[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]







              LIQUEFIED NATURAL GAS AND U.S. GEOPOLITICS

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

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                       Tuesday, February 27, 2018

                               __________

                           Serial No. 115-38

                               __________

       Printed for the use of the Committee on Natural Resources






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                                   or
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                                   ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

28-794 PDF                     WASHINGTON : 2018 



















      

                     COMMITTEE ON NATURAL RESOURCES

                        ROB BISHOP, UT, Chairman
            RAUL M. GRIJALVA, AZ, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
  Chairman Emeritus                  Madeleine Z. Bordallo, GU
Louie Gohmert, TX                    Jim Costa, CA
  Vice Chairman                      Gregorio Kilili Camacho Sablan, 
Doug Lamborn, CO                         CNMI
Robert J. Wittman, VA                Niki Tsongas, MA
Tom McClintock, CA                   Jared Huffman, CA
Stevan Pearce, NM                      Vice Ranking Member
Glenn Thompson, PA                   Alan S. Lowenthal, CA
Paul A. Gosar, AZ                    Donald S. Beyer, Jr., VA
Raul R. Labrador, ID                 Norma J. Torres, CA
Scott R. Tipton, CO                  Ruben Gallego, AZ
Doug LaMalfa, CA                     Colleen Hanabusa, HI
Jeff Denham, CA                      Nanette Diaz Barragan, CA
Paul Cook, CA                        Darren Soto, FL
Bruce Westerman, AR                  A. Donald McEachin, VA
Garret Graves, LA                    Anthony G. Brown, MD
Jody B. Hice, GA                     Wm. Lacy Clay, MO
Aumua Amata Coleman Radewagen, AS    Jimmy Gomez, CA
Daniel Webster, FL
Jack Bergman, MI
Liz Cheney, WY
Mike Johnson, LA
Jenniffer Gonzalez-Colon, PR
Greg Gianforte, MT
John R. Curtis, UT

                      Cody Stewart, Chief of Staff
                      Lisa Pittman, Chief Counsel
                David Watkins, Democratic Staff Director
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                      PAUL A. GOSAR, AZ, Chairman
            ALAN S. LOWENTHAL, CA, Ranking Democratic Member

Louie Gohmert, TX                    Anthony G. Brown, MD
Doug Lamborn, CO                     Jim Costa, CA
Robert J. Wittman, VA                Niki Tsongas, MA
Stevan Pearce, NM                    Jared Huffman, CA
Glenn Thompson, PA                   Donald S. Beyer, Jr., VA
Scott R. Tipton, CO                  Darren Soto, FL
Paul Cook, CA                        Nanette Diaz Barragan, CA
  Vice Chairman                      Vacancy
Garret Graves, LA                    Vacancy
Jody B. Hice, GA                     Raul M. Grijalva, AZ, ex officio
Jack Bergman, MI
Liz Cheney, WY
John R. Curtis, UT
Rob Bishop, UT, ex officio
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                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, February 27, 2018.......................     1

Statement of Members:
    Gosar, Hon. Paul A., a Representative in Congress from the 
      State of Arizona...........................................     1
        Prepared statement of....................................     3
    Lowenthal, Hon. Alan S., a Representative in Congress from 
      the State of California....................................    25
        Prepared statement of....................................    26

Statement of Witnesses:
    Doran, Peter B., President and CEO, Center for European 
      Policy Analysis, Washington, DC............................     8
        Prepared statement of....................................    10
    Gentle, Meg, President and CEO, Tellurian, Inc., Houston, 
      Texas......................................................    19
        Prepared statement of....................................    21
        Questions submitted for the record.......................    24
    Livingston, David, Deputy Director for Climate and Advanced 
      Energy, Atlantic Council, Washington, DC...................    13
        Prepared statement of....................................    15
    Smith, Christopher, Senior Vice President, Policy, 
      Government, and Public Affairs, Cheniere Energy, Inc., 
      Houston, Texas.............................................     4
        Prepared statement of....................................     6
        Questions submitted for the record.......................     8

Additional Materials Submitted for the Record:
    List of documents submitted for the record retained in the 
      Committee's official files.................................    48 
 
    OVERSIGHT HEARING ON LIQUEFIED NATURAL GAS AND U.S. GEOPOLITICS

                              ----------                              


                       Tuesday, February 27, 2018

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to call, at 2:14 p.m., in 
room 1324, Longworth House Office Building, Hon. Paul A. Gosar 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Gosar, Lamborn, Tipton, Graves, 
Hice, Cheney, Bishop (ex officio), Lowenthal, Costa, Beyer, and 
Soto.

    Dr. Gosar. The Subcommittee on Energy and Mineral Resources 
will come to order.
    The Subcommittee is meeting today to hear testimony on 
liquefied natural gas and U.S. geopolitics.
    Under Committee Rule 4(f), any oral opening statements at 
the hearing are limited to the Chairman, the Ranking Minority 
Member, and the Vice Chair. This will allow us to hear from our 
witnesses sooner and help Members keep to their schedules. 
Therefore, I ask unanimous consent that all other Members' 
opening statements be made part of the hearing record if they 
are submitted to the Subcommittee Clerk by 5:00 p.m. today.
    Without objection, so ordered.

   STATEMENT OF THE HON. PAUL A. GOSAR, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ARIZONA

    Dr. Gosar. The advent of the Shale Revolution in America 
has revolutionized the way we extract valuable hydrocarbons, 
leading to lower energy prices and an infusion into the 
American economy with billions in revenues. The combination of 
horizontal drilling and hydraulic fracking technologies has 
also allowed the United States to transition from a position of 
energy insecurity to energy dominance.
    In recent years, the production of natural gas has allowed 
the United States to become an undeniable force within the 
global energy market. Indeed, the United States has become the 
world's largest producer of natural gas since 2009. And this 
production must continue if we are to provide our allies with 
reliable energy, while maintaining jobs and increasing revenues 
from production here at home.
    Further driving our Nation's energy security is the 
production of liquefied natural gas, or LNG. LNG is produced by 
shipping natural gas to a liquefication facility, where the gas 
is cooled until it is compressed 600 times, becoming liquid. 
The LNG is then ready to be shipped anywhere in the world.
    Global demand for natural gas has tripled in the last two 
decades, and the advent of new market opportunities indicates 
that this trend will no doubt continue and increase America's 
role in energy security for our allies.
    Just last year, the United States became a net exporter of 
natural gas for the first time since the 1950s. The production, 
liquefication, and shipping of LNG has risen to meet the 
incredible global demand for the product, implicating 
geopolitics across the globe.
    For instance, Russia has long monopolized the gas supply to 
Europe. According to Deputy Secretary of State John McCarrick, 
11 European countries relied on Russian gas to meet 75 percent 
of their heating and electrical generation needs. The continent 
is therefore quite exposed to supply disruptions, either 
intentionally imposed or not.
    Russia's Nord Stream pipeline, which supplies westbound gas 
from Russia to Germany across the Baltic Sea, is approaching 
its full transmission capacity of 55 billion cubic meters. 
Germany supports the construction of an identical pipeline, 
Nord Stream 2, which effectively doubles capacity. If 
constructed, the highly controversial pipeline will allow 
Russia to supply 75 percent of Europe's natural gas demand.
    In 2017, Cheniere delivered the first shipment of American-
produced LNG from its Sabine Pass export terminal in Louisiana 
to the Baltic nation of Lithuania. Lithuania, like many of its 
Eastern European neighbors, relied exclusively on Russia to 
meet its energy demand for decades. This monumental shipment of 
LNG indicates that the European nations are looking to 
diversify and to break the stranglehold of Russian energy 
control.
    Outside of Europe, demand for natural gas is skyrocketing 
in Asia. Last year alone, demand grew 20 percent in China, 
South Korea, and Japan as these nations continue to grow their 
economies while limiting greenhouse gas emissions. China is on 
track to more than double its natural gas from 38.1 million 
metric tons today to 82 million metric tons by 2030.
    Meanwhile, India, which currently operates four LNG import 
and regasification facilities, is planning to expand its import 
capacity by 11 terminals.
    American companies, such as Cheniere Energy, Incorporated, 
represented by Mr. Christopher Smith today, have signed some of 
the largest long-term supply agreements. Just this month, 
Cheniere signed the first ever long-term LNG supply contract 
with the Chinese National Petroleum Corporation.
    With the rise in demand, Australia has stepped up in the 
Asian markets, supplying over 80 percent of China's demand for 
LNG. As such, the United States is now competing for market 
share with strong local suppliers, and, therefore, it is 
essential that we support production, LNG export facility 
permitting, and pipeline capacity here on the American shores.
    Today, we will discuss the implications of being a major 
player in the expanding global energy market.

    [The prepared statement of Dr. Gosar follows:]
Prepared Statement of the Hon. Paul A. Gosar, Chairman, Subcommittee on 
                      Energy and Mineral Resources
    The advent of the ``Shale Revolution'' in America has 
revolutionized the way we extract valuable hydrocarbons--leading to 
lower energy prices and an infusion in the American economy with 
billions in revenues. The combination of horizontal drilling and 
hydraulic fracturing technologies has also allowed the United States to 
transition from a position of energy insecurity to energy dominance.
    In recent years, the production of natural gas has allowed the 
United States to become an undeniable force within the global energy 
market. Indeed, the United States has been the world's largest producer 
of natural gas since 2009, and this production must continue if we are 
to provide our allies with reliable energy, while maintaining jobs and 
increasing revenues from production here at home.
    Further driving our Nation's energy security is the production of 
Liquefied Natural Gas (LNG). LNG is produced by shipping natural gas to 
a liquefaction facility, where the gas is cooled until it is compressed 
600 times becoming liquid. The LNG is then ready to be shipped anywhere 
in the world. Global demand for natural gas has tripled in the last two 
decades, and the advent of new market opportunities indicates that this 
trend will no doubt continue--and increase America's role in energy 
security for our allies.
    Just last year, the United States became a net exporter of natural 
gas for the first time since the 1950s. The production, liquefaction, 
and shipping of LNG has risen to meet the incredible global demand for 
the product, implicating geopolitics across the globe.
    For instance, Russia has long monopolized gas supply to Europe. 
According to Deputy Secretary of State John McCarrick, 11 European 
countries relied on Russian gas to meet 75 percent of their heating and 
electrical generation needs. The continent is therefore quite exposed 
to supply disruptions, be they intentionally imposed or not. Russia's 
Nord Stream pipeline, which supplies westbound gas from Russia to 
Germany across the Baltic Sea, is approaching its full transmission 
capacity of 55 billion cubic meters. Germany supports the construction 
of an identical pipeline, Nord Stream 2, which effectively doubles 
capacity. If constructed, the highly controversial pipeline would allow 
Russia to supply 75 percent of Europe's natural gas demand. In 2017, 
Cheniere delivered the first shipment of American produced LNG from its 
Sabine Pass export terminal in Louisiana to the Baltic nation of 
Lithuania. Lithuania, like many of its Eastern European neighbors, 
relied exclusively on Russia to meet its energy demands for decades. 
This monumental shipment of LNG indicates that European nations are 
looking to diversify and break the stranglehold of Russian energy 
control.
    Outside of Europe, demand for natural gas is skyrocketing in Asia. 
Last year alone, demand grew 20 percent in China, South Korea, and 
Japan, as these nations continue to grow their economies while limiting 
greenhouse gas emissions. China is on track to more than double its 
natural gas from 38.1 million metric tons today to 82 million metric 
tons by 2030. Meanwhile, India, which currently operates four LNG 
import and regasification facilities, is planning to expand its import 
capacity by 11 terminals. American companies, such as Cheniere Energy, 
Inc., represented by Mr. Christopher Smith today, have signed some of 
the largest long-term supply agreements. Just this month, Cheniere 
signed the first ever long-term LNG supply contract with the Chinese 
National Petroleum Corporation.
    With the rise in demand, Australia has stepped up in the Asian 
markets, supplying over 80 percent of China's demand for LNG. As such, 
the United States is now competing for market share with strong local 
suppliers, and therefore, it is essential that we support production, 
LNG export facility permitting, and pipeline capacity here on American 
shores. Today, we will discuss the implications of being a major player 
in an expanding global energy market.

                                 ______
                                 

    Dr. Gosar. I now recognize the Ranking Member.
    Do you have a statement?
    Mr. Beyer. Mr. Chair, I would yield to the actual Ranking 
Member when he comes later, if that is possible. If not, we 
will put it in the record.
    Dr. Gosar. That sounds good. We are going to go right to 
our witnesses then.
    First, we have Mr. Christopher Smith, Senior Vice President 
of Policy, Government, and Public Affairs, Cheniere Energy, 
Incorporated; Mr. Peter Doran, President and CEO of the Center 
for European Policy Analysis; Mr. David Livingston, Deputy 
Director for Climate and Advanced Energy at the Atlantic 
Council; and Ms. Meg Gentle, President and CEO of Tellurian, 
Incorporated.
    Let me remind the witnesses that, under our Committee 
Rules, they must limit their oral statements to 5 minutes, but 
their entire statement will appear in the record as detailed.
    Our microphones are not automatic. For the first 4 minutes, 
you will see the green. Then it will turn to yellow for 1 
minute. When you see it red, summarize and get done.
    I will now recognize Mr. Smith for your 5 minutes.

STATEMENT OF CHRISTOPHER SMITH, SENIOR VICE PRESIDENT, POLICY, 
GOVERNMENT, AND PUBLIC AFFAIRS, CHENIERE ENERGY, INC., HOUSTON, 
                             TEXAS

    Mr. Smith. Thank you very much. Chairman Gosar, Ranking 
Member Lowenthal, and members of the Subcommittee, it is an 
honor to appear before you on behalf of Cheniere Energy, 
Incorporated. I would also like to recognize Representative 
Graves and Gohmert from Louisiana and Texas, where Cheniere 
lives and works.
    Cheniere Energy is a Houston-based energy company that 
provides clean, secure, and affordable U.S. natural gas to the 
world. Over 280 cargos of U.S. LNG from Sabine Pass have been 
delivered to 25 countries and regions since start-up in 
February of 2016.
    Cheniere is a full-service liquefied natural gas company, 
which makes us unique in the U.S. LNG industry. We procure 
North American natural gas, transport that gas through our own 
pipelines or existing pipeline networks, build and operate 
large-scale liquefaction facilities, and offer U.S. LNG to our 
customers either at our facility or delivered to import 
facilities around the world.
    Cheniere's operations create jobs at home and project 
American influence abroad. Cheniere is the first company to 
export LNG from the contiguous United States and is the largest 
U.S. LNG exporting company. Cheniere is investing approximately 
$30 billion in American energy infrastructure and has created 
thousands of direct jobs and tens of thousands of indirect jobs 
across America.
    When all our production capacity that is currently under 
construction is on line in 2020, we will be a top-five global 
LNG supplier.
    Cheniere's investment is having a positive impact on global 
energy markets, providing affordable and reliable natural gas 
to countries around the world to meet their energy needs. U.S. 
natural gas is an attractive alternative for many customers, 
particularly those who are captive to a handful of suppliers, 
making them vulnerable to supply disruptions and, at times, 
geopolitical dynamics.
    Due to the commercial nature of our domestic energy 
industry, U.S. natural gas did not come with a political 
requirement or pressures, helping to depoliticize the 
commodity. As a result, it is making natural gas a more 
economic and more secure fuel for buyers around the world.
    Many countries--developed and developing, traditional LNG 
importers and emerging markets--are also choosing natural gas 
as part of a global shift toward a lower-carbon energy mix that 
favors natural gas over coal and liquid fuels, reducing air 
pollution and carbon emissions. Just as the Shale Revolution 
has allowed the United States to reduce carbon emissions, the 
export of liquefied natural gas makes similar advances possible 
worldwide.
    Cheniere is the largest physical consumer of natural gas in 
the United States, sourcing gas from Texas, Louisiana, 
Arkansas, Pennsylvania, Ohio, West Virginia, Oklahoma, 
Illinois, and Kentucky.
    We have a role in promoting environmental standards that 
will maintain the sustainability of the LNG that we sell. We 
are committed to working with our suppliers to maintain high 
and consistent environmental standards, including working to 
reduce methane leakage.
    Cheniere and the U.S. LNG industry are well-positioned to 
compete in the increasingly competitive global natural gas 
market. Indeed, earlier this month, we executed two long-term 
agreements with the China National Petroleum Corporation. Our 
success in China to date is due to our ability to execute, and 
a value proposition that will be difficult for others to match.
    These are the first direct, long-term LNG supply contracts 
between a Chinese company and a U.S. LNG exporter, a historic 
milestone in energy cooperation between the United States and 
China and a constructive way to address trade imbalances. We 
expect these agreements to support our growth plans and are 
focused on the remaining steps necessary to achieve a final 
investment decision at Train 3 at Corpus Christi in the next 
several months. This will be the first new large-scale LNG 
capacity to progress to construction in the United States since 
2015.
    And we are just getting started. Cheniere plans to lead the 
next wave of American LNG by continuing to make investments in 
American jobs and infrastructure. It is important to note that 
Cheniere's existing LNG platform, over $30 billion, has 
followed a transparent public regulatory process both by the 
Department of Energy and the FERC, where it has considered both 
environmental and economic issues.
    And while we always like to see these processes move along 
faster, our business model does not benefit from cutting 
corners. It is important that these processes are robust enough 
to withstand public scrutiny. If we want to continue to project 
American influence abroad through U.S. LNG exports, we need to 
ensure regulatory certainty for domestic infrastructure and 
that domestic production is safe and environmentally 
sustainable.
    The future growth of U.S. LNG exports will be determined by 
whether projects are able to provide the most attractive 
commercial terms in a fiercely competitive global LNG market. 
In that, Cheniere plans to continue leading the U.S. LNG export 
industry.
    Thank you, and I look forward to answering your questions 
during the question session.

    [The prepared statement of Mr. Smith follows:]
    Prepared Statement of Christopher Smith, Senior Vice President, 
                         Cheniere Energy, Inc.
    Chairman Gosar, Ranking Member Lowenthal, and members of the 
Subcommittee, it is an honor to appear before you on behalf of Cheniere 
Energy, Inc. We appreciate the opportunity to discuss the global 
economic, energy security, and environmental benefits of exporting U.S. 
natural gas. I'd also like to recognize Representatives Graves and 
Gohmert from Louisiana and Texas, where we live and work.
    Cheniere Energy is a Houston-based energy company that provides 
clean, secure, and affordable U.S. natural gas to the world. Cheniere 
is a full-service liquefied natural gas (``LNG'') company, which makes 
us unique in the U.S. LNG industry: we procure natural gas from the 
robust North American natural gas market, construct and operate 
pipelines and contract capacity on multiple existing pipelines to 
transport that gas to our facilities, build and operate large-scale 
liquefaction facilities, and offer U.S. LNG to our customers either at 
our facility or delivered to import facilities around the world. 
Cheniere owns and operates the Sabine Pass LNG Terminal in Cameron 
Parish, Louisiana and is constructing additional liquefaction and 
export facilities at the Sabine Pass LNG Terminal and near Corpus 
Christi, Texas. Cheniere has a global presence with offices in Houston, 
Washington, London, Santiago, Singapore, Tokyo, and Beijing.
    Cheniere's operations create jobs at home, and project American 
influence abroad. Cheniere is the first company to commercially export 
LNG from the contiguous United States. Cheniere is constructing or 
operating around half of the approximately 10 Bcf per day of LNG export 
capacity under construction in the United States, making Cheniere the 
largest U.S. LNG exporting company.
    Cheniere expects to make an approximately $30 billion investment in 
American energy infrastructure. Cheniere has directly created thousands 
of jobs and, from local services to increased domestic energy 
production, tens of thousands of indirect jobs across America. 
Cheniere, with our engineering, procurement and construction (``EPC'') 
contractor Bechtel, sources materials for our facilities from nearly 
1,600 different manufacturers across 46 states. Supporting U.S. energy 
exports and free trade supports U.S. jobs and American manufacturing.
    Cheniere's investment is having an impact on global energy markets. 
When all of our production capacity currently under construction is on 
line, which is expected to be by 2020, we are projected to be a top-5 
global LNG supplier alongside longtime industry participants such as 
Shell and Qatar Petroleum.
    Cheniere Energy is uniquely committed to U.S. success on both 
energy production and environmental stewardship, as it is that 
combination that supports the long-term growth of U.S. natural gas 
exports. An important part of our business model is the fact that we're 
selling an affordable, reliable, cleaner fuel that customers around the 
world want. Cheniere sells into a global market, and every Cheniere 
customer resides in a country that has committed to reducing emissions 
under the Paris Agreement. LNG is contributing to a global shift toward 
a lower-carbon energy mix that favors natural gas over coal and liquid 
fuels--reducing air pollution and carbon emissions. Many countries--
developed and developing, traditional LNG importers and emerging 
markets--are choosing natural gas as a lower-carbon, affordable and 
reliable option for their energy portfolio.
    Cheniere is already the largest physical consumer of natural gas in 
the United States. We are currently consuming approximately 3.2 Bcf/d 
of gas per day, and once our seven trains that are either operating or 
are under construction are in operation, we will be consuming 
approximately 5-6 percent of total U.S. gas production at a level just 
under 6 Bcf/d. This gas consumption, which supplies our export 
facilities, is responsible for many jobs associated with the upstream 
domestic production and transportation of natural gas across the 
country. Cheniere sources gas produced across the country, including 
Texas, Louisiana, Arkansas, Pennsylvania, Ohio, West Virginia, 
Oklahoma, Illinois, and Kentucky. We have also purchased gas produced 
in the Montney basin in Canada.
    Our market position domestically and internationally provides us 
with a unique responsibility to promote standards that support the 
value of the LNG that we sell. Methane leakage rates are a critical 
variable in the Greenhouse Gas lifecycle of LNG. We are committed to 
working with our suppliers to maintain high and consistent 
environmental standards, including working to reduce methane leakage as 
well as promoting water conservation and recycling.
    Since the start-up of operations in February 2016, over 280 cargoes 
of U.S. LNG from Sabine Pass have been delivered to 25 countries and 
regions. In 2017, cargoes from Sabine Pass were landed all over the 
world, with Mexico, South Korea and China as the top three 
destinations. This is in line with recent trends in the global market, 
reflecting Asia as the most dominant source of LNG demand growth. About 
45 percent of the cargoes from Sabine Pass were delivered to Asian 
markets, 30 percent to Latin America, 15 percent to Europe, and about 
10 percent to Middle East and North Africa. The worldwide distribution 
of destinations from the Sabine Pass LNG Terminal is a result of 
Cheniere's business model and destination free contracts.
    Cheniere's liquefaction facilities currently under construction or 
in operation across our two facilities are underpinned by long-term 
contracts with 13 third party customers which represent approximately 
80 percent of their expected aggregate LNG production capacity. Our 
long-term foundation customers--a mix of International Oil Companies 
(``IOC''), National Oil Companies (``NOC''), Trading Houses and end-
users (such as utilities)--purchase LNG at our facilities at a price 
linked to Henry Hub, and can pick it up to deliver to their end market 
or almost anywhere in the world. To date, Cheniere has initiated our 
long-term contracts with Shell/BG of the UK and Holland, Gas Natural 
Fenosa of Spain, and Korea Gas Corporation (``KOGAS'') according to 
their date of first commercial delivery (``DFCD'') under their 
contracts, and will shortly begin long-term supply to GAIL Limited of 
India in March. Cheniere's long-term foundation customers determine the 
final destination of U.S. LNG in accordance with U.S. law and 
regulation, and the multitude of destinations for U.S. LNG highlights 
its importance to the development of an open, transparent and free 
market for global LNG. Cheniere also manages a portfolio of our 
liquefaction capacity, chartering a fleet--currently over 20--of LNG 
carriers to deliver LNG directly to our customers at import facilities 
around the world, directing cargoes based on market prices.
    The same exports that grow our economy strengthen the global energy 
market, providing affordable and reliable natural gas to countries 
around the world to meet their energy needs. U.S. natural gas is an 
attractive alternative for many consumers, particularly those who are 
captive to a handful of suppliers, making them vulnerable to supply 
disruptions and, at times, geopolitical dynamics. Due to the commercial 
nature of the domestic energy industry, U.S. natural gas does not come 
with political requirements or pressures, helping to depoliticize the 
commodity. U.S. natural gas priced at a linkage to Henry Hub in the 
Gulf Coast--the most transparent and liquid gas price index in the 
world--provides price and supply source diversity to customers, who 
have traditionally purchased LNG based on a price linked to oil, 
helping strengthen competition in natural gas markets and the global 
energy market. U.S. LNG is making the global natural gas trade more 
competitive, more responsive to customer needs and more resilient. As a 
result it is making natural gas a more economic and more secure fuel 
for buyers around the world.
    Cheniere and the U.S. LNG industry are well-positioned to compete 
in the increasingly competitive global natural gas market. Destination 
flexible contracts, affordable prices linked to Henry Hub, and 
diversified supply from the robust U.S. natural gas market are key 
factors that will drive the expansion of U.S. export capacity. 
Cheniere's on time and on budget engineering and construction record, 
growing reputation as a reliable operator and ability to leverage first 
mover advantages leading to the most attractive commercial terms are 
key differentiators that will help us continue to lead the U.S. LNG 
industry.
    Indeed, Cheniere recently announced three new long-term Sales and 
Purchase Agreements (``SPA''). In January we executed a long-term SPA 
with Trafigura, and earlier this month we executed two long-term SPAs 
with a subsidiary of China National Petroleum Corporation. These CNPC 
transactions in particular demonstrate Cheniere's strategic 
positioning, our ability to execute, and a value proposition that is 
difficult for many to match. We are honored to be involved in this 
historic deal--the first direct, long-term LNG supply contract between 
a Chinese company and a U.S. LNG exporter--a significant milestone in 
energy cooperation between the United States and China. We expect these 
long-term SPAs to support our growth plans and we are focused on the 
remaining steps necessary to make a final investment decision Train 3 
at Corpus Christi in the next several months, which would be the first 
new large-scale LNG capacity to progress to construction in the United 
States since 2015.
    The United States is still adjusting from an age of scarcity to an 
age of abundance with respect to energy, and U.S. LNG is showing the 
benefits of that abundance. The export of natural gas from the United 
States as LNG is driving beneficial changes in the global natural gas 
trade--changes that help make the fuel mix of many existing trade 
partners more sustainable, more economic and more secure. It also has 
and is expected to open new trade routes and relationships--extending 
the sphere of U.S. trade influence. To support U.S. LNG exports and 
domestic energy production, it is important for the United States to 
continue to advocate free and open markets, the rule of law and 
contract sanctity, and the importance of low-carbon energy sources. 
This will help ensure the continued growth of U.S. natural gas exports, 
creating jobs and economic benefits to the United States.

                                 ______
                                 

 Questions Submitted for the Record by Rep. Hice to Christopher Smith, 
                          SVP, Cheniere Energy

    Question 1. As our export capacity grows, we will increasingly be 
able to compete with Russian companies--such as Gazprom--to supply 
Europe with energy sources. Do you feel that our ability to export LNG 
to the continent reduces Russian leverage in Europe and could improve 
the national security of our European allies?

    Answer. U.S. natural gas is an attractive alternative for many 
consumers, particularly those who are captive to a handful of 
suppliers, making them vulnerable to supply disruptions and, at times, 
geopolitical dynamics. Due to the commercial nature of the domestic 
energy industry, U.S. natural gas does not come with political 
requirements or pressures, helping to depoliticize the commodity.

    In addition, Europe, like many places around the world, is looking 
for supply diversity, with the understanding that it is a competitive 
price environment. Diversifying energy supplies is one of the primary 
means for ensuring energy security. The flexibility conferred by the 
nature of Cheniere's contracts, global presence, and charted fleet of 
LNG carriers ensure that we have the capacity to supply U.S. natural 
gas to markets looking to diversify their supplies.

                                 ______
                                 

    Dr. Gosar. Thank you, Mr. Smith.
    We are going to go a little out of sequence, go down the 
row and then back to the Ranking Member.
    So, Mr. Doran, you are now recognized for 5 minutes.

  STATEMENT OF PETER B. DORAN, PRESIDENT AND CEO, CENTER FOR 
            EUROPEAN POLICY ANALYSIS, WASHINGTON, DC

    Mr. Doran. Good afternoon, Mr. Chairman, Ranking Member, 
and members of the Committee. I am Peter B. Doran, President 
and CEO of CEPA, the Center for European Policy Analysis. I 
want to thank you for the opportunity to speak with you today. 
It is an honor to give this testimony.
    I would like to submit my written testimony for the record 
and offer a few brief thoughts on my summary of liquid natural 
gas and U.S. geopolitics.
    Mr. Chairman, my organization is a U.S.-based non-profit 
policy institute dedicated to the study of Central Europe. At 
CEPA, we have developed an ongoing effort to inject new 
insight, analysis, and ideas into the current considerations 
over the role of LNG exports and to support America's allies 
and partners overseas.
    Our goal is to make sure that the world has a chance for 
safe, secure, rules-based energy relationships. This is 
especially important in countries like central Europe. The 
timing and scope of this hearing could not be more relevant.
    When we look at the question of LNG and geopolitics, we 
invariably uncover the persistent question of competition from 
Russia. Russia's advocates like to say that Kremlin gas is 
cheaper than American LNG. Based on our research and reporting 
at CEPA, my main message to the Committee is this--there is no 
such thing as cheap Russian gas. More than the cost of a BTU, 
energy relations with Russia impose high political and 
geopolitical costs on countries, customers, and the idea of 
fair play in a marketplace.
    When we survey the horizon, we can be sure that increased 
demand for American LNG is good for domestic production, good 
for our economy, and great for customers who need it. The 
problem is that LNG exporters like the United States face stiff 
competition in Europe from monopolistic suppliers like Russia. 
The Russian government derives immense benefits from placing 
its hidden costs on its consumers, most especially when these 
hidden costs allow the Kremlin to use energy as a weapon or, 
most recently, as a wedge issue between America and Europe.
    More than any other commodity, energy relations bind 
countries together. Russian leaders understand this dynamic. 
They want America's allies to be dependent on Russia's state-
owned companies to fuel their economies and keep their citizens 
warm in winter.
    If ever there was a time for robust American leadership in 
Europe and to increase our own ties that bind us closer to 
allies in partner countries, this is it.
    The problem is that, right now, Russia is ahead of us. I am 
speaking, of course, of Russia's Nord Stream pipeline to 
Germany. A sizable addition to this pipeline, Nord Stream 2, is 
proposed, and if it is ever completed, the unwanted costs that 
Russia imposes on its European customers, our allies, will be 
substantial.
    This Committee should have no doubt, Russia's Nord Stream 2 
pipeline is not a straightforward commercial venture to link 
Germany to Russian gas fields. Instead, Nord Stream 2 has 
larger strategic purposes: to undercut the EU's energy supply 
security, to close large parts of Europe to gas-on-gas 
competition, and to isolate and damage America's strategic 
partner Ukraine. We should take this challenge very seriously.
    Mr. Chairman, I would suggest to the Committee that the 
solution to this geopolitical challenge has three parts, and 
America plays an essential role in each. First, American and 
other LNG exporters are helping to protect vulnerable consumers 
against monopolistic business practices by the Kremlin. Second, 
energy connectivity is happening, linking our upstream in 
America with downstream consumers. This is a process, and the 
job is not yet done.
    A third part of this solution is in the policy realm. Give 
Congress a round of applause for the work it has done in 
actually providing the Administration the tools that it needs 
to help support the allies we have in Europe. I would 
especially note the provisions in existing legislation to 
encourage the State Department to work closely with Ukraine. 
Ukraine could suffer tremendously if Nord Stream 2 is 
constructed.
    Looking ahead, my final message to the Committee is this: 
the contest over the future of Nord Stream 2 is likely to 
intensify in 2018, and its consequences could reverberate for 
years to come. I have included a menu of recommendations for 
the Committee to consider in my written testimony, and I am 
happy to take questions from Members.
    But I would highlight this message to you: U.S. leadership 
is crucial in helping to protect our allies and partner 
countries from monopolistic business practices by the Kremlin. 
Its geopolitical interests are at odds with ours. Let's not let 
Vladimir Putin win. Let's disappoint him.
    Thank you, Mr. Chairman.

    [The prepared statement of Mr. Doran follows:]
  Prepared Statement of Peter B. Doran, President and CEO, Center for 
                        European Policy Analysis
    Good afternoon, Mr. Chairman, Ranking Member, and members of the 
Committee. I am Peter B. Doran, President and CEO at the Center for 
European Policy Analysis (CEPA). I want to thank you for inviting me 
here today. It is an honor and a privilege to give this testimony. I 
would like to submit my written testimony for the record and offer a 
summary of my thoughts on ``Liquefied Natural Gas and U.S. 
Geopolitics.''
    Mr. Chairman, my organization is a U.S.-based non-profit policy 
institute dedicated to the study of Central Europe. At CEPA, we have 
developed an ongoing effort to inject new insight, analysis, and ideas 
into current considerations over the role U.S. energy exports (such as 
LNG), and to support the efforts of America's allies and partner 
countries to establish an energy future that is safe, secure and based 
on the rules of the market. The timing and scope of this hearing could 
not be more relevant.

    Based on our research and reporting at CEPA, my main message to the 
Committee is this:

    There is no such thing as ``cheap'' Russian gas. More than the cost 
of a Btu (British thermal unit), energy relations with Russia impose 
high political and geopolitical costs on countries, customers, and the 
idea of fair play in a marketplace. The Russian government derives 
immense benefit from placing these hidden costs on its customers, most 
especially when they allow the Kremlin to use energy as a weapon--or 
most recently--as a wedge issue between America and Europe.
    More than practically any other commodity, energy relations bind 
countries together. Russian leaders understand this dynamic. They want 
America's allies to be dependent on Russia's state-owned energy 
companies to fuel their economies and keep their citizens warm in 
winter. In order to do so, Russia seeks to limit--where possible--
outside energy competition in Europe. This is Russia's aim--and we 
should not let the Kremlin win.
    If ever there was a time for robust American leadership in Europe--
and to increase our own ties that bind us closer to allies and partner 
countries--this is it. The problem is that, for now, Russia is ahead of 
us.
    For the first time since the 2008 Russia-Ukraine Gas Crisis, 
America's allies in Europe face a return to the dangers of widespread, 
long-term energy dependence on Russia. During the previous crisis in 
2008, the Russian government demonstrated its `winner-take-all' 
approach to energy deals when it abruptly halted winter natural gas 
shipments to tens of millions of consumers extending from the Ukrainian 
border all the way to the Eastern Balkans. The Kremlin had turned 
energy into a political weapon.
    What followed in the wake of this crisis was a groundbreaking 
response from the EU to construct a new network of regulatory and legal 
fortifications against monopolistic energy suppliers. This effort was 
historic in nature and broad in scope, and in many ways important. 
Only, these steps were just a set-back for monopolistic energy 
suppliers--not a knock-out. In Russia's case, the Kremlin's state-owned 
energy sector has now offered a response: the Nord Stream 2 (NS2) 
pipeline.
    This Committee should have no doubt: Russia's NS2 project is not a 
straight-forward commercial venture to link Germany with Russian gas 
fields.
    Instead, NS2 has a larger strategic purpose: to undercut the EU's 
energy supply security, to close large parts of Europe to gas-on-gas 
competition, and to isolate and damage America's strategic partner: 
Ukraine. These outcomes present a mid- to long-term danger to American 
interests, yes. But they are a far more existential challenge to the 
immediate national interests of our allies and partner countries in 
Europe. We should take this challenge very seriously.
    Mr. Chairman, I would suggest to the Committee that the solution to 
this geopolitical challenge has three parts--and America plays an 
essential role in each.
    First, we should view America's capacity to export LNG to the world 
as more than just an economic boon at home. This capacity offers 
profound strategic benefits to America. As members of the Committee are 
aware, over the last two decades the North American shale revolution 
has positioned the United States to bring ever-increasing levels of LNG 
(and crude oil) onto the global energy market. It is exceptionally 
beneficial to our allies and partner countries in Asia, Europe and 
elsewhere. In some cases, our energy shipments are helping to diversify 
allies away from sole-source dependence on Russia. This has been a 
long-standing aim of U.S. foreign policy. And we are only now beginning 
to achieve it. Together with supplies from the Middle East and other 
regions, Americans can take pride in the fact that we are helping to 
protect vulnerable consumers beyond our shores; and to increase their 
leverage in energy negotiations with Moscow. These are great outcomes.
    Second, energy interconnectivity is happening. There was a time 
when individual markets in Europe were cut off from America, isolated 
from their neighbors, and largely dependent on a single pipe(s) from 
Russia. That's changing. Today we are seeing how new infrastructure is 
beginning to redraw the energy map of Europe. This change is beginning 
to give consumers options. On the U.S. side, facilities like the Sabine 
Pass LNG terminal (and others) give our companies the ability to reach 
new export markets abroad. Meanwhile in the Central-East European (CEE) 
region--a region that previously enjoyed few alternatives to Russia--we 
have seen the construction of coastal LNG terminals in Swinousjscie 
(Poland) and Klaipeda (Lithuania); as well as well as the realization 
of necessary interconnectors across borders. The overall result is 
positive. These interconnectors represent a major step toward achieving 
the goal of encouraging market forces to match supply with demand in 
the CEE natural gas sector, but the job is far from done. 
Interconnectivity is a crucial precondition. The main question of 
getting non-Russian gas to vulnerable consumers is still unresolved for 
some land-locked countries. Major infrastructure development is still 
an unfinished business.
    A third part of the solution exists in the policy realm. Congress 
should be commended for doing its part. I would highlight for the 
Committee the importance of the ``Countering Russian Influence in 
Europe and Eurasia Act of 2017,'' and applaud the provisions directing 
the Department of State to work with the government of Ukraine to 
increase that country's energy security. The Administration deserves 
equal recognition. When Sec. Rex Tillerson declared America's 
opposition to NS2 in Warsaw last month, his statement was welcomed by 
many allies from the Baltic to the Black Seas. For years, Europeans 
asked America to lead from the front. Now we are--and we are not alone. 
We have allies in Europe who support us. Sec. Tillerson was correct 
when he stressed in Warsaw how America's opposition to NS2 was based on 
our mutual strategic interests with Europe. NS2 is a threat to 
everyone. And thanks to Congress, the executive branch has an arsenal 
of new tools to counter the spread of the Kremlin's malign influence in 
the energy space. If deployed carefully, judiciously, and in the right 
sequence then the Administration's expanded armory of policy tools--
including sanctions--may have a beneficial effect in halting the spread 
of Russia's malign influence across Europe. It is a robust toolkit 
that, as a citizen, I would like to see fully employed in support of 
our allies and partner countries.
    Now, if this assessment seems positive--and indeed there is a lot 
of good news here--I would add a note of caution for the Committee: be 
wary of the next phase in the fight over NS2.

    This is my second message to the Committee: The contest over the 
future of NS2 is likely to intensify in 2018; and its consequences 
could reverberate for many years to come.

    As stated earlier, the NS2 pipeline is not a purely commercial 
venture. This project serves the Kremlin's geopolitical aims. These are 
in direct conflict with our own.
    Ultimately, NS2 is intended to shut down gas-on-gas competition in 
Europe--and to isolate America's strategic partner: Ukraine. NS2 is a 
direct challenge to America's win-win approach to our relations with 
European allies. By contrast, Russia sees its interests in NS2 in terms 
of win-lose--and the Kremlin wants us to lose. Let's disappoint 
Vladimir Putin.
    In the commercial realm, we want Europe to enjoy the benefits of 
gas-on-gas competition, where supply and demand determine prices--not 
international politics. As a threat to gas-on-gas competition, Russia's 
NS2 will be bad for European consumers. Moreover, the pipeline will 
make entire countries and regions inside the EU more vulnerable to the 
use of energy as a weapon. In the past, Russia has repeatedly used 
energy as a weapon against its neighbors. There is good reason to 
believe that it could do so in the future. It is why the establishment 
of enduring, market-based alternatives to Russia are firmly in line 
with U.S. national interests; and the interests of everyday Europeans.
    A second area where our energy interests conflict with Russia is 
over the future of Ukraine. Here too, Russia's NS2 pipeline serves a 
geopolitical purpose--one that runs counter to our own. By completing 
NS2, Russia will be able to deny Ukraine between $2-3 billion a year in 
gas transit revenue. Moscow seeks to isolate Ukraine in the energy 
space and pressure it financially. The Russian government does not want 
Ukraine's Western-orientated policies and reforms to succeed. Once 
again, we want the opposite.
    Ukrainians have already showed the world that they seek a Western 
future for their country. The United States wants Ukraine's success to 
be a resounding refutation of Vladimir Putin's authoritarian model. And 
unlike Putin, America has a very clear and compelling interest to see 
that Ukraine succeeds.
    If Russia's NS2 gambit is ever going to be completed, then its 
owners will need to pull off a series of financial, regulatory, and 
legal victories. In terms of finance, it appears that the pipeline's 
backers will not be able to bear the full cost of NS2 out of Russia's 
coffers. The pipeline will therefore need outside lenders to assist 
with financing. On the regulatory front, NS2 must receive a series of 
approvals at the national and European levels in order to proceed. A 
final `green light' from Germany--for example--would almost certainly 
pit Berlin against other European capitals who feel they would be 
negatively impacted by NS2. Diplomatic cooperation and multilateral 
communication between the United States and European allies will be 
essential on this front, particularly if disagreement over the pipeline 
between EU Member States sets up a third battle in the EU court system. 
Even if Russia loses its NS2 gambit in the political or legal realm, it 
will gain by creating ruptures between its presumed competitors in the 
West. This makes energy deliberations in Europe a national security 
priority for the United States.
    Mr. Chairman, these questions are front and center for my 
organization, CEPA, and like you, we will be watching such developments 
closely.
    Looking ahead into 2018, the potential challenges may seem great--
but so are the opportunities. We should never doubt that America's new 
energy abundance grants us a tremendous economic benefit at home and a 
strategic advantage abroad. When we consider risks on the horizon, 
Europe should be at the forefront of our attention. If members of this 
Committee, leaders in the Administration, the private sector, and the 
expert community are going to defeat Russia's attack on long-term 
energy security in Europe (via NS2), then allies on both sides of the 
Atlantic will need to apply the right combination of commercial, 
diplomatic, and legal mechanisms to stop NS2. The stakes for Europe are 
tremendously high--and the clock is ticking.
    For the recommendations that follow, CEPA has developed a package 
of ideas to address different dimensions of the energy and geopolitical 
problem--set in Europe--and how America might play a beneficial role.

    I present them to the Committee for consideration.
Recommendations
    When it comes to NS2, European law is on our side--let's encourage 
Member States to use it. Congress and the Administration should 
encourage EU Member States to mobilize their clear and vocal support in 
Brussels for the full and uniform implementation of the EU's 2009 Gas 
Directive. They should make it abundantly clear: EU law applies to 
everyone uniformly--Russia does not get its own special exemptions. 
Full and uniform implementation of the 2009 Gas Directive could halt 
NS2 in its tracks.

    Leverage our soft power to the hilt. The Administration can ramp up 
its diplomatic engagement in countries like Croatia, where Russia wants 
to prevent a new LNG facility from being constructed on Krk Island. 
Croatia needs to know: it does not stand alone, but with the United 
States. Its LNG project serves a strategic purpose in Europe. When 
completed, Krk Island would open up non-Russian gas alternatives to 
consumers across Southeast and Central Europe.

    Make energy security part of Ukraine's success story. Fair 
competition and market liberalization are just as important for 
Ukraine's energy sector as they are for the EU. Ukraine stands to gain 
as much--and more--from a diversification of its energy imports. 
Finding ways to prioritize U.S. exports of energy to Ukraine will 
benefit our own economy and strengthen our foreign policy position east 
of NATO.

    Energy is a front in Russia's information war against the West--
let's defend that front. CEPA research has shown how outlets of Russian 
propaganda are conducting a comprehensive disinformation campaign to 
manipulate the energy vulnerabilities of allies like the Baltic states. 
Its narratives are calibrated to divide U.S. allies against each other, 
while spreading the false impression that the EU does not support 
energy independence from Russia in the Baltics. When crafting America's 
all-of-government approach to counter-propaganda, addressing energy 
disinfo should be a priority.

                                 ______
                                 

    Dr. Gosar. Thank you, Mr. Doran.
    Mr. Livingston, you are now up for 5 minutes.

STATEMENT OF DAVID LIVINGSTON, DEPUTY DIRECTOR FOR CLIMATE AND 
       ADVANCED ENERGY, ATLANTIC COUNCIL, WASHINGTON, DC

    Mr. Livingston. Chairman Gosar, Ranking Member Lowenthal, 
and distinguished members of the Subcommittee, thank you for 
the opportunity to appear before you and to present additional 
perspectives on the matters being discussed today.
    My name is David Livingston, and I serve as Deputy Director 
for Climate and Advanced Energy in the Global Energy Center of 
the Atlantic Council. The Atlantic Council is a non-partisan, 
non-profit organization headquartered in Washington, DC.
    My remarks and written testimony were prepared in 
accordance with the Atlantic Council policy on intellectual 
independence. These remarks are my own, and the Atlantic 
Council and its donors do not determine, nor do they 
necessarily endorse or advocate for, any of my views.
    Given that the topic of LNG's role in U.S. geopolitics has 
been well-covered and will continue to be well-covered by the 
other witnesses, I plan to address the role of climate 
leadership and advanced energy technologies in further 
advancing global gas markets and U.S. national security.
    To begin with, the United States should embrace rather than 
retreat from the broader trend shaping the global energy market 
in an increasingly climate-conscious world. A number of 
countries, including China, specifically identify natural gas 
as a greenhouse gas emissions reduction strategy to meet their 
Paris climate commitments. And many others, from Latin America 
to Southeast Asia, clearly have a compelling need for LNG to 
meet their decarbonization goals.
    When the unambiguous clean air benefits of natural gas over 
coal are taken into account, its appeal for countries grappling 
with harmful smog and air pollution is all the more clear.
    How might the United States, then, best capitalize on these 
opportunities? I would suggest that the United States should 
embrace an international climate change framework that is 
flexible, fair, and that grows markets for gas, renewables, and 
other advanced energy technologies in which the United States 
has natural advantages.
    This framework exists. It is the Paris Agreement, 
formalized in 2015 but many years in the making by American 
diplomats.
    Indeed, I would note the recent words of George David 
Banks, a climate and energy adviser who served in both the 
George W. Bush and, more recently, the Trump administration, 
``The Paris agreement is a good Republican agreement. It's 
everything the Bush administration wanted. . . . It's a climate 
policy based on U.S. national interest that the Bush team 
started and the Obama team kept.. . . The climate agenda is not 
going to go away anytime soon, and if you're not engaged 
aggressively, actively, there are going to be policies that are 
detrimental to the United States.''
    I agree with this assessment and will briefly outline a few 
ways in which the lack of U.S. climate leadership might be 
detrimental to U.S. economic and national security interests.
    Given that if it were to leave the Paris Agreement the 
United States would be the only country in the world outside of 
it, this would leave significant scope for future evolutions of 
the international climate governance architecture, over which 
the United States would have no say but by which it would 
inevitably be impacted.
    In the 1960s, the United States accounted for 40 percent of 
global GDP. Today, it accounts for just over 20 percent. In 
other words, the United States, as an isolated climate policy 
island, is not insulated from the rising tide of agreements and 
economic architectures forged by the rest of the world.
    For example, some foreign officials and politicians have 
floated the idea of tariffs or even sanctions being applied to 
the United States should it unilaterally withdraw from the 
Paris Agreement.
    With the opening of China's national carbon market this 
year, a growing share of the global economy is under a formal 
carbon price, increasing the dangers of tariffs or other 
measures being levied against jurisdictions without formal 
carbon pricing.
    The most punitive of these prospects would likely never 
occur. Others are distant but plausible. But some are already 
evident. The European Union is now refusing to complete a new 
trade agreement with any partner that has not only joined but 
also officially ratified the Paris Agreement. To take another 
angle, imagine if countries were to halt LNG imports from 
countries that have not ratified the Paris Agreement, just as 
today the United States provides preferential LNG export 
approval to countries which have a free trade agreement with 
the United States.
    Equally, if not more, critical to the long-term 
geopolitical interests of the United States is that this 
country does not abandon its superlative strengths in 
innovation and advanced energy technologies. Global renewables 
deployment has gone from less than $20 billion per year a 
decade ago to now enjoying the eighth consecutive year in which 
investment has been between $250 billion and $350 billion.
    But, today, as the United States mulls dramatic budget cuts 
to its leading energy innovation programs, other actors such as 
China are stepping in to fill the gap. China recognizes not 
only the domestic benefits of advanced energy, from clean air 
to reduced energy imports, but also the geopolitical 
opportunities. In emerging sectors, such as batteries and 
electric vehicles, it seeks to shape markets early on, setting 
key standards, locking in certain technology pathways, and 
locking out innovations from smaller countries with its 
economies of scale.
    In conclusion, the opportunities afforded by growing LNG 
exports, while plentiful, should not distract from other 
critical priorities, including shaping global climate action 
and ensuring that innovation drives America's energy edge well 
into the future.
    Thank you for the opportunity to provide my thoughts on 
U.S. energy and geopolitics, and I look forward to taking your 
questions.

    [The prepared statement of Mr. Livingston follows:]
 Prepared Statement of David Livingston, Deputy Director for Climate & 
                   Advanced Energy, Atlantic Council
    Chairman Gosar, Ranking Member Lowenthal, and distinguished members 
of the Subcommittee, thank you for the opportunity to appear before you 
and to present additional perspectives on the matters being discussed 
today.
    My name is David Livingston and I serve as deputy director for 
climate and advanced energy in the Global Energy Center of the Atlantic 
Council. The Atlantic Council is a non-partisan, non-profit 
organization headquartered in Washington, DC. My remarks and written 
testimony represent my views, and do not necessarily represent the 
views of my colleagues or institution.
               liquefied natural gas and u.s. geopolitics
    U.S. natural gas production has been booming for nearly a decade, 
while recently U.S. liquefied natural gas (LNG) exports have been 
increasing, as well. There are a number of benefits that accrue to the 
United States from exports of liquefied natural gas and the expansion 
of domestic natural gas production needed to support them. Increased 
LNG exports can help to narrow the U.S. current account deficit, expand 
economic activity and employment in the natural gas extraction, 
processing, and related industries, and aid broader American foreign 
policy goals insofar as they contribute to a diverse, sustainable, and 
affordable energy mix in recipient markets. As such, increased LNG 
exports would indeed appear to strengthen the U.S. position in global 
geopolitics.
    Three commonly raised caveats to the aforementioned view are that 
(1) U.S. economic and energy security interests may be better-served by 
keeping most, or all, of this gas at home as inputs into domestic 
activities, (2) local environmental risks could rise alongside 
increasing U.S. production needed to feed exports, particularly U.S. 
shale production, and (3) natural gas may not offer climate benefits, 
either due to high rates of methane leakage associated with its 
production and processing, or due to it ``crowding out'' opportunities 
for lower-carbon sources of energy such as renewables.

    I will briefly address each of these caveats.

    On the first, that the U.S. economy would be better-served by 
curbing exports, there is significant ex-ante analysis, before U.S. LNG 
export growth, and additional empirical evidence, now that LNG export 
growth is underway, that the economic benefits from exporting LNG 
outweigh the gains to energy-intensive manufacturing that might accrue 
if exports were to be curbed.\1\
---------------------------------------------------------------------------
    \1\ Michael Levi, A Strategy for U.S. Natural Gas Exports, The 
Hamilton Project, Brookings, June 2012.
---------------------------------------------------------------------------
    On the second concern, environmental risks, it looks increasingly 
likely that local environmental risks are real and possible, but are 
not inevitable and can be avoided through responsible gas production, 
transport, processing, and utilization. However, this is unlikely to 
happen on its own in a uniform manner, and thus responsible regulation 
is both necessary and also serves to reward the most responsible, 
efficient U.S. operators with a competitive advantage.
    On the third concern, interactions with decarbonization, the story 
is more complicated. Switching from coal to natural gas has been a 
major driver of recent greenhouse gas (GHG) emissions reductions in the 
United States. While the pace of coal-to-gas switching can be expected 
to slow in coming years, it will likely continue to be a positive story 
for the United States in providing energy not only with lower GHG 
emissions, but also delivering cleaner air, as well.
    However, more can be done to ensure that gas maintains a clear edge 
over more carbon-intensive resources. The GHG emissions of natural gas, 
as a general rule of thumb, have traditionally been considered to be 40 
percent lower than those of coal and 20 percent lower than those of oil 
on a per-unit of energy basis. However, as a recent report from the 
International Energy Agency has pointed out, the climate profile of gas 
depends upon responsible extraction, transportation, and utilization of 
the gas so as to avoid methane leakage. Methane is a potent greenhouse 
gas (GHG), with a short term radiative forcing (global warming) 
potential that is between 28-36 times more powerful than that of carbon 
dioxide over a 100-year time frame, and around 85 times more powerful 
over a 20-year time frame.
    At current estimated average rates of methane leakage of gas 
production globally (a leakage rate of 1.7 percent of gas produced), 
the total climate impact of natural gas is still less than that of 
coal. However, the variance in methane leakage among different 
individual wells and operators is likely significant, again 
underscoring the importance of responsible regulations in order to 
ensure that American gas is some of the cleanest and most competitive 
in the world.
    According to analysis by the International Energy Agency, producers 
can reduce greenhouse gas emissions by 75 percent simply by improving 
supply chain practices. About half of that can be cut at no net cost--
i.e., they pay for themselves over the long term by monetizing the 
methane that is captured.\2\
---------------------------------------------------------------------------
    \2\ International Energy Agency, World Energy Outlook 2017, 14 
November 2017.
---------------------------------------------------------------------------
    Moreover, implementing only net negative cost measures could result 
in an equivalent long-term climate benefit as would be achieved by 
immediately shutting all existing coal-fired power plants in China.\3\
---------------------------------------------------------------------------
    \3\ Energy Institute, Golden age of gas dependent on changing DNA 
of industry, new EI survey reveals, press release, 19 February 2018, 
https://www.energyinst.org/media-relations/media-centre/1735.
---------------------------------------------------------------------------
    The other decarbonization concern associated with natural gas is 
that it may ``crowd-out'' lower-carbon forms of energy. So far, this 
appears not to be the case in most regions. Under proper market design, 
natural gas can serve as a ``force multiplier'' for renewables that 
enhances the value of renewable energy to the grid by balancing out the 
intermittency of wind and solar.\4\ Eventually, natural gas may also 
find new sources of demand that are consistent with long-term 
decarbonization trajectories, such as in the transport sector or vis-a-
vis a hydrogen-based energy system that draws on existing natural gas 
infrastructure. Natural gas, then, can be a valuable tool in the 
transition to a more advanced energy economy in the United States and 
around the world.
---------------------------------------------------------------------------
    \4\ NREL, Opportunities for Synergy Between Natural Gas and 
Renewable Energy in the Electric Power and Transportation Sectors, 
Technical Report, NREL/TP-6A50-56324, December 2012.
---------------------------------------------------------------------------
    Over time, it is possible that new technological advances and cost 
reductions will bring to bear lower-carbon options, such as renewables 
paired with energy storage or demand flexibility services, that compete 
directly with natural gas in some markets. Lithium ion battery costs 
were down to $230 per kilowatt-hour in 2016, compared with almost 
$1,000 per kilowatt-hour in 2010, and McKinsey & Co. projects that 
prices could reach $200 per kilowatt-hour by 2020 and $160 per 
kilowatt-hour or less by 2025.\5\ Storage is already economical for 
many commercial customers, and is increasingly being deployed by 
companies on-site to reduce peak-demand and avoid demand charges.
---------------------------------------------------------------------------
    \5\ Paolo D'Aprile, John Newman, and Dickon Pinner, The New 
Economics of Battery Storage, McKinsey & Company, August 2016, https://
www.mckinsey.com/business-functions/sustainability-and-resource-
productivity/our-insights/the-new-economics-of-energy-storage.
---------------------------------------------------------------------------
    Already, there are signs of faster-than-expected cost decline 
trajectories for utility-scale renewables plus storage, with a recent 
solicitation from Xcel Energy in Colorado resulting in median bids of 
$36 per megawatt-hour for solar-plus-storage, and $21 per megawatt-hour 
for wind-plus-storage. These bids are for projects that would be 
delivered in 2023, and thus represent anticipated, rather than 
realized, cost reductions.
    Nevertheless, over the next 10 years energy storage coupled with 
renewables and demand response may increasingly undercut the economics 
of coal as well as natural gas peaker plants.
    This dynamic, however, would only seem to underscore the importance 
of focusing on the role of exports. LNG exports can be an important 
outlet for increasing domestic natural gas production as domestic U.S. 
gas demand growth begins to flatten. Over the next 5 years, the United 
States is poised to see a dramatic increase in LNG exports. With most 
outlooks foreseeing less than 6 billion cubic feet per day (Bcf/d) of 
demand growth, but nearly 18 Bcf/d of net supply growth, around 12 Bcf/
d of new gas exports may be realized over the period. Of this, 
somewhere around 3 Bcf/d of the export increase is likely to be sent to 
Mexico via pipeline, while the remainder (8-10 Bcf/d) will be exported 
as LNG.
    However, the United States is neither the least-cost LNG exporter, 
nor the closest to many key demand markets. In order to sustain and 
grow the global demand necessary to support continued U.S. LNG exports, 
it should support systemic drivers of global gas demand growth, 
including an accelerated transition from coal to gas in emerging 
markets. A number of studies have indicated that the lifecycle 
greenhouse gas emissions of U.S. LNG are lower than that of Russia, and 
as highlighted earlier there are ample opportunities to further reduce 
these lifecycle emissions over time. The United States is better-suited 
to deliver lower-carbon gas than many of its competitors, given both 
numerous homegrown technologies and innovations that help reduce 
emissions, as well as the comparatively more sophisticated 
environmental policy-making apparatus of the United States. The United 
States should not neglect these significant advantages.
    Notably, the Paris Agreement on climate change may represent one of 
the most compelling opportunities to create future gas demand growth. A 
number of countries, including China, specifically identify natural gas 
as a GHG emissions reduction strategy to meet their Paris commitments, 
while others, such as India, do not mention natural gas but clearly 
have a compelling need for additional LNG imports if they are to enjoy 
an affordable, sustained supply of gas needed to wean the country off 
of coal. When the unambiguous clean air benefits of natural gas over 
coal are taken into account, its appeal for countries grappling with 
harmful smog and air pollution is all the more clear.
    Latin America also represents a significant opportunity, and a 
logical nearby market, for U.S. LNG to contribute to decarbonization 
goals. LNG aided Brazil to maintain steady energy supplies during its 
historic drought periods of the mid-2010s, and many countries in the 
region are planning to expand LNG import capacity as part of their 
decarbonization strategies.
    The United States should embrace, rather than retreat from, the 
broader trends shaping the global energy market in an increasingly 
climate-conscious world. Two additional points are worth making here: 
(1) advanced energy will represent the fastest growing segment of the 
energy market over coming decades and it is imperative that the United 
States play a leadership role; and (2) climate change not only shapes 
the energy market, but is a critical determinant of U.S. national 
security and likewise demands a leading role by the United States.
            advanced energy, innovation, and u.s. leadership
    American hydrocarbon abundance should not obscure the importance of 
focusing strategy on the largest growth opportunities in the global 
energy sphere.
    Global renewables deployment has gone from less than $20 billion 
per year a decade ago to now enjoying the eighth consecutive year in 
which investment has been between $250 billion to $350 billion. The 
global head of the Blackrock Infrastructure Investment Group recently 
stated that renewables represent ``almost 30 percent of the globally 
addressable market in infrastructure. This is no longer niche, it's 
fundamental to any infrastructure allocation.'' \6\ Wood Mackenzie, the 
energy consultancy, forecasts an annualized growth rate of 6 percent 
for wind and 11 percent for solar, compared with half a percent for oil 
and around 2 percent for gas, over the next 20 years.\7\ Last year, 
solar power grew by around 50 percent, with China accounting for 
approximately half of this growth.
---------------------------------------------------------------------------
    \6\ CNBC, Cost, not climate, is driving transition to renewables: 
BlackRock's Jim Barry, 23 February 2018, https://www.cnbc.com/2018/02/
23/cost-not-climate-is-driving-transition-to-renewables-blackrocks-jim-
barry.html.
    \7\ Wood MacKenzie, Could Renewables be the Majors' Next Big 
Thing?, 4 May 2017.
---------------------------------------------------------------------------
    Whereas Europe and the United States were once dominant players in 
renewable and advanced energy markets--and indeed, U.S. national labs 
played a critical role in the birth of modern photovoltaic solar 
technologies--other actors such as China are now playing a larger and 
larger role as they recognize not only the energy system and commercial 
opportunities of advanced energy, but also the geopolitical 
opportunities to shape markets early on, setting key standards and 
favoring certain technologies that accrue outsized domestic benefits. 
This is further magnified by concerns over energy security in countries 
less-rich in hydrocarbons than the United States.
    Indeed, there may be limits to the heretofore exponential rise in 
China's liquefied natural gas imports. In 2017, China became the 
world's second largest importer of natural gas, after Japan, with an 
average of 5 billion cubic feet per day. China also finds itself 
increasingly dependent on imported oil, which now accounts for around 
two-thirds of its total oil demand. As Chinese concerns over gas and 
oil imports continue to grow, this in turn will drive further support 
for renewables and other advanced energy technologies that can reduce 
energy import reliance. It was widely reported at the beginning of this 
year that the city of Shenzen in China has procured more electric 
busses--17,000--than the number of busses both conventional and 
electric in the five largest North American metropolitan fleets 
combined.\8\
---------------------------------------------------------------------------
    \8\ Steve Hanley, Shenzhen Completes Switch To Fully Electric Bus 
Fleet. Electric Taxis Are Next, Clean Technica, 1 January 2018, https:/
/cleantechnica.com/2018/01/01/shenzhen-completes-switch-fully electric-
bus-fleet-electric-taxis-next/.
---------------------------------------------------------------------------
    The United States is not yet losing the advanced energy race, and 
still represents a significant market for the deployment of advanced 
energy. Renewables now generate almost as much electricity as the U.S. 
nuclear fleet, and if Texas were a country, it would be the fourth 
largest global producer of wind power. The largest wind farm in the 
free world is being built in Oklahoma.
    A key question, though, is whether the United States will invest 
in, and support, the historical source of its advanced energy edge--
innovation. Deployment of today's technologies is not enough. From the 
Department of Energy's SunShot Initiative to the ARPA-E innovation 
agency and beyond, investment in advanced energy innovation today will 
continue to underwrite American energy security and competitiveness 
tomorrow. Energy innovation has been, and can continue to be, a 
defining strategic advantage of this country.
                   climate change and u.s. leadership
    Finally, I would like to highlight the importance of climate change 
to these discussions, not only as an exacerbating factor of the risk 
landscape but also as an area where the abdication of U.S. leadership 
could have deleterious effects on broader U.S. economic and energy 
interests.
    A historical lens reveals that the recognition of climate change as 
a U.S. national security risk driver is not a new, nor a partisan, 
phenomenon. In 1969, Daniel Patrick Moynihan--then an adviser to 
President Richard Nixon--wrote a memo to the president raising concern 
over the possible ``apocalyptic change'' represented by anthropogenic 
climate disruption, and called it an issue that the ``[Nixon] 
administration ought to get involved with'' and a ``natural for NATO.'' 
\9\ Climate change first appeared in the National Security Strategy in 
1991 as an identified environmental challenge that does not respect 
international boundaries, and has been included in the Worldwide Threat 
Assessment since 2009 and the Quadrennial Defense Review since 2010.
---------------------------------------------------------------------------
    \9\ Nixon Library, Memorandum from Daniel Patrick Moynihan, 17 
September 1969, https://www.nixonlibrary.gov/virtuallibrary/releases/
jul10/56.pdf.
---------------------------------------------------------------------------
    This is not limited to threats that will draw on the utilization of 
our military assets abroad, but also poses challenges for our 
military's own capabilities and readiness. A Department of Defense 
(DoD) report published in January surveyed 3,500 military sites in the 
United States and found that over half have already experienced 
climate-related challenges. This builds upon a 2009 DoD report which 
found that 128 coastal installations, including 56 naval installations 
valued at over $100 billion, would be at risk if sea level rise of more 
than 1 meter were to occur. Recent projections of end-of-century sea 
level rise under current assumptions range from two-tenths of a meter 
to 2 meters.\10\
---------------------------------------------------------------------------
    \10\ NASA, Understanding Sea Level: Empirical Projections, https://
sealevel.nasa.gov/understanding-sea-level/projections/empirical-
projections.

    How might the United States best deal with these risks? The purpose 
of this hearing is not to contest the most appropriate instrument or 
approach for dealing with the climate challenge, but I would note the 
recent words of George David Banks, a climate and energy advisor who 
---------------------------------------------------------------------------
has served in both the George W. Bush and the Trump administrations:

        ``The Paris agreement is a good Republican agreement. It's 
        everything the Bush administration wanted . . . It's a climate 
        policy based on U.S. national interest that the Bush team 
        started and the Obama team kept . . . The climate agenda is not 
        going to go away any time soon, and if you're not engaged 
        aggressively, actively, there are going to be policies that are 
        detrimental to the United States.'' \11\
---------------------------------------------------------------------------
    \11\ Lisa Friedman, Former Trump Aide Calls Paris Climate Accord `a 
Good Republican Agreement', 22 February 2018, https://www.nytimes.com/
2018/02/22/climate/george-david-banks.html.

    I tend to agree with this assessment, and will briefly mention a 
number of ways in which lack of U.S. climate leadership may be 
detrimental to U.S. economic and national security interests.
    Given that, if it were to leave the Paris Agreement, the United 
States would be the only country in the world not party to the 
Agreement, this would leave significant scope for future evolutions of 
the international climate governance regime over which the United 
States would have no say but would inevitably be impacted by. In the 
1960s, when awareness of climate change was emerging, the United States 
accounted for 40 percent of global GDP. Today, it accounts for just 
over 20 percent. An isolated United States is not large enough to avoid 
the economic repercussions of agreements forged by the rest of the 
world.
    For example, a number of foreign officials and politicians have 
floated the idea of tariffs, or even sanctions, being applied to the 
United States should it unilaterally withdraw from the Paris Agreement. 
With the opening of China's national carbon market this year, a growing 
share of the global economy is under a formal carbon price, increasing 
the dangers of tariffs or other measures to be levied against 
jurisdictions without formal carbon pricing. The most punitive of these 
prospects would likely never occur. Some are distant but plausible. 
Others are already evident: the European Union is now refusing to 
complete a new trade agreement with any partner that has not only 
joined, but also officially ratified, the Paris Agreement. To take 
another angle, imagine if countries were to begin prioritizing LNG 
imports from countries that have ratified the Paris Agreement, just as 
the United States today provides preferential LNG export approval to 
countries which have a free trade agreement with the United States.
    It is also worth noting that even in the absence of a Federal 
carbon price, there exists a complex mosaic of de-facto carbon prices 
across the United States. A wide range of regulations, from methane 
rules to fuel efficiency standards, create compliance costs that equate 
to an implicit price on carbon. For example, the 25 cent increase in 
the Federal gas tax that has recently been debated is the equivalent of 
a transport sector carbon price of around $30 per ton.
    A growing number of U.S. companies are pricing carbon voluntarily, 
as well. In 2017, almost 1,400 firms were integrating an internal 
carbon price into business decisions, a more than eightfold increase 
from 2013. Most large integrated oil companies now use internal carbon 
prices between $40-$80 per ton.
    While this patchwork of de-facto carbon prices is better than no 
climate action, it nonetheless suffers from opacity, asymmetry, and--
undoubtedly--inefficiency. A far more efficient and effective approach 
would be an economy-wide carbon price. This would level the playing 
field, encourage the lowest-cost carbon reductions to be harvested 
first, and would give the United States many more policy options for 
defending the competitiveness of its industry vis-a-vis competitors in 
countries both with and without carbon prices. A pragmatic, stable, 
predictable carbon price remains a prudent policy option for the United 
States.
                               conclusion
    In conclusion, the United States finds itself at a unique point in 
history in which its endowment of hydrocarbon resources, including 
natural gas, are re-shaping both domestic markets as well as, 
increasingly, the global energy landscape. While the growth of U.S. 
natural gas exports is poised to be a positive development for energy, 
economic, and climate security, this should be complemented by the 
strategies, investments, and policies necessary to ensure that gas 
maintains its relevance and value in the shift to more advanced and 
decarbonized energy systems in the United States and elsewhere. 
Moreover, excitement over the opportunities afforded by growing LNG 
exports should not distract from other critical priorities, including 
ensuring that innovation drives America's energy edge well into the 
future. Thank you for the opportunity to provide my thoughts on U.S. 
energy and geopolitics. I look forward to taking your questions.

                                 ______
                                 

    Dr. Gosar. Thank you, Mr. Livingston.
    Ms. Gentle, you are up next for 5 minutes.

 STATEMENT OF MEG GENTLE, PRESIDENT AND CEO, TELLURIAN, INC., 
                         HOUSTON, TEXAS

    Ms. Gentle. Thank you, Mr. Chairman, Ranking Member 
Lowenthal, and members of the Subcommittee. It is an honor to 
speak with you today about the role that U.S. liquefied natural 
gas production, exports, and investment plays in powering the 
global leadership of the United States and supporting the 
safety and security of our allies.
    I serve as President and CEO of Tellurian, Inc., a 2-year-
old company created to build a global natural gas business with 
the intention of spending nearly $30 billion of investment in 
infrastructure in this country, including manufacturing dollars 
in 18 states, and creation of almost 50,000 direct and indirect 
jobs.
    As I speak, we are witnessing change in the global energy 
system unprecedented in its scale and speed. Access to flexibly 
produced LNG allows countries from Eastern Europe, to East and 
South Asia, to our neighbors in our own hemisphere to diversify 
their energy supply, diminish the power of sole-source 
suppliers, and access gas more quickly and at a lower cost. It 
helps countries meet their decarbonization goals, access more 
affordable electricity, and improve their air quality and, 
overall, improve their energy security.
    We need your support to build out the infrastructure needed 
to meet domestic and global demand for gas. We can empower our 
friends and deny leverage to hostile powers while growing the 
U.S. economy and employing tens of thousands of Americans 
across our country.
    The world is turning inexorably toward LNG. The 
International Energy Agency estimates that LNG will constitute 
60 percent of the total inter-regional trade of gas by 2040, up 
from just 39 percent today. The world has seen a rapid increase 
in LNG importers in recent years, with 10 new importers added 
between 2011 and 2016 alone and a total of 38 countries now 
importing LNG.
    Many of these are smaller, emerging importers which seek to 
grow their domestic gas markets for a range of security, public 
health, and climate-related reasons. Our southern neighbors 
Brazil, Chile, and Argentina rely on the spot markets to buy 
gas for base-load power and to back up their renewable energy.
    Shorter, more flexible contracts, the steady decline of 
destination clauses, and the rise of floating storage and 
regasification technology has propelled LNG and innovative U.S. 
suppliers like Tellurian forward. The United States has played 
a key role in driving this transition of an LNG market from one 
dominated by a few powerful, inflexible suppliers to a 
commoditized, integrated global gas market.
    The management team at Tellurian includes in its ranks the 
first innovators of destination-flexible contracts. This 
feature of U.S. LNG exports has helped bolster the energy 
security of our allies on every continent and disempower 
unfriendly and hostile regimes who would seek to use vital 
energy resources as bargaining chips or outright pressure. In 
Europe, Poland's ability to import LNG forced Russia to cuts 
its export prices before a single molecule had actually been 
imported. Russia had little choice, as Gazprom depends on the 
European market for the bulk of its revenues.
    Yet, despite these developments, Russian gas still supplies 
40 percent of all of Europe's supply and exported 8 percent 
more gas to Europe last year. Even now, Russia seeks to expand 
its influence to growing markets in Asia through the $55 
billion Power of Siberia pipeline to China. In 2014, China and 
Russia executed $400 billion in gas supply agreements.
    In the Middle East, our allies Kuwait, the United Arab 
Emirates, Israel, Egypt, and Jordan have started importing LNG 
to produce electricity and potable water. The IEA noted in its 
2017 World Energy Outlook that, next to Asia-Pacific, the 
Middle East region will experience the greatest total gas 
demand growth in the coming decades, at approximately 2.2 
percent per annum.
    The power sector drives the bulk of this growth. UN data 
shows that our allies in the Middle East power generation from 
burning oil was equivalent to the amount of electricity 
generated by the great state of Ohio.
    LNG imports can enhance the electric grids of these nations 
and provide security of supply. Natural gas demand to fuel 
desalinization facilities is also key, as the water-scarce 
region requires more water to support its growing population.
    In Asia, hundreds of millions of people remain without 
access to reliably and cleanly produced electricity. An 
analysis produced from a joint CSIS and IEA workshop in May 
2017 noted, ``Asian countries, including India, will continue 
to be the dominant forces globally in terms of demand for 
growth for LNG.'' Among these are Japan and Korea, critical 
U.S. allies, as well as China, which has relied on LNG to 
address grave air quality concerns.
    We at Tellurian are up for the challenge of continuing to 
support our allies and worldwide energy security. Tellurian 
stands firm behind supporting expanded access to clean American 
energy, enhancing diversity of supply, ending price 
discrimination and undermining those who practice it, and 
enabling energy transitions to lower carbon fuels throughout 
the world.
    Simultaneously, LNG exports will continue to help the 
American people by creating thousands of jobs and fueling 
expansion of the economy while having limited effect on 
domestic natural gas prices given continued increases in shale 
productivity.
    Tellurian plans to invest $29 billion in natural gas and 
LNG infrastructure, but we need additional infrastructure 
across the value chain to ensure American energy remains 
competitive. We ask policy makers to encourage the 
infrastructure investments which will support our industry and 
ultimately our geopolitical goals.

    [The prepared statement of Ms. Gentle follows:]
    Prepared Statement of Meg Gentle, President and Chief Executive 
                        Officer, Tellurian Inc.

 the geopolitical imperatives of expanded u.s. natural gas production 
                     and infrastructure investment

    Mr. Chairman, Ranking Member Lowenthal and members of the 
Subcommittee, it is an honor to speak with you today about the role 
that U.S. liquefied natural gas (LNG) production, exports and 
investment plays in bolstering the global leadership of the United 
States and the safety and security of our allies.
    Recent years have brought tremendous change across global energy 
markets, including the dramatic expansion of the LNG trade. The U.S. 
shale gas revolution has been a boon for the American people as the 
application of new technologies has opened trillions of cubic feet of 
cleaner-burning natural gas for U.S. consumption.
    Exporting natural gas as LNG continues to benefit the American 
people by creating thousands of jobs and stimulating economic 
expansion. We expect our Driftwood LNG project alone to create at least 
13,000 jobs while supporting manufacturing jobs in 18 U.S. states. U.S. 
LNG exports advance American geopolitical interests and leadership by 
strengthening the energy security of our allies and improving air 
quality through cleaner-burning natural gas. The United States is 
positioned to lead a global energy transformation as countries around 
the globe grapple with an array of energy modernization and climate 
challenges.
    These benefits can only be achieved through a continued partnership 
of all public and private constituents that support American LNG's 
cost-competitiveness. Other nations such as Russia and Qatar continue 
to grow their LNG export capacity, expanding their financial, 
geopolitical, and industrial influence. Timely infrastructure 
investment for pipelines and export facilities will be essential to 
support continued U.S. leadership in the global LNG market. Our team at 
Tellurian can support U.S. geopolitical goals by offering low-cost gas 
supply and flexible terms, but even our plans to invest $29 billion in 
American infrastructure are insufficient to meet this growing 
challenge. With more investment in American energy infrastructure, the 
United States is uniquely positioned to support global energy security 
and air quality through a leadership position in LNG markets for 
decades.
A Changing Market
    The LNG market is rapidly commoditizing. Traditionally, LNG has 
been traded through rigid, long-term contracts with large volumes at a 
price indexed to oil. Today, LNG is increasingly traded in short-term 
and spot markets, with prices reflecting global supply and demand 
balances. This price transparency has supported natural gas demand 
growth in financially challenged regions and countries, providing 
nations with an environmental and cost-competitive alternative to coal.
    These changes support a new wave of LNG buyers worldwide and create 
an advantage for suppliers who can compete with low-cost supply. The 
development of a spot market enables countries with varying degrees of 
credit worthiness to access LNG supplies without signing long-term 
contracts. The world has seen a rapid increase in LNG importers in 
recent years, with 10 new importers entering the market between 2011 
and 2016 and a total of 38 countries importing LNG at the end of 2017.
    LNG exports from the U.S. lower-48 began from Sabine Pass in 2016, 
with cargoes destined for emerging importers in our own hemisphere, 
such as Brazil, Chile, and Argentina, which rely almost exclusively on 
the spot markets. Some buyers purchase on a seasonal basis based on 
hydroelectric variability, others as a backup for renewables, and still 
others to deal with disruptions in supply. The rise of floating storage 
and regasification units (FSRUs) has made it easier for other countries 
to quickly access low-cost LNG supplies. FSRUs enable gas buyers to 
access LNG supplies within months rather than years while minimizing 
the cost to build infrastructure. By year-end 2017, 40 percent of LNG 
importers used FSRUs, and IHS forecasts that over 50 percent of import 
markets will use FSRU terminals by 2025.
    The United States is uniquely positioned to supply this 
heterogeneous market. With a stable and reliable regulatory 
environment, low-cost gas, skilled labor, and flexible contract terms, 
we can be the preferred supplier to the world. Indeed, Tellurian is 
pioneering a low-cost, flexible and reliable LNG supply model ideal for 
a maturing commoditized market. Customers have the opportunity to 
invest in Driftwood LNG to access gas at cost for approximately $3/
mmBtu on the beach. Tellurian stands at the forefront of the LNG 
revolution, positioned to compete in a rapidly evolving market.
Geopolitical Impacts of the New Market
    The United States has played a key role in driving this transition 
of an LNG market dominated by a few powerful, inflexible suppliers to a 
commoditized, integrated global gas market. The management team at 
Tellurian includes in its ranks the first innovators of destination-
flexible contracts. This feature of U.S. LNG exports has helped bolster 
the energy security of our allies on every continent and disempower 
unfriendly and hostile regimes which seek to use vital energy resources 
as bargaining chips or outright pressure.
    In Europe, the transformative effect of LNG imports has been 
enormous. The flexible nature of LNG has allowed European buyers 
dependent on a single supplier of pipeline gas to access the same fuel, 
but with a greater diversity of suppliers and sources. By offering a 
wider range of suppliers, LNG introduces price competition. Lithuania, 
hitherto an energy island in Europe, successfully negotiated lower gas 
prices from its traditional gas supplier just by publicly engaging in 
talks with potential LNG suppliers. Lithuanian President Dalia 
Grybauskaite has said the ability to import LNG would put an end to the 
``existential threat'' of relying on one supply source.
    Russia seeks to expand its market share to growing markets in Asia, 
notably through the $55 billion Power of Siberia pipeline to China, a 
$13 billion pipeline to Turkey, and the new Yamal LNG export terminal 
in its far east. In 2014, China and Russia concluded $400 billion in 
gas supply agreements and Russia intends to build additional pipelines 
to serve growing Chinese demand. Low-cost LNG supplies from the United 
States offer gas buyers in Europe, Asia and around the world an 
opportunity to diversify their energy mix.
    U.S. LNG exports can also fuel economic development and help meet 
basic human needs for many of our allies and friends around the world. 
Hundreds of millions of people remain without access to reliable and 
cleanly produced electricity, including nations in the Middle East, 
Asia, Latin America, and Sub Saharan Africa. Even those with access to 
electricity often face severe air pollution, harmful to human health 
and the global environment. Low-cost, clean, and reliable LNG can help 
tackle these issues and improve diplomatic relationships with our 
allies.
    The Middle East, including our allies in the region--Kuwait, the 
UAE, Israel, Egypt, and Jordan--has started importing LNG in the last 8 
years to produce electricity and potable water. The IEA noted in its 
2017 World Energy Outlook that next to Asia-Pacific, the Middle East 
region will experience the greatest total gas demand growth in coming 
decades, consuming an additional 318 bcm in the period to 2040, 
equivalent to a fifth of global growth in that time frame. The power 
sector drives the bulk of this growth; UN data shows that our allies in 
the Middle East burned around 168 TWh of oil to generate electricity, 
equivalent to all the electricity consumed in the great state of Ohio 
in 2016. Natural gas demand to fuel desalination facilities is also a 
key demand driver, as the water-scarce region requires more water to 
support its growing population. Supplying LNG to this dynamic region 
directly supports our allies' energy security and, by extension, our 
military and diplomatic presence.
    The same is true in Asia, where hundreds of millions of people 
remain without access to reliable and cleanly produced electricity. A 
CSIS analysis ``U.S. Natural Gas in the Global Economy,'' produced from 
a joint CSIS-IEA workshop in May 2017, noted ``Asian countries 
including India will continue to be the dominant forces globally in 
terms of demand growth for LNG.'' Among these are Japan and Korea, 
critical U.S. allies in the region that consumed a combined 42 percent 
of global LNG in 2017.
    China has relied on LNG to address grave air quality concerns; in 
this winter alone, China installed gas heaters in 5.54 million 
households in northern China to reduce particulate emissions. The 
environmental impacts were immediate, as residents reported cleaner air 
and blue skies atypical of Chinese winters. However, 426,000 of these 
households reported gas shortages despite record purchases of LNG to 
satisfy this increased demand for cleaner burning fuels. Not 
surprisingly, the IEA estimates that China will account for 40 percent 
of total global natural gas demand growth between now and 2022--but 
China must have ample supply to meet its ambitious coal-to-gas 
switching targets.
    India, similarly, will be the other major driver of global economic 
growth; despite similar air pollution and public health problems as 
those facing China, Bloomberg New Energy Finance notes that in 2016 
India added 16 GW of new coal-fired generation--nearly double the total 
amount of renewable capacity added that year. Natural gas is well-
suited to meet India's energy modernization challenges and bridge the 
gap between its stated climate and pollution goals and its tremendous 
need for more power. Its government has invested accordingly: this 
month, the Indian government announced that its current 4 LNG terminals 
will be augmented by 11 new terminals over the next 7 years as part of 
plans to have natural gas contribute 15 percent of its energy mix by 
2020. Spot LNG supplies will be vital for these new terminals, many of 
which will support India's enormous and growing coastal cities.
    U.S. exports to Asia can fill the gap and help meet future energy 
demand growth--but natural gas must be cost competitive and widely 
available to compete with coal in this region. If this massive 
continent continues to rely on coal to generate its accelerating power 
demand, these nations will not meet their targets under the Paris 
climate agreement and the global climate consequences could be grave. 
Indeed, the United States is in a historic position to be a world 
leader in reducing pollution and improving air quality around the 
world, saving millions from dying from preventable environmental 
diseases. For many governments facing these public health threats, air 
quality is the driver for a coal-to-gas transition, more than climate 
change alone. One study last year suggested that Sub Saharan Africa 
alone saw over 175,000 preventable deaths in the region due to air 
pollution. Positioning the United States as a leading supplier of a 
fuel resources which could dramatically improve these problems is more 
than just good business--it's good policy. It is the essence of 
``smart'' power, leveraging America's energy abundance help meet basic 
humanitarian needs throughout the world.

Investment in Infrastructure

    The prolific U.S. natural gas resource base can support American 
geopolitical, environmental and economic goals, but only through 
sustained investment, initially totaling $170 billion over 5 years in 
U.S. natural gas infrastructure to support expected production growth. 
Earlier this month, the Energy Information Agency (EIA) forecasted that 
natural gas production will reach 80.3 Bcf/d in 2018, establishing a 
new record. We expect natural gas production to grow 20 Bcf/d by 2025 
from five shale basins alone.
    However, this natural gas is at risk of being stranded or flared 
without additional investment in pipeline and LNG infrastructure. There 
are six U.S. LNG export terminals approved by the Federal Energy 
Regulatory Commission (FERC), under construction, and existing, 
providing over 9 Bcf/d of LNG export capacity. Based on the pace of 
natural gas production, the United States requires 13 Bcf/d of new 
natural gas transportation and export infrastructure to support 
incremental gas output. Indeed, a recent BTU Analytics report noted 
that U.S. gas production growth may be limited to the total capacity 
and utilization of LNG export facilities, suggesting that the United 
States can produce as much LNG as the global gas market can absorb.
    Typically, LNG infrastructure operates under a long multi-year 
development cycle, where the speed at which decisions are made today 
will impact the ability of the United States to supply low cost gas 5 
years from now. We are far from the only ones with an eye to the 
future. Qatar recently announced that it will increase LNG output by 30 
percent, Australia is moving ahead with new LNG export infrastructure, 
and Russia is planning new liquefaction plants while laying miles of 
pipelines across Eurasia. Perhaps most importantly, our allies want to 
buy our gas. The same CSIS analysis mentioned earlier also notes, 
``Many already well-established LNG import markets in Asia have looked 
toward U.S. LNG for diversification of both supplies and contractual 
terms . . . Asian importers seem to recognize that the value of U.S. 
LNG goes beyond price; it alleviates the region's heavy reliance on the 
Middle East and the Asia-Pacific for LNG and attendant maritime 
chokepoints, such as the Straits of Hormuz and Malacca.'' The United 
States clearly enjoys many advantages, but our valuable supply stands 
at risk of being left behind if we don't build infrastructure now.
    Tellurian plans to invest $29 billion in natural gas and LNG 
infrastructure, but we need additional infrastructure across the value 
chain to ensure American energy remains competitive on a global basis. 
In addition to laying the literal groundwork for U.S. gas exports, the 
importance of a supportive, efficient policy and regulatory environment 
for natural gas cannot be overstated. The potential is undeniably 
there, but the United States must make deliberate decisions today to 
realize the opportunity before it as we pursue ``energy dominance'' in 
the years to come.

Conclusion

    The United States is well positioned to help make the global LNG 
market more competitive by providing low-cost supply on flexible terms 
to buyers everywhere while empowering our friends and allies to have 
greater control over their energy security. Tellurian stands firmly 
behind supporting expanded access to American energy, enhancing 
diversity and security of supply, ending price discrimination and 
undermining those who would practice it, and enabling energy 
transitions to lower carbon fuels throughout the world. To reach this 
goal we must make investments today that will enable our leadership in 
global markets in the years ahead. We encourage policy makers to 
advance the supportive dialogue regarding infrastructure development 
and investments which will help the energy industry play a leading role 
in supporting America's international and geopolitical goals.

                                 ______
                                 

Questions Submitted for the Record by Rep. Lowenthal to Ms. Meg Gentle, 
                  President and CEO of Tellurian, Inc.

    Question 1. During the hearing, you appeared to indicate that you 
did not believe that anthropogenic emissions are the main driver of 
climate change. Could you please clarify your position on this issue?

    Answer. Yes. Humans definitely contribute to climate change. In 
fact, it is our responsibility to reduce and mitigate human emissions, 
and we take that responsibility very seriously in our operations.

                                 ______
                                 

    Dr. Gosar. Thank you, Ms. Gentle.
    I now recognize the Ranking Member, who showed up, my 
friend Mr. Lowenthal.

 STATEMENT OF THE HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Lowenthal. Thank you.
    I thank the Chairman for allowing me to give my opening 
statement after the witnesses, and I thank the witnesses for 
putting up with me.
    Dr. Gosar. Do I get to question you?
    Mr. Lowenthal. Yes, you do. You always get the chance to 
question. But this should not be counting on my time.
    The topic of today's hearing is something that would have 
been unthinkable 10 years ago. Back then, U.S. oil and gas 
production was going down, imports were going up, and members 
of this Committee were being urged to immediately open the 
Atlantic Ocean to new drilling because we were in desperate 
need of more natural gas.
    Today, U.S. natural gas production is at record levels, 
U.S. oil production is near record levels and climbing, and we 
are seeing soaring volumes of exports, not imports.
    Nearly all of this turnaround happened during President 
Obama's time in office. While the Republicans rarely accept 
this, oil production on Federal lands went up nearly 80 percent 
under President Obama. He signed the law ending the crude oil 
export ban, and his administration approved 24 natural gas 
export licenses.
    But President Obama had a real all-of-the-above strategy, 
not just fossil fuels. He made the deployment of renewable 
energy a top priority while also acknowledging that all forms 
of energy development have impacts that must be addressed.
    Summary--natural gas is seen as a very important but as an 
intermediate solution. It is not the long-term solution for our 
energy needs.
    What is that long-term solution? Well, we have already 
begun to measure it. Wind power in the United States quadrupled 
under President Obama, while solar power grew almost 40-fold. 
When he took office, there were no solar plants on public 
lands. When he left office, 34 had been approved, with a 
potential capacity of nearly 10,000 megawatts.
    All told, solar and wind generation in the United States 
has nearly quadrupled since 2008, generating almost 20 percent 
of U.S. electricity last year.
    But we are not doing enough. Global carbon emissions 
continue to rise, and the impacts of climate change have become 
evident. In 2017, it is the third year in a row that every 
single state in the Lower 48 had above-average temperatures.
    President Obama took this very seriously by signing us onto 
the Paris Accord and making meaningful commitments to cut 
emissions. President Trump only has a single agenda--more 
fossil fuels--all in the service of an ill-defined agenda of 
geopolitical bullying which he calls ``energy dominance.'' But 
this is like saying that we are going to achieve 
telecommunications dominance by making ourselves the world 
leader on landline telephones.
    Focusing on the energy of the past and ignoring the impacts 
of climate change is not a formula for being dominant. It will 
simply marginalize us internationally and handicap us 
economically.
    Other countries are already bypassing us in advanced energy 
investments. Last year, a major energy consulting firm dropped 
the United States to third place in the rankings of the most 
attractive countries for renewable energy investment, behind 
China and India. These two countries are now leading the world 
in deploying renewable energy, and both governments are setting 
ambitious renewable energy targets and attracting tremendous 
private-sector investments.
    In January of 2017, China announced that it would invest 
$360 billion in renewable energy by 2020, a move that is 
forecast to create over 13 million jobs and to help reduce 
hazardous air pollution. India has pledged to install 100 
gigawatts of solar and 60 gigawatts of wind by 2022.
    It goes without saying that both nations are party to the 
Paris Accord, because every single nation on Earth is party to 
the Paris Accord--at least, they all will be until President 
Trump makes us the odd country out.
    Developing more renewable energy and increasing investments 
in innovative technology is a win-win for our climate, our 
security, and our economic competitiveness.
    I am pleased with this hearing, because we are looking 
today at some of the bigger-picture issues around energy and 
where we are moving toward. But I hope that this means we will 
soon have hearings on climate change and renewable energy in 
this Subcommittee. If we care about geopolitical strength as 
much as we say, we will give climate change the attention it 
rightfully deserves.
    I thank the witnesses for being here, and I yield back. And 
I thank the Chairman for allowing me to speak.

    [The prepared statement of Mr. Lowenthal follows:]
   Prepared Statement of the Hon. Alan S. Lowenthal, Ranking Member, 
              Subcommittee on Energy and Mineral Resources

    Thank you, Mr. Chairman, and thank you to the witnesses for being 
here.

    The topic of today's hearing is something that would have been 
unthinkable 10 years ago. Back then, U.S. oil and gas production was 
going down, imports were going up, and members of this Committee were 
being urged to immediately open the Atlantic Ocean to new drilling 
because we were in desperate need of more natural gas.
    Today, U.S. natural gas production is at record levels, U.S. oil 
production is near record levels and climbing, and we're seeing soaring 
volumes of exports, not imports.
    Nearly all of this turnaround happened during President Obama's 
time in office. While Republicans hate to accept this, oil production 
on Federal land went up nearly 80 percent under President Obama. He 
signed the law ending the crude oil export ban. And his administration 
approved 24 natural gas export licenses.
    But President Obama had a real all-of-the-above energy strategy, 
not the Fossils First approach of this Administration, and he made the 
deployment of renewable energy a top priority, while also acknowledging 
that all forms of energy development have impacts that must be 
addressed.
    Wind power in the United States quadrupled under President Obama, 
while solar power grew more than 40-fold. When he took office, there 
were no solar plants on public lands. When he left office, 34 had been 
approved with a potential capacity of nearly 10,000 megawatts.
    All-told, solar and wind generation in the United States has nearly 
quadrupled since 2008--generating almost 20 percent of U.S. electricity 
last year.
    Still, global carbon emissions continue to rise, and the impacts of 
climate change have become evident: in 2017, for the third year in a 
row, every state in the Lower 48 had above-average temperatures.
    President Obama took this issue seriously, signing the United 
States onto the Paris Accord and making meaningful commitments to cut 
emissions. President Trump has only one agenda: more fossil fuels. All 
in the service of an ill-defined agenda of geopolitical bullying he 
calls ``energy dominance.'' But this is like saying we're going to 
achieve telecommunications dominance by making ourselves the world 
leader in corded telephones.
    Focusing on the energy of the past and ignoring the impacts of 
climate change is not a formula for being dominant. Instead, it will 
simply marginalize us internationally and handicap us economically.
    Other countries are already bypassing us in advanced energy 
investments. Last year, a major energy consulting firm dropped the 
United States to third place in the rankings of the most attractive 
countries for renewable energy investment, behind China and India. 
Those two countries are leading the world in deploying renewable 
energy, and both governments are setting ambitious renewable energy 
targets and attracting tremendous private sector investments.
    In January 2017, China announced the country would invest $360 
billion in renewable energy by 2020--a move that's forecast to create 
over 13 million jobs and help reduce hazardous air pollutants.
    India has pledged to install 100 gigawatts of solar and 60 
gigawatts of wind by 2022.
    It goes without saying that both nations are party to the Paris 
Accord, because every single nation on Earth is party to the Paris 
Accord--at least, they all will be until Donald Trump makes us the odd 
man out.
    As a nation, one of our great strengths has been our ability to 
lead. Not to dominate, but to lead. In countless fields, from science 
and medicine to computers and the space program, we have led the world 
and created entirely new industries that now form the foundation of our 
economy and are responsible for tremendous numbers of jobs.
    This Administration has decided leadership, much like their energy 
policy, is a thing of the past.
    While this Administration tries to resuscitate the coal industry, 
our competitors are positioning their economies and equipping their 
workers for the 21st century.
    Deploying more renewable energy and increasing investments in 
innovative technology is a win-win-win for our climate, our security, 
and our economic competitiveness.
    I'm pleased that with this hearing we're looking at some of the big 
picture issues around energy, and I hope this means we will soon have 
hearings on climate change and renewable energy in this Subcommittee.
    If we care about our geopolitical strength as much as we say, we'll 
give climate change the attention it rightfully deserves.

    I thank the witnesses again for being here, and I yield back.

                                 ______
                                 

    Dr. Gosar. Thank you to the Ranking Member.
    And I thank the panel for their testimony.
    Reminding the Members that Committee Rule 3(d) imposes a 5-
minute limit on questions. I will recognize Members for their 
questions that they may ask the witnesses. I am going to start 
first.
    Mr. Livingston, your testimony highlights an increased 
demand for lithium to store solar and wind power. Quite 
frankly, renewable energy storage technology is not very 
efficient. And our domestic mining industry is shackled by 
regulatory roadblocks and environmental lawsuits.
    Are you advocating for an increase in domestic 
metallurgical mining to meet this demand?
    Mr. Livingston. Thank you very much, Chairman Gosar.
    I am not advocating for any specific activity----
    Dr. Gosar. Why not? Because if this is an issue, this is a 
critical pathway. So, why aren't you?
    Mr. Livingston. Certainly. I would hope that the market 
will serve that----
    Dr. Gosar. You don't hope markets. I mean, this has to have 
an active supply chain. So, you can't hope. You have to be 
engaged one way or the other. How do you stand?
    Mr. Livingston. I think this issue would merit, indeed, a 
government-focused policy of exploring different options of 
better understanding the U.S.----
    Dr. Gosar. What are those options?
    Mr. Livingston. That would include better understanding the 
U.S. resource base and certain critical minerals. However----
    Dr. Gosar. How is that any different right now that we are 
dictated 100 percent by China with some of these critical 
minerals that are essential to these batteries?
    Mr. Livingston. I would say not 100 percent, though China 
is a----
    Dr. Gosar. Pretty darn close. It is 99.9 percent when you 
continue to look at outside supply chains.
    Mr. Livingston. Very true. Chile, Peru, Bolivia are also 
significant players in lithium. Brazil is a----
    Dr. Gosar. And if you look at who controls those assets, 
they go through China.
    Mr. Livingston. That may be an increasing case in some 
circumstances.
    What I would endorse, to answer your question, is I do 
think that there is a role for a more strategic look on the 
part of the United States at what is the mineral base both here 
and around the world; what is the degree of substitutability 
for some of these minerals and different technologies. We don't 
want to find ourselves chasing certain minerals when the 
technologies themselves could easily substitute for another 
mineral which is more abundant here in the United States.
    Dr. Gosar. Well, we are constantly doing that already.
    I have limited time, so a second question to you is, how is 
natural gas necessary to meet all base-load energy 
requirements?
    Mr. Livingston. Natural gas is, in my view, a very 
important part of an advanced energy system in the United 
States. It is potentially, particularly at this moment, an 
important force multiplier for renewables, as well, in many 
different markets. It can serve to balance out the 
intermittency of solar and wind resources.
    It is cleaner than coal and has many attractive 
characteristics on its own, in terms of faster ramp-up and 
ramp-down times. It is for this reason that natural gas plants 
in the United States are more attractive than coal peaker 
plants in a number of different jurisdictions.
    Dr. Gosar. OK. I have limited time, so I think we will end 
that.
    Mr. Doran, over the last few years, increased U.S. 
production of oil and natural gas has significantly impacted 
the global energy marketplace. In particular, our energy 
exports are helping to foster a more dynamic and diverse global 
energy market.
    This is providing international customers with greater 
choice and helping to curb the use of energy as a political 
weapon. In fact, many of our European allies see our energy 
exports as a game-changer to help break their dependence on 
regimes like Russia that use energy to influence their 
neighbors.
    What role do you see the U.S. energy production and exports 
playing in global energy security?
    Mr. Doran. Thank you, Mr. Chairman. I really appreciate the 
question.
    I would say if we look at what we face right now, we are in 
an environment of heightened competition. In the energy space 
in Europe, that competition is Russia.
    We have to ask ourselves, what does Russia fear? Russia 
fears our ability to break its monopolistic business practices. 
And we could do that through the increased export of American 
LNG to markets that want it.
    Dr. Gosar. You bring up a good point, because we just went 
to Germany this last summer, and we had a nice conversation 
with the German energy ministry, which gave us a whole 
portfolio in regards to alternative energy.
    Then the next day we went to Eurocom, based out of Germany. 
And my question to them was, where do you get your energy? It 
is a contract through Germany. And my comment is, where do you 
get your base load?
    You can't tell me that our base load is then going to come 
from Nord Stream 1 and 2. That is such an oxymoron. I can't 
believe it, that we have such a disdain for Russia that we 
would actually allow that to be base-load energy with our 
military.
    Do you see a quandary in that?
    Mr. Doran. I do. And I think, Mr. Chairman, you have 
identified one of those hidden costs that Russia imposes on its 
customers. There is no such thing as cheap Russian gas. There 
are hidden costs, and you have identified one.
    Dr. Gosar. And utilizing the country of Lithuania, which is 
actually a valuable lesson. Here they were 100 percent dictated 
on their energy dependence by Russia, and now, with liquefied 
natural gas, they are less than 30 percent.
    Do you look at that as one of the forecasting models for 
the future?
    Mr. Doran. I hope so. When we look at options, that is the 
important part. Just the ability to have alternatives to 
Russia, in the case of Lithuania, has actually decreased 
Lithuania's natural gas price by 55 percent and lowered 
Russia's total imports by 65 percent to Lithuania.
    That is what victory in an energy competition looks like. 
And in the case of Lithuania, America is starting to win. We 
want that for the rest of our allies.
    Dr. Gosar. Thank you, Mr. Doran.
    I now yield 5 minutes to the Ranking Member for his 
questions.
    Mr. Lowenthal. Thank you, Mr. Chair.
    I would like to make a statement, one short statement, 
before I ask questions, that while we are talking about LNG 
exports, this is an opportunity also to support local American 
shipbuilding by requiring a small percentage of exported crude 
and LNG to travel on U.S.-built and U.S.-flagged vessels.
    Congressman Garamendi is soon going to be introducing the 
Energizing American Shipbuilding Act in the near future which 
would do exactly that. I am not here to say support or not, I 
just hope that we at least look at that to make sure that 
American shipbuilding also benefits by the growth of LNG.
    My first question is for all the witnesses. Yes or no, just 
simply, and we will start off right away with Mr. Smith. Are 
human emissions from burning fossil fuels the primary driver of 
global climate change? And do you believe climate change is a 
threat to our society and the economy?
    Mr. Smith?
    Mr. Smith. Yes.
    Mr. Lowenthal. Next, Mr. Doran?
    Mr. Doran. I am not a climate scientist, so my answer has 
to be ``I don't know.''
    Mr. Lowenthal. You are a ``don't know.''
    Next, Mr. Livingston?
    Mr. Livingston. Yes.
    Mr. Lowenthal. And Ms. Gentle?
    Ms. Gentle. I am not an expert on climate change. I do not 
believe that human emissions are the primary driver of climate 
change.
    Mr. Lowenthal. Thank you.
    We have two yes's, one not an expert, and one who does not 
believe that human emissions are the primary.
    Mr. Livingston, in June of last year, President Trump 
announced his intentions to withdraw the United States from the 
Paris climate agreement. In his Rose Garden speech, he said 
participating in the Paris Accord would, ``undermine our 
economy, hamstring our workers, weaken our sovereignty, impose 
unacceptable legal risks, and put us at a permanent 
disadvantage to the other countries of the world.''
    Is this true? If not, what would you say will be the most 
significant geopolitical impact if the United States fully 
withdraws from the Paris Agreement?
    Mr. Livingston. Thank you very much, Representative 
Lowenthal.
    I would underscore some of the comments I made in my 
opening statements again, in that I agree with Mr. Banks, 
adviser to both George W. Bush and to President Trump, on this 
issue in that the Paris Agreement should not be viewed as a 
partisan issue. I don't think the Democrats or Republicans have 
a monopoly over the issue of climate change, nor do I believe 
any one party has a monopoly over any one energy source. These 
should be non-partisan, American issues.
    A few features of the Paris Agreement are worth noting. It 
is indeed a flexible agreement. The United States can adjust 
its commitment unilaterally at any time it wishes to with no 
penalties therein. It involves all countries. China and India 
are also required to make commitments, which was not previously 
the case in other international climate policy architectures 
that were being attempted prior to the Paris Agreement's 
formulation.
    So, it displays a number of characteristics which were 
indeed the intended outcome of early efforts by Republican 
administrations, including the George W. Bush administration, 
to address the global challenge of climate change.
    In terms of the repercussions should the United States 
leave, as I mentioned, I do think it will open up the United 
States to unnecessary risks of action, particularly vis-a-vis 
trade, imports, tariffs, carbon border adjustments, et cetera. 
So, I would note that the downsides of leaving the Paris 
climate agreement are both uncertain and unnecessary.
    Mr. Lowenthal. Thank you.
    I want to follow up. You mentioned China and India, and I 
also indicated earlier that they are investing billions of 
dollars in renewable energy development, and both made 
ambitious commitments under the Paris Agreement to reduce their 
emissions. However, both nations are two of the top fossil fuel 
consumers and greenhouse gas emitters in the world.
    How are we supposed to believe that China and India really 
care about climate change and want to assume, kind of, global 
leadership positions when they are two of the biggest 
contributors to the problem?
    Mr. Livingston. It is a very good and fair question, and it 
is a question which is often asked and should be. The points I 
would make are twofold.
    In terms of motivations, Number one, one need not believe 
that they care about climate change, first and foremost, as the 
driver of their actions. It is enough to simply look at air 
qualities in cities such as New Delhi, Beijing, et cetera, to 
understand why they are taking action on moving coal generation 
outside of cities or near cities, why they are moving to 
cleaner forms of energy. So, air pollution being one factor and 
the political legitimacy questions that are involved therein.
    The second is that, increasingly, these countries see 
industrial policy benefit to moving on climate and, in 
particular, are becoming exporters of clean energy technologies 
and advanced energy technologies.
    Mr. Lowenthal. Thank you, Mr. Chair, and I yield back.
    Dr. Gosar. I thank the Ranking Member.
    The gentleman from Colorado, Mr. Lamborn, is recognized for 
5 minutes.
    Mr. Lamborn. Thank you, Mr. Chairman, for having this 
hearing.
    Thank you to all the witnesses for being here.
    I am not going to ask about the Paris Accord, because that 
is really not the topic that we were supposed to be discussing 
today. It is LNG and U.S. geopolitics.
    Mr. Doran, I see in the news that Boston recently received, 
about a month ago, a big shipment of LNG from Russia. What is 
wrong in the Northeast where they are taking Russian natural 
gas? We have tons of natural gas in the United States if you go 
farther west than the Northeast. What is wrong with this 
picture?
    Mr. Doran. Thank you, Congressman.
    I would put it pretty straightforward: for Vladimir Putin, 
it is personal. Liquid natural gas has become a heightened 
field of competition, and Russia is increasingly trying to 
compete with the United States. That is something this 
Committee should keep an eye on.
    Mr. Lamborn. Why does Boston and the Northeast have to get 
it all the way from the Arctic in Russia instead of from 
pipelines closer, by domestic states that are inside the United 
States?
    Mr. Doran. As this Committee knows, one of the things that 
we are trying to see is an increased level of globalization in 
the liquid natural gas market. So, increasingly, we are going 
to see, I hope, LNG acting like a barrel of oil, where you can 
buy and sell it, it is a fungible commodity that you can buy 
and sell it anywhere in the world.
    The fact that Russia wanted to sell its natural gas to 
Boston, I would propose to this Subcommittee, was a political 
act and not necessarily a fundamental economic act on the part 
of Russia or downstream consumers.
    Mr. Lamborn. Mr. Smith, would you agree with me that there 
are problems with permitting of and allowing of pipelines in 
the Northeast to bring gas in from the West?
    Mr. Smith. Yes. Thanks for the question, Congressman.
    We are not a producer, we are an LNG exporter. We benefit 
from having natural gas we bring from numerous states down to 
our facility. We have actually been able to create a supply 
chain that allows us to ensure that we have reliable sources of 
natural gas and that we don't have constraints.
    Other parts of the country have seen some transportation 
constraints and some pipeline constraints. That is driving some 
price spikes, when you have some irregular weather or other 
things that create volatility in local Citygate prices. And 
given that we do have an increasingly liquid global market for 
LNG, it is going to attract cargos in from different places.
    We think this was probably a one-off in terms of having a 
very high price spike that is driven by shortages in 
transportation, but that is probably what is behind that.
    Mr. Lamborn. Ms. Gentle, are you able to comment on 
permitting problems in the Northeast for gas pipelines?
    Ms. Gentle. Tellurian is also not active in the Northeast. 
We have always pursued a philosophy that we will build 
infrastructure in communities where they welcome the 
infrastructure and jobs in the local community.
    Mr. Lamborn. OK.
    Then, for you and Mr. Smith, for the export facilities that 
allow LNG exports, are there any permitting issues that are 
outstanding today?
    I know that the Trump administration is, in my opinion, 
more reasonable in terms of allowing permitting to go forward. 
I think the Obama administration made a start, but we are 
building on what was just started in the last administration.
    Mr. Smith. Thank you for the question.
    As we look at the market, there are over 20 billion cubic 
feet of natural gas that has been permitted for projects. 
Currently, about 10 billion cubic feet are being constructed.
    As we look at our process and the processes that Cheniere 
has gone through, we don't see permitting as the primary issue. 
There are still commercial issues. It is still a challenging 
market.
    Cheniere is having some success in signing long-term 
contracts to take natural gas to destinations around the world, 
again, in a way that creates value in the United States, 
creates U.S. jobs, and helps our balance of trade.
    There are financing issues and commercial issues, but we 
don't see the primary problem as being permitting. I think that 
is something we have been able to----
    Mr. Lamborn. Ms. Gentle, to finish out, do you have 
anything to add?
    Ms. Gentle. We have $17 billion worth of infrastructure 
sitting in the FERC amid the permitting process. We have long 
enjoyed a very good partnership with the FERC. On a global 
scale, it is a very transparent and clear regulatory process.
    We were set back a little bit by the lack of the quorum at 
the FERC, but we are very happy to now have a clear pathway 
forward and a scheduling notice. We are the only company that 
is developing LNG infrastructure that has a scheduling notice 
in their FERC process and also has a signed EPC contract to 
move forward with construction.
    And we are very enthusiastic about the Administration's 
continued support for a streamlined and efficient regulatory 
process.
    Mr. Lamborn. OK. Thank you all.
    Dr. Gosar. I thank the gentleman.
    The gentleman from Virginia, Mr. Beyer, is recognized for 5 
minutes.
    Mr. Beyer. Thank you, Mr. Chairman, very much.
    First, I want to start out by highlighting that the 
Majority memo discusses how NEPA is problematic in the approval 
of the construction of LNG terminals, specifically citing the 
frivolousness of how NEPA allows for public comments and for 
environmental concerns like greenhouse gas emissions.
    So, let me defend NEPA using real-time Virginia examples. 
Because FERC was considering two pipelines in my Commonwealth, 
and separately, not together, one of which, the Mountain Valley 
pipeline, will destroy about 100 miles of the Appalachian 
Trail.
    And here is the thing--we don't need two new pipelines. The 
demand isn't there. And we certainly don't need them 
constructed in separate areas to double the environmental 
damage.
    The FERC approval process was widely considered a rubber 
stamp. The fact that it approved the Atlantic Coast Pipeline 
when there was an incomplete environmental statement means that 
certainly was not an impediment in the NEPA process. The fact 
that FERC approved the pipeline without a final EIS for another 
reinforces how flawed the process is.
    So, if anything, it seems that FERC has been a disaster, 
which is both sides of the political aisle. Both Republican and 
Democratic Members of Congress agree. So, we should be very 
careful before we argue that we should gut NEPA and the ability 
for local communities to weigh in.
    Ms. Gentle, first of all, I do think Paris is a 
geopolitical issue of great importance. How do you square LNG 
exports with the commitment of countries to reduce their 
greenhouse emissions under the Paris Agreement?
    Ms. Gentle. Thank you very much for the question.
    As a hiker on the Appalachian Trail in Virginia, I am 
sympathetic to your concerns. And I think that natural gas 
actually has a tremendous opportunity to support international 
goals for decarbonization and also for increased use of 
renewables in the overall power generation mix.
    I would cite to the example of the Iberian Peninsula just 
this last year as a perfect example of the partnership between 
natural gas and renewable energy, where the Iberian Peninsula 
depends a lot on hydroelectric and wind power for their 
renewable power generation. They had a lack of wind and a lack 
of rain this past year, and there was a 50-percent increase, 
therefore, in natural gas imports. Thankfully, they have the 
back-up gas-fired power generation that enabled them to have 
reliability in their grid. And Portugal now is, I think, the 
largest importer in Europe of U.S. LNG.
    Mr. Beyer. Thank you.
    Countries in the Caribbean are dependent on Venezuela's 
PetroCaribe program for fiscal support. Can the U.S. LNG 
exports be of help to these small countries?
    Ms. Gentle. Absolutely. We believe that there are systems 
that can be developed for distributed LNG, somewhat like a hub-
and-spoke. So, a large LNG vessel could depart from the United 
States carrying LNG and then off-load to a hub in the Caribbean 
onto smaller vessels and then bring LNG to the Caribbean and 
displace oil-fired power generation, significantly cutting the 
cost of power for our very important neighbors and allies.
    Mr. Beyer. Won't more LNG exports mean more methane leakage 
at home?
    Ms. Gentle. We certainly are very focused on this issue. It 
is important for the industry to work together also with 
government and regulators to ensure that we absolutely 
minimize, if not eliminate, methane emissions and especially 
leakage.
    Newer infrastructure is, of course, much more secure in 
terms of leakage, so we are turning our attention to producing 
gas in the United States and ensuring that through older 
infrastructure we can reduce the leakage.
    Mr. Beyer. It has been argued that we need LNG in order to 
keep energy prices low in the United States. If we are 
exporting it, though, won't that drive up domestic prices?
    Ms. Gentle. There actually are numerous studies that have 
been done over the past 5 years or so by the EIA, who have 
commissioned independent studies on this very issue. We agree 
it is an important concern. And the findings have been that we 
have such a vast reserve base in the United States that can be 
produced at very economic cost, that the impact of exports will 
be very minimal to the domestic prices.
    As an example, we have seen over the last several years 
that increased improvements in drilling technology have 
actually reduced the cost of production. We are now below $1 in 
MMBTU of production cost in the field in many of our major 
basins, which, for the first time ever, actually makes us 
competitive on a global basis with all suppliers around the 
world.
    Mr. Beyer. Thank you.
    Mr. Chair, I yield back.
    Dr. Gosar. I thank the gentleman.
    The gentleman, the Chairman for the Full Committee, Mr. 
Bishop from Utah, is recognized.
    Mr. Bishop. Thank you, Mr. Chairman.
    I appreciate the witnesses, especially this topic area that 
we have.
    The past two decades in the United States have truly been 
revolutionary. There was a time when manufacturing was leaving 
this coast because of excessive cost for energy as well as lack 
of security and what the future will be. That has all changed 
now. We have revolutionized how we develop our domestic 
product; we are maximizing that, not only here but abroad.
    I am interested in a lot of discussions--maybe Mr. 
Lamborn's question. Boston, it was shipped in there because 
there was a pipeline stranglehold in Pennsylvania and New York. 
You can't get it there. So, if you are not going to be able to 
do it by pipeline, you have to build some LNG ports. And that 
is really the problem that we have.
    It is ironic, because we just came back from a CODEL in 
Australia, and I found out that Australia is probably going to 
be the leading LNG exporter by 2019. At the same time, I also 
found out that western Australia, where all the produce of the 
stuff is, has the same attitude toward eastern Australia, where 
the population is, as I from the western United States have 
toward eastern--nothing personal--United States. In fact, they 
call them the wise men of the East, with as much derision as I 
would as well.
    But, ironically, even though they have the resources there, 
in the East, they are still having brownouts. And they are 
still exporting LNG and then trying to legislatively keep it 
there to try to solve that problem. And the problem comes from 
the stuff that we are looking at as well.
    There are no pipelines that go east and west in Australia. 
They all go north and south. To build one across the desert 
would be terribly expensive. But to have LNG ports in Sydney 
and Melbourne so that you could move it by transporting that 
way would be very easy to do.
    The other problem is, in the East, that is where they have 
their coal, and they have banned their coal-fired stuff for 
whatever political reason they wanted to, which has caused them 
to have--even though they have all sorts of exports and 
potential and development, they are still coming up with 
policies that give them rolling blackouts and brownouts in the 
process.
    But that is the same thing that we could be looking at in 
the United States. Not only are we talking about the ways of 
helping our allies in Europe, especially the Baltic states, but 
also a lot of this LNG is going up to China, Korea, and Japan. 
Working with our allies, we could become a part of Pacific 
stability so that we could be a counterforce to some countries 
in the Pacific that are not necessarily that positive toward us 
right now, as well as providing for our own country at the same 
time.
    So, Mr. Smith, let me get to you. We talked a lot to them 
about permitting processes. Are there some things we can learn 
about the permitting process in Australia and maybe in Canada--
because they always look at Canada as having a better 
permitting process--that we could learn to make it easier for 
us to try to use the resources to solve these geopolitical 
problems at the same time?
    Mr. Smith. Thank you, Congressman, for the question. Lots 
of issues there at the end of the statement that you just made 
around some of the challenges on the East Coast and in 
Australia and also issues that we have to deal with as an LNG 
exporter in the Gulf Coast.
    First of all, we spoke a moment ago about the permitting 
process. In all cases, we always like these things to roll 
along a little bit more quickly. We are in a hurry to build 
what we can, to deploy the capital that we have raised to 
construct our terminals. But, overall, we think having a 
transparent, rigorous process in the United States has been 
part of our competitive advantage.
    When we go to India, when we go to China, when we go to 
other countries and we are selling these long-term agreements, 
we do so with a confidence that the regulatory process that we 
have to go through here withstands the legal scrutiny that it 
is put under.
    Mr. Bishop. Like, the transparency is obvious, and it is 
good. What we are talking about also is the length of time that 
it takes before a company can start the process to when they 
can be in production and making it.
    And the point of this is trying to be, we have this LNG 
that is very positive here that can make us a true source of 
strength to our allies, both in Europe and in the Pacific, 
where we have countries that are not friendly to the United 
States that are actually trying to push their will upon us.
    That is one of the things we are looking at in an energy 
bill that we will be bringing to the Floor, trying to partner 
with our states to streamline the permitting process--not 
change the rules, but allow the paperwork to be done in a way 
that we can actually be up and in production to actually 
assist.
    And one thing I found out in our trip to Europe, as well as 
this recent trip to Australia, is the United States can play a 
huge role in working with our allies to stabilize, 
geopolitically, this world if we are smart on how we actually 
do it. And that is one of the reasons why we have to have more 
pipelines and right-of-ways. We also have to have more LNG 
ports. And we have to be able to do it faster, quicker. Not 
taking away the transparency and accountability, just the time 
it takes to do what is blindingly obvious.
    I am sorry. I went over 40 seconds. I apologize. I will 
give you an extra 40 seconds on our next markup. Is that OK? 
And I will take it from Lowenthal's time.
    Mr. Lowenthal. I can probably get it spoken in less than 4 
minutes.
    Dr. Gosar. The gentleman from Florida, Mr. Soto, is 
recognized for 5 minutes.
    Mr. Soto. Thank you, Mr. Chairman.
    On November 7, 2017, last year, Syria, despite being 
embroiled in a civil war, managed to become yet another country 
that joined the Paris climate agreement, leaving us with the 
infamous distinction of being the only country on the entire 
planet that is not part of the Paris climate agreement now.
    Having looked up some of the trends with liquefied natural 
gas, Mr. Doran, it seems that the Paris Agreement has actually 
increased demand for liquefied natural gas in Europe. Is that 
fair to say?
    Mr. Doran. I would argue, respectfully, that the market is 
driving a great deal of demand, plus increased European 
regulations that shift the fuel mix in Europe to a more 
diversified mix, including natural gas.
    Mr. Soto. Well, thank you for that. And, certainly, we have 
some other analysts who have said that, because the liquefied 
natural gas actually reduces emissions, it is helping both the 
United States and our European allies reduce their emissions so 
that they could actually comply with the Paris climate 
agreement.
    Ms. Gentle, Mr. Smith, do you all support the Paris climate 
agreement because it increases the demand for liquefied natural 
gas from the United States?
    We will start with you, Mr. Smith.
    Mr. Smith. Thank you for the question.
    Cheniere is on the record as supporting the United States' 
participation in the Paris climate agreement. We actually sent 
a letter encouraging the United States to remain in the 
agreement.
    Subsequent to the decisions that the Administration has 
made, which we understand, it really does not impact the 
reality of our commercial situation. We are selling in a global 
market. Every single customer to whom we sell resides in a 
country that is part of the Paris Accord. And those countries 
see that the product that Cheniere sells is the one that helps 
them reduce emissions, increase reliability, et cetera.
    Mr. Soto. Has the Paris climate agreement helped you 
increase sales for your company?
    Mr. Smith. What I would say is that the global driver to 
reduce emissions and increase diversity of supply, and to take 
into account these environmental issues, has been a net benefit 
for Cheniere.
    Mr. Soto. Ms. Gentle, has your company seen an increase in 
demand because of that?
    Ms. Gentle. I would say that the commitment that various 
countries have made to the Paris Agreement to reduce emissions 
and have a balanced electric generating profile has generally 
increased demand for natural gas because----
    Mr. Soto. Thank you for that. I have limited time, but I 
appreciate that comment.
    Turning next to Mr. Livingston, how critical are the wind 
and solar tax credits to continuing to encourage renewable 
energy production in the United States?
    Mr. Livingston. I can say that in recent years they have 
been incredibly important in allowing this industry to gain its 
footing and to help provide additional support where the full 
external costs of other energy resources are not internalized 
via carbon price. So, it is another method to try to level the 
playing field.
    These technologies, wind and solar, are increasingly 
maturing. I don't know exactly what point in time, but within a 
few years they will no longer need that credit for their 
survival to the same degree they did in the past. However, it 
remains an important, and it has been a very important policy 
instrument for supporting those technologies.
    Mr. Soto. A lot of us have had mixed feelings about the 
tariffs on solar-powered panels coming in from China. Is this a 
plus or is this a minus for the industry domestically? What is 
your opinion on that?
    Mr. Livingston. Yes, sir. Thank you for that question. It 
is a good one.
    I think that addressing China's dumping of solar modules 
and panels in the United States would have been best addressed 
a number of years ago. At this point, it is too late. So, I 
think that the effect of the tariffs is likely to be more 
pernicious than not.
    Just a few notes.
    Number one, I believe the duration, including the step-down 
over the number of years that the tariffs will be in place, 
does not give enough time for U.S. manufacturing to make actual 
investment decisions. The step-down occurs in such a way that 
the benefits would be accrued mostly in 1 year or 2 years, and 
then for all the out-years you would still have them be out-
competed by Southeast Asia, East Asia, et cetera.
    Number two, solar manufacturing is becoming increasingly 
automated and advanced. That is not necessarily a negative 
thing, but it is a reality of the market. In fact, First Solar 
has a plant in Toledo, Ohio, that had to close due to Chinese 
dumping, reopened, highly automated, and now produces solar 
panels which can compete with Chinese panels that are in fact 
30 percent cheaper. So, to the degree----
    Mr. Soto. My time is up, so thank you for that.
    I yield back.
    Dr. Gosar. I thank the gentleman.
    The gentleman from Colorado, Mr. Tipton, is recognized for 
5 minutes.
    Mr. Tipton. Thank you, Mr. Chairman, and thank the panel 
for taking the time to be here.
    It is interesting, listening to some of the dialogue that 
we are having right now, in terms of the benefits of 
responsibly developing a resource and to be able to develop LNG 
for export.
    I did want to address, Mr. Smith, your comments that you 
don't actually deal in the production. You just facilitate 
actually being able to sell it. You rely on the pipelines and 
other producers to be able to get it through.
    I just read a report on CNBC that Shell Oil had just made 
the comment that the market for LNG could face a shortage by 
the mid-2020s due to underinvestment in new projects.
    How important is it for us, as a country, to be able to 
maintain the edge, not only for our own energy security, our 
own jobs, keeping those prices low for American consumers, but 
also being able to address something Mr. Doran had mentioned, 
being able to compete on the world stage as well, given that we 
had Mr. Putin with his hand on the valve for a lot of Europe?
    Mr. Smith. Thank you for the question, Congressman.
    We absolutely believe that LNG is tremendously important in 
that area. We see that there are players in the market, like 
Cheniere, that are having success and selling into various 
markets. There are other projects that I think have the 
potential to come on line. And we see an increasing amount of 
LNG coming out of the United States, which is not only really 
beneficial for our country in terms of job creation, but also 
provides opportunities and options for our allies and our 
trading partners around the world.
    So, those U.S. molecules being able to project American 
influence through exporting of hydrocarbons developed right 
here in the United States we see as being very positive, not 
only for our economy but also for the global economy and, 
again, for our allies and trading partners who buy LNG from the 
United States.
    Mr. Tipton. Great.
    Would you concur with what Shell was just noting, that if 
we don't have the continued investment, the continued 
development in terms of being able to build the export 
facilities out, to be able to address that, with some of the 
suppressed prices that are out, that we may actually have an 
actual shortage? That it is important to keep those investments 
going?
    Mr. Smith. I think it is very important to ensure that we 
can move capital to these projects, that new projects do get 
built.
    Cheniere does see a next wave of LNG projects being 
constructed. We are expecting to get a final investment 
decision on our third train in the Corpus Christi facility in 
Texas, which will be the first new production, new final 
investment decision made in the United States since 2015.
    We see other projects coming forward. So, we absolutely 
feel that that is a real opportunity to build capital right 
here in the United States, and we think that is really 
important.
    Mr. Tipton. Great.
    In my part of the world, the West Slope of Colorado, in the 
Piceance Basin, with the Mancos Shale, we have the USGS coming 
out and saying it could be the second-largest reserve that we 
have in the country.
    And, Ms. Gentle, you are nodding your head. I know you are 
well aware of, probably, that particular area.
    How important is it for us to be able to have those 
pipelines to be able to deliver it? You made the comment you 
want to be able to go where you are welcomed. I think everybody 
will welcome having heat on in the winter, cooling on in the 
summer, no matter where you are--to be able to actually deliver 
that and have that sustainable, affordable supply.
    Ms. Gentle. We concur it is absolutely critical. And, 
overall, we believe that over $170 billion of investment is 
needed in pipeline and export infrastructure in the country, 
which was originally piped to deliver gas from the Gulf Coast 
to the major cities on the East Coast, West Coast, and Chicago 
market area. Now that supply is coming from west Texas, 
Rockies, Northeast, all of the pipeline systems have to be 
rerouted and new pipelines have to be built.
    Mr. Tipton. Great.
    Mr. Chairman, I think it is remarkable, if we step back in 
time, not long ago they were saying that we were going to run 
out of energy in this country, we were going to have to be 
importing LNG into the United States, and now we are in a 
position to where this country can lead. We can put our people 
to work. We can address a lot of the complications that we see 
in terms of the geopolitical issues they are facing over in 
Europe and elsewhere with American ingenuity, American 
inventiveness, to be able to create this abundant, affordable 
supply of energy, to be able to keep the lights on, and to be 
able to keep our people employed.
    Thank you for holding this hearing, and thank our panel for 
taking the time to be here.
    Dr. Gosar. I thank the gentleman.
    The gentleman from California, Mr. Costa, is recognized for 
5 minutes.
    Mr. Costa. I want to thank the Chair and the Ranking Member 
of this Subcommittee for holding a hearing which I think is 
very timely, given what is occurring not only in Europe but 
around the world. The geopolitics of natural gas and gas 
exports, obviously, are critical in terms of our relationships.
    As a Democratic co-chair of the Transatlantic Legislators' 
Dialogue, I work closely with our European allies. We meet 
twice a year on multilateral relations that can strengthen our 
democracies in Europe and our influence as it relates to 
freedom around the globe.
    I think this Administration has had positive and negative 
effects on our European allies, and I think many of them are 
very obvious. One of the positive effects is that this 
Administration has had a continuation of policies that led to 
the development of America's unconventional oil and gas 
resources that were really begun in the last administration, 
the Obama administration. I have said for 14 years on this 
Committee that I support using all the energy tools in our 
energy toolbox, and I think I have been consistent.
    The development of these resources have had a remarkable 
impact on the global landscape on energy. Only last year, as we 
all have acknowledged, the United States became a net exporter. 
It is commendable it provides opportunities not only for the 
United States to improve the security of our allies and the 
globe by weakening the influence of bad actors like Russia, but 
it also provides an opportunity to wean these countries off, as 
we have all agreed upon--I think there is a sense of agreement 
here in the Committee--kind of unusual--that we wean these 
countries off of other energy sources that, obviously, don't 
have the same common agreement in human rights and other values 
that we all, as a democracy, support.
    Energy sources that emit a larger percentage of greenhouse 
gases, of course, contribute to climate change. We know that. 
This is one of the areas where, generally, European leaders 
wish we would rejoin the Paris climate agreement and disagree 
with the current action of this Administration.
    But I can tell you, from our regular dialogue, that 
development of natural gas resources sends a strong message 
around the world in favor of open, non-politicized global 
energy markets. This is already having an important effect on 
behaviors and policies, as all of us have generally 
acknowledged. Europe is actively working to diversify its 
external suppliers and become increasingly dependent on imports 
of oil and gas.
    The EU is working to develop infrastructure, as was noted 
by the Chairman, that will permit energy to flow around Europe 
continental-wide. And that is important. It is in this area 
that the European gas diversification and the United States may 
play the biggest geopolitical role. The existing licensing of 
the regime for U.S. LNG exports to the EU is a restriction that 
should not exist, I believe, with close allies like the EU and 
the United States.
    There is a proposal in the framework of the Energy and 
Natural Gas Act of 2017 that has been submitted to Congress to 
restrict the amount of time that the Department of Energy has 
for assessing non-free-trade agreements in LNG export 
applications to 45 days. I think that is important.
    While this would be a good step, the complete removal of 
the requirement of the Department of Energy to approve LNG 
exports to the EU, I think, would bring significant economic 
and employment benefits to the United States, enhance the 
energy security for Europe, and it would build better 
relationships that I think have suffered in the last year.
    It makes no sense for multiple Federal agencies to be 
involved in processing permits to export gas to countries which 
we already have free trade agreements with. These are the type 
of common-sense policy changes that could not only improve our 
economy but our national security as it relates to our allies 
in Europe.
    Let me ask some questions.
    Mr. Smith, are there some beneficial aspects to removing 
the requirement of the Department of Energy approval of the 
export LNG to countries which already have free trade 
agreements with the United States?
    Mr. Smith. Thank you for the question, Congressman.
    One thing I would note is that these are major investments. 
Cheniere has invested over $30 billion in our facilities. 
Generally, in order to underpin those investments, one would 
need to be able to send liquefied natural gas both to FTA 
countries and non-FTA countries.
    Mr. Costa. Are there drawbacks to removing the 
requirements?
    Mr. Smith. Are there drawbacks? There are probably not any 
drawbacks. I am not sure that there are any benefits either.
    Mr. Costa. The benefits certainly outweigh whatever 
drawbacks there may be.
    Do any of you want to comment on this?
    Mr. Doran. Mr. Congressman, if I can just jump in really 
quick, I would say that you are exactly correct. Atlanticism 
means increasing the ties that bind with our allies. Cutting 
red tape in the export of American hydrocarbon resources to our 
allies is a good thing for us and it is a great thing for 
countries that we are treaty-bound together with. That is the 
nature of Atlanticism, and that should be, in my view, a 
priority for this Congress.
    Mr. Costa. And weaning them off of Russia, which obviously 
does not have any interest in supporting these democracies, as 
we know.
    Mr. Doran. I would heartily concur.
    Mr. Costa. Thank you.
    Dr. Gosar. I thank the gentleman.
    The gentleman from Georgia, the dog himself, Mr. Hice, is 
recognized.
    Mr. Hice. Thank you, Mr. Chairman.
    I am intrigued with our discussion and the line of 
questioning Mr. Costa was going down. Right now in Georgia, the 
first next-generation liquefaction plant is under construction 
at Elba Island. It should be beginning production by the middle 
of this year and in full production by the end of the year.
    And they have actually obtained authorization from the 
Department of Energy for our free-trade-agreement countries, to 
export to those countries. They will be producing 2.5 million 
metric tons a year. Obviously, that is a huge economic issue 
for Georgia, and for our country and beyond.
    I am not sure exactly who all to address my questions, but, 
Mr. Smith, I will begin with you. Considering the current rate 
of production of natural gas and the capacities of Elba Island, 
the production plant there, do we have enough plants in America 
to keep up with the production needs?
    Ms. Gentle. We do not have enough plants to keep up with 
the production.
    The EIA is estimating that we will have a 25 percent 
increase in natural gas production in this country by 2025. 
That is an additional 20 Bcf a day of production over and above 
the 80 Bcf a day almost that is produced today. And there are 
roughly 8, including Elba Island, 8 Bcf a day of export 
infrastructure that is under construction today. We still need 
12 to 13 Bcf a day of additional demand, and most of that will 
need to be export.
    Mr. Hice. So, are you saying we would need an additional 12 
plants? How many more plants would be needed so we keep up with 
the production needs?
    Ms. Gentle. If they were Elba Island-sized plants, we would 
need six. If they were Tellurian-sized plants, we would need 
three.
    Mr. Hice. OK.
    What, if anything, needs to be done here in the House of 
Representatives or, even more specifically, in this Committee 
to help speed the process up, to get production up to where it 
needs to be?
    Ms. Gentle. So, incidentally, we are a producer of natural 
gas. We produce gas in the Haynesville, which is in north 
Louisiana. And we are really asking legislators to do one 
primary thing, and that is to continue to support the 
streamlined and efficient regulatory process.
    By way of example, when I did work for Cheniere, we 
permitted the Sabine Pass export terminal in 12 months, and it 
will take us about double that time to permit the Driftwood LNG 
facility. So, you can see that, even from the very first plant 
to today, we have had a considerable increase in the time that 
it takes to complete the process even though we have the exact 
same people working with the local, state, and Federal 
officials.
    So, it will be beneficial for us, anything that can help 
streamline the process. Make sure FERC has the appropriate 
resources to be able to work through the permits that they have 
in front of them and stick to the timelines that are already 
part of the policy that don't allow extra tolling procedures to 
add 30, 60, 90 days to comment periods.
    Mr. Hice. Very good. All right.
    And, again, I am not sure who would be best to answer this 
last question, because my time is running out. I think, Mr. 
Smith, I want to go to you, but anyone else can chime in.
    As our export capacity grows, we will increasingly, 
obviously, be able to compete with other countries, like 
Russia, and the impact that that will have in Europe, I think, 
is significant.
    Do you feel that our ability to export LNG to Europe would 
reduce the leverage of Russia in the region and improve the 
national security of those countries?
    Mr. Smith. Thank you, Congressman.
    I think the answer to that is definitely yes. The fact----
    Mr. Hice. Real quickly, before you go further, let me just 
get everybody else. Just go down the line.
    Mr. Doran. Yes, if we can increase the interconnectivity of 
countries in Europe so that the natural gas not only goes to an 
LNG receiving facility on the water but then it can move across 
borders to other allies that are landlocked and more distant 
from maritime facilities.
    Mr. Hice. Well, that is what I am getting to. But would it 
help the national security?
    Mr. Doran. Yes, it would.
    Mr. Hice. OK.
    Mr. Livingston. I fully agree. Yes, it would. And, I think, 
it is a positive contributor to Europe's own energy union 
strategy, as Peter mentioned.
    Ms. Gentle. I fully agree as well.
    Mr. Hice. OK. Great.
    I am sorry, my time is up, Mr. Smith. If you have more 
comments, please submit that. We would appreciate it.
    Thank you.
    Dr. Gosar. I thank the gentleman.
    The gentlewoman from Wyoming, Ms. Cheney, is recognized for 
5 minutes.
    Ms. Cheney. Thank you very much, Mr. Chairman.
    And thank you to all of our witnesses for being here.
    Mr. Doran, I wanted to start with you. Could you talk a 
little bit more about--you mentioned in your written testimony 
the fact that Secretary Tillerson has been clear about our 
opposition to the NS2 pipeline. Talk about what you see as the 
next steps, what are the next actions we need to take in terms 
of opposing that pipeline, making clear that we view it as 
fundamentally inconsistent with our interests.
    Mr. Doran. Thank you, Congresswoman. I will be brief and 
direct. I will sum it up in three points.
    The first one is that, for years, Europeans have been 
asking the United States to lead from the front. So, when 
Secretary Tillerson was in Warsaw declaring America's 
opposition to Nord Stream 2, something that is against our 
interests, against the interest of allies, America was 
demonstrating the kind of leadership that we have been looking 
to see. That is good.
    Now we need to align the rhetoric with actual actions that 
can truly support allies and help achieve what America has 
wanted, and that is to increase a market environment where 
energy is not politicized, it is a commodity like anything 
else. That should be the goal.
    How do we do this? First of all, we need to recognize that 
Russia is not competing on a fair playing field. Russia 
provides subsidies that industry in America cannot match one-
to-one, so we actually have to use existing rules and 
regulations to our advantage.
    As a citizen, I would propose to this Committee that the 
Countering America's Adversaries Through Sanctions Act of 2017, 
and especially section 257 that directs the State Department to 
increase its outreach to Ukraine to increase their energy 
security and promote their reform process, are essential parts 
of the fight against Nord Stream 2.
    Ms. Cheney. Thank you.
    And then you also mentioned in your response to Mr. Hice 
the importance of infrastructure in Europe and 
interconnectivity in Europe. As we look at what options are 
available to us in the United States to help counter the 
weaponization of energy that the Russians have clearly 
undertaken, what are the specific things that you see that the 
Europeans need to do? How can we help to encourage that kind of 
activity and that kind of interconnectivity?
    Mr. Smith?
    Mr. Smith. We don't have a particular position on Nord 
Stream, on the pipeline itself. We do believe that the U.S. LNG 
industry is providing a product to Europe that is valuable for 
our customers there on the continent, particularly with our 
allies and trading partners.
    We are seeing that markets are driving U.S. LNG into the 
European market in a way that is providing new flexibility and 
diversity to those customers. So, even if molecules are not 
going from the United States to Europe, just the fact that that 
is an option, just the fact that those are available to those 
customers, we think, is providing a valuable service.
    Ms. Cheney. Have you seen action on the part of countries--
this is for either Mr. Smith or Mr. Doran. I think in your 
testimony, Mr. Doran, you called them, obviously, the 
landlocked countries--but actions to indicate their willingness 
to take the kinds of steps that would be needed in order to 
either wean themselves from or prevent them becoming dependent 
upon Russian sources of energy?
    Mr. Doran. I would say this: the answer is yes, and the key 
right now has been a lack of options. For the very first time 
in years, we are beginning to see those options emerge. The 
process is not done. Interconnectivity is beginning to happen, 
but the job is not done.
    If we can find ways to increase cross-border, 
multidirectional interconnectors across countries in Europe and 
across borders, that is a crucial next step in the development 
of a market-based energy and especially gas market in Europe.
    I would encourage the Administration and, to the extent it 
is appropriate, for Congress to encourage the Administration to 
show strong American leadership.
    Also, in the case of Croatia, we would like to see, as an 
American, new LNG receiving facilities in the Adriatic as well 
as in Poland's Swinousjscie and Lithuania's Klaipeda 
facilities.
    Ms. Cheney. Thank you very much.
    I will yield back the balance of my time. Thank you, Mr. 
Chairman.
    Dr. Gosar. I thank the gentlewoman.
    We are going to go a lightning round. The Ranking Member 
always has to put up with me, so we recognize the Ranking 
Member for his questions.
    Mr. Lowenthal. First, I want to thank the Chair for 
acknowledging that I have to put up with him. But that is a 
whole other issue, and that would take a lot longer than my 5 
minutes. But I do appreciate working with the Chair. Obviously, 
it was said in jest.
    This question is really going to be for Mr. Smith and Ms. 
Gentle.
    Between 2009 and 2015, oil and gas producers on public and 
Indian lands flared, vented, and leaked over 460 billion cubic 
feet of natural gas. According to the Government Accountability 
Office, taxpayers are losing as much as $23 million a year in 
lost royalty revenues from this wasted energy resource.
    As you are aware, the Obama administration developed 
regulations requiring industry to reduce natural gas venting, 
flaring, and leaking at operations on public lands. The Trump 
administration is trying to undo this rule even after Congress 
specifically voted to keep it.
    My first question to Mr. Smith is, does Cheniere support 
the 2016 Bureau of Land Management Methane and Waste Prevention 
Rule? And what are some of the economic and environmental 
benefits of decreasing natural gas flares and leaks?
    Mr. Smith. Thank you, Congressman, for the question.
    Cheniere is the largest purchaser of natural gas in the 
United States. We purchase from nine states throughout the 
United States. We are on the record already as supporting the 
BLM rule.
    I would note that the majority of the gas we purchase, or 
that is produced in the United States, is produced on public 
lands, so one could discuss the overall impact of that rule.
    But, overall, as we endeavor to work with suppliers to 
reduce methane emissions, one thing you note is that, if you 
are concerned about energy security, you are concerned about 
economic development, you are concerned about climate or 
methane or greenhouse gas emissions, this is great low-hanging 
fruit. Because this is the one area in which you can reduce 
emissions and you can actually sell the stuff that you are 
reducing.
    So, we think that there are a lot of actions that producers 
can take to make headway in this area, and we look forward to 
working with our suppliers to make that happen.
    Mr. Lowenthal. Thank you.
    Ms. Gentle, as President and CEO of Tellurian, do you 
support the 2016 Bureau of Land Management Methane and Waste 
Prevention Rule? And what are the economic and environmental 
benefits of decreasing natural gas flares and leaks?
    Ms. Gentle. Yes, we support minimizing flares.
    Mr. Lowenthal. Do you support the rule?
    Ms. Gentle. We support the rule, and we support minimizing 
and preventing flares, leaks, and venting on public and private 
land all across the industry.
    And there is an enormous environmental benefit. As Mr. 
Smith said, not only are you able to reduce the emissions, you 
are also able to sell the gas. And then the gas can displace 
other fuels that have higher emissions than natural gas when 
used, for example, in power generation, where natural gas has 
50 percent or more of the reduction in carbon emissions 
compared to even the cleanest coal-fired power plant in service 
today.
    Mr. Lowenthal. Thank you.
    Thank you, Mr. Chair. I yield back.
    Dr. Gosar. OK.
    All four of you listened very carefully. What was the 
question you wished was asked, and what is the answer?
    We are going to start with Mr. Smith first.
    Mr. Smith. Well, thanks for the question. That is a tough 
one because you actually asked pretty good questions. I think 
we had an opportunity to talk about the things that were 
important to us.
    Perhaps the question that I would raise would be what do we 
think the prospects are for a company like Cheniere going 
forward in terms of creating economic value.
    We pointed to some of the successes that we have had in 
terms of long-term commercial agreements into Europe, into 
India, into China. We believe that there is more of that to do. 
And we have appreciated the support that we have gotten 
particularly from the Department of Commerce and particularly 
in making inroads into China.
    The China deal is really an opportunity to help balance of 
trade, to project American influence abroad by taking 
hydrocarbons developed right here in the United States and 
selling those into China. So, we appreciate that support and 
hope that it would continue in the future.
    Dr. Gosar. Mr. Doran?
    Mr. Doran. Thank you, Mr. Chairman. That is probably one of 
the best questions I can imagine.
    I would say this: what happens when we win? If we were in a 
competition geopolitically and in a market competition with 
other suppliers of energy to Europe, what happens when America 
succeeds and we win?
    And I think the answer to that question would be: we will 
find increased opportunity for American jobs at home. We will 
find better relationships with allies who are looking for signs 
of long-term American commitment to their security. Energy 
security, as you have identified, is a national security 
priority.
    So, when we win, we will see a variety of economic as well 
as strategic benefits to American interests in Europe.
    Dr. Gosar. Mr. Livingston?
    Mr. Livingston. Terrific.
    I would like to build off of Mr. Doran's question and ask 
myself: what can be done to ensure and invest in American 
dominance or winning the next battles that lie in energy 
markets globally? The answer to that would be to build on 
America's superlative strength, the key source of America's 
energy edge, which is innovation.
    So, what I would recommend, to the degree that it is within 
Congress' ability to do so, is to support some of the vessels 
and some of the agencies and initiatives that have supported 
that energy innovation over time.
    Whether it be ARPA-E, whether it be initiatives like the 
SunShot Initiative, the United States has a rich history of 
creating the technologies that end up defining energy ethics 
across the world, be it nuclear energy, shale drilling 
technologies, the modern solar PV industry, et cetera.
    And I would urge and encourage the United States and 
Congress to continue to invest in capabilities that will 
guarantee a prominent U.S. role in those energy technologies 
for years to come.
    Dr. Gosar. Ms. Gentle?
    Ms. Gentle. Thank you, Mr. Chairman.
    As you all have noted, for the first time we are now a net 
exporter of energy, not only of natural gas but also oil. And 
this gives the United States an unprecedented opportunity to 
fundamentally change the global energy balance of power and 
bring energy security to our allies.
    One thing we did not talk about, I guess the question we 
did not ask is: what happens if we don't continue to support 
exports? And the answer to that is that we will hurt the 
industry that we have worked over the last decade to build up 
in this country and attain our own energy independence.
    If we don't allow the continued growth of markets, 
including domestic and export markets, we will not be able to 
sustain the investment in upstream drilling both for oil and 
natural gas.
    And, as we continue to see, especially in the Permian, the 
commingling of gas associated with oil production, we need to 
find markets to that gas in order to continue producing oil, or 
we will have increased venting or shut-ins of production.
    So, the support of the export market is really at the same 
time supporting our own domestic industry.
    Dr. Gosar. Those are actually great questions.
    The only comment I have, Mr. Livingston, is in IP, 
intellectual property. That is kind of problematic now that we 
are no longer the leader in the world. China has taken that 
purview, and it has been noted all the way around the world.
    But I have to compliment you. Great questions. Maybe we 
ought to put you guys up on the dais.
    I thank the witnesses for their valuable testimony and the 
Members for their questions.

    Members of the Committee may have some additional questions 
for the witnesses, and we will ask you to respond to those in 
writing.

    Under Committee Rule 3(o), members of the Committee must 
submit witness questions within 3 business days following the 
hearing by 5:00 p.m., and the hearing record will be held open 
for 10 business days for those responses.

    If there is no further business, without objection, the 
Subcommittee stands adjourned.

    [Whereupon, at 3:50 p.m., the Subcommittee was adjourned.]

[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S 
                            OFFICIAL FILES]

Rep. Gosar Submissions

    --BLUEPRINT 2025--Comments on Oversight Hearing, detailing 
            concerns on the analytics and communications 
            technologies of the 1970s and 1980s dictating our 
            environmental review procedures of the 21st 
            century.

    --BLUEPRINT 2025--Statement for the record from November 
            29, 2017 Oversight Hearing, regarding support for 
            NEPA modernization and of insights into the lengthy 
            permitting processes.

                                 [all]