 
authorization that DOE gives: we give conditional 
authorizations, which is essentially consistent with the 
precedent we have set for giving some sort of confidence to 
individual investors that their final approval will be granted, 
and then there is the final approval. So we have given seven 
conditionals and we have given one final approval. So if there 
was someone who actually did go through the entire FERC process 
without a conditional approval, they conceivably could come 
back for a final authorization from DOE.
    Mr. Lankford. And would they still have to wait in line in 
the queue on that? Let's say they are number 15--I am just 
going to make up a number--in a list, but they have a FERC 
permit done, but they are still waiting on DOE on this. Would 
they have to wait until number 12, 13, 14 is complete before 
they get it, or would they move up the queue?
    Mr. Smith. That hasn't occurred yet, so I don't have a 
definitive answer to that question, but conceivably, if they 
were done with the FERC process, then we would have to come up 
with some process for dealing with an applicant who went 
forward, did all that work without having gone through the 
conditional approval process. But, again, I don't have a 
precedent to point to that.
    Mr. Lankford. But it does become the challenge that if they 
walk through that process and get that done, they are holding 
the FERC permit process in place, they are ready to go. It 
shows a seriousness that others may not have. You mentioned I 
don't know how many it is total that have already started 
through that FERC process on it. Do you know what the number is 
that have already started through the FERC permit process?
    Mr. Smith. I don't know. I could probably tally that up. I 
don't know off the top of my head, but there are a number of 
projects that, even though they have not gotten up in the queue 
in terms of DOE, they have started with the FERC process.
    Mr. Lankford. I am guessing, just based on the preliminary 
report that I have, about seven companies have started working 
with FERC to get that permit process, but they don't have DOE 
approval yet, at various forms in that line. So the concern is 
if they end up with one and they are waiting on the other one, 
we are back to what Mr. Jordan and Mr. Hochstein had this 
wonderful conversation about Keystone on; they are in this 
unique situation where they are just waiting. That is the 
difficulty of all this from a business side and from also our 
foreign partners and allies around the Country, and when they 
come to talk to me, their one statement is when will we get an 
answer, and the difficulty is I can't tell them that.
    As a member of Congress, I can't look at them and say here 
is when the answer is coming, because there is no predictable 
answer. Because, as we talked about before, it could be two 
weeks before the next permit comes or it could be two years. It 
might be 20 years; it could be five and a half years and still 
discussing it. So there is no predictability in this, and that 
is terrible for business and that is terrible for our allies. 
So at some point we have to get some sort of predictability in 
this process to know, yes, we are working through a process; 
here is how many weeks it is going to take; and it is not a red 
flag to people to say if you will just write more letters to 
us, then we will slow down the process even more, which is what 
it seems to be now.
    Mr. Smith. Well, Mr. Chairman, I will make a couple points 
on that. First, I think the Department of Energy has 
established a track record of getting these authorizations 
done. Again, these are all very complex, sensitive, complicated 
evaluations that we have to do, where we have to balance a 
myriad of sometimes conflicting interests. But the Department 
has established, I think, a very credible and very reliable 
track record of moving through the queue. Again, we don't have 
a clock or a bell that says time for the next application. When 
the team is done writing the application, the application is 
released by the Department.
    The second part of that answer, if someone says what is 
going to be the availability of natural gas from the United 
States, as my colleague from the State Department has pointed 
out, we have already authorized 9.3 billion cubic feet per day 
of exports, which is equal to all the LNG that goes into 
Europe, it is equal to half the LNG that Europeans import from 
Russia. So there has already been a tremendous amount of LNG 
that we have authorized even going through this very important 
public interest determination. And there will be a question 
that you posed earlier about how many of these will be built. 
At what rate will the private sector actually build the 
terminals that we have already authorized.
    So there is, I think, certainly some demonstrated progress 
that we have made. It is a tremendous amount of gas that we 
have already authorized and, indeed, the fact that we are no 
longer importing large quantities of LNG has already impacted 
global markets dramatically.
    Mr. Lankford. With that, when you talk about a tremendous 
amount that has already been permitted, is there some cap 
amount, that you are saying we are going to get to this certain 
cumulative total and we are not going to permit any more beyond 
that?
    Mr. Smith. No, there is not. We have not determined a level 
beyond which we are not going to permit. So that is not 
something the Department of Energy has identified or 
determined.
    Mr. Lankford. So best interest continues to be a subjective 
for each location based on the letters that come in and 
responses that come in for that area, working through looking 
at did you fill out the application correctly type thing and 
trying to evaluate that, getting a chance to interact with the 
Department of State to see who the partners are and how much is 
demanded from around the Country. Obviously, the NERA study 
that DOE commissioned gave a more objective look at the 
economic benefits of this, so while I understand you have 
letters coming in that say we don't want this or we do want 
this, you also have an economic study that you commissioned 
that says, yes, this is a good idea and it is in the best 
interest, economically, of the United States.
    Mr. Smith. Indeed. I mean, there was a study that was 
commissioned that was received by the Department that was 
considered as part of all of our applications to date. But I 
will point out that, as we go forward in time, conditions do 
change. As was pointed out earlier, a couple months ago we 
would not have foreseen sitting in this room talking about 
issues in the Ukraine because it wasn't an issue that existed.
    Mr. Lankford. Well, I am not sure that is 100 percent true 
since, like I said, almost two years ago members of the 
Ukranian parliament were already knocking on my door, saying 
how quickly could we get this. They were already dealing with 
Russia randomly shutting off their energy. I think this was a 
pretty predictable crisis in Central Europe. It may not be 
specific to Ukraine, but we knew it was coming somewhere.
    Would you agree or disagree, Mr. Hochstein?
    Mr. Hochstein. I would agree that we have been working on 
the vulnerability that we identified the vulnerability that 
Europe has with its reliance on a single source in many cases 
and we have been trying to reduce that. So, yes, I would agree 
that this is a crisis that is a surprise to some, but not to 
others, the energy portion of the crisis.
    Ms. Speier. Mr. Chairman, I don't know if we ever got 
clarification of how much natural gas is going to be generated 
by these other countries that you had mentioned earlier, Mr. 
Hochstein.
    Mr. Hochstein. By the other producers coming online? A lot 
of this is we are early in the process. Israel has already 
taken care of, with the first two fields that have come online. 
The first big one, Tamar, has addressed their entire ABCM, 
their entire domestic needs. They have come up with an export 
policy, so it is not only about how much you are going to 
produce, but how much you are going to put on the market, that 
40 percent of their production of Israeli production will go on 
to exports.
    We don't know yet the amount out of Cyprus. We have one 
field that has been proven, but there is going to be drilling 
throughout the summer and fall by three companies, one U.S. and 
two European.
    Mozambique is about double the size of the Israeli find, 
but they need to get their act together as well.
    So a lot of the gas from Eastern Africa is going to end up 
going to Asia, if you think of what makes sense from a 
transportation perspective. And this takes us back to the 
argument this is not just about Ukraine and Europe. This is 
about a global demand. And as we are putting more product on 
the market from a variety of places, there is demand that is 
rising as well, in Asia in an impressive pace, and that has to 
be addressed. So what happens to Europe, they are not entirely 
at their own decision-making; there are a lot of market forces 
that are going to have to come into play. And as we see what 
the prices are around Asia, that will determine what the 
supplies are available for Europe.
    But that pressure is already there. As a result of our 
production and not importing, Europe, for the first time, 
actually went out and renegotiated and forced the Russians into 
a renegotiation of price, and were able to get better terms 
from the Russians a couple years ago in a way that they weren't 
able to do that in the past. So these dynamics are having real 
impacts.
    I am with my colleague here, it is very difficult to make 
some predictions on this, because if you read anybody's 
predictions in 2009 into global supplies and trade of natural 
gas, they would have been very, very mistaken today, in 
hindsight.
    Mr. Lankford. Mr. Hochstein, you mentioned before that the 
State Department is helping some of the folks in Europe with 
non-conventional explorations of oil and gas, and you made the 
comment that you are helping them focus on science, not 
emotion. Can you clarify that?
    Mr. Hochstein. I didn't say I am helping them; I said that 
we recommend that when you are going to make a decision on 
whether or not to explore unconventional and shale, it is 
important to look at what the science is and what is and what 
isn't true. We have had a great experience here in the United 
States with a regulatory system of both Federal and the States 
of looking at that, and what we would like to do is to brief 
them and educate and show what we have been able to learn from 
the experience here.
    We have brought a variety of delegations here to the United 
States, together with EPA, Department of Interior, Department 
of Energy to learn from the process here; and what is great 
about it is that it is not a monolithic here is how to do it. 
Here is how we do it at the Federal level, but then look at 
what Colorado is doing, versus what New York or Pennsylvania or 
Texas, etcetera. I think that has been very useful and there is 
a larger and larger interest in that program.
    There are some countries that have announced moratoriums on 
shale development and exploration, and that is their decision 
to do it, and if they don't want to explore it, that is fine. 
We continue these conversations even with those countries, but 
obviously don't have programs with them to support the process 
if they are going to have a moratorium.
    Mr. Smith. I would add one thing, if I could, Mr. Chairman, 
to that observation. A couple years ago I traveled to Warsaw 
with Mr. Bob Secuda, who is the Principal Deputy Assistant 
Secretary for the Bureau for Energy and Natural Resources, 
where Mr. Hochstein works, and we participated in a session 
that was held by the IEA called the Golden Rules for the Golden 
Age of Gas, and it was a collection of subject matter experts 
from around the world convening to discuss their experiences in 
shale gas and unconventional gas development.
    Again, I will reiterate it isn't our jobs to tell other 
sovereign nations what to do with their resources, but we think 
it is in the best interest of the United States to be as open 
and transparent in sharing the best practices that we have 
learned here to help build kind of a scientific basis for 
decision-making. So we see that as being positive and something 
that we affirmatively support through our actions.
    Mr. Lankford. Just for clarification on this, the State 
Department is working with other countries that have shale to 
be able to bring them to the United States, to be able to 
interact with some of our regulators, to be able to look at 
some of the science side of this, how we can actually do it, do 
fracking, do horizontal drilling to be able to take this on, 
because obviously their country--well, depending on the nature 
of their country and whether they own their own oil companies; 
some places do and some don't. Basically exposing them to what 
we are doing in the United States, saying this is a good idea 
for you to be able to take this on so you can provide your own 
energy resources in your own country.
    Mr. Hochstein. I would agree with everything except for the 
last sentence. It is not for you to encourage you to do so. It 
is not our decision; it is a sovereign decision. If they decide 
that they want to move ahead and go ahead and exploit it, we 
will be there to support them with this program, if they are 
interested, to show them all the other things that you just 
said, yes.
    Mr. Lankford. Right. You can't force a country to say I 
want to be independent, but most countries would say, if they 
have the opportunity to not be dependent on someone else for 
energy, they would most likely take that.
    Mr. Hochstein. Mr. Chairman, at times there are also 
external factors and external forces that come into countries 
to encourage them not to explore those resources.
    Mr. Lankford. I would say Oklahoma would be welcome to 
receive folks from around the world to be able to show them how 
we do natural gas exploration, how we do it extremely well, 
extremely clean. And our regulatory scheme in the State of 
Oklahoma and how we actually regulate things as far as 
exploration is exemplary. I encourage people to come drink our 
water and breathe our beautiful air and see our wonderful land, 
and to be able to see how you can do this and can do it clean. 
We have had over 100,000 fracs in Oklahoma, and it is a 
beautiful State and has very clean water and very clean air.
    So, as you mentioned before, trying to deal with the 
science, not the emotion, when you are finished with the rest 
of the world, I would appreciate it if you would come back to 
the United States and share what you have learned as well about 
dealing with the science, not the emotion.
    One other comment, unless the ranking member has another 
question on this, I want to shift topics. I promise I won't 
stay long. I want to bring up the issue of crude oil exports. 
And what we are hearing from our international partners on 
that, we already export refined products around the world. We 
are currently not exporting crude. What are we hearing? We have 
heard quite a bit from people. They are very interested in our 
LNG. What are we hearing about crude and the request for that 
from our allies?
    Mr. Hochstein. I think just like in the United States, this 
is a conversation that is happening around the world, and I 
think it was the next logical conversation that we were going 
to see happen. We are following that discussion of what it 
means. We are in the very early stages of this conversation. I 
followed what has been done here in Congress, both in the House 
and the Senate side, of discussion on what does this mean to 
have crude oil exports. I think this is a much bigger 
discussion. We have been so focused on the LNG side that the 
oil side is next. So I think we are in the early stages of 
understanding what it means and listening to the views that are 
being expressed.
    I think there is less than a drum beat as far as our 
partners; I think there is more of a focus on natural gas. But 
there is definitely an interest in the topic of what the United 
States is going to do, but less of independence for those 
countries like the discussion of gas and more from the aspect 
of understanding how will this impact the mid-and long-term oil 
markets and prices and structures.
    We have talked a lot about gas today, but we have the same 
changes, radical changes in the oil markets around the world 
today that are happening in gas; they are just slightly 
different. Big changes from the days where OPEC dominated the 
market; new players. And with most OPEC countries today 
producing at maximum capacity for a variety of reasons, some 
for sanctions, some for political instability, some for 
technical reasons, and some because that is the most they can 
do, the question of what happens to the market if the United 
States starts exporting is one that is fascinating those who 
follow the energy markets.
    Mr. Lankford. So let me just complete that thought. Prices 
drop worldwide if we start exporting, correct or not correct?
    Mr. Hochstein. I think it would depend on the dynamic. I 
have learned one thing in this business, which is that any 
prediction on oil prices, those who make those predictions 
usually regret them later.
    Mr. Lankford. It tends that all it takes is a little cross-
border war somewhere in the Middle East and it changes 
everyone's gas prices all the time. I do understand that. But 
is there an unease, I would say, in the OPEC countries that the 
United States could become an exporter?
    Mr. Hochstein. I think they are watching our decision-
making process very carefully.
    Mr. Lankford. Okay.
    Mr. Smith, do you want to make a comment about that?
    Mr. Smith. I would probably second the comments of Mr. 
Hochstein. There has been more focus on gas, obviously, because 
there is a statutory process for dealing with natural gas and 
there is not a statutory process for dealing with oil. But this 
certainly is a topic that we think is of interest, but we don't 
have a direct role in even the current limited capability of 
exporting oil if there is a waiver granted, so the DOE does not 
have a role there.
    Mr. Lankford. Is the DOE doing a study of oil capacities, 
what is coming online, our capability of production and what we 
will actually use?
    Mr. Smith. Well, that is something that obviously the 
Energy Information Agency follows very closely, and that is 
kind of a semi-autonomous part of the Department of Energy. We 
are consumers of their analysis, so we follow that very 
closely.
    Mr. Lankford. Semi-autonomous. I am enjoying that 
conversation. We can have that conversation about several 
agencies, actually, and several departments, semi-autonomous.
    The length of time issue you and I have talked about often, 
as far as the permitting, getting back to LNG. Predictability I 
think is extremely important not only for American companies 
and American production, but I think it is extremely important 
for our international partners at this point. I don't know how 
we get there, because, based on what you are saying, your team 
is working on it, but there are no deadlines and there are no 
demands on certain time periods; it is we will get it done when 
we get it done. And my concern is, for our international 
partners, they need some certainty. The folks that have come to 
visit my office have all said the same thing: when?
    Ms. Speier. Well, Mr. Chairman, let me interject, then. If 
this is one of speediness and still doing the job, then the 
question becomes are the fees that are being charged to provide 
this evaluation adequate to do the job and does the office need 
more staff. Maybe you can address that as well.
    Mr. Smith. Well, thank you. I will make two points on that. 
First, when I go and talk about LNG at various venues, I am 
often followed by a market expert who will put a chart on the 
wall that shows the exact length of time between various DOE 
actions and juxtapose that against prices or a bunch of other 
things, and there is all this analysis about why is it 10 days 
longer between these two than these other two. So those are 
always interesting to watch because there is all this 
theorizing about what is the back story about the extra four 
days here, and the bottom line is that there is not a back 
story; all of these are slightly different.
    But what we can see is that we have established, I think, a 
fairly reliable track record of getting these authorizations 
out in a reasonable amount of time. There has been a 
consistency over the past year or so. It varies from order to 
order within a reasonable amount because all the orders are not 
the same. So it is our intention to make sure that we are 
moving forward in that manner. We have already authorized, 
again, 9.3 bcf, which is a considerable amount, and the biggest 
uncertainty really now is what is going to be the reaction of 
the private sector that has already received these 
authorizations. At what rate are these terminals going to be 
built? Because they are massive multi-billion dollar 
investments that are complex to get built, and they will be 
built if the market determines that there is going to be a 
demand for U.S. gas.
    Mr. Lankford. But if they have the FERC permit done, they 
are not moving in line or they are moving in line?
    Mr. Smith. Again, we have a number of applicants that have 
not yet received a conditional authorization from the 
Department of Energy that are working through the FERC process. 
We have not come to the position where someone has finished 
that process in advance of having received a conditional 
authorization, so unfortunately I don't have an answer to that 
question because it is sort of a hypothetical at this point.
    Mr. Lankford. I understand, but that will be a big issue. I 
mean, obviously this becomes very, very significant. I would 
hope that you are addressing this, that if someone is holding 
the FERC permit in their hand, but it is two and a half years 
of still waiting on the DOE piece, or it is unpredictable, they 
just don't know--I know you said we have established a process 
that has some predictability, but just because it has been done 
that way in the past, as you mentioned already, doesn't mean it 
is going to be done that way in the future. You are not saying 
it is going to be six to ten weeks between each one; you are 
just saying this is what we have done in the past.
    Mr. Smith. I am saying that we have established a track 
record. But, again, this is an unprecedented activity. I mean, 
the Department of Energy, when this market changed, and you 
referred to this energy production revolution in your opening 
statement that has taken the regulators within my organization 
and they have gone from looking at import terminals to export 
terminals. Everything has changed. So I think there are a 
number of hypothetical situations that one could come up with 
and say, well, what are you going to do in this situation, what 
are you going to do in that situation? We are busy and hard at 
work at making sure we are doing the work that is before us, 
that we are meeting our commitment to get these out in as 
timely a manner as possible; and as we move into new 
situations, those are things that we are going to have to 
consider and made the best decision that we can.
    Mr. Lankford. So it is possible at that point, if they are 
holding a FERC permit, for them to be able to come back and be 
able to step out of line. We have to reevaluate that.
    Mr. Smith. I will certainly say that at all times we are 
looking at ways to make the process better and more efficient 
based on signals that are being sent by the markets. So as the 
market sends us signals that are different from the signals 
that were sent when we established a certain process, we are 
not inflexible to doing the thing that is appropriate based on 
appropriate market signals and our assessment of public 
interest.
    Mr. Lankford. Okay.
    We will still have more conversations about this, 
obviously, because I understand you are still saying look at 
our history, but there is no predictability of what happens in 
the future, and that is really a much needed thing right now, 
both in our Nation, development of infrastructure. If any of 
these facilities are going to be built, we have to get 
pipelines to them. That is years in the process, it is years of 
construction and it is lots of capital. It is going out and 
pursuing contracts worldwide. It is our international partners 
saying, okay, we are going to get it, here is the date we are 
going to happen. All those things are all pending on your team 
making a decision and people knowing when it is going to 
happen.
    So not to say you have the whole world in your hands, but 
there are a lot of folks around the world that are waiting on 
decisions that if we can't get predictability of when they are 
going to happen, there are a lot of folks around the world that 
are just waiting a lot of economic development here in the 
United States that is waiting to be released pending a decision 
from your office. So if we can get some level of predictability 
on that, it would certainly help our economy and would help our 
geopolitical situation as well.
    Mr. Smith. Understood.
    Ms. Speier. Mr. Chairman, I would just like to close by 
thanking our two witnesses who have, I think, presented some 
very persuasive arguments for why this is global in nature and 
not something that the United States, in and of itself, is 
going to fix. But certainly your admonition that there should 
be some predictability is worthy of us reviewing, but I would 
urge us to look at FERC as being part of that, and they are 
absent from this discussion here today, and they are a key 
component as well.
    So thank you for your good work and for your service to our 
Country.
    Mr. Lankford. Gentlemen, thank you.
    With this, this hearing is adjourned.
    [Whereupon, at 11:56 a.m., the subcommittee was adjourned.]


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