[Senate Hearing 115-529]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 115-529
 
   THE ROLE OF U.S. LIQUEFIED NATURAL GAS IN MEETING EUROPEAN ENERGY 
                                 DEMAND

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 13, 2018

                               __________
                               
                               
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                            ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 32-265               WASHINGTON : 2020         
        
        
               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
LAMAR ALEXANDER, Tennessee           MAZIE K. HIRONO, Hawaii
JOHN HOEVEN, North Dakota            ANGUS S. KING, JR., Maine
BILL CASSIDY, Louisiana              TAMMY DUCKWORTH, Illinois
ROB PORTMAN, Ohio                    CATHERINE CORTEZ MASTO, Nevada
SHELLEY MOORE CAPITO, West Virginia  TINA SMITH, Minnesota

                      Brian Hughes, Staff Director
                     Kellie Donnelly, Chief Counsel
       Suzanne Cunningham, Senior Policy Advisor for Oil and Gas
             Mary Louise Wagner, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
           Scott McKee, Democratic Professional Staff Member
           
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from 
  Washington.....................................................     2

                               WITNESSES

Winberg, Hon. Steven E., Assistant Secretary for Fossil Energy, 
  U.S. Department of Energy......................................     4
Book, Kevin, Managing Director, ClearView Energy Partners, LLC...    13
Grigas, Dr. Agnia, Associate, Argonne National Laboratory, and 
  Nonresident Senior Fellow, Atlantic Council....................    22
Slocum, Tyson, Energy Program Director, Public Citizen...........    28
Mills, Mark P., Senior Fellow, Manhattan Institute...............    41

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Book, Kevin:
    Opening Statement............................................    13
    Written Testimony............................................    15
    Responses to Questions for the Record........................    74
Cantwell, Hon. Maria:
    Opening Statement............................................     2
Grigas, Dr. Agnia:
    Opening Statement............................................    22
    Written Testimony............................................    24
    Responses to Questions for the Record........................    78
Industrial Energy Consumers of America:
    Statement for the Record.....................................    86
Mills, Mark P.:
    Opening Statement............................................    41
    Written Testimony............................................    43
    Responses to Questions for the Record........................    84
Murkowski, Hon. Lisa:
    Opening Statement............................................     1
    Press Release dated September 13, 2018, from the Department 
      of Energy titled ``U.S. Secretary of Energy Rick Perry 
      Meets With Russian Minister of Energy, Alexander Novak''...    55
Slocum, Tyson:
    Opening Statement............................................    28
    Written Testimony............................................    30
    Responses to Questions for the Record........................    81
Winberg, Hon. Steven E.:
    Opening Statement............................................     4
    Written Testimony............................................     6
    Responses to Questions for the Record........................    68


   THE ROLE OF U.S. LIQUEFIED NATURAL GAS IN MEETING EUROPEAN ENERGY 
                                 DEMAND

                              ----------                              


                      THURSDAY, SEPTEMBER 13, 2018

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:11 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Lisa 
Murkowski, Chairman of the Committee, presiding.

           OPENING STATEMENT OF HON. LISA MURKOWSKI, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. Good morning, everyone. The Committee will 
come to order.
    As we meet here this morning, everyone is focused on 
weather and what is coming our way, concerned about the impact 
of Hurricane Florence on the East Coast, particularly North and 
South Carolina and closer to Virginia. We have watched very 
attentively over these past few days, it was characterized as a 
monster storm, the likes of which we have not experienced in 60 
years. It has since been downgraded to Category 2, but I think 
we all know that you still keep a very, very watchful eye, 
because a dangerous storm can cause significant damage. There 
is no doubt that we will see power outages resulting from 
downed transmission and distribution lines, as well as 
flooding. The question is how long will people be without power 
and how quickly will the grid system be back up and running?
    This Committee has spent a fair amount of time following 
this situation in the aftermath of the hurricanes in Puerto 
Rico and the U.S. Virgin Islands, and a year later, a year 
later, you still have some folks that are still struggling. So 
as Hurricane Florence proceeds, know that we are going to be 
monitoring the situation closely. The utility industry has 
already mobilized its mutual assistance program, deploying 
workers from other parts of the country in advance of the storm 
so that restoration work can start as quickly as possible. I 
understand that FEMA is also already standing ready to assist.
    Next Thursday, the Committee was planning to hold an 
oversight hearing on ``blackstart'' capabilities, which is the 
process for returning energy to the power grid after a system-
wide blackout. Unfortunately, we have had to postpone this 
hearing due to our schedule here in the Senate. When it is 
rescheduled, we will be able to examine system restoration 
plans in the utility industry in the wake of Hurricane 
Florence.
    But today's hearing is not about hurricanes and it is not 
about blackouts, it is focused on the role of the United States 
in exporting LNG, Liquefied Natural Gas, in meeting Europe's 
growing energy demand.
    Europe is now the biggest importer of natural gas in the 
world. The continent consumes close to 15 percent of the 
world's gas, but holds only two percent of the reserves. 
Europe's reliance on the natural gas resource is increasing as 
its coal-fired power plants are phased out and nuclear plants 
are placed out of service.
    Russia, we know, continues to be the main supplier of much-
needed natural gas to European nations. But as we have seen too 
often, Russia has used this energy resource as a geopolitical 
weapon, cutting off supplies to Ukraine in 2006 and 2009 and 
halting deliveries to Europe. Recent disputes between those two 
nations only highlight Europe's vulnerability given its 
dependence on Russian gas.
    But with the abundance of our domestic natural gas 
supplies, the United States is poised to change that equation. 
Through technological advancements, the U.S. has emerged as the 
largest gas-
producing nation in the world and is fast becoming a global 
leader in LNG exports.
    According to the International Energy Agency (IEA), gas 
imports to Europe are expected to rise almost 20 percent by 
2040. Our nation is well-positioned to assist our allies in 
diversifying their energy supplies and achieving a level of 
energy security.
    As we examine these global issues today, we are joined by a 
very impressive panel of experts and we appreciate that. Our 
witnesses this morning are appearing on behalf of the 
Department of Energy, ClearView Energy Partners, the Atlantic 
Council, the Manhattan Institute and Public Citizen. I am 
interested in their thoughts on the economic and geopolitical 
implications of a stronger U.S.-EU energy relationship, as well 
as what actions may be needed to maximize the benefits of LNG 
exports to our nation and our allies.
    With that, I turn to Senator Cantwell for your opening 
remarks this morning.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Well thank you, Madam Chair, and I, too, 
thank all those that are preparing for the storm that is 
hitting our coast for their hard work and diligence.
    I would point out as I watched the TV, I continued to see 
this information about the European model versus the U.S. 
model, and I hope that as we continue to move forward we will 
put more time into supercomputing information that allows us to 
have good information and modeling about our U.S. storm 
impacts. I think this is vitally important for us and for many 
parts of the United States.
    I would, if I could, as a point of privilege, say something 
good about a storm, which is that I want to congratulate the 
Seattle Storm on winning the Women's WNBA Championship last 
night and for all the good work that they did. We are very 
happy about that Storm. Congratulations to all of them and 
their hard work, and congratulations to Seattle.
    Well, Madam Chair, thank you for holding this hearing about 
the role that U.S. liquified natural gas can play in meeting 
European energy demand. While it is good to discuss ways to 
help our allies, I hope we do not lose focus on protecting U.S. 
consumers.
    Driven in large part by technologies developed through R&D 
by the Department of Energy, there has been a dramatic growth 
in domestic natural gas production. The growth in U.S. 
production has driven down natural gas prices for consumers and 
provided a key U.S. competitive advantage for manufacturers 
that use natural gas as an energy source and feedstock.
    As natural gas production has increased, the volume of 
natural gas exports has also increased, and the United States 
became a net natural gas exporter in 2017 for the first time in 
nearly 60 years. The U.S. LNG exports reached 25 destinations 
last year, and more than half of those LNG exports were shipped 
to three countries: Mexico, South Korea and China. Countries in 
Europe have accounted for the third largest share of U.S. LNG 
exports.
    Several more LNG export projects are expected to be 
completed in the coming years and, once completed, the U.S. LNG 
export capacity is expected to reach 9.6 billion cubic feet per 
day by the end of 2019.
    The Department of Energy has approved over 20 billion cubic 
feet per day in export capacity, with another 30 billion cubic 
feet per day pending in applications. So when the Department of 
Energy makes their public interest determination, they should 
prioritize domestic consumption before exports, and make sure 
that there are proper environmental mitigations in place when 
considering the benefits of using natural gas.
    The prospects of increased U.S. LNG exports and growing 
global LNG markets can create opportunities for countries to 
look to diversify their natural gas supply. For example, 
countries in Europe are heavily dependent, as the Chair said, 
on Russia for their natural gas supply, with Russian natural 
gas accounting for 37 percent of the European imports in 2017.
    However, other factors influence LNG cargo delivery and, 
although Europe has a large number of LNG import facilities, 
they are currently only operating at 20 to 30 percent of 
capacity. I am sure we will hear about this.
    The International Energy Agency projects that U.S. LNG 
suppliers will reach a market share of only about 10 percent of 
the LNG imports to Europe by 2025. So it is clear that the role 
of U.S. LNG can be particularly impactful, but will be driven 
by economics, infrastructure, and perhaps a little policy here. 
I look forward to exploring these topics and hearing from our 
witnesses today.
    Thank you for scheduling this hearing.
    The Chairman. Thank you, Senator.
    We will now move to our panel. As I mentioned, we have a 
good panel this morning. We appreciate you all being here.
    We will start off this morning with comments from Steven 
Winberg, who is the Assistant Secretary of Fossil Energy at the 
U.S. Department of Energy (DOE). We welcome you.
    Mr. Kevin Book has been before the Committee on numerous 
occasions. He is the Managing Director for ClearView Energy 
Partners.
    Dr. Agnia Grigas, who is the Associate at Argonne National 
Lab. She is a nonresident Senior Fellow with The Atlantic 
Council. Welcome.
    Mr. Mark Mills is at the end here, kind of out of order, 
according to my list, but Mr. Mills is a Senior Fellow at 
Manhattan Institute.
    And Mr. Tyson Slocum is the Energy Program Director for 
Public Citizen.
    We will go down the order in the way that you are seated, 
not in the way that I have introduced you there, so sorry for 
that little mix-up on the end.
    Again, we appreciate that you have made time in your busy 
day to help educate the Committee on these important and 
significant issues.
    We ask that you try to limit your comments to about five 
minutes. Your full statements will be incorporated as part of 
the record.
    Assistant Secretary Winberg, if you would like to lead off 
please?

 STATEMENT OF HON. STEVEN E. WINBERG, ASSISTANT SECRETARY FOR 
            FOSSIL ENERGY, U.S. DEPARTMENT OF ENERGY

    Mr. Winberg. Thank you, Chairman Murkowski, Ranking Member 
Cantwell and members, member, of the Committee.
    [Laughter.]
    I appreciate the opportunity to be here today.
    Increased supplies of U.S. natural gas in Europe help 
ensure competition in the energy markets, giving our allies a 
safe and reliable source of energy governed by market forces, 
not political win. That's exactly the message that Secretary 
Perry is delivering to his Russian counterparts right now as we 
speak.
    With the United States and Russia as two of the world's 
largest energy producers, Secretary Perry is re-opening a 
dialogue with the Russians to help ensure increased competition 
in the energy markets and to stand firm on U.S. sanctions which 
prohibit any U.S. participation in energy production and 
exploration projects in Russia's deepwater, Arctic offshore and 
shale energy projects. These sanctions are directly related to 
Russia's actions to undermine our democracy by meddling in our 
elections.
    Secretary Perry has stated that every molecule of energy 
that the United States exports is exporting freedom to the 
world. This Administration made a commitment to spreading 
American energy dominance throughout the world through exports, 
and we're delivering on that commitment.
    DOE has authorized exports of LNG at a rate of over 21 
billion cubic feet per day to anywhere in the world not 
prohibited by U.S. law or policy. These non-free trade 
agreement authorizations are primarily spread across ten large-
scale export projects.
    Six of these projects are in various states of construction 
and operation in Texas, Louisiana, Georgia, and Maryland. 
Cheniere Energy's Sabine Pass facility in Louisiana has been 
exporting LNG since February 2016. Dominion Energy's Cove Point 
facility in Maryland began LNG exports in March 2018, and 
Secretary Perry had the opportunity recently to participate in 
the formal ribbon cutting for the facility along with officials 
from both the Japanese and Indian governments. Four additional 
export projects are expected to come online over the next two 
years.
    In support of the Administration's deregulation, 
deregulatory agenda, DOE proposed a rule to expedite approval 
of smaller volumes of natural gas exports to non-free trade 
agreement countries. We call this the Small-Scale Rule, and the 
final rule went into effect this past August.
    DOE's action to increase U.S. LNG exports are critical to 
ensuring that Europe pursues diversification of its energy 
supplies. The large-scale facilities currently operating and 
under construction in the U.S. have long-term authority to 
export LNG anywhere in the world, including Europe, except 
where otherwise prohibited by law, for example, if there are 
sanctions.
    As European Union (EU) member states decrease their 
reliance on electricity generation from coal to comply with EU 
emission goals, European countries are becoming more dependent 
on natural gas overall. As a consequence, due to a lack of 
supply routes and inefficient pipeline buildout, Europe is also 
becoming more, not less, dependent on Russian natural gas. This 
does not have to be the case.
    Our nation is endowed with vast supplies of natural gas and 
production is growing rapidly. The U.S. Energy Information 
Administration (EIA) projects that dry natural gas production 
will reach 110 billion cubic feet per day by the year 2040, up 
from the projected production of nearly 80 billion cubic feet 
per day this year. The EIA also projects U.S. LNG exports to 
ramp up from 2.8 billion cubic feet per day in 2018 to the rate 
of 14 billion cubic feet per day in 2040.
    The United States has the natural gas supplies to spread 
freedom throughout the world by giving our allies a safe and 
reliable energy supply, and we look forward to working with our 
European allies to bring more U.S. natural gas to the continent 
moving forward.
    I thank you for your attention, and I look forward to your 
questions.
    [The prepared statement of Mr. Winberg follows:]
    
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    The Chairman. Thank you.
    Mr. Book, welcome.

 STATEMENT OF KEVIN BOOK, MANAGING DIRECTOR, CLEARVIEW ENERGY 
                         PARTNERS, LLC

    Mr. Book. Thank you.
    Good morning, Chairman Murkowski, Ranking Member Cantwell, 
distinguished members of this Committee. My name is Kevin Book. 
I head the research team at ClearView Energy Partners, an 
independent firm that examines macro energy trends for 
institutional investors and corporate strategists. Thank you 
for inviting me to contribute to your discussion of U.S. LNG 
exports to Europe.
    Our nation is on track to play a major role in global gas 
markets by the early years of the next decade. Getting there 
will require much investment, not just financial but also the 
intellectual investment, in sound energy policy that this 
Committee continues to make. I'm grateful for the important 
work you are doing.
    I would like to start with a small word that tells a big 
story. That word is ``net.''
    The Energy Information Administration, or EIA, reported 
0.34 billion cubic feet of net natural gas exports in 2017, 
0.34. It may not sound that big compared to EIA's latest 
production forecast. The agency sees 84.1 billion cubic feet 
per day in 2019, up 14 percent from 2017. But before last year 
one must go all the way back to 1957 to find another year of 
net exports. During the six intervening decades, the U.S. was 
the net importer.
    The star of the story is LNG. U.S. LNG exports, year-to-
date through June, were up 58 percent over the same interval 
last year. The U.S. exports natural gas by pipeline too, but 
LNG has gone from essentially zero percent of the export mix in 
2016 to an average of more than 25 percent over the 12 months 
through June of this year.
    Worldwide LNG supplies a growing share of gas demand. The 
International Energy Agency projects that LNG will account for 
about 12 percent of global gas demand by 2020.
    We are on our way to becoming a decisive player in these 
global markets and perhaps even a dominant one. U.S. 
liquefaction capacity is on track to be third behind Qatar and 
Australia by 2020. If project sponsors end up building every 
facility that DOE and the FERC have approved so far, our 
capacity could exceed 18 billion cubic feet per day which would 
make the U.S. the world's largest LNG exporter.
    Today, however, only about eight percent of U.S. LNG goes 
to Europe. Most of the rest goes to Asia and Latin America. On 
the other side of the pond, the numbers are similar. Only about 
four percent of European LNG comes from the U.S. Most of the 
rest comes from Africa and Qatar.
    The reasons for this stand, as the Ranking Member said, 
from economics, infrastructure and policy.
    Economics first. Europe doesn't import that much LNG from 
anywhere, only about 15.5 percent of net European gas imports 
came in as LNG last year according to BP data. The rest came in 
by pipe and much of that, yes, from Russia. Russia supplied 
about 56 percent of Europe's net pipeline imports, about 47 
percent of all net imports and about 36 percent of European 
consumption.
    Second, infrastructure. The International Gas Union 
estimated last year's worldwide average re-gasification 
terminal utilization rate at about somewhere between 34 and 41 
percent. By contrast, data from Gas Infrastructure Europe show 
utilization of about 20 percent. This could reflect limited 
exporter interest in selling cargoes to Europe that could 
command higher prices elsewhere.
    In addition, European re-gas utilization rates vary widely 
with geography. This could suggest infrastructure gaps, 
regulatory barriers or both. It also could reflect country 
specific consumption differentials.
    To policy. U.S. supply additions that alleviate LNG 
imbalances worldwide could narrow price disparities across 
markets. That has potential to increase LNG imports into 
Europe. Faster throughput by the FERC which handles federal 
environmental reviews of LNG export facilities on behalf of the 
DOE could help. The environmental review schedules FERC 
released last Friday imply a target average window between 
draft and final environmental statements of about four months. 
That would be about one month faster than the average my 
colleagues have compiled for all comparable projects since 
2010. The burden does not fall exclusively on the Commission. 
Some project sponsors respond faster than others. Under FERC's 
process, better prepared applicants can move more quickly. This 
merit-based approach seems appropriate.
    To close. The world wants more natural gas and U.S. 
exporters have LNG to sell. European importers make their own 
choices, but every additional cargo of LNG that the U.S. puts 
on the water can give them better choices.
    Madam Chairman, this concludes my prepared testimony. I 
will look forward to any questions you or your colleagues may 
have at the appropriate time.
    [The prepared statement of Mr. Book follows:]
    
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    The Chairman. Thank you, Mr. Book.
    Dr. Grigas.

  STATEMENT OF DR. AGNIA GRIGAS, ASSOCIATE, ARGONNE NATIONAL 
  LABORATORY, AND NONRESIDENT SENIOR FELLOW, ATLANTIC COUNCIL

    Dr. Grigas. Good morning, Chairman Murkowski, distinguished 
members of this Committee. My name is Dr. Agnia Grigas, and I'm 
an Associate at the Argonne National Laboratories and a non-
resident Senior Fellow at The Atlantic Council. I'm also the 
author of this new book, The New Geopolitics of Natural Gas.
    American LNG exports to Europe are relatively new. However, 
they have significant, positive national security, economic, 
political and geopolitical implications for the United States 
and its allies.
    In terms of national security, the United States, as the 
largest NATO power and a key security guarantor for a number of 
European states of alliance, is directly implicated in the 
security repercussions of Europe's energy dependence on Russia. 
We well know that Russia and its national gas company, Gazprom, 
uses gas exports as a means of political influence, coercion 
and even as an energy weapon, thus directly threatening the 
national security of European gas importing states.
    In terms of the economic implications, LNG exports, 
American LNG exports to Europe will be of economic benefit to 
the United States energy sector, trade balance and the economy 
overall.
    In contrast, however, Russian gas weaponry has been highly 
detrimental to the welfare of our European states, European 
ally states. We have seen this from the numerous gas cuts 
Russia has pursued in Europe in 2005, 2008 and 2014. For 
instance, in the very cold winter of 2008-2009 when Gazprom cut 
supplies to Ukraine, they impacted the supplies of six European 
Union states and, in fact, Poland even experienced ten 
casualties as citizens froze to death when there was no gas 
supply in this very cold winter.
    Moreover, if U.S. LNG is not exported to Europe, those 
economic benefits will instead accrue to the Kremlin regime 
which is very well known for its export of corruption, money 
laundering and trying to spread the worst types of business 
practices.
    When it comes to the political implications, make no 
mistake, Russia certainly has used and continues to use the gas 
exports as a means to form political alliances and to spread 
its political influence in Europe. If we look at the German-
Russian gas relationship that has been ongoing since the late 
1960s, as a result today, we see that German companies with 
strong business ties to Russia have been among the most vocal 
critics of western sanctions against Russia since 2014.
    We've also seen Russia try to enlist some of the most high-
profile European politicians via their gas business. For 
example, ex-German Chancellor, Gerhard Schroeder, who joined as 
the Chairman of Nord Stream as subsequently as the Chairman of 
the largest Russian oil company, Rosneft. He's also pursued an 
anti-American campaign of German politics.
    In Italy, a country that has also been increasingly 
dependent on Russian gas imports, we also see an effort to 
create a similar type of alliance between the Italian energy 
company, ENI and Gazprom.
    A NATO strategic member, Turkey, has also been increasingly 
reliant on Russian gas and we've seen the Kremlin try to use 
its gas relationship as a forum, as a means of creating a 
closer relationship with Turkey's President Erdogan.
    When it comes to the geopolitical implications, the exports 
of American LNG would serve to strengthen Washington's global 
leadership and serve as a source of leverage in the currently 
emerging geopolitical competition between America's rival 
powers such as China and other revisionist states, such as 
Russia.
    Also, whoever will supply the European continent will have 
the degree of political and economic influence in key European 
industrial states and in the politically and economically 
contested regions of Eastern Europe.
    In summary, American LNG exports to Europe would bring 
strategic, economic and geopolitical benefits to the United 
States and its European allies.
    Thank you, Chairman Murkowski. This concludes my prepared 
testimony. I look forward to questions.
    [The prepared statement of Dr. Grigas follows:]
    
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    The Chairman. Thank you, Dr. Grigas.
    Mr. Slocum, welcome.

  STATEMENT OF TYSON SLOCUM, ENERGY PROGRAM DIRECTOR, PUBLIC 
                            CITIZEN

    Mr. Slocum. Thank you very much, Chairman Murkowski, 
members of the Committee. I'm Tyson Slocum. I'm the Energy 
Program Director with Public Citizen. We're one of America's 
largest research and advocacy groups, representing the 
interests of household consumers across the United States.
    The main reason that we're talking about LNG exports is 
because natural gas producers are demanding that we accelerate 
the ability for them to export their product. And that's 
because for natural gas producers, they've been mired in an era 
of low prices, right?
    Gas prices domestically are stubbornly stuck at around 
$3.00 per million BTU. What this means is that it's limiting 
the ability of natural gas producers to earn bigger profits. So 
what their strategy is, is to come up with new markets to sell 
their U.S. product abroad at higher prices. Understanding that 
exporting LNG is all about domestic producers getting access to 
higher prices abroad helps us understand some of the 
implications for household consumers and for domestic 
manufacturers. And what that means is, it's going to expose 
American consumers to higher prices.
    That's what the Department of Energy Macroeconomic Study 
concluded this summer. It predicted that domestic natural gas 
prices are going to double as a result of increasing LNG 
exports. They try to claim that that's going to be offset 
because Americans are going to enjoy the benefits of higher 
share prices from natural gas producers and LNG exporters, but 
you have to remember that the ownership of shares in those 
companies are highly concentrated among the wealthiest 
Americans. The most people are going to be subjected to the 
higher prices that we're going to see at the retail level and 
at the end user level.
    The public interest standard as interpreted by the Supreme 
Court over the years has insisted that exports have to take 
into account the impact on supply and prices. I think if we're 
going to be approving a significant increase in export 
capacity, it's going to conflict with the traditional public 
interest standard of ensuring that consumers have access to 
fairly priced commodities.
    I think all we have to do is look at the problems going on 
in Australia today which Australia has embarked on a very 
aggressive LNG export strategy with disastrous results, 
especially for the more heavily populated eastern part of that 
country. We've seen threats of supply shortages and 
skyrocketing prices for Australia that have been impacted by 
the significant growth in LNG exports to the point where now 
Australia is talking about trying to reduce the amount of those 
exports.
    So this whole concept of trying to counter Russian 
influence in Europe is an admirable one, but I think that there 
are limits to so-called commodity diplomacy and those limits 
are market forces. The fact is, is that the U.S. Secretary of 
State does not dictate where exports go. Markets decide. And 
Europe, according to the International Energy Agency, is a 
constricting market over the next five years. In fact, they 
term Europe the market of last resort.
    Where sales are going is China. Over the next five years, 
one third of new natural gas demand is going to be from China. 
Already 45 percent of U.S. LNG exports are going there, and 
that's only going to accelerate as China's demand continues to 
increase and because of pricing changes in the way that LNG 
markets work.
    Traditionally, LNG has been financed through the assumption 
of long-term, typically 20-year contracts. We're seeing a 
radical change in that financing model, a move toward spot and 
short-term contracts. That only exacerbates the movement of 
supplies toward where the demand is and the demand is all going 
to Asia. And when you look at where the demand growth is in 
China, it primarily is in the industrial and manufacturing 
sectors. So exporting LNG from the United States to China is 
going to be assisting their manufacturing industry at the 
expense of our own. If we're talking about revitalizing 
American manufacturing, we have to have access to those raw 
materials.
    I think that exporting unrefined raw materials is a 
Nigerian model of economic growth. The United States has 
consistently led because we focus on value added manufacturing 
and high tech, and that's what LNG exports threaten to 
undermine.
    And I think, finally, and this is a very important point, 
that we shouldn't be talking about significantly expanding LNG 
exports at the same time that we are eviscerating regulations 
to deal with methane emissions from the oil and gas sector and 
our lack of federal regulations to deal with climate change.
    Gas does have a favorable emissions profile compared to 
coal, but the fact of the matter is, is that it is a fossil 
fuel and we have a duty and an obligation to ensure that we 
have proper regulation. We shouldn't be exporting this product 
which is going to result in large domestic production increases 
without having corresponding methane and greenhouse gas 
emission regulations.
    Thank you very much for your time. I look forward to any 
questions you have.
    [The prepared statement of Mr. Slocum follows:]
    
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    The Chairman. Thank you, Mr. Slocum.
    Mr. Mills, welcome.

 STATEMENT OF MARK P. MILLS, SENIOR FELLOW, MANHATTAN INSTITUTE

    Mr. Mills. Madam Chairman, thank you for inviting me back. 
Members of the Committee, thank you for the opportunity to 
testify.
    As the Committee is well aware, in recent months the 
President has elevated the issue of Europe's dependency on 
Russia for natural gas and, collaterally, elevated the 
opportunity and the discussion about the role of the United 
States in taking a larger role for European supplies. But a 
number of European officials, as you know, have said that they 
believe this is all about, and I quote, ``American self-
interest.'' I think we can be honest. Of course, it is. It's 
also in Europe's self-interest.
    And these--so let me outline very quickly, three underlying 
facts that illustrate the opportunities that are inherent in 
mutual self-interests because that's when allegiances and good 
relationships can be established, when we have mutual self-
interests.
    First, Europe, as has been said here earlier, is becoming 
increasingly dependent on imports for natural gas. Its own 
production is in rapid and, in fact, faster than forecast, 
decline. And at the same time, Europe's needs domestically for 
natural gas are rising, in fact, as a direct consequence of its 
policies to promote wind and solar. So, as you know, modern 
digital economies are very dependent on reliable power, and 
that combined with the push to electrify the transportation 
sector will accelerate the need for what can only be called, 24 
by 7 power which wind and solar cannot deliver. It's simply a 
fact and indisputable that completion of Gazprom's 
controversial Nord Stream II will increase Europe's reliance on 
Russia to about 40 percent of its gas imports.
    Which leads me to my second point which is, interestingly, 
a recent Pew Global Survey found that 78 percent of Europeans 
don't trust Russia to do the right thing. And the quote is, 
``to do the right thing when it comes to world affairs.'' As 
the European Council on Foreign Relations recently put it, the 
EU is, and I quote, ``in open battle with Russia over the norms 
of international conduct'' which, the Council cautioned, won't 
be won by ``countering Russia'' but rather from ``improving 
Europe's resilience.''
    So my third point then is that Europe has a remarkably easy 
path, of course, for increasing its resilience, in particular, 
in critical energy markets. This has been noted earlier by the 
Secretary, the EU's existing--and by you, Madam Chairman--the 
existing LNG import capacity is operating at about 27 percent 
utilization. Putting those terminals to work at full capacity 
would provide nearly threefold more gas than the Nord Stream II 
pipeline will deliver if it's completed. Some European 
officials which have indicated receptivity to buying more 
American LNG, they say so at what they call, ``competitive 
prices'' but it bears noting that EU policymakers have 
demonstrated an appetite and willingness to embrace other 
energy policies for important non-price attributes and security 
and resilience, I would submit, are such attributes.
    The current price, it's interesting to note, that the 
current price premium between U.S. LNG and, of course, low cost 
Gazprom gas, if Europe were to use all of its idle import 
capacity to buy American LNG, that would raise the cost of 
Europe's overall energy imports, but it would only do it by a 
total of 10 percent, probably less, more like 6 percent. That 
could be the cheapest resilience hedge that the European 
policymakers could buy.
    However, as you know, LNG and energy policy, both, are 
long-term issues and long-term gains. And LNG, in particular, 
involves infrastructure when it comes to exports that require 
long-term, major capital commitments from patient and risk-
taking investors.
    In order to reduce uncertainty and market friction and 
encourage the necessary long-term investments, there is one 
specific feature of U.S. LNG export policy that, I think, 
Congress could address and that is the requirement that 
American businesses seek permission in the first place from the 
Department of Energy to export gas. This is an antiquated 
legislative artifact that stipulates that it has to be, ``in 
the national interest,'' as you know, but I think it's 
demonstratively the case that it is de facto in the national 
interest for any and all businesses willing to invest in such 
exports.
    Insofar as adequacy of American supply to fuel those 
increased LNG terminals, I would just want to note for the 
record that there is no forecast for domestic demand uptake for 
any use of natural gas, including accelerating CNG vehicles 
that could come close to absorbing half of the expected 
increase in domestic gas production from the productive shale 
fields. We just are going to have too much gas production 
capacity.
    Now I know there are legislative efforts underway to 
require that DOE expeditiously consider and grant such 
permissions, but I don't think that approach is enforceable 
over the long-term, nor does it solve the core issue of 
potential future capriciousness and I don't think it's 
responsive to the new energy realities that exist both in 
America on the supply side and Europe on the demand side.
    So I'm suggesting it's time that Congress consider removing 
what could only be called sand in the gears of commerce and 
eliminate these kind of political uncertainties in the long-
term with respect to export policies. And I think Congress 
should, in fact, repurpose DOE's role here from one of 
permission granting to export assistance which is what we do 
with agriculture, at the Department of Agriculture. I think 
those actions would be powerful and productively impact both 
domestic markets and send a very powerful signal of the 
geopolitical status quo.
    Let me conclude that by noting that the President of the EU 
just last month also cited the importance of, in his words, 
``eliminating the red tape restrictions'' around the 
uncertainties about U.S. LNG exports.
    Thank you, Madam Chairman.
    [The prepared statement of Mr. Mills follows:]
    
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    The Chairman. Thank you, Mr. Mills, and thank you to each 
of you for your comments, your testimony, this morning. We 
greatly appreciate it.
    As I sit here listening, you mention the new energy 
reality. We have just come so far. I have been privileged to be 
on this Committee now for 15 years and to think how this 
country has changed in terms of our position as an energy 
supplier, not only to meet our needs, but to be in the position 
and in that role where other can actually look to us.
    It was not too many years ago we were working the 
initiative to remove the 40-year policy that prohibited oil 
exports outside of the State of Alaska and our opportunity to 
export oil, and we were basically sitting in the back seat. It 
has been interesting because when that debate was going on 
there was a great deal of discussion about well, if we are 
allowed to move forward with oil exports, the price of oil is 
going to go sky high.
    The question I would like to start off with today, Mr. 
Slocum, you have shared a view with the Committee that is, 
perhaps, not endorsed by the rest of the panel here in stating 
the position that domestic and natural gas prices will double 
because of exports.
    I do not know who wants to jump in here on this, but I 
would appreciate a rebuttal or a response to that. Obviously, 
there has been discussion here about the national interest 
finding that has to, at this point in time, move forward to 
make sure that the determination to allow for additional 
exports does not unduly impact prices.
    Assistant Secretary, would you like to speak to this as an 
issue that is under consideration today?
    Mr. Winberg. Sure, I'd be happy to and thank you.
    I think there's several facets here that we need to 
consider, and let me start with the first one, which is the 
technology. We're still climbing the learning curve on 
producing both oil and natural gas from unconventional 
resources, often called shale plays. And there's, as we climb 
that learning curve, as the producers understand how to get 
more of the resource out of a frack zone and we're going to 
make some pretty significant strides as we move forward on 
that, as we climb the learning curve.
    The second thing that the Department is doing, the Fossil 
Energy Office and Senator Cantwell raised the issue of 
supercomputers or high-performance computing. We're now, we 
have about a decade worth of data that we have amassed from the 
producing community in unconventional oil and gas and that 
data, combined with our, the Department's high-performance 
computing capability at our national labs, combined with 
physics-based modeling, we believe that we're going to be able 
to increase production. So we're going to be able to go beyond 
what they currently produce which is only about 10 percent, by 
the way, within the frack zone. So that's one point.
    The second point is that EIA projects that we're going to 
be at 110 billion cubic feet per day by 2040, but only 14 
billion cubic feet per day in LNG exports. And just to put this 
into perspective--right now, we're at about 3.5 billion cubic 
feet. We have four projects coming on in the next two years 
that will take us to about 11 billion cubic feet, and we've 
approved 21 billion cubic feet. So there is an enormous amount 
of head room here. And when you combine the learning that's 
going on in the fields in the unconventional gas space along 
with the build out of these terminals, there is sufficient gas 
for us to send to our allies and friends over in Europe.
    The Chairman. Other comments?
    Dr. Grigas.
    Dr. Grigas. So, regarding--I'd like to follow up on the 
price issue because the figures I have, actually, are 
different.
    So the DOE did a series of studies on the impact of exports 
on gas pricing, and the figures I have is that they anticipate 
a gas price increase of somewhere between 4 to 12 percent. And 
the conclusion of that study, not doubling, and the conclusion 
was that an increase in production, overall, should balance the 
market effect of exports and, in fact, that GDP growth will 
offset any negative effects of these gas price increases for 
the U.S. economy.
    The Chairman. Thank you.
    Mr. Mills, and then we will go to Senator Cassidy here. Go 
ahead.
    Mr. Mills. Just to add, I take the technology perspective, 
if I might, Madam Chairman.
    The interesting thing about natural gas markets is that I 
was on the front lines because of our, my involvement, in a 
technology venture fund that's working with the shale producers 
and midstream folks.
    The cost of natural gas in parts of the Permian these days 
in West Texas is negative, which is kind of interesting. There 
aren't many critical commodities that are produced in a high 
volume. I mean, they produce tremendous quantities of it, for 
which, in effect, you're being, it's not leaking methane. This 
is, natural gas, you're effectively paying somebody to take 
away.
    It's clear that that's not an aberration. That's a 
consequence of the nature of this particular resource. So as 
demand for oil, and you're an oil producer, you co-produce 
natural gas and you're not interested, particularly, in the 
fact that it's not generating a profit for you. So you have 
these odd negative prices.
    The other thing is in the Marcellus in the Pennsylvania 
region, the production of gas, like Alaska, is astonishing. I 
mean, the quantities of gas that can be produced, technically, 
technologically, are utterly astonishing. The only question 
that you have as a technologist is, you know, the technologies 
around this domain getting better fast enough to keep driving 
the cost curve down, the cost of producing it?
    Every engineer I talk to on the front lines answers, yes, 
not even close to an acid tone. What that refers to is, with 
all due respect to my friends at DOE who make forecasts at EIA, 
they have consistently demonstrated an inability to understand 
the price dynamics of these markets. And it's not a criticism 
that's an insult. It's because it's very difficult.
    One thing we do know is the productive capacity is 
astonishing which benefits American consumers. Domestic 
consumers will benefit from global competition because LNG 
can't be exported unless it's cheap when it goes onto the train 
that liquifies it. It has to be very, very cheap. It's always 
going to be cheaper to buy in America which is why there's 
something like $100 billion of capital construction, private 
money, building chemical processing plants and plastic plants 
to use the cheap domestic gas. They're making these bets on the 
assumption that gas will be cheap in America for a very long 
time.
    The Chairman. Let's go to Senator Cassidy.
    Thank you.
    Senator Cassidy. Thank you, Madam Chair.
    Thank you all for your testimony.
    I will just tell you. My observation in our study is that 
LNG and increased natural gas production is good for the 
economy, good to decrease greenhouse gas emissions and good for 
international trade.
    We actually have a White Paper about the release that hits 
this, among other things, showing that our greenhouse gas 
emissions have declined precipitously because of natural gas 
replacing coal and, frankly, elsewhere where they have used 
natural gas instead of coal, you have seen that same 
precipitous drop. Not only does it cause it by direct 
substitution but also by enabling the deployment of renewables 
which, as you say, Mr. Mills, do not have a certain volatility. 
When you deploy one unit of natural gas, studies show that you 
end up deploying about 0.88 units of renewables. So it enables 
the renewable, if you will.
    With that said, I kind of lost who said this, but the point 
was, and I think you said, Mr. Slocum, on this point that most 
of our gas is going to China because you have a better price in 
the spot market there than in the EU.
    Now I get that, but let me ask. There's a lot of pipeline 
gas coming from Kazakhstan, from Azerbaijan and potentially 
from Israel going over to the Mediterranean coast of Europe. 
Will that supplant the potential for a market of LNG? Let me 
first ask that, when all that is fully online, and will it 
diversify their energy source away from the Russian 
preponderance right now? Anybody want to take that? Anyone?
    Dr. Grigas. So the southern gas corridor which is coming 
online which will bring about 25 BCM of Caspian gas into 
Europe, this is a new development. But this is still a very 
small amount, given Europe's overall gas demand. I mean, again, 
Europe today is the largest gas importer in the world. Its 
total gas demand is about 550 BCM.
    So I think there's still a lot of appetite for American LNG 
in Europe. And we can see that already from the fact that----
    Senator Cassidy. Even despite, even if the Israelis and the 
Caspian come over, they will still be----
    Dr. Grigas. Well, the Caspian is certainly coming online. 
The Israeli, that's something that's a work in progress.
    Another element to consider here is that I think the U.S. 
could really use right now and take advantage of its leading 
position and its, you know, first mover position as a shale 
producer and LNG exporter, rather than leave these markets to 
competitors. Again, since 2016 American LNG has gone to a wide 
variety of countries all across the European continent and I'll 
give you the list. Some of these countries----
    Senator Cassidy. Well then, hang on. Let me hold off on 
that just because I have such limited time, although I do 
suspect I could have a second round.
    [Laughter.]
    But if the price point is better in South America and Asia, 
there is going to be, just from the way markets work, it is 
going to disproportionally go there as opposed to Europe even 
though that potential market is there.
    Yes sir, Mr. Book.
    Mr. Book. If, Senator, I may offer? Yes, of course the 
market that has the greatest scarcity and commands the greatest 
price premium will be the most attractive, but it's not the 
only market at all times.
    One of the ways to think about it is that the differentials 
that exist today are a function of an undersupplied, global 
inventory of LNG to satisfy the demand that's being----
    Senator Cassidy. So the point you made, the more supply 
there is, the more those price differentials would----
    Mr. Book. They will start to narrow, yeah.
    Senator Cassidy. So then, let me ask. Is the amount that is 
coming on both from the Caspian as well as from our XL, our 
production, will that be adequate to decrease that differential 
between Asia and in the EU?
    Mr. Book. I think it would be premature to expect that the 
amount that we're bringing on now will do all of the work. It 
will do some of the work, and it's not the only work being 
done.
    Senator Cassidy. Yes, the Aussies are doing it. The 
Canadians are doing it.
    Mr. Book. As you add to the global supply, those 
differentials will start to tighten.
    Senator Cassidy. One more thing. One thing I have heard, 
but I do not know it to be true. And ma'am, this might be your 
answer. When the Germans are bringing that gas in and selling 
it to the rest of the EU, are they putting a premium on that or 
will say France get it at the same price as the Germans 
purchase? Mr. Mills, you are kind of laughing. Do you know the 
answer to that?
    Mr. Mills. I apologize. I don't know the intricacies of the 
German market, but I appreciate the motivation in the question.
    Senator Cassidy. Yes.
    [Laughter.]
    Dr. Grigas. Well, I'll say here, Germany has an incentive 
to become a gas hub of Europe. So basically, directly receiving 
gas from Russia via Nord Stream I and Nord Stream II and 
subsequently using its pipeline system, its infrastructure to 
distribute that gas to the rest of Europe. So, for Germany they 
have, you know, domestic, economic incentives to eliminate 
other transit states and become, again, the gas hub.
    Senator Cassidy. That would suggest that they would not put 
a premium because they would want to become the hub. On the 
other hand, unless they put a premium there is really no 
advantage to being the hub.
    Dr. Grigas. I think their industry and their energy sector 
will be making money from being the distributor of gas for the 
rest of Europe.
    Senator Cassidy. Gotcha, which may end up creating a market 
opportunity for others if the Germans charge too much a 
premium, I would think.
    I yield.
    The Chairman. Senator Daines.
    Senator Daines. Chair Murkowski and Ranking Member 
Cantwell, thank you for holding this hearing today. This is a 
topic that I am very interested in.
    In fact, I want to thank the Chair for inviting me for 
visit that we made at the Hammerfest LNG facility in Norway a 
year ago. In fact, very helpful. We were able to discuss some 
of these issues on the ground there regarding LNG.
    I think this is very important. It is important for the 
U.S. to continue to grow as a global energy leader in order to 
strengthen our allies in Europe as well as our national 
security. When I think about energy, I am not sure there is a 
more important geopolitical issue on the table than energy. I 
have said it before. I will say it again. The less the U.S. and 
Europe rely on oil and gas from hostile or volatile countries, 
the safer and stronger they are.
    The U.S. has the unique ability to play a larger role in 
the global energy economy. I just saw the news that came out in 
the last 24 hours, and we are now officially the world's 
largest producer of oil. I believe we need to make this final 
push to really, truly move, as has been said by the Trump 
Administration, move us from independence to global dominance 
as it relates to energy.
    Dr. Grigas, I recently sent a letter to Secretary Mattis 
with some of my colleagues on this Committee, including 
Senators Manchin and Sullivan, discussing the importance of 
lessening the United States Armed Forces in Europe dependence 
on Russian sourced energy. We also recently passed legislation 
that is part of the NDAA directing the Secretary to do just 
this. At the very least, the U.S. should be supplying our own 
troops and not relying on a country that is known for playing 
political games with energy.
    My question is, what do you see as the geopolitical 
concerns with relying too heavily on foreign, especially 
Russian, sourced energy for our troops as well as our NATO 
allies?
    Dr. Grigas. This is an excellent point you bring up. I 
think this is absolutely detrimental and dangerous for the U.S. 
military to rely on foreign sourced energy, especially energy 
from hostile countries.
    We know what Russia does with their energy supplies in 
peace time, so we can only imagine what type of tactics they 
could rely on during times of conflict.
    And it's certainly a paradox for NATO which, you know, 
seeks to defend European country states from hostile countries 
to then at the same time, you know, send revenues to Gazprom 
and other such Russian energy companies.
    I think there should be more work done in this area and I'd 
like to highlight that there is an institution, a NATO Center 
of Excellence for Energy Security, located in Lithuania that 
has done some work on this question, essentially ensuring the 
energy security supply of NATO military troops. And I think 
they should be tasked to doing more work on this subject.
    Senator Daines. Thank you.
    I want to shift gears here, Assistant Secretary Winberg.
    I just read this morning the good news that the Department 
of Energy recently authorized 2.14 billion cubic feet per day 
of LNG exports from the Freeport project in Texas. I am excited 
to see multiple other LNG projects ramping up in the next few 
years. I believe there are four more projects currently under 
construction.
    A question is, are these projects on track for approval by 
DOE and how much LNG exports would that represent?
    Mr. Winberg. Well, the Freeport project we announced 
yesterday, and they have an authorization for 2.14 billion 
cubic feet per day. That will get them to their startup and 
also for short-term sales.
    The total four projects that will be coming on will take us 
from 3.4 billion cubic feet per day which is what we have with 
Cove Point and Sabine Pass, and it will take us up to 11 
billion cubic feet per day.
    I should mention that those are, all of those projects, so 
all six of those, the two operating and the four coming online 
here in the next couple of years, can deliver LNG to both free 
trade and non-free trade agreement countries. And so, moving 
gas into Europe, moving gas into Asia is available to all of 
those six----
    Senator Daines. Do you anticipate and foresee a large 
portion of those exports headed to Europe?
    Mr. Winberg. I think that's difficult to say.
    Right now, we have sent some 50 or 43 cargos to nine 
countries in Europe. I expect some of that will continue, but I 
don't know that that majority of the LNG will be going into the 
European market. These are private companies, and so they're 
free to move that gas where they want.
    Senator Daines. I am a big believer in Milton Friedman and 
free to choose, so I understand.
    Mr. Book, one last question. Your written testimony spoke a 
lot about the increase in U.S. exports. Exports are increasing 
sharply. We are building more terminals. We are producing more 
natural gas with this shift. Can the U.S. meet Europe's demand 
for LNG?
    Mr. Book. Well, Europe's demand for LNG, arguably, is met 
when Europe buys the LNG it needs. The question, I guess, is 
what they need it for.
    As a substitute for all of their imported gas, no. The U.S. 
isn't going to be able to do that with LNG, nor would it 
necessarily be in Europe's interest to make an undiversified 
commitment to another single supplier. But can we help close 
the gap?
    Senator Daines. Right.
    Mr. Book. In growth? Yes.
    Senator Daines. So, let me ask you this. What is that gap 
back to, you said we cannot replace all of it. What is the gap 
and what could we do with that gap?
    Mr. Book. Think about this. Europe net imports about 39 
billion cubic feet per day, roughly 36 percent, 37 percent, 
come from Russia. So, 14 billion cubic feet per day of gas.
    Start with one. Every single one you add diversifies and 
provides more opportunity for Europe. They may not choose to 
buy U.S. gas. All that matters is that U.S. gas goes into the 
world and that other LNG, wherever it might be found, that the 
U.S. gas might displace----
    Senator Daines. Right.
    Mr. Book. Can go to Europe.
    Senator Daines. Maybe the better question is, do you think 
the U.S. has the ability to replace Russia as the largest 
supplier of LNG to Europe?
    Mr. Book. Well certainly as the largest supplier of LNG, 
we've got them beat cold because they're not sending much LNG 
to Europe.
    As gas goes, Senator, I think we're a long way from 
displacing all 14 BCF a day, but we can cut it down.
    Senator Daines. Okay, thank you.
    The Chairman. Senator Gardner.
    Senator Gardner. Thank you, Chairman Murkowski. Thanks to 
all of you for your testimony today.
    On Tuesday I had the opportunity to hold a roundtable in 
Grand Junction, Colorado, which is on the Western Slope. We 
were joined by county commissioners from across Western 
Colorado as well as a county commissioner from Oregon. We also 
were joined by Assistant Secretary of State, Frank Fannon from 
the Department of State who handles energy issues at the 
Department of State and Assistant Secretary Joe Balash who is 
in charge of the mineral department over at Department of the 
Interior.
    We discussed the issue of Jordan Cove, the opportunity to 
have a West Coast outlet for Rocky's natural gas and the 
importance of Asia as an expanding market, a region of the 
world that will soon have 50 percent global population, 50 
percent global GDP. And Jordan Cove represents an opportunity 
for us to have an access to those markets, countries that look 
toward the United States for energy security because they know 
our rules, our transparency, our environmental standards, are 
far higher than turning to China or other nations for those gas 
supplies.
    We also talked about Russia and the possibility that if a 
state like Colorado, I will give you an example, the Mancos 
Shale in the Piceance Basin. In 2003, USGS estimated that there 
were 1.3 trillion cubic feet of natural gas, shale natural gas, 
in the Mancos formation. In 2016, they revised the estimate, 66 
trillion cubic feet in the Mancos Shale in Colorado in the 
Piceance Basin. In just 13 years from 1.3 trillion to 66 
trillion cubic feet, the opportunity for us to play a part, 
Colorado's role in geopolitics is pretty incredible.
    When it came to Russia though, I believe it was the 
Assistant Secretary of State who said, ``Russia uses its 
natural gas for power and it uses its oil for money.'' I mean, 
he is certainly not talking about electrical power. He is 
talking about state power. Would you agree with that statement, 
Mr. Winberg?
    Mr. Winberg. Well, I think they gain quite a bit of money 
on both oil and gas but I think, certainly, the ability to turn 
the valve off in the middle of winter into the European market 
gives them a certain amount of power and as we've talked about 
here this morning, the LNG, the opportunity to export LNG out 
of the United States and out of the great State of Colorado 
into other markets helps alleviate that ability of Russia to 
utilize that power.
    Senator Gardner. Does anyone on the panel disagree that 
Russia is using its natural gas as a political tool?
    [No response from panel members.]
    No one disagrees. Let the record reflect that no one 
disagrees with that statement.
    If we see policies in the United States that lessen our 
ability to produce natural gas or to export natural gas--Mr. 
Book, you talked about the fact while natural gas may not be 
going directly to Europe, if it displaces a Russian sale 
somewhere that means somebody is freed up to sell to a European 
nation, Germany as an example.
    If we pursue policies that lessen our ability to enter the 
world market, lessen production here, that empowers Russia. 
Would you agree with that, Mr. Winberg?
    Mr. Winberg. Absolutely.
    Senator Gardner. Dr. Grigas?
    Dr. Grigas. Absolutely, and I would also like to highlight 
that Russia is also aggressively looking to enter the LNG 
markets. So if we don't move now, we can expect more 
competition from Russia in the future.
    Senator Gardner. There was a 2014 New York Times article 
about Russia funding anti-hydraulic fracturing efforts in 
Europe. There have been studies and concerns in the United 
States that the same activity has been used here.
    Russia's continued use of information/disinformation 
campaign hybrid warfare to fund division of the United States 
has been used to help depress, destroy and divide Americans on 
our energy production.
    Are you familiar with these efforts, Dr. Grigas?
    Dr. Grigas. Yes, absolutely.
    Senator Gardner. And they have occurred? This is a real 
thing?
    Dr. Grigas. Yes.
    Senator Gardner. There is an initiative in Colorado, 
Proposition 112 I believe it is, that would essentially take 85 
percent of land off of production potential, out of production 
potential, banning, essentially, energy production on 85 
percent of state and private land in Colorado.
    Colorado is one of the highest natural gas producers in the 
country. If something like that were to pass, we know that 
money has been used by Russians to fund anti-energy initiatives 
in the United States and around the globe. Does it empower 
Vladimir Putin when he is able to shut down energy production 
or, if we pass initiatives that shut down production in the 
United States, does that give him greater leverage over world 
markets and energy manipulation?
    Mr. Winberg?
    Mr. Winberg. Absolutely, the less natural gas that we can 
produce in the United States means less natural gas we can 
export over to Europe or other places around the globe.
    Senator Gardner. Dr. Grigas?
    Dr. Grigas. Yes, absolutely.
    Senator Gardner. Thank you.
    I am very concerned that while we are rightfully focused on 
Russia and the activities Russia is pursuing, their malign 
activity around the globe, that states could unwittingly fall 
into a trap of allowing its initiative processes to be used to 
further the power and grip of Vladimir Putin over global energy 
supplies.
    Thank you, Madam Chair.
    The Chairman. Senator Gardner, I will share with you a copy 
of a press release that was released this morning from the U.S. 
Department of Energy on Secretary Perry's visit with the 
Russian Minister of Energy. It states that Secretary Perry made 
clear that while the U.S. welcomes competition with Russia in 
energy markets across Europe, Asia and elsewhere, Moscow can no 
longer use energy as an economic weapon. The United States is 
now in a position to offer these nations an alternative source 
of supply.
    [The information referred to follows:]
    
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    The Chairman. It goes on, indicating that we all look 
forward to continuing this previously dormant energy dialogue 
and searching for ways to work together. I think it has been 
clear that the relationship has been less than stellar for a 
host of different reasons for far too long. But the use of 
energy, particularly LNG, as a political tool when you cut 
nations off, when you cut communities off from their power 
source in the middle of the winter to gain their political 
attention, that is absolutely unacceptable.
    Where we have an opportunity to make a difference, when we 
can weigh in--I think we recognize that this is not only an 
opportunity, but to use your term, Mr. Mills, it is mutual 
self-interest here and so, how we are able to advance that.
    I wanted to ask about infrastructure in Europe right now. 
Obviously there is a great deal of discussion and focus on Nord 
Stream, on the pipeline side and pipeline capacity, but I am 
more curious now as to the import terminals. We can talk a lot 
about what we need to do to work with the FERC to advance more 
export opportunities here, but if you do not have the ability 
to receive things on the other end, it doesn't pair up.
    I don't know who wants to field this question, but it is 
pretty broad. Is there sufficient capacity right now in Europe? 
If not, what LNG import projects are being considered at this 
point in time? How do we make sure that dovetails with what we 
are doing here with increased production, with their ability to 
receive on the other continent there?
    So, I throw that out. We will go to the Assistant 
Secretary, and then we will go to you, Mr. Mills.
    Mr. Winberg. Thank you.
    Europe is constrained on their ability to import LNG. 
Currently, they're limited to about 20 BCF per day. They're 
only using about 20 percent of that capacity that they have.
    I think there are three challenges with Europe. Number one 
is limited distribution, pipeline distribution capacity. Number 
two, there is resistance to pipeline build out, similar to what 
we see in the United States, in different parts of the United 
States. It's fairly prevalent across Europe. And then number 
three, they're lacking storage facilities. And so, the 
Department of Energy is working with our European allies on 
those issues. As you mentioned, Secretary Perry is over in 
Russia, but also Deputy Secretary Dan Brouillette is in Berlin. 
And so, we're working with Europeans to create ways to reduce 
some of those constraints.
    I think there's an investment opportunity on that side of 
the Atlantic Ocean for U.S. companies to come in and invest in 
the very much needed infrastructure.
    The Chairman. Mr. Mills?
    Mr. Mills. Well Madam Chairman, I think the Secretary is 
absolutely right. I mean, the pipeline distribution system, to 
my understanding, is the critical impediment to expanding the 
use of the existing LNG terminals. Although they do face some 
challenges there, they're far less challenging in terms of 
capital formation than building an LNG facility, obviously. And 
as you know, there are quite a few under construction. Even 
Germany has now announced its--plans for its first LNG import 
facility.
    I would just make the high-level point of the 
transformation back to what you said at the outset and what you 
said at the World Gas Conference. There's been a transformation 
of the fundamental structure of this market, and we need to 
participate in unleashing that full transformation so that 
private capital takes the private risks, by and large, for 
these kinds of projects.
    Obviously, there are government permissions involved with 
building pipelines pretty much everywhere in the world. But the 
market price for gas collapsed before our first LNG exports 
happened. It was in anticipation in markets that this was 
coming. There was a glut coming.
    If we recognize that this glut is such a permanent, then 
what we need to do is figure out ways to let capital markets 
function efficiently. That was my main point is that we put 
impediments here at the state level or federal level to the 
U.S. really fully functioning in this new commodity market the 
way we do with many other markets will depress the appetite to 
build what's required in Europe and the rest of the world.
    The Chairman. Let me ask on the capital investment side, 
because we all recognize that it is substantial. How do the LNG 
contracts play into that?
    We have moved from a situation where about 10 years ago the 
average LNG contract for large volumes was 18 years. This year 
the average contract has dropped to 5 years. Is that having any 
play or any influence in terms of ability to secure the capital 
necessary to make these long-term investments in this 
infrastructure?
    Mr. Mills and then Mr. Book.
    Mr. Mills. So, just to finish the point. Of course it does, 
because these are very expensive, as you know, capital 
projects. So that's essentially what's driving my proposition 
that we need to find ways to take whatever other risks exist in 
the market. We've added a new risk to an LNG facility, instead 
of 18-year contracts, 5-year contracts and even spot markets.
    So, when you look at broad capital markets at the level of 
abstraction which is realized in practice, people make 
decisions based on what they think the risks are. If there's a 
risk we can remove, which is what I've coined the ``permissions 
risk,'' and if America were not involved in permissioning but 
encouraging and facilitating actively over a long time, it's 
signaling that today is a permanent change, that can be a 
countervailing factor to offset these kinds of decisions and 
encourage investment for these shorter cycles.
    The Chairman. Mr. Book.
    Mr. Book. Well, I absolutely agree that the faster that you 
can get things approved, the sooner you can get them on the 
water. That's a compelling case for investors who are looking 
at committing capital to a project.
    The infrastructure challenges in terms of raising money 
because of contract life are part of this story. Shorter 
contract life means there's less cash to take to the bank to 
get the loan, basically, in colloquial terms because you don't 
have as long to guarantee. On the other hand, low prices were a 
factor too in making some of the financing issues more 
challenging.
    The nature of energy infrastructure is very much like the 
nature of upstream production, comes in booms and busts and 
more or less for the same reason. You have a, sort of, 
inelastic supply and long lead times to projects. And so, 
things overshoot and undershoot and then periodically balance.
    But the world can move very quickly from surplus to 
scarcity. And in those opportune moments, financing opens back 
up. So contract life won't be the only constraint because price 
was part of the story and price won't stay the constraint for 
long because when a higher price comes, financing will come 
back.
    The Chairman. Okay, thank you.
    Mr. Slocum, did you want to weigh in?
    Mr. Slocum. I did.
    I don't think that the move toward short-term or spot 
contracts is any detriment to financing. It's the market that 
is moving this direction. And in fact, right now if you've got 
a long-term supply commitment contract, that might be an 
impediment because that might be locking you in at prices below 
what the spot market can provide you.
    There is a reason that LNG terminals in the United States 
are moving, aggressively, toward spot market because that is 
where the market is moving. And they are simply following where 
the market is. And so, in terms of developing these, that is 
absolutely a benefit. And I think that the long-term 
contracting model is not going to provide any assistance.
    And getting to the issue of siting that was touched on. It 
was commented that it's tougher to site pipelines, maybe, in 
the United States and Europe. Nobody talks about how tough it 
is to site pipelines in China because in China no one has any 
rights.
    I am extremely proud to live in a country where we've got a 
variety of different constitutional protections that ensure 
that landowners have lots of ability to have a say in what goes 
on in their community. And so, I don't think that we should be 
negatively talking about constitutional due process rights of 
American citizens to have a say in potentially sited 
infrastructure projects on their property or in their 
communities.
    The Chairman. Thank you.
    Senator Cassidy, we are at round two.
    Senator Cassidy. Oh, great, thank you.
    Mr. Slocum, I was intrigued by your testimony so I had my 
staff go pull a Department of Energy study and let me just, 
kind of, go through some highlights, and then I will try and 
address some of the other issues you raised.
    Mr. Winberg, I am probably stealing your thunder.
    But that said, the DOE study is all about exporting natural 
gas and, by the way, in Louisiana there is so much prosperity 
that has come from developing natural gas resources, down to 
the parish level where DeSoto Parish has more money for its 
police department and for its school board because it gets one-
sixteenth of the royalties.
    Let me just say, I have seen that prosperity. A prosperity 
that has filtered out to the working family who over the last 
eight years really suffered but now, because of high-paying 
energy jobs, actually has a better life, a better future. So it 
is with that perspective, the empiric perspective, I say this.
    But here is the Department of Energy study.
    [The information referred to is available at:
https://www.energy.gov/sites/prod/files/2018/06/f52/
Macroeconomic%20LNG%20Export%20Study%202018.pdf]
    Households will benefit from the additional wealth 
transferred into the U.S., all related to LNG exports, which 
increases the value of the dollar and reduces cost of imported 
goods.
    Next, the consumer. As increased demand pull due to changes 
in international market induces more LNG exports, consumer 
welfare measured in dollars also increases.
    Next, under these export scenarios, they did low, 
intermediate and high exports. As U.S. LNG exports increase, 
U.S. households receive additional income, et cetera, et 
cetera.
    Overall, GDP improves as LNG exports increase. There is 
greater gain in GDP as LNG export volume increases.
    Obviously, I am excerpting.
    Restrictions on LNG exports would forego the additional GDP 
to be gained by allowing exports to respond to market 
conditions.
    And to your point about it doubling, the reference they 
have here to price increases, the slightly higher price of 
natural gas with higher levels of LNG exports is, you know, go 
along, but that is the phrase to emphasize.
    And then lastly, the conclusion. The results from this 
analysis suggest that there is no support for the concern that 
LNG exports would come at the expense of domestic natural gas 
consumption. In fact, a large share of the increase in LNG 
exports is supported by an increase in domestic natural gas 
production leading to a modest increase in natural gas prices 
and additional income from export revenues.
    The other thing you mentioned is about the methane leakage 
issue and whether or not this Administration is addressing the 
methane rule is affecting that. Again, our White Paper which we 
have, we have been looking at this. I am going to quote from 
that. Let's see if I, shoot--you live by technology, you die by 
technology. Here we have--in ours we show that from 2005 to 
2014 that our methane life-cycle from well head to use that the 
methane leakage has decreased an absolute amount while the 
amount of gas has improved dramatically.
    I had it pulled up and I lost it. Let me just go there real 
quickly. Jack Cramton, who is sitting in that back row, 
actually helped write it--I should have him quote it.
    Our current methane leakage in the United States is 1.4 
percent and over various timelines that has to be less than 3 
or 5.5 percent. We're at 1.4 percent. And so, the U.S. is 
dramatically lower than the threshold. That is according to the 
International Energy Agency. And since 2005, natural gas 
production has increased 49 percent while the absolute amount 
of methane emissions from natural gas systems has decreased by 
3.3. Now that is, frankly, without the methane leakage rule 
because all this pre-dated methane leakage.
    And then if you say okay, absolute amounts were down this 
much leakage and we are up that much gas, there is an inverse 
relationship between the amount of gas being produced and the 
amount being leaked.
    Lastly, I will say that if you look at charts, because you 
mentioned it all going to Asia, if you look at charts of SOx 
and NOx and greenhouse gases blowing on to our Pacific Coast, 
it comes from coal-fired energy in the Pacific Coast of China 
blowing over.
    I think it is a good thing that China is substituting out 
their coal with our gas. It is a good thing for our economy, 
for our workers, but also for our environment because the SOx 
and NOx in Washington, Oregon and California is coming from 
China. If we replace that with clean burning gas which does not 
have SOx or NOx and has a lower carbon footprint, then the air 
quality in those states will be far cleaner. And that is all 
from the academic literature. There is no questioning that.
    But there is a lot of stuff from the objective literature 
that, I think, needed to be used in this discussion.
    Thank you, Madam Chair.
    I yield.
    The Chairman. Thank you, Senator Cassidy.
    Senator Barrasso has joined us. Welcome.
    Senator Barrasso. Thank you, Madam Chairman. Thank you for 
bringing together this august group to have this discussion.
    Russia continues to undermine peace and security in Europe 
as we have talked through a variety of mechanisms including its 
use of energy as a weapon. It uses its energy sector as a 
weapon to intimidate, to influence and to coerce other nations, 
and Russia continues to be Europe's main energy supplier. It 
also has significant ownership in Europe's energy 
infrastructure, including pipelines, distribution and storage 
facilities.
    I believe it is in the national security interest of the 
United States to help our allies reduce their dependence on 
Russian energy. If America does not step up to the plate now, 
then Russian influence is only going to grow and continue to 
grow and they will continue to use energy as a weapon.
    There was a story in the Economist last week, Madam 
Chairman, about Russia and its nuclear dominance. It is a 
nuclear power and they are exporting that technology and 
keeping countries connected to Russia as a result of all sorts 
of different energy.
    Due to technological advances and a newfound abundance of 
natural gas, the United States really now has capability and 
capacity to be a strategic energy supplier to Europe. The 
United States can help Europeans meet their energy demands and 
diversify their energy imports away from countries that use 
energy as a weapon against them.
    So I think our LNG exports create jobs across America, they 
assist in reducing our nation's trade deficit, they help our 
allies and strategic partners across the globe and we have 
plenty of natural gas to meet our own needs while helping our 
country's allies.
    There are a couple of export facilities right now in the 
United States able to ship natural gas overseas, one in 
Maryland, one in Louisiana. Three more are due to be 
operational by the end of the year and at least 20 additional 
projects are awaiting federal permits. I think we have to 
expedite these approvals to give our allies alternatives to 
Russian energy.
    On July 18th of this year I introduced what is called the 
ESCAPE Act. It stands for Energy Security Cooperation with 
Allied Partners in Europe Act. It is going to improve energy 
security and help end the political manipulations by Russia 
through its energy resources. It does require the State 
Department, USAID, and the Department of Energy to create a 
transatlantic energy strategy focused on enhancing the energy 
security of our NATO allies and increasing American energy 
exports to these countries. The bill also requires the 
Secretary of Energy to expedite approvals of natural gas 
exports to NATO allies and other foreign countries where 
exports to that country would promote our national security 
interests.
    I think it is time for Congress to clear away regulatory 
hurdles and make the changes necessary to give Americans, as 
well as our European allies, a better energy option.
    So, Dr. Grigas, I would like to start with you because I 
thought your testimony, the written testimony, was very 
compelling. The United States natural gas infrastructure, to 
me, is still inadequate. There are groups and members of 
Congress wanting it to stay that way to prevent our resources 
from ever being developed. But is it appropriate to keep this 
incredible resource locked in the ground and what do you think 
we should be doing?
    Dr. Grigas. I think the United States today has an 
incredible resource at its disposal, a resource that could be 
used for America's economic gains, its geopolitical gains. It's 
an incredible resource that should be used.
    And as we discussed with the panel, the global gas markets 
are currently transforming. There's a lot more supply coming 
online. There are a lot more competing countries.
    The U.S. is a leading player right now in the gas markets, 
the largest gas producer, and it should maintain that position 
and it should actually improve its position. It should really 
emerge as one of the leading LNG exporters so it cannot only 
secure a lot of allied countries which happen to be dependent 
on energy imports. Both in Europe our allies are dependent on 
energy imports and in Asia our allies such as Japan, South 
Korea and others are also dependent on energy imports. So, this 
is, you know, an economic and geopolitical benefit for the 
United States.
    Senator Barrasso. Okay.
    Mr. Book, anything you would like to add to that?
    Mr. Book. Well, I think that one of the issues that came 
up, Senator, while you were out is the question of whether or 
not we're imperiling other economic sectors in the United 
States. And I think Mr. Slocum's comments are reasonable. We 
should be concerned. We are Americans. We're all here. And he 
brought up the example of Australia. But look, you can wrap 
Crocodile Dundee in American flag pajamas, but it doesn't make 
him the President. That is a very different circumstance. If 
you have infrastructure on the West and East Coast connected 
together, you have a different situation in Australia.
    Here in the U.S., our problem is that we have too much gas, 
not too little infrastructure. And the goal is to try to get it 
to market to make value for the American people. And so, if 
that produces dividends in the form of freedom and 
international benefits with our allies, even better. There's a 
lot to be had all around but very different situation, not--
it's a very flat supply curve here in the U.S.
    Senator Barrasso. Mr. Mills, anything you would like to 
add?
    Mr. Mills. Well, no. I think the--I would echo again, I 
mean, with Mr. Slocum and Mr. Book, the domestic features are 
critical. They obviously are.
    We are, all of us, sensitive to economic, domestic economic 
impacts are negative because it's not, economics, as you know, 
it's like the proverbial analogy to the balloon. You squeeze 
one part, it inflates other places. But that's life.
    However, the technological fundamentals that I study and 
have for years with respect to the underlying resource bases 
are so remarkable, so different than what anybody imagined 
before, that we are literally gushing gas. We need to find 
places to use it.
    The part that I would like to emphasize. We've talked a lot 
about Russia's overt negative behaviors. The issue is actually, 
I think, more subtle than that. We all know this. The nature of 
international relations that attend to what's called ``soft 
power'' have to do with the postures of all the counter 
parties. When you're in a weak position, it profoundly affects 
the nature of a negotiation or a treaty.
    For the United States to be in a profoundly powerful 
position has benefits that are difficult to categorize in ways 
that somebody might turn off the gas. We don't have to make 
overt threats when you have such dominant positions in Europe 
as Russia now has.
    Senator Barrasso. Well, it is interesting because we had a 
Foreign Relations Committee hearing specifically on this and 
talked about Russia. Russia has basically three sources of 
power. They have energy, they have a military, and they have 
the cyber. And other than that, not at all.
    So thank you very much.
    Thank you, Madam Chairman.
    The Chairman. Thank you, Senator Barrasso.
    I have one final question here. It was somewhat hinted to, 
Dr. Grigas, when you talked about, you know, we have this 
global supply that is coming on. In Alaska, obviously, we are 
very keenly interested in the opportunities to be able to 
export our enormous volumes of natural gas.
    We are not looking to the European market. We are looking 
to the Asian market. I believe there is considerable 
opportunity there, but as we know, if you supply one corner of 
the globe over here it frees up supply in other areas.
    But as Alaska has been working through our process, over 
decades, to advance our natural gas opportunities, we have seen 
windows open and we have seen windows close. There was a time 
when our focus was on supplying the Lower 48. That was a 
limited window.
    As I have mentioned, this is a new world when it comes to 
domestic energy supply and what technology has allowed us to 
do. You mentioned the Permian, Mr. Mills. But our reality is 
that Alaska's gas is probably further away from the Lower 48 
than it is from our partners in the Asian market. So we look to 
that. But we are very acutely aware that windows come and 
windows go.
    So, the question is, are we looking at that here in the 
United States when it comes to this window of opportunity with 
Europe? Is this a situation where you will have others that 
will be able to fill this need which is clearly a demonstrated 
need in a way that not only provides them with the supply that 
they need but the political stability that they are also 
seeking? Are we in a race with others to gain this market share 
in Europe?
    I will start with you, Dr. Grigas.
    Dr. Grigas. We certainly are in a race. And if we look at 
the actions today of Gazprom, we see that they're trying to see 
the competition that they see. They're trying to secure their 
European markets. Specifically, they're trying to secure 
Germany which is their largest natural gas market by building 
the second line of the Nord Stream II pipeline which would 
bring additional 55 BCM, billion cubic meters, of Russian gas 
to Germany.
    And they're also trying to secure the markets of Southeast 
Europe, essentially through their plans of TurkStream, a 
pipeline that would bring Russian gas directly to Turkey which 
is their second largest, the second largest Gazprom market in 
Europe.
    So, again, this is a race. They're trying to secure these 
markets before American LNG, I think, really comes online with 
full force.
    The Chairman. Let me, if I can interrupt there though and 
just ask, outside of Russia. Let's just say that Europe 
rejects, they say, we do not want to be partnering with Russia. 
We have seen this resource used as a political weapon in the 
past. We reject that.
    Now I am not suggesting that that is actually going to 
happen, but let's just consider it for discussion sake here. 
Who else in this global market could be that supplier?
    Mr. Book and Mr. Winberg?
    Mr. Book. Well, Senator, today the world's largest supplier 
is Qatar and Australia is right behind. And Qatar has talked 
about expanding capacity during the conflict they had with 
Saudi Arabia, that was one of the plans they outlined. They 
have not yet developed or released additional information to 
suggest that they would expand capacity, but they have very 
low-cost gas, very, very cheap gas. So expanding capacity and 
entering into the world market they would have some of the 
advantages that adhere to the Permian associated gas Mr. Mills 
mentioned and the advantages here in the U.S. of exporting it.
    To the extent that there's a time window or there's a time 
horizon, the spot market is still 30 percent of LNG today, give 
or take. And so, there is actually a contract opportunity to be 
had in a world that is still predominantly a contracted market. 
If you think about it that way, then yes, there is a time 
window because of contracts. If you think about the shorter 
contract life then it's not necessarily that the window stays 
closed forever. We'll get a second bid at some of that same 
market either in next contract or more spot future.
    The Chairman. Assistant Secretary.
    Mr. Winberg. Just to expand a little bit on what Mr. Book 
said. Qatar does about 39 billion cubic feet a day. Australia 
about 11. I said earlier that within the next year and a half 
we're going to be up to that 11 billion cubic feet. That means 
that we are going to be surpassing Indonesia, Nigeria, and 
Malaysia and, in fact, we probably already have passed at least 
a couple of them. So we're moving up that chain very quickly. 
Qatar at 39 billion. It will take a while to eclipse them, but 
we can get right behind them.
    And as LNG becomes more liquid it becomes very much a 
commodity play out there. And so, there are opportunities as 
there is more liquidity built into the market because of 
supply. There are market--there are opportunities for short-
term, mid-term and long-term contracts to meet whatever market 
need the customer has. So I think we're not behind. We're, 
well, maybe we are a little behind, but we're catching up very 
quickly.
    And as I mentioned, once we get beyond the 11 billion cubic 
feet that's coming on in the next year and a half, we still 
have another 10 billion cubic feet that the DOE has authorized. 
So, that gives us a lot of head room to play in this global 
market.
    The Chairman. Mr. Slocum.
    Mr. Slocum. Yeah, I think, in thinking about just about how 
quickly things have changed that you alluded to there were very 
few that predicted the fracking boom in the United States. And 
we're in the middle of a number of disruptive changes within 
the energy sector and particularly in the electric power 
sector.
    And so, I think when you talk about a window of 
opportunity, we have to keep in mind that things are moving 
very quickly. And what I'm talking about is renewables actively 
displacing gas in the electric power sector.
    In two big U.S. power markets, Texas and California, we 
have seen owners of natural gas generators make formal requests 
to change market rules because they are claiming that there is 
so much abundant, inexpensive renewable energy in the 
California and Texas markets that it's rendering 
superefficient, combined cycle natural gas power plants to 
become uneconomic. And that's not even with energy storage 
advancements that are being predicted in the next couple of 
years.
    And so, if it's happening in big disparate markets in the 
United States, it's going to be happening in Europe and China. 
And I think we have to think long and hard before we make legal 
changes to public interest standards, before we commit to 
significant capital investment for natural gas exports. Are we 
already missing that window of looking into what role 
renewables are going to have in displacing gas in the next 
several years in electric power markets?
    Thank you.
    The Chairman. It is a dynamic world out there, isn't it? It 
just is. Wow. Which is why this is so great. These are 
extraordinary opportunities for our country right now. And 
there is so much in flux. I think we recognize that.
    But to be in a position to be a player, to be in a position 
to wield some influence for good. I think back to several years 
back when a first initial shipment of LNG came into, I believe, 
was it Lithuania?
    Dr. Grigas. Lithuania.
    The Chairman. Lithuania. And they dubbed the LNG tanker the 
Freedom because they said this represented, to them, freedom 
from reliance on, not necessarily reliance, but that first step 
toward having a more secure, more friendly supply of a resource 
that they desperately needed.
    So it is an interesting time, an important time for the 
United States when it comes to recognizing our energy abundance 
and how that can be used for the good, for the good of those 
here in this country and our friends and our allies, the good 
of our environment and that is why it is good to be part of the 
Energy Committee.
    I appreciate the time that you have given us all this 
morning, and I will continue this conversation later, but we 
now stand adjourned.
    [Whereupon, at 11:43 a.m. the hearing was adjourned.]

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