[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


 
                    ENERGY REVOLUTION IN THE WESTERN
                     HEMISPHERE: OPPORTUNITIES AND
                        CHALLENGES FOR THE U.S.

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 14, 2015

                               __________

                           Serial No. 114-44

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
        
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]        


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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       BRIAN HIGGINS, New York
MATT SALMON, Arizona                 KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
PAUL COOK, California                ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas            GRACE MENG, New York
SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
TOM EMMER, MinnesotaUntil 
    5/18/15 deg.

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

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

                 Subcommittee on the Western Hemisphere

                 JEFF DUNCAN, South Carolina, Chairman
CHRISTOPHER H. SMITH, New Jersey     ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida         JOAQUIN CASTRO, Texas
MICHAEL T. McCAUL, Texas             ROBIN L. KELLY, Illinois
MATT SALMON, Arizona                 GREGORY W. MEEKS, New York
RON DeSANTIS, Florida                ALAN GRAYSON, Florida
TED S. YOHO, Florida                 ALAN S. LOWENTHAL, California
TOM EMMER, MinnesotaUntil 
    5/18/15 deg.
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

James H. Knapp, Ph.D., professor, Department of Earth and Ocean 
  Sciences, University of South Carolina.........................     5
Mr. Kevin Book, managing director, Clearview Energy Partners.....    16
Mr. Jamie Webster, senior director, IHS Energy...................    23
Mr. Jeremy Martin, director, Energy Program, Institute of the 
  Americas.......................................................    32

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

James H. Knapp, Ph.D.: Prepared statement........................     8
Mr. Kevin Book: Prepared statement...............................    19
Mr. Jamie Webster: Prepared statement............................    26
Mr. Jeremy Martin: Prepared statement............................    36

                                APPENDIX

Hearing notice...................................................    62
Hearing minutes..................................................    63

                    ENERGY REVOLUTION IN THE WESTERN
                     HEMISPHERE: OPPORTUNITIES AND
                        CHALLENGES FOR THE U.S.

                              ----------                              


                         THURSDAY, MAY 14, 2015

                       House of Representatives,

                Subcommittee on the Western Hemisphere,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 2 o'clock p.m., 
in room 2200 Rayburn House Office Building, Hon. Jeff Duncan 
(chairman of the subcommittee) presiding.
    Mr. Duncan. A quorum being present, the subcommittee will 
come to order. I would now like to recognize myself for an 
opening statement.
    The Western Hemisphere is home to an abundance of natural 
resources, including nearly a third of the world's oil 
reserves. With their own U.S. supplies of oil, natural gas and 
shale gas resources, the capacity to export liquified and 
compressed natural gas and the option of offshore drilling in 
the Atlantic, we have many reasons to deepen our energy 
engagement in the region.
    Such action would spur economic growth and energy security 
while reducing energy costs, which will go a long ways toward 
building a more stable and prosperous hemisphere. Currently, 
our top crude oil imports come from Canada and Mexico.
    Yet, the Obama administration's policies, while seeking to 
appease dictators in Cuba, have refused to take common sense 
approaches with Canada and Mexico.
    The Keystone Pipeline decision remains mired in White House 
delaying tactics and State Department bureaucracy while the 
U.S. continues to unfairly prohibit crude oil exports to 
Mexico, and it is unlike our treatment toward Canada.
    So earlier this year, President Obama used just the third 
veto of his presidency to stop House- and Senate-passed 
authorizing legislation to finally begin construction of the 
pipeline, even saying at the time that the pipeline wouldn't 
actually create that many jobs for the U.S.
    Approval of the Keystone XL Pipeline would not only inject 
over $7 billion in private investment into our economy, it 
would also create thousands of good-paying jobs for the 
American people. Energy security is a segue to job creation.
    Keystone XL also represents an important piece of ensuring 
our national security interest. Reducing our dependence on 
energy from unstable parts of the world and from regimes 
hostile to the U.S. interests has long been a crucial element 
in protecting our broader national security interests.
    Canada and the United States enjoy a very close bilateral 
relationship with robust commercial ties. Our two countries 
enjoy the world's largest bilateral trade relationship, 
translating into over $1 billion crossing our shared northern 
border each day.
    Moreover, Canada is the world's fifth largest petroleum 
producer and its reserves are believed to be third largest in 
the world only after those of Saudi Arabia and Venezuela.
    Canada is already the United States' largest supplier of 
energy, and approval of the Keystone Pipeline from Canada to 
refineries in the Midwest and the Gulf Coast would translate 
into approximately 1 million additional barrels of oil per day, 
along with tens of thousands of high quality good-paying U.S. 
jobs.
    It is telling when you remember that President Obama 
managed to force Obamacare onto the America people in just over 
400 days, yet it has been over 2,000 days since the application 
for Keystone XL Pipeline from Canada was submitted to the State 
Department, and the administration continues to stall on 
approving or disapproving the project.
    On this question I believe our treatment of our neighbor to 
the north, one of our best and largest trading partners and on 
so many other issues, is shameful.
    So because of this, as chairman of the Subcommittee on the 
Western Hemisphere of the House Foreign Affairs Committee, I 
convened the first meeting of this panel earlier this year to 
host senior leaders from several Caribbean countries in 
conjunction with the administration's Caribbean Energy Security 
Summit.
    These CARICOM countries suffer from some of the most 
expensive energy prices in the world, hampering the growth of 
their island economies.
    Isn't it time that we figure out innovative and cost-
effective ways to export our recently discovered energy 
abundance to help these small countries once and for all get 
off their dependence on subsidized energy from Venezuela?
    Not only does this make economic sense, but it also might 
actually help the U.S. geopolitically when the votes are cast 
at the U.N. and the OAS.
    Today, the Western Hemisphere has some amazing 
opportunities for deeper U.S. engagement with Mexico's energy 
sector reforms, energy revolutions in Argentina, Brazil, 
Colombia, Peru, offshore exploration activities by Caribbean 
countries, and potentially new resources in the Arctic.
    In Mexico, the promise of opening Pemex to foreign 
investment will not only potentially benefit U.S. companies but 
will go a long way in improving the efficiency of Pemex while 
stabilizing, indeed, increasing Mexico's stalled oil 
production.
    This will lead to a more prosperous Mexico and that, 
unquestionably, is in the national interest of the United 
States.
    The imminent approval of the United States Commerce 
Department to allow Mexico to swap up to 100,000 barrels of 
heavy crude for similar amounts of lighter U.S. oil could yet 
be a milestone toward eventual loosening of the four-decade-old 
ban on U.S. oil exports. This is truly a win-win.
    In South America, despite simmering domestic political 
challenges with the vast offshore pre-salt oil reserves in 
Brazil and with Argentina sitting on the world's second largest 
shale gas reserves in the Vaca Meurta, opportunities for U.S. 
engagement abound.
    The discoveries made in the pre-salt are among the world's 
most important in the past decade as the pre-salt province 
comprises large accumulations of excellent quality high 
commercial value light oil.
    With elections set for this fall, it remains to be seen 
what the investment climate will look like in a post-Kirchner 
regime in Argentina. The world will be watching.
    This hearing will explore how we can grow and enhance our 
existing partnerships with countries in this hemisphere, and 
preserve U.S. energy security, increase investment 
opportunities for U.S. companies and high-paying jobs for the 
American people.
    Challenges for U.S. business investment remain in the 
region, but it is my hope that through hearings like this we 
will determine ways in which the U.S. can better engage on 
energy issues with our neighbors in the hemisphere.
    Just returning from the Summit of the Americas, I really 
started thinking about hemispheric energy independence. If we 
think about some of the things I have talked about, whether it 
is Keystone Pipeline oil to U.S. refineries, whether it is the 
abundance of natural gas that we are finding in the United 
States, whether it is shale oil in the Bakken and our ability 
to extract that, possible energy exports of oil to the 
Caribbean nations limiting or effectively ending Petrocaribe's 
influence in the region, natural gas exports to Mexico, natural 
gas LNG and CNG through Central America and all throughout the 
hemisphere, working with our partners in Colombia and allies in 
Colombia and Brazil, expansions of possibly energy in 
Argentina, and what Peru and Chile are wanting to do, just so 
many different things that could happen, especially if 
political winds shift in Venezuela and that Venezuelan oil 
becomes more productive--oil fields become more productive and 
opportunity to utilize that oil in this hemisphere.
    If you take every piece of that equation that I talked 
about--and there are others, I am sure, that we will hear from 
the panelists today--if you factor all those in to the Western 
Hemisphere and think about it in terms of hemispheric energy 
independence, then we negate a lot of the geopolitical concerns 
that are happening in other parts of the world.
    So I look forward to today's hearing as we delve into this 
and I now turn to Ranking Member Sires for his opening 
statement.
    Mr. Sires. Thank you, Mr. Chairman, and thank you to our 
witnesses for being here this afternoon.
    Today's hearing looks at both the opportunities and 
challenges enhancing our energy cooperation within the Western 
Hemisphere.
    I believe integrating our energy interests in the region 
have been ignored for far too long. That is why I am encouraged 
to see the administration's recent efforts to deepen energy 
cooperation within the hemisphere.
    The administration hosted the White House Caribbean Energy 
Security Summit in January and launched the Caribbean Energy 
Security Initiative to facilitate an energy transition for the 
islands that have been far too dependent on Venezuela's shaky 
energy sector for their needs.
    While we continue to focus energy policy on the Middle 
East, taking a look at our own back yard shows the opportunity 
that exists right next door.
    We get about half of our oil and petroleum from the Western 
Hemisphere, half of which is from Canada. Canada is the single 
largest foreign supplier of petroleum and natural gas to the 
United States, and after Saudi Arabia, Mexico is the United 
States' third largest supplier of petroleum.
    Venezuela is home to 88 percent of the region's proven oil 
reserves. In regards to nontraditional sources of energy, 
Brazil is the world's second larger producer of ethanol after 
the United States.
    In countries like Venezuela, Bolivia, Ecuador and 
Argentina, the troubling trends of the nationalization of 
private industry has become the norm rather than the exception.
    Moreover, the region's trade relationships and increasing 
presence of anti-democratic actors such as Russia, Iran and 
particularly China, whose self-interests are counter to the 
strategic concerns of the United States, should not be taken 
lightly.
    In January, China pledged $250 billion in investments in 
Latin America over the next 10 years, seeking to boost their 
influence in the resource-rich region.
    The United States cannot fall behind, as the Western 
Hemisphere plays a critical role in our energy security. 
Specifically, it is clear that maintaining and strengthening 
our energy relationship with Canada and Mexico is in the 
national interests of the United States.
    That is why I believe the proposed Keystone XL Pipeline and 
the Transboundary Hydrocarbon Agreement with Mexico are in the 
national interests of the United States. I am sensitive to the 
environment and the concerns associated with the development of 
the Keystone Pipeline project.
    But the conversation has stagnated. The concerned parties 
need to avoid further delays of a constructive dialogue and 
chart a path forward.
    This is true especially in light of declining foreign oil 
supplies from Mexico and Venezuela. Our national security 
requires that energy policy be a central component of our 
foreign policy.
    Furthermore, we should build upon and expand our energy 
diplomacy efforts and mitigate the Caribbean's dependence on 
subsidized Venezuela oil and support the economic growth of the 
region in ways that are both relevant and practical to the 
needs of everyday people.
    No one single project or initiative is a cure-all for 
energy security needs, and no proposal will satisfy everyone's 
needs or alleviate every doubt. But we must continue to work 
with our neighbors to develop a beneficial energy policy for 
the region.
    I look forward to the hearing--to hearing from our 
panelists on how we can address these critical issues.
    Thank you.
    Mr. Duncan. I thank the ranking member, and other members 
are reminded they can provide written testimony for the record. 
In the essence of time, we are going to move on to the 
witnesses. They are thinking about calling votes around 2:30, 
possibly 3 o'clock.
    We may get through all that. Before I recognize each of 
you, I want to explain the lighting system, and I don't know 
where the lights are right near the----
    Mr. Sires. One minute, 2 minutes, 3 minutes.
    Mr. Duncan. One minute. Yes, that is right. So 5, 1--5 
minutes we are going to start, 1 minute it will give you a 
warning.
    At the end of that 5 minutes I am going to need to cut you 
off. I will give a little leeway but and before I recognize the 
witnesses we have got their bios in the books. So I am not 
going to recognize each of you but I do want to recognize Dr. 
Knapp, who is from South Carolina.
    He has testified on the Hill a couple times for me in this 
committee and in Natural Resources as well. At the University 
of South Carolina, he is a professor training the new minds on 
geophysical and seismic and all the things that we are going to 
need to take advantage of energy security in the future and I 
appreciate him being here.
    So Dr. Knapp, I am going to go ahead and recognize you for 
5 minutes.

 STATEMENT OF JAMES H. KNAPP, PH.D., PROFESSOR, DEPARTMENT OF 
     EARTH AND OCEAN SCIENCES, UNIVERSITY OF SOUTH CAROLINA

    Mr. Knapp. Good afternoon, Chairman Duncan, Ranking Member 
Sires and esteemed member of the House Foreign Affairs' 
Subcommittee on the Western Hemisphere.
    It is my great pleasure and high honor to be here today and 
I thank each of you both for your continued dedicated service 
as Members of Congress and for the opportunity to appear before 
you today.
    For the record, I am James H. Knapp, professor in the 
Department of Earth and Ocean Sciences in the School of the 
Earth, Ocean and Environment at the University of South 
Carolina, and I currently serve as chair of the faculty senate 
at the University of South Carolina, Columbia campus. I will be 
summarizing my written testimony in these opening comments.
    I am also taking the liberty to introduce some graphics 
here which, hopefully, will supplement the comments I will 
make.
    By way of background, I was born and raised in California 
and have lived in six and travelled to 49 states and through my 
profession as an earth scientist have worked in or visited more 
than 40 countries, many of those in the Western Hemisphere.
    I hold a Bachelor of Science degree with distinction in 
geological sciences from Stanford University and a Ph.D. in 
geology from the Massachusetts Institute of Technology, and 
from 1988 to 1991 I worked with Shell Oil where I participated 
directly in oil and gas exploration in the Gulf of Mexico.
    For more than 20 years since then, my research team and I 
have carried out both fundamental and applied research in earth 
sciences including the design, acquisition, processing and 
interpretation of seismic surveys both onshore and offshore and 
many of my former students are now gainfully employed in the 
energy industry.
    Access to energy is and will for future generations 
continue to be an essential foundation upon which modern 
society operates.
    On a personal level, one need only experience a prolonged 
power outage to be poignantly reminded of the ways in which we 
on a daily basis depend on energy to illuminate, heat and cool 
our homes and businesses, preserve and prepare our food, and of 
critical importance in this digital age, power our numerous IT 
devices.
    As many have come to appreciate in recent years, we simply 
cannot turn off the power switch overnight regardless of the 
perceived societal imperatives.
    Safe, efficient and environmentally responsible development 
of energy resources is critical for the long-term energy 
security of this country and the Western Hemisphere.
    In all of the above energy strategy, which includes 
continued exploration for and development of conventional and 
unconventional hydrocarbon resources, as we develop 
economically viable technologies for alternative and renewable 
energy resources is clearly the best path forward. Much of the 
future promise of renewable and alternative energy sources 
awaits the capacity for efficient storage through research and 
development.
    The title of this hearing is most appropriate. As many will 
know, for the better part of the last decade we have witnessed 
a global energy revolution led by the United States, which few 
if any could have predicted.
    Harnessing the oil and gas potential of shale reservoirs 
through American technological innovation has practically 
doubled the estimated volume of undiscovered technically 
recoverable oil resources in the United States.
    The most recent estimates from the energy information 
administration for proven crude oil reserves in the Western 
Hemisphere amount to approximately 550 billion barrels of oil 
equivalent with well more than half of those in Venezuela.
    The countries of the Western Hemisphere combined represent 
approximately one-third of the proven global reserves. Clearly, 
the major players in terms of conventional production have been 
and will continue to be the United States and Canada with 
growing contributions from Brazil, Mexico and Argentina.
    As seen in the figure on the screen, shale oil and shale 
gas potential is abundant throughout the Western Hemisphere 
from the North Slope of Alaska to the tip of Tierra del Fuego, 
and the offshore potential of such unconventional resources is 
yet to be evaluated in any significant way. Note that these are 
all onshore shale gas and shale oil plays.
    The presence of this resource potential represents an 
opportunity to engage our hemispheric neighbors through both 
the public and the private sector.
    Methane hydrates, or deposits of natural gas frozen into 
sedimentary deposits, represent a significant future resource 
potential.
    Recent estimates from the Bureau of Ocean Energy Management 
suggest that more than 20,000 trillion cubic feet of gas, or as 
much as 35 times the inventory of conventional gas resources on 
the entire U.S. outer continental shelf, are present on the 
Atlantic margin alone, as shown in this figure.
    A similar reserve potential has been estimated for the U.S. 
waters of the Gulf of Mexico. We need look no further than the 
Atlantic shelf of the U.S. for other energy opportunities.
    The Bureau of Energy--Ocean Energy Management is charged 
with periodic evaluation of the energy and mineral resource 
potential of the outer continental shelf.
    Their most recent estimate in 2011 of undiscovered 
technically recoverable resources for the Atlantic OCS was 8.87 
billion barrels of oil equivalent revised only a year ago up to 
11.4 billion barrels of oil equivalent without any new data.
    This is simply reevaluation of the existing data. Too often 
such reserve estimates are dismissed as unworthy of the 
investment required to produce them or the anticipated 
environmental disruption involved.
    However, such volumes represent as much as a tenth of the 
combined estimated petroleum resource base of the United 
States.
    In addition, as much as 80 percent of the Atlantic OCS 
territory currently under consideration in the draft proposed 
plan of the Bureau of Ocean Energy Management has never been 
evaluated with commercial seismic surveys. Only the shelf 
portions of the area under consideration have ever been 
surveyed.
    So if we compare this with the entire remainder of the 
Atlantic Basin, essentially the entire Atlantic Basin is 
currently under exploration for oil and gas in offshore areas 
with the conspicuous exception of the Atlantic Margin and the 
eastern Gulf of Mexico of the United States.
    In conclusion, I believe the U.S. can and must play a 
leading role in promoting energy security for our own citizens 
and for the hemisphere at large. In most cases, the biggest 
opportunities appear to be here close to home.
    New opportunities exist to bring U.S. deepwater technology 
and experience to Mexico and the Gulf of Mexico. Additional 
steps should be taken to deepen our engagement with Canada by 
completing the Keystone XL Pipeline, bringing crude petroleum 
to excess refining capacity in the Gulf Coast region and 
removing the ban on crude oil exports from the U.S. helping to 
bring reliable energy to our neighbors from a stable economic 
and political base.
    I yield the rest of my time. Thank you.
    [The prepared statement of Mr. Knapp follows:]
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    Mr. Duncan. Dr. Knapp, thank you, and I felt like I was in 
a classroom there with a slide presentation. But very 
informative.
    Mr. Book.

   STATEMENT OF MR. KEVIN BOOK, MANAGING DIRECTOR, CLEARVIEW 
                        ENERGY PARTNERS

    Mr. Book. Thank you, Chairman Duncan, Ranking Member Sires 
and distinguished members of this committee.
    Good afternoon, and I appreciate the invitation to 
participate in this important discussion about energy 
revolutions in the Western Hemisphere.
    My name is Kevin Book. I head the research team at 
Clearview Energy Partners, LLC, a Washington, DC-based 
independent research firm. We serve financial investors and 
corporate strategists, and we look at macro energy trends.
    Here is a trend. It is hard to miss the dramatic shift in 
U.S. energy security during the last decade. In May 2005, net 
petroleum imports accounted for 59 percent of our consumption, 
according to EIA data.
    This fact linked our economic fate to the sometimes 
unstable political circumstances of foreign producers and the 
insatiable energy appetites of emerging economies. As of 
February 2015, the most recent month for which robust EIA data 
are available, net imports represented only about 26 percent of 
our petroleum consumption.
    Much of this can be explained by the incremental production 
from shale and other type formations. We also reduced petroleum 
consumption by about 1.7 million barrels per day, or 8.1 
percent.
    According to International Energy Agency data, Canadian 
crude oil and natural gas liquids production grew by 47 percent 
between the first quarter of 2005 and the first quarter of 
2015, which was from about 3 million barrels per day to 4.3 
million barrels per day.
    Last June, the Canadian Association of Petroleum Producers 
projected that production will rise to 6.4 million barrels per 
day by 2030. Although to be fair, that forecast preceded the 
recent price collapse.
    In Mexico, where the last decade brought a bruising 29 
percent production decline, constitutional reforms have ended 
the state oil company's 75-year monopoly. Pemex will retain 83 
percent of Mexico's probable and possible reserves and 21 
percent of prospective reserves.
    But Mexico opened its first round of bidding for the 
remainder in December 2014. This week, bidding opened for the 
third of five first round tenders and the first onshore 
offering.
    Brazil opened its oil and gas sector to foreign competition 
in 1997. In October 2006, a joint venture between Petrobras and 
private operators discovered Tupi, which is now called Lula, 
the first of Brazil's many promising pre-salt offshore finds.
    In June 2010, Brazil amended its regulatory framework. The 
new regime gives state entities substantially greater control 
over the pre-salt fields. The first competitive auction in 
October 2013 attracted only one bid.
    It remains to be seen whether, and to what extent, Brazil's 
tighter grip on the pre-salt might deter further foreign 
investment.
    As the U.S. transitions out of an era of energy scarcity 
into an age of adequacy and, hopefully, abundance, we are 
likely to encounter new opportunities to contribute to the 
energy security of our regional neighbors.
    For example, financial pressures forced Venezuela to pare 
back subsidized crude oil and products exports to Petrocaribe 
signatories.
    The U.S. became a net petroleum products exporter in July 
2011, which is if you look backwards 12 months an average as 
analysts are prone to do. Since then, average products exports 
to Petrocaribe member countries rose about 14 percent from 
194,000 barrels per day in July 2011 to 221,000 barrels per day 
in February 2015.
    U.S. exporters aren't likely to offer the same financing 
terms that Venezuela does. But U.S.-refined products can 
provide Caribbean importers with volumes to cover supply 
shortfalls.
    Two U.S. policy changes--liberalizing crude oil exports and 
approving the Keystone XL Pipeline and any other southbound 
conduit out of the oil sands could contribute so similar cover 
for Petrocaribe's crude importers. U.S. natural gas provides 
another opportunity.
    EIA's reference case for natural gas in this year's annual 
energy outlook projects net exports of a little less than half 
of 1 billion cubic feet per day in 2017, rising to almost 6 
billion cubic feet per day by 2040.
    Pipeline exports to Mexico appear likely to continue 
growing and LNG exports from the lower 48 have potential to 
enhance energy security throughout the Western Hemisphere. 
Liquefied gas has to be regasified to be used and the high 
total costs of onshore facilities may be out of reach for many 
nations, especially in the Caribbean.
    Floating storage and regasification units provide a 
possible alternative at lower capital cost and with faster 
construction times, albeit with higher operating costs.
    Completion of an offshore facility in Colombia will bring 
Latin American floating regas capacity to more than 2.8 BCF a 
day, most of it in Brazil.
    Finally, Latin American electrification provides another 
opportunity. The IEA estimated that approximately 23 million 
people in Latin America lacked access to electricity in 2012.
    My written testimony suggests that countries that cannot 
harness endogenous hydroelectric resources may short of fossil 
fuel baseload generation. Many of these countries do not rely 
primarily on natural gas generation.
    With outside financing including facilities outlined in a 
bill that was passed by the House last year--the Electrify 
Africa Act of 2014--a number of them could theoretically 
operate new gas-fired turbines fueled by water-borne LNG 
imports.
    The data on Latin America point to energy transportation 
challenges, in addition to generation capacity deficits. Simply 
put, the region needs pipelines and transmission lines, too.
    That said, Latin America gets plenty of sunlight, creating 
an opportunity for distributive solar photovoltaic generation 
to supplement regions where economic development, population 
density, and/or topography might make the build-out of pipes 
and wires impractical or unfeasible.
    Mr. Chairman, this concludes my prepared testimony. I will 
look forward to responding to any questions you might have at 
the appropriate time.
    [The prepared statement of Mr. Book follows:]
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                              ----------                              

    Mr. Duncan. Thank you, Mr. Book, and the Chair will 
recognize Mr. Webster for 5 minutes.

  STATEMENT OF MR. JAMIE WEBSTER, SENIOR DIRECTOR, IHS ENERGY

    Mr. Webster. Thank you very much, Chairman Duncan, Ranking 
Member Sires and distinguished members of the committee.
    I appreciate the opportunity to testify before you today on 
the immense changes in the energy market, its landscape, its 
impacts on the Western Hemisphere and the importance of crude 
exports in continuing this change.
    I am Jamie Webster and I appear before you today in my 
capacity as senior director at IHS where I lead the company's 
oil markets practice.
    In that role, I travel regularly, not just nationally in 
the United States but also internationally. I also attend the 
OPEC meetings and was at the OPEC meeting on Thanksgiving when 
OPEC took the historic role--the historic stance of deciding to 
stand down in the face of growing U.S. production. This 
provides me a unique view in terms of what is going on not just 
in energy today but where it may go in the future.
    Today, I want to address a few issues. One, the recent 
changes that we have seen in the global oil market, North 
America's critical place in it and what it means for both 
energy security and energy independence.
    I will address the crude export issue and market-related 
issues as they relate to Keystone XL, and given I am just 
returning from Mexico last night, a brief update on where I see 
the energy reforms there.
    The catalyst for the oil price decline that began in June 
of last year was the restart of Libya production. But what 
really supported it underneath that was the huge growth that we 
saw in U.S. production from 5.6 million barrels a day to 9.2 
million barrels a day here in the United States.
    OPEC's decision on Thanksgiving was really about its 
recognition that it could not compete in terms of these volumes 
that were coming online incessantly, and its decision was 
really one to focus on volume since it could no longer focus on 
price.
    This underscores a serious shift that you are seeing in the 
market that we have not seen since the beginning of the 1970s 
when we shifted from the power of the Texas Railroad Commission 
to OPEC.
    The market balancer, as us market analysts call it, is that 
entity that is able to bring production on and offline 
relatively quickly to handle changes in demand.
    The boom in U.S. production actually has the potential to, 
again, allow a shift in this market balancer, and it is not 
just about the volumes but it is about the character of those 
volumes and the scope of those volumes.
    One, it is the time scale. U.S. production can come online 
in 4 months versus conventional production that can take years 
to be planned, financed, and allowed online. The other is the 
decline rates.
    U.S. production brings oil out of the ground so quickly 
that it actually brings the decline rate down very, very fast, 
which essentially has the impact of being able to slow U.S. 
production by slowing down on investment.
    This shift from OPEC to the potential for the first time, 
perhaps, to a market-driven oil-based economy by shale is far 
from certain and it is far from complete. One of the key policy 
changes that would actually help to continue this drive is 
actually allowing U.S. exports.
    Energy flows out of the United States and the growth in 
U.S. production on oil has already shifted the world 
dramatically. Nigeria used to export 1.1 million barrels a day 
to the United States. It is now essentially zero and we are 
providing large portions of their refined products.
    Additionally, Mexico is taking increasing amounts of 
natural gas from the United States in order to support its 
economy both on the industrial side and electric side.
    LNG soon will be allowing our natural gas to reach parts 
around the world and we have also go an increased tie with 
Canada. While we are continue to receive increased volumes from 
Canada, we are now exporting about 490,000 barrels a day up to 
Canada. This is up from 30,000 barrels a day in 2010.
    This tight interconnection between the countries extends 
from power lines to rail lines to pipelines. The Keystone 
Pipeline can help to economically move oil from Canada down to 
refiners that are ready to take it.
    Our view is very much that this is a useful and helpful 
pipeline. While the slowdown in oil prices has impacted Canada, 
over the next several years it is going to be bringing on 
another 800,000 barrels a day of new production. The obvious 
home for this is in the United States Gulf system.
    The decision on Keystone is really a decision between 
importing oil from our near neighbor, Canada--our largest 
trading--or Venezuela, whose hostility to the United States is 
manifest.
    The competitive oils between these two countries has about 
the same carbon footprint. But that is about the only thing 
that is similar between Canada and Venezuela.
    The U.S. liberal trade policy on natural gas, coal, refined 
products, and processed condensate also needs to extend to oil.
    Eliminating this is even more important when prices are 
low, as producers are in a much more difficult position in 
order to continue this production going forward. Additionally, 
removing this ban would actually help to bring down gasoline 
prices in the United States because the gasoline price in the 
United States is largely set by the global marker Brent, and so 
by pushing more volumes into the global market we will actually 
bring prices down on--leaving everything equal.
    This brings me to Mexico. This country is eager to extend 
its imports of U.S. natural gas to also include oil. While 
there have been discussions about being able to execute oil 
swaps with Mexico, in reality there are a number of commercial 
hurdles that must be surmounted in order for this to occur.
    The easier thing would be to allow crude oil exports so 
that this can be done on a single transaction rather than 
having to get at complex transactions to get around the current 
and outdated policy that currently exists.
    Right now, Mexico, as Kevin mentioned, is undergoing a huge 
renaissance and a huge change in its energy reform, which is 
allowing a lot of opportunities for U.S. companies to 
participate, and I know they look forward to increased working 
with U.S. companies in the future.
    Thank you very much for being here.
    [The prepared statement of Mr. Webster follows:]
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    Mr. Duncan. I want to thank the gentleman. Great comments. 
We are going to come back to some of that.
    Mr. Martin, whose parents are from South Carolina, a 
Citadel graduate, recognized for 5 minutes.

   STATEMENT OF MR. JEREMY MARTIN, DIRECTOR, ENERGY PROGRAM, 
                   INSTITUTE OF THE AMERICAS

    Mr. Martin. Oh, boy. Thank you, Mr. Chairman. Good 
afternoon.
    Chairman Duncan, Ranking Member Sires, it is a delight and 
pleasure to be here. Flew in on a red-eye so I may be over-
caffeinated, so bear with me if I blow through this too 
quickly.
    Mr. Sires. We want to thank you, all of you.
    Mr. Martin. Thank you so much, Ranking Member.
    Thank you all to the subcommittee. This hearing, obviously, 
all my colleagues here at the table have underscored how much 
the topic of energy is of relevance to the United States, but 
to our hemisphere.
    And yes, my name is Jeremy Martin. I am the director of the 
energy program at the Institute of the Americas. We are based 
at the University of California San Diego out in La Jolla.
    So second time I have been before this subcommittee, so it 
is a pleasure. I am going to summarize my written testimony and 
in doing so I would like to offer some insights on several of 
the most important energy-producing nations in the region, 
their production outlook, geopolitics and challenges and 
opportunities for the United States.
    And in order to do so, I would like to discuss three main 
points. First, not all countries are the same, and it is 
important to distinguish between above ground and below ground 
issues.
    Secondly, the lessons learned from the energy boom in the 
United States, particularly in terms of unconventionals, 
provide a major opportunity to export knowledge, technology 
goods, and services as well as energy to the region, as several 
of my colleagues have underscored.
    Thirdly, Latin America offers important investment and 
energy diplomacy opportunities for the United States. So not 
all countries are the same.
    In discussing major energy-producing nations in Latin 
America, a country's oil and gas potential, its resources in 
the ground, as Dr. Knapp put up on the screen, may be actually 
less important than what is occurring in Congress, the halls of 
government and in the geopolitics of the day, or, as I like to 
say, not all countries are the same.
    From Canada to Argentina, as the chairman and ranking 
member underscored, our region has a formidable natural 
resource endowment.
    But beyond the resource potential below ground, the above 
ground, or nontechnical risks such as political, financial, 
social, and environmental issues, are often just as critical to 
a project's success.
    So how government, industry, NGOs, and communities engage 
and interact warrants increased attention by companies and 
policy makers alike. And, of course, as we have talked a little 
bit about already, volatility in international oil markets that 
we have seen since last June and today's lower price 
environment demands even closer attention to these above ground 
ramifications.
    So in a way of trying to talk about some of the above 
grounds, I wanted to talk about three countries in the region. 
I would like to start with Argentina.
    And after a rocky decade for the Argentine economy and 
energy industry, the nation is now faced with the onerous task 
of restoring investor confidence damaged by years of political 
and institutional instability.
    Many are hopeful, as the chairman mentioned, that the 
October Presidential elections will usher in a more business-
friendly administration. The potential reversal of the nation's 
fortunes is rooted in its vast unconventional oil and gas 
potential.
    Argentina holds the world's second largest shale gas 
resources and fourth largest shale oil. And Argentina, it 
should be noted, is one of just four nations to produce 
commercial quantities of shale oil or gas, along with U.S., 
Canada, and Mexico--excuse me, China.
    I want to move on to Mexico. We have talked about Mexico. 
Mexico has entered a new energy era. In the years since the 
nation passed a constitutional amendment and major energy 
reform legislation, progress has been remarkable.
    Round One, launched last December, is considered the first 
real opportunity in Mexico's new energy landscape. This year, 
the government will auction 169 blocks for exploration and 
production across a range of oil and gas prospects from mature 
fields to shale to deepwater.
    The outcome of the Round One oil and gas auction as well as 
the creation of a wholesale electric market in Mexico by the 
end of this year will have a significant impact on determining 
the reform's durability and eventual success.
    Venezuela, for my last country to talk about--Venezuela's 
woes are very, very well documented. We all have read the 
headlines and the stories. But, unfortunately, these woes have 
occurred during the largest oil-derived windfall in the history 
of the country.
    Oil production has declined by more than 350,000 barrels a 
day since 2008 and more than 800,000 barrels a day since its 
peak level in 1998. At the same time, oil exports from 
Venezuela declined approximately 28 percent between 1999 and 
2013.
    But, again, talking about the below ground potential, 
despite this grim news, Venezuela has unbelievable energy 
potential. It has the hemisphere's second largest gas and 
natural gas resources, after the United States, and in terms of 
oil, holds 298 billion barrels of proven reserves, and 
Venezuela's famous Orinoco Belt contains one of the world's 
largest oil accumulations.
    The next main point I want to talk about is exporting the 
lessons learned from the U.S. energy boom. Latin America has 
much to learn from the shale revolution in the United States 
but policy makers in the region must also understand the 
critical factors that drove this success and I want to 
highlight four of them--natural resource ownership, finance, 
technology, and infrastructure.
    That is to say, who owns the right to the subsoil, the 
hydrocarbons in the ground, the ease in access to finance and 
risk capital and cutting-edge technology and the ability to use 
infrastructure to move the product to market.
    A key hurdle for the region is to adapt innovative 
techniques developed in the United States to local conditions 
both above ground and below. Argentina is doing so to a certain 
degree.
    For example, it is using technology to almost have 
unconventional well costs in the last 5 years. Firms, 
hopefully, will also have a similar opportunity in Mexico when 
they tender unconventional blocks as part of the Round Process 
perhaps later this year.
    My third--my third and final main point--Latin America's 
investment in energy diplomacy opportunities, and let us start 
with U.S. energy exports.
    The U.S. energy revolution in the United States has created 
an unprecedented opportunity for natural gas and crude exports 
to the region. Natural gas exports by pipeline to Mexico have 
more than doubled in the last 5 years.
    At the same time, several liquefied natural gas projects 
along the coastal United States are nearing completion and will 
firmly plug the U.S. into the global gas market.
    Countries from Central America and the Caribbean to Chile 
stand to benefit from greater access to the cleaner-burning 
fuel.
    In the debate over exporting crude oil, it is important to 
appreciate how the boom in U.S. production has affected oil 
trade flows.
    Oil that once flowed east to west is now flowing from west 
to east, and the shift in oil trade flows underscore how 
important it is to address this topic of the U.S. export ban, 
and I would suggest starting with Mexico and Pemex's request 
for an exemption.
    However, the proposed oil swap is not just about the 
relationship between the U.S. and Mexico. It is also about 
North American energy integration. And another point I would 
make is that joint development of unconventional resources in 
North America and greater electric integration bring economic, 
environmental and political benefits to all three countries of 
North America.
    Briefly, Central America and the Caribbean--for nations of 
Central America and the Caribbean, the possible arrival of an 
era of abundant and cheap natural gas propelled by the shale 
boom in the United States has greatly advanced the case for a 
natural gas market in those regions.
    U.S. leadership and commitment to energy security in the 
Caribbean, as the ranking member talked about, has been 
extremely encouraging. The summit by the White House in 
January--the Caribbean Energy Security Initiative--are 
extremely important initiatives, trade finance initiatives.
    But I would suggest they are only the beginning of what 
must be a continued, consistent and concentrated effort to 
provide an alternative to Venezuela's Petrocaribe.
    Finally, very briefly, the role of China--the world's 
largest energy consumer, China has devised a strategy to deal 
with spiking energy demand and insufficient domestic 
production, and some have called that checkbook diplomacy.
    And the point is that Chinese, state-owned enterprises have 
fanned out across the hemisphere with the support of Beijing to 
secure access to resources, to secure access to Latin America's 
oil patch.
    Venezuela has been the largest beneficiary, but they have 
also made loans and invested in Argentina, Ecuador, Brazil, and 
the Caribbean.
    So in conclusion, Latin America's importance to the United 
States makes it critical that we continue to engage, 
particularly with the largest oil- and gas-producing nations.
    Without question, Latin America's outlook and opportunities 
are complex and at times challenging. But given the region's 
potential, the energy glass is at least half full over the long 
term.
    Thanks so much for allowing me to testify. I look forward 
to the conversation.
    [The prepared statement of Mr. Martin follows:]
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                              ----------                              

    Mr. Duncan. Thank you so much.
    Great testimony, and I just want to reiterate a statistic 
that I think Mr. Webster threw out there. Twenty-three million 
people in Latin America lack access to energy or electricity. 
Is that the number you threw out there?
    Mr. Webster. It was a different number, Chairman.
    Mr. Duncan. Twenty-three million?
    Mr. Webster. But that is--that is an accurate number, yes.
    Mr. Duncan. It is pretty--I am all about improving the 
quality of life. I think electricity does that for so many 
people around the world. If there is a way we can electrify 
Africa or electrify more in Latin America, you improve quality 
of life.
    If people are cooking over charcoal or other things, air 
quality issues, lack of education ability, having to stop 
reading or hurting your eyes reading by candlelight, or other 
things, there are just so many different ways. So I appreciate 
you bringing that up.
    Question for Mr. Webster--there are two different types of 
oil, really--heavy and light crude--and I am generalizing, of 
course. We have talked a lot about Keystone Pipeline today.
    What kind of oil is coming out of the ground in Canada? 
Isn't it the more heavy type?
    Mr. Webster. Thanks for your question, Chairman.
    Absolutely. It is quite heavy oil and this is important 
because the U.S. refining in the Gulf Coast is what we call a 
world class refining system and when we say it is world class, 
that means it can take some of the toughest oils to refine, 
which include Canadian oil.
    Mr. Duncan. We are set up--our refineries are set up?
    Mr. Webster. We are set up.
    Mr. Duncan. Because it is very similar to the oil we are 
importing from Saudi Arabia.
    Mr. Webster. Actually, it is even heavier than what we get 
from Saudi Arabia, yes.
    Mr. Duncan. And so the oil we are bringing out the ground, 
say, in the Bakken is a lighter, sweeter oil is my 
understanding.
    Mr. Webster. That is absolutely correct.
    Mr. Duncan. So in order to refine that oil it takes 
retooling or actually new refineries or heavy investment in 
U.S. refineries to refine that end of the--all the hydrocarbon 
products?
    Mr. Webster. That is correct. That is correct, yes.
    Mr. Duncan. That is missed in a lot of the debate on why 
bringing the Keystone Pipeline and bringing that Canadian oil 
down.
    Our refineries are set up to handle it without a lot of 
significant investment on behalf of U.S. companies. So that is 
why it makes sense.
    One thing that came to mind while one of you was speaking 
is some of the understandings that we have in talking with 
people in Peru and other South American countries is just 
private property rights, who owns the resources--a little 
different than the U.S. where we own air rights and mineral 
rights of a piece of property.
    Down there you don't and, generally, ownership and surveys 
and deeded property and all that is not applicable in the 
jungles of Peru or a lot of indigenous people live in villages. 
The head of the village knows well, that property belongs to 
that family, but there is no deeded record of that.
    So you run into a lot of problems with energy exploration 
and leases. So we have learned a lot about that in the last 
year travelling down there and talking with folks.
    I think that is going to provide an impediment in a lot of 
ways--and I think Mr. Martin was talking kind of along those 
lines--as energy companies continue to try to explore and 
produce in South America and possibly in Central America. But I 
think that is an issue that they need to address, and I will 
just raise that. So with falling oil prices in the world, who 
gets hurt the most in this hemisphere? Mr. Book.
    Mr. Book. Well, the--you know, the problem with saying who 
gets hurt is that there is two groups of the United States that 
you want to think about.
    The U.S. consumer is helped. The U.S. producer is hurt. 
And, arguably, the U.S. producer in some cases is being hurt 
very badly. In the Western Hemisphere, though, the greatest 
pain probably belongs to Venezuela.
    Ultimately, their dependence on oil to fund their economy, 
the high breakeven price they need for all of their fiscal 
obligations and their lack of sourcing capital to produce that 
oil means that a low price really squeezes them hard.
    Mr. Duncan. Do you think Pemex is hurt a little bit with 
U.S. and global investors looking to help them change their 
infrastructure and update and modernize?
    Mr. Book. Well, it is a bad time to be selling. You don't 
want to auction off blocks at the bottom of the market, and I 
think Pemex isn't necessarily going to have as much competition 
as it might have had if we had been at $100 a barrel.
    On the other hand, it seems like the petroleum industry in 
Mexico is rationalizing their auctions and trying to time for 
maybe right sizing it and timing it to not get totally burned.
    Mr. Duncan. Right.
    Mr. Martin. Mr. Chairman, if you don't mind, just a--there 
was an important deal about a month ago that I think also 
offers an alternative that Pemex, now more than ever, needs to 
partner with outside foreign private capital and there was a 
deal that First Reserve and Black Rock did about $900 million 
on the natural gas pipeline that some people considered the tip 
of the iceberg in potential partnerships. So I think that is 
one thing to talk about the block, talk about the government 
auctions.
    But I think under the new restructure of Pemex, their 
ability to partner in that First Reserve/Black Rock deal could 
be important to watch.
    Mr. Duncan. I think it is not unfortunate. The American 
consumer is definitely benefiting and, you know, we are going 
to see that trickle down in consumer goods and a lot of 
different things because transportation fuels are cheaper now.
    But when Pemex is going through the reforms that I applaud, 
and I have made a lot of assumptions on what falling oil prices 
would have--the impact they would have on energy reforms in 
Mexico but offshore development not only here in the U.S. 
because we see a lot of production starting to fall off but 
also investment in other countries--that probably may have 
taken place had energy prices, barrels of oil been a little bit 
higher.
    So let me ask this, Dr. Knapp. Arctic drilling--in your 
opinion, what is the energy potential in the Arctic?
    Mr. Knapp. Thank you for your question, Chairman.
    I think for a long time we have known that there is a very 
high potential of petroleum exploration in the Arctic and I was 
heartened to see the move by the administration earlier this 
week to approve the project that Shell has been pursuing in the 
Arctic of Alaska.
    There, again, we really won't know for sure until we go up 
there and collect the data--the basic data that tell us what 
the geological conditions are.
    But we can certainly speculate that it has got the right 
conditions for formation of oil. We tend to think of the Arctic 
as a frozen wasteland, but it actually has only been that for 
relatively recent geologic time and the time when the 
conditions would have been right for generating petroleum would 
have existed in the geologic past. So I think it is quite a 
perspective.
    Mr. Duncan. That is an interesting map you've got up there 
where seismic work has happened all around the Atlantic, with 
the exception of a big gap there alone the Atlantic coast of 
the U.S.
    Mr. Knapp. Well, this reflects current activities, right, 
not even just historic ones but current ones. So yes, that is 
why I wanted to leave it up there so we got a good look at it.
    Mr. Duncan. That is current drilling?
    Mr. Knapp. Well, yes, exploration, which would include both 
seismic and drilling of well, yes.
    Mr. Duncan. Okay.
    Mr. Knapp. That is courtesy of a colleague from Shell Oil.
    Mr. Duncan. I see a big gap off the coast of South Carolina 
where there are no production or activities happening. We would 
love to see that.
    Mr. Knapp. It is interesting that the area off of Florida 
that is actually being done by the Bahamas, Cuba, all the 
Caribbean nations are actively exploring.
    Mr. Duncan. That is right. U.S. LNG exports--the Department 
of Energy approval process authorized that, has repeatedly got 
criticism by industry, experiencing lengthy delays. I think on 
May 7th the DOE granted final approval to a facility in 
Maryland. I am very bullish on exporting LNG.
    I am talking with the folks in Latin America. They would 
love to see more U.S. exports of LNG. I think it is a win for 
the Caribbean nations that are struggling for cheap or 
affordable energy sources.
    So what impact do you think would have--this would have on 
U.S. ability to export LNG, Mr. Book?
    Mr. Book. The question, Mr. Chairman, is what ability would 
the DOE approvals have? What--I mean, there is really--the DOE 
is turning around their approvals pretty quickly right now, 
which is good.
    What they did is they have essentially now taken a bunch of 
brownfields projects, which are relatively good bets, given the 
cost of building one of these facilities, and they have said--
they have given final approval to them.
    This week they gave final approval to the first greenfields 
project, the Corpus Christi project. And now the question 
starts to become whether or not the investment decisions will 
get taken on some of these incremental projects.
    But we are going to probably have--we have final investment 
decisions. We are under construction already, about 6\2/3\ 
billion cubic feet per day of LNG export capacity. We might end 
up having ten to 15 built.
    Mr. Duncan. Right. You know, Mexico is looking to Eagle 
Ford in Texas to look for some pipelines that are in the works 
to bring natural gas into Mexico to assist them.
    But in talking with the Panamanians, they would love to be 
that sort of natural hub for Central America. You know, ships 
are coming through the canal anyway--why not offload some LNG 
and allow that to be regasified and distributed by pipeline 
throughout some of the Central American countries? I think it 
is a win for the region.
    I think there is a lot of opportunity not only for Panama 
but also for American energy companies. And so I have got a lot 
of questions, but my time is up, so in the essence of time I am 
going to yield to the ranking member.
    Mr. Sires. Thank you, Mr. Chairman.
    You know, I listened carefully with the--all these 
unprecedented opportunities that we have, and I am always 
concerned about Petrocaribe--you know, Venezuela--because 
basically Petrocaribe has everybody by the throat in the 
Caribbean.
    What percentage do you think of the LNG that the Caribbean 
needs that we can supply by us now opening up to export since 
last year, you said--last July, somebody mentioned here?
    Mr. Book. I think--if you are referring to my testimony I 
was talking about July 2011 we started exporting refined 
products, not LNG, and----
    Mr. Sires. I thought energy and, you know, I am trying to 
get rid of this stranglehold that Venezuela has on these 
islands. So with the energy that we have, what do you think is 
the possibility of us basically getting rid of that, that 
Petro--the stranglehold that Petrocaribe has on these islands?
    Mr. Book. Well, thank you for the question. It is a great 
question, because we are doing it right now.
    We are actually already now supplying slightly more than 
Petrocaribe is to the destination countries--that Venezuela is 
to the destination countries, and part of that is because our 
refineries are, as Jamie mentioned, world class.
    We have low feedstock costs, low energy costs. We are 
getting out there in the world. There is more we can do, 
though. Some of those countries are buying crude as well, and 
if we opened up our crude exports that could be a solution 
also.
    Mr. Sires. You know what? For example, I look at Dominican 
Republic. They are totally basically dependent on Venezuela for 
their energy. I was just wondering if you can answer that, Mr. 
Martin.
    Mr. Martin. The good news is Venezuela paid off their debt 
to--excuse me, the Dominican Republic paid off their debt to 
Venezuela and Petrocaribe early part of this year.
    So they don't have--and I agree with my colleague, this 
stranglehold is not a stranglehold anymore. It is a very loose 
grip at best. The Dominican Republic is bringing gas from 
Trinidad but what we could do is send some gas from the United 
States.
    There are a lot of hurdles. In my full written testimony I 
have talked about some of the financial issues, the credit 
issues that smaller markets deal with when they need to import 
the scale of natural gas via LNG or CNG.
    But the fact of the matter is via the fine product exports 
as well as Venezuela just destroying themselves in terms of 
their incapacity to export product we are loosening if not have 
completely loosened that stranglehold.
    In the case like Dominican where they have paid off their 
debt they do not owe Venezuela any money and so therefore are 
in a position to completely move forward.
    Mr. Sires. And some of the islands are still dependent?
    Mr. Martin. Yes. Other islands--it is a different--I mean, 
Dominican is very unique in a situation where for about 10 
years they have had a liquefied natural gas importation 
terminal that American company AES based here in Arlington 
built and now that has been able to--at a period of time it 
wasn't doing so well but in the last several years it has been 
able to really move the Dominicans' power supply away from a 
fuel oil dependency, not to a natural gas dependency but to a 
diversified matrix.
    Mr. Sires. Thank you.
    You know, the other day in the news I saw that Tesla had a 
battery for houses. You know how there are battery cars. How 
might oil prices affect the development of unconventional 
energy throughout the hemisphere? In other words, what other 
alternative--how are prices affecting the alternative energy 
industry?
    Mr. Webster. I will go ahead and take that. I will try 
that.
    Mr. Sires. I mean, these countries don't have the 
infrastructure.
    Mr. Webster. Thanks. Yes.
    Mr. Sires. Even if we send it to these countries they don't 
have the infrastructure to get it. We are talking about these 
23 million people that do not have energy.
    Mr. Webster. Thank you very much for your question, Ranking 
Member.
    So, you know, one of the big things that people who look at 
either battery power or renewable energies is, you know, when 
oil prices are higher than it makes more sense to start looking 
for alternatives.
    Oil price is quite a bit lower now and you can see here in 
the United States we are starting to buy larger cars. But I 
think what is going to happen over the next couple of years is 
we are going to have quite a bit of volatility on oil prices 
and that volatility is actually going to be something that both 
consumers and producers are going to want to get away from, and 
so one of those ways to do that is this potential for battery 
technology.
    So while in the short term this is not exactly what I would 
consider positive for moving towards, you know, electric cars 
and things like that, longer term this up and down in prices 
and the desire to kind of escape that volatility so that you 
can have better planning for your budgets is actually going to 
favor other alternatives.
    Mr. Sires. Thank you.
    And I read about a deal between Argentina and China just 
recently. Can you talk a little bit about the----
    Mr. Martin. I am not sure, Mr. Ranking Member, what deal 
but there are several deals. China--I mean, a crude description 
of its checkbook diplomacy--China has financed billions and 
billions of dollars of loans to Venezuela are guaranteed by oil 
supplies.
    In Argentina, it has been more in the investment in some of 
the local companies. They have bought stakes in companies 
through their national companies--you know, Sinopec.
    So I am not sure exactly what deal you are referring to but 
there are--Venezuela is the number-one recipient of China's 
checkbook diplomacy but Argentina is obviously also an 
important target for what I call China's go out and secure 
access to the oil patch, in this case Latin America's oil 
patch.
    Mr. Sires. I really believe that one of the reasons that we 
are refocusing on this region is because China now is stepping 
into this region, and we just don't want to give this region to 
China.
    I mean, I was in Colombia a few years ago, and I had dinner 
with one of the presidents of the colleges or the colleges 
there, and he told me that the second most studied language in 
Colombia today is Mandarin, after English.
    So, you know, the wave is coming, and I think we finally 
realized here in this country that we just cannot surrender 
this region to China. So I think that is one of the reasons we 
are focusing more on these places.
    Mr. Martin. Mr. Ranking Member, in terms of Argentina I 
think it is the perfect example. When I talked about exporting 
technology, goods and services, know-how, and the lessons we 
have learned from the unconventional revolution in the United 
States, there is no way China is going to do that in Argentina.
    The United States is going to do that, is already doing 
that. We have helped them halve the cost of an unconventional 
well in Argentina through partnerships with Dow Chemical, 
Chevron.
    There is a lot of other U.S. companies that are very 
interested in exporting all of those lessons and technology 
business services to really move Argentina from a 40,000 barrel 
a day of unconventional production to a real player.
    Mr. Sires. How does this scandal in Venezuela affect in the 
industry? Does anybody know? This energy scandal where the 
President is involved. There is a big scandal. Not Venezuela, 
excuse me. Brazil. In Brazil.
    Mr. Book. I think----
    Mr. Sires. We visited--this committee, with Matt Salmon, 
the chairman, we visited Brazil. We visited that whole complex 
that they have, and all their plants that they have for, you 
know, working with us in terms of trying to get oil from the 
ocean, you know, and everything. But, you know, this scandal 
has paralysed, I think, Brazil.
    Mr. Book. Thank you for the question, Mr. Ranking Member.
    I think the answer is it is bad news not just for Brazil 
but for the world.
    The pre-salt resources, as I mentioned, are--it is a way to 
think about--it is the oil the world needs in the next decade. 
What is not being invested in now is going to matter much more 
to us later.
    We have seen a big surge in shale. That is great. But the 
world is declining at 4 to 5 percent a year that has to be 
replaced. This is that replacement. It is an amazing resource. 
It requires world class companies making hundreds of millions 
to billions of dollars of investment in each of the producing 
assets they put to work.
    And so for two things that have gone wrong, one is that 
they have changed rules, and that may have had an effect of 
dulling some of the investment enthusiasm.
    And the second thing is that the corruption scandal is 
going to result in significant delays, in all likelihood, and 
therefore under investment. So bad news, I think, not just for 
Brazil but for the world.
    Mr. Sires. And my last comment--this is a basic problem 
with these countries. You go there and invest and then they 
change the rules.
    I mean, I don't get it where they think a company is going 
to spend hundreds of millions of dollars and then they say 
well, I don't think--the percentage you charge is too high--we 
are not going to pay you.
    I think that is why they don't get any--you know, any real 
investment in some of these places. And that was the case in 
Argentina. They didn't want to pay.
    So, you know, to me, making a large investment in energy 
and to have a country say, well, we don't want to do it 
anymore, and mark my words, this is going to happen in Cuba 
when people make investments there.
    They will wake up one day and say, well, I don't think this 
deal is that good--we are going to take this back. And I don't 
know any company that is willing to take that risk.
    I am sorry, Chairman. I didn't want to----
    Mr. Duncan. It has happened before, and there are a lot of 
companies and individuals that have lost ownership. I think the 
ranking member is right about engagement in this hemisphere.
    We have neglected, I think, as a nation and maybe even just 
Congress have neglected countries in this hemisphere way too 
long and we allow China or Russia to get a foothold.
    But one thing that we are trying to do with this 
subcommittee is get re-engaged from the United States Congress 
with countries in the hemisphere and I think energy as a segue 
toward that re-engagement because I think energy is a win-win 
for everybody.
    It improves quality of life. It helps electrify. It also 
helps U.S. businesses be able to export or to go down and 
invest in infrastructure. I just think it is a win-win. So we 
are going to continue with these type hearings about U.S. 
engagement in the hemisphere. Energy, I think, is the primary 
one right now.
    I will turn to the gentleman from Florida, Mr. Yoho, for 5 
minutes.
    Mr. Yoho. Thank you, Mr. Chairman.
    I appreciate you all being here and I share the chairman 
and ranking member's goal and my vision is to make North 
America energy secure, energy independent in this region in the 
Western Hemisphere, to bring stability to the fuel prices.
    You know, we have seen the volatility and we saw a lot in 
the 2004-2008 area when it was just going up and I was paying 
$5 a gallon for diesel for my Ford Excursion. Luckily, it got 
22 miles to the gallon.
    But we saw that fluctuation, and when the fluctuation was 
there it was just--you know, it disrupts the economy, from the 
guy out there planting corn to the, you know, the cosmetics on 
the aisle that people buy. It affected everything--
pharmaceuticals. And so there is no reason, with our natural 
resources--correct me if I am wrong--that we should be 
importing oil from anybody outside of the Western Hemisphere.
    Would you agree with that? Is there a need to with the 
natural resources here?
    Mr. Book. I would--Congressman, I think the good news is 
that we have everything we need in the Western Hemisphere. The 
bad news is that if you don't allow the world to compete the 
price might be too high.
    Let me give an example. The Keystone Pipeline would bring 
Canadian oil down to the Gulf of Mexico. Right now, Venezuela 
and Mexico sell most of the crude that goes into those 
refineries from overseas, and Canada would democratize that 
market ever so slightly.
    I think we might find that we get most of our energy from 
the Western Hemisphere, but we would always want to have 
somebody out there bidding against them just to keep the prices 
fair.
    Mr. Yoho. No, I agree with that. But if we had enough 
production here--I don't want to control the oil market. It 
would be nice to stabilize it, you know, and if we stabilize it 
prices wouldn't show the volatility that they have, and I think 
if we work together as the Western Hemisphere we could 
accomplish that.
    Let the Middle East, or whoever else wants to produce 
energy, do that but not to where it affects our market. And, 
you know, the competition is always good because it keeps the 
price down and the stable supply will stabilize, you know, the 
prices.
    So with what we have in this hemisphere, I don't see why we 
are not doing that. And Mr. Sires brought up a perfect example 
of the geopolitical landscape.
    When you have an unstable government or a government that 
doesn't follow the rule of law or civil society or property 
rights or they are corrupt you get what we see in a lot of the 
Latin American countries.
    And if I was an oil company I would be hard pressed to 
invest there when I look at that map and I see what is in North 
America, and certainly there is a lot of resources off the 
coasts.
    But with what is on the interior is there really a need to 
do deepwater exploration, deepwater drilling with the risks of 
that when we have so much on the interior. What are your 
thoughts on that? Get the low laying fruit?
    Mr. Knapp. I will take a shot at that. We currently produce 
more than a quarter of our domestic production offshore and one 
of the issues about the offshore is that these are more complex 
longer-term projects.
    So if we wanted to be developing that resource we are 
looking at a 10- to 15-year time frame from the time we start 
on that to before we could ever be producing the product.
    The reality is that other than the unconventional play, 
which has really energized the market in the last few years, 
the conventional plays onshore are, largely, highly explored in 
North America and the only place where we are likely to find 
major new resources is the 87 percent of the outer continental 
shelf that we have never explored in.
    So I think that still remains the big opportunity here in 
North America for new reserves that we might discover.
    Mr. Yoho. Okay. On the Keystone Pipeline we get a lot of 
questions where people say well, it is not going to benefit 
America at all--all that product is going to be exported.
    What are your thoughts on that? How much of that oil would 
be exported? How much would stay here? How much would be used 
domestically?
    Mr. Webster. So IHS actually conducted a study on this to 
try to better examine this and our view is very much that 70 
percent of both the crude and refined products would be kept 
here in the United States.
    The remainder of it would actually tend to back out to that 
Venezuelan oil and, again, it goes back to what the chairman's 
point was earlier, which is that the Gulf Coast refinery is 
perfectly suited to this oil.
    So it actually doesn't make a whole lot of sense to bring 
that oil down to the perfect market for it and then say you are 
going to export it to someplace else. There is no better place 
for it.
    Mr. Yoho. So 70 percent of that oil would stay here 
domestically and, you know, it is funny how many different 
things are out there.
    When people say it is all going to be exported, it won't 
benefit America at all and, you know, you try to explain facts 
and people don't want to listen to that.
    What would you recommend about removing our export bans on 
all petroleum or energy products? I mean, it sounds like you 
are all in agreement with that, right?
    That would help our producers. It would lower prices. It 
would stabilize the region, and especially if we focus on the 
Caribbean and our allies with Mexico and any other country in 
the Western Hemisphere that wanted to be our friends.
    I think it would just be a win-win situation and I don't 
see any reason not to do that. When you look at that 
possibility and you look at this body, Congress, what do you 
see as the biggest stumbling block? Is it just the political 
will? You are amongst friends.
    Mr. Webster. Yes, I will go ahead and try it. One, I would 
agree with you that crude oil exports is, to me--it is very 
difficult for me to come up with--as an analyst to come up with 
an intellectually credible argument on why you would not allow 
crude oil exports when petroleum products are okay, natural gas 
is okay, coal is okay, electricity is okay but crude oil is 
not.
    Mr. Yoho. But not crude. Don't do--that is dirty oil.
    Mr. Webster. Yes. I would--my estimate would be that the 
reason why is because of a concern is that when people see the 
price on television they look at the oil price and so they 
often link oil price with gasoline price, not recognizing that 
actually exporting oil is actually going to increase the supply 
around the world and as I often say a free barrel of oil 
anywhere actually increases energy security everywhere. And so 
that actually would bring down gasoline prices.
    Mr. Book. If I might add to that.
    Mr. Yoho. Yes, sir.
    Mr. Book. I have some sympathy for you and your colleagues 
who are addressing this challenge. You pay your utility bill 
usually about once a month. You fill up your tank 40 or 50 
times a year, which is 40 or 50 times you are reminded how much 
you are spending. That makes it a much more emotional and 
politically volatile issue.
    The American public on average is spending 6 to 7 percent 
of disposable income on energy writ large. Two-thirds of that 
is gasoline.
    If you think about who it hurts when gasoline prices go up, 
it hurts the poorest the most, the people who drive longest 
distances inflexibly.
    Mr. Yoho. Right.
    Mr. Book. The problem then is that there is a perception 
risk. Right now, if you go back to January '14, gasoline prices 
are now down about 66 cents or so per gallon. On the other 
hand, they are up 62 cents per gallon from where they were 
January of '15.
    So if--you know, if this is something that you and some of 
your colleagues are worried about in terms of the perceptions, 
the sweet spot is behind us right now. It shouldn't be there.
    I think Jamie is absolutely right. What people need to be 
focused on is the broader economic picture. But I certainly 
understand what the concerns are getting to that focus.
    Mr. Yoho. Mr. Chairman, can I add one more thing? When 
you--when you and I were in South America and we were sitting--
I think it was in Colombia and the oil executives were there, 
they were talking about the world asset tax they had to pay. 
Have you heard of that? Good. Do you remember that comment?
    I haven't been able to find it and I am, like, what is 
that, and I haven't been able to find it. So that is good that 
you don't know about it. Thank you.
    Mr. Duncan. I will yield a little bit of time to the 
ranking member.
    Mr. Sires. Dr. Knapp, you know, I see this map and I see 
all these areas of exploration, and I remember a few years ago 
we had this big hoopla that Cuba was sitting on I don't know 
how many barrels of oil and everything else and there was, you 
know, Spain went in there and invested.
    I think Italy went in there and invested. They didn't find 
a drop of oil. So where is all this oil that I see this line 
going through there?
    Mr. Knapp. Thank you for a question that I feel qualified 
to answer, Mr. Ranking Member. So much of this ultimately gets 
back to the geology and that is do you have the right geologic 
conditions, first of all, to form the oil or gas and, second of 
all, to trap it in some geologic formation where you can then 
go and recover it.
    And when we are in areas like the Atlantic margin, which is 
right out our door here, where we have basically what is called 
the passive margin, we have got areas where there is lots of 
marine sedimentation that takes place and we get sediments 
deposited on top of that that then mature into oil, and it is 
subsequently not disturbed in some significant way by 
geological processes then the oil is going to be preserved.
    Cuba, on the other hand, sits on a plate boundary. It is 
the collision of the Caribbean Plate with the North American 
Plate and it has got faults all through it and it is highly 
deformed, and if the conditions ever were right for the oil to 
form there, chances are it has long since been released through 
geologic time.
    So it doesn't surprise me. As geologists, we can have a 
fairly great insight in where we are likely to find oil and gas 
reserves and where we are not.
    Mr. Sires. People were talking about the rigs and the oil, 
if there was an accident it would go on the beaches in Florida. 
I mean, it went beyond.
    Mr. Knapp. Well, they are still doing that now in--down 
where we live.
    Mr. Sires. Thank you.
    Mr. Martin. Ranking Member, if I could just add, I think 
there is three reasons why Cuba doesn't even need to worry 
about it right now.
    Number one is the price of oil. Number two is the number of 
dry holes that--you could down the list of who has drilled a 
dry hole in Cuba. And number three is we talk about Mexico.
    The enormous opportunity that Mexico provides I think makes 
anyone who might think Cuba is another opportunity to take a 
little back.
    Mr. Sires. But people will want to invest there because at 
the moment----
    Mr. Martin. I think there's three reasons I can think of 
off the top of my head why it doesn't make a whole lot of sense 
in 2015.
    Mr. Sires. That's terrible.
    Mr. Duncan. Why are--why did gas prices come down?
    Mr. Book. Gasoline prices are mostly linked to crude oil 
prices. There is local--if you look at California recently you 
can see that when the refineries went out and just in general 
because they have a special blend of California gasoline the 
prices tends to be a bit higher.
    It doesn't move necessarily the same direction all the 
time. But by and large, it was the collapse in oil prices that 
brought down gasoline prices.
    Mr. Duncan. Okay. So why did--why did global oil--crude oil 
prices come down?
    Mr. Book. Well, there is three easy explanations. Demand 
was weak, supply was long and OPEC decided that they wouldn't 
cut. Those are--each of those requires a Master's thesis to 
give you all the details.
    The first one was the one that I think a lot of people 
didn't expect. We have seen effectively a low-energy recovery 
from the Great Recession. Whether it is structural or whether 
it is just a slow recovery of consumer patterns is yet to be 
seen.
    Mr. Duncan. Well, global--slow recovery globally, right?
    Mr. Book. Basically, yes.
    Mr. Duncan. So global demand was down. Supply was up.
    Mr. Book. Supply was up and----
    Mr. Duncan. You had the Bakken onlining, but you also had 
the Saudis and OPEC keeping production levels up?
    Mr. Book. And the thing that broke the camel's back, Jamie 
mentioned, was Libya. Libya had been blinking on and off like a 
bad light bulb for a while at 300,000, 400,000 barrels a day. 
It suddenly shot up to 800,000, 900,000 barrels per day and 
shocked the market.
    When you look down after you have run off the edge of the 
cliff in the Roadrunner cartoons there is a moment before you 
fall. That was the moment. When they looked down, that was when 
the market moved.
    Mr. Duncan. Right. So just to simplify things, demand was 
down, supply was up. That affects prices. If the U.S. was able 
to export our crude oil on the global market then it would 
increase global supply to meet maybe a stagnant global demand, 
even decreasing--increasing global demand. But if you got more 
supply, then you are going to keep prices relatively stable or 
inexpensive.
    Mr. Book. Well, there is good news out there, which is that 
if you put oil out there cheap enough for long enough, demands 
wakes back up and that is a good thing because with it brings 
economic opportunity.
    What you have is most of the growth in oil demand right now 
is not coming from the OECD. The OECD is pretty stagnant, as 
you say, and very efficient. There's wing tips in all our 
planes. We are all buying new cars.
    So when the price drops, it doesn't unlock a lot of new 
demand. Where does that demand come from? It comes from GDP 
growth in the non-OECD and that is where the flagging economic 
fortunes of the world have been a problem.
    But if you see that oil price low enough for long enough, 
the investment that comes with it brings demand back, and I 
think we are starting to see that.
    Mr. Duncan. Do you think there is demand in the Western 
Hemisphere for energy resources?
    Mr. Book. Writ large, absolutely. Just the electrification 
issue I mentioned in my testimony that is a lot of--that is a 
big energy gap right there. But let us not kid ourselves. There 
is--even if we are driving cars less we want to fly planes and 
move trucks. There is freight and commerce to be done.
    Mr. Duncan. Right. Exactly.
    So talk about Colombia just for a minute. We were down 
there in November. Wasn't it November we were down? And FARC 
had just blown up a natural gas pipeline and it is a pipeline 
that they have attacked numerous times.
    There is a lot of work on the Colombians' part just to keep 
that safe. Then you throw in the reduction in the price of oil. 
Colombia pulled back from its offshore development somewhat.
    So I am not talking about global prices but just safety and 
security in the region is very, very important, I would think. 
I mean, I have--people contact my office that do business down 
in Latin America that are needing security and caravans just to 
go out and do exploration or even the hydroelectric projects 
that they are working on to replace turbines or work on 
turbines they have got to have a security team with them just 
for safety and security.
    How do you--how does that factor into what we are talking 
about today, and that is energy in this hemisphere when you 
factor in a security threat like FARC or any others? Can you 
all talk to that?
    Mr. Webster. Well, one, it--you know, a lot of the 
companies that are looking at this in terms of energy they look 
at the risk profile for each of these countries, and one of the 
benefits of both the United States being a bigger producer of 
oil and gas is it gives them another safer opportunity that is 
certainly present within Canada and increasingly within Mexico.
    What ends up happening is for these countries is they 
essentially, you know, either price themselves out of the 
market, so to speak, which then reduces the opportunity that 
the world has for those energy--additional energy supplies from 
those regions.
    Mr. Duncan. So it is not--it is an impediment but it is not 
going to--that can't be overcome, I guess, is what I am hearing 
from you?
    Mr. Webster. That is correct.
    Mr. Martin. Mr. Chairman, yes, I think that is exactly what 
I was trying to get at with my above ground--the concept of 
being sure you understand the above ground, the nontechnical 
risk, the political, the security.
    Those things can all, as Jamie said, be mitigated or 
figured into the project life cycle--how do deal with them, 
community engagement. All of these things, all these 
nontechnical issues, have certain components and ways to deal 
with them.
    The problem is you have to be aware, and you have to really 
understand where you are operating and where you are going 
into. And I would just say a final point about Colombia.
    We talked about--I think the question from the ranking 
member which country is the hardest hit in our hemisphere by 
lower oil prices and Venezuela is, you know, surely a winner. 
But Colombia has been really hard hit by low oil prices as 
well.
    Colombia was a wonderful story for 5 or 6 years in terms of 
rewriting their oil and gas investment framework, launching bid 
rounds year upon year, attracting billions of dollars of 
investment.
    That has been paralysed, in part, because of some of the 
security issues, but the low price of oil has really impacted 
Colombia as well.
    Mr. Duncan. Well, the last thing--they are going to call 
votes in just a second. It has been a great hearing. The last 
thing I want to--we have talked about the Caribbean and how we 
can lessen the influence of Venezuela in Petrocaribe by U.S. 
engagement in the Caribbean with the, you know, crude oil, with 
electrification and all that.
    So the questions is, for each of you, how can countries in 
the Western Hemisphere work more closely together to achieve 
Western Hemisphere energy independence and wean ourselves off 
the resources from the Middle East and Africa?
    If you had to put your hand on one thing that we could do 
as a hemisphere, what would that be? How can we work together? 
And I will start at Dr. Knapp and work across.
    Mr. Knapp. Thank you for that question, Mr. Chairman, and I 
would say first and foremost the thing that we need to do is 
develop the resources that we have such that they are on the 
table for those partnerships with those other companies and to 
the extent that we have identified significant resources here 
in our own country that is where we need to begin.
    Mr. Duncan. That is all countries need to develop the 
resources?
    Mr. Knapp. Sure.
    Mr. Duncan. Yes. Mr. Book?
    Mr. Book. Well, since Dr. Knapp has already picked the 
drill it, I am going to pick the ship it. The next--the next 
thing you might want to put on your list is removing the 
barriers to trade that we control.
    We are the ones who have decided not to export our oil. 
There are other barriers we don't control, but this one is 
ours.
    Mr. Webster. Thank you for the question, Chairman. Since 
drill it and ship it have been taken, I will take share it, 
which is actually--and Senator Murkowski has put out some 
language on this--which is that you actually need to continue 
to increase the integration of both data, both--just in terms 
of flows and trade, but also in terms of technical data between 
these different countries to understand what those resources 
are so that you can then drill it and ship it.
    Mr. Martin. I don't know if that leaves me to flip it or 
what here, but maybe we could say flip it in terms of the 
switch or what Petrocaribe is doing. But look, full 
liberalization of energy trade and everything that that 
statement encompasses is what I would say.
    Energy diplomacy--the Caribbean Energy Security Initiative 
is a great start. It is a small piece. We need to do more. We 
need to export more and that is the way we have always, as the 
United States, been able to champion engagement, in this case, 
in energy diplomacy.
    Mr. Duncan. Well, I want to thank the ranking member. I 
want to thank the members of the committee. I want to thank you 
for your great testimony and answering the questions.
    We are just scratching the surface, really, of what we need 
to be doing about energy engagement and engagement all across 
the board on a lot of different fronts whether it is 
agriculture or other things in this hemisphere.
    I am excited about the future. I think there is opportunity 
and I use that word in all caps. There is opportunity for 
American businesses. There is an opportunity for America and 
safety and security, national security, energy security.
    But this is our neighborhood. It is not our back yard. I 
hate when people say well, that country is in our back yard. 
No, they are neighbors in this hemisphere. This is a 
Neighborhood.
    We need to work with our neighbors in the Western 
Hemisphere to help everybody. I mean, a rising tide floats all 
boats and I think energy is a segue to rise the quality of 
living and standards and other things in this hemisphere and it 
is a way for the U.S. to get engaged once again to thwart any 
efforts by China or Russia or Iran or others that may be 
sticking a toe in the water here in our neighborhood.
    So I look forward to continuing engagement with you, and 
with nothing further, I will stand adjourned.
    [Whereupon, at 3:24 p.m., the committee was adjourned.]
                                     

                                     

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