[Senate Hearing 117-463]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-463

                     HEARING TO EXAMINE THE USE OF
                     ENERGY AS A TOOL AND A WEAPON,
                    AND ENSURING ENERGY SECURITY FOR
                    THE UNITED STATES AND ITS ALLIES

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 10, 2022

                               __________


                       Printed for the use of the
               Committee on Energy and Natural Resources
               
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]               

        Available via the World Wide Web: http://www.govinfo.gov        
        
                              __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
47-892                      WASHINGTON : 2024                    
          
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon                    JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
MARTIN HEINRICH, New Mexico          STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii              LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine            JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada       JAMES LANKFORD, Oklahoma
MARK KELLY, Arizona                  BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado       CINDY HYDE-SMITH, Mississippi
                                     ROGER MARSHALL, Kansas

                      Renae Black, Staff Director
                      Sam E. Fowler, Chief Counsel
                Rory Stanley, Professional Staff Member
             Richard M. Russell, Republican Staff Director
              Matthew H. Leggett, Republican Chief Counsel
       Stephen Eule, Republican Senior Professional Staff Member
                            
                            
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West 
  Virginia.......................................................     1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from 
  Wyoming........................................................     4

                               WITNESSES

Elkind, Jonathan, Senior Research Scholar, Center on Global 
  Energy Policy, Columbia University.............................     6
Michot Foss, Dr. Michelle, Fellow in Energy, Minerals and 
  Materials, Baker Institute for Public Policy, Rice University..    14
Hirstius, Colette, Senior Vice President, Gulf of Mexico, Shell 
  USA, Inc.......................................................    24
Kenderdine, Melanie, Principal, Energy Futures Initiative........    33
Medlock III, Dr. Kenneth B., James A. Baker III and Susan G. 
  Baker Fellow in Energy and Resource Economics and Senior 
  Director, Center for Energy Studies, Baker Institute for Public 
  Policy; Director, Master of Energy Economics, Economics 
  Department, Rice University....................................    49

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Barrasso, Hon. John:
    Opening Statement............................................     4
    Chart depicting gasoline price increases.....................    61
Elkind, Jonathan:
    Opening Statement............................................     6
    Written Testimony............................................     8
Hirstius, Colette:
    Opening Statement............................................    24
    Written Testimony............................................    26
    Responses to Questions for the Record........................   110
Kenderdine, Melanie:
    Opening Statement............................................    33
    Written Testimony............................................    35
    Responses to Questions for the Record........................   111
Manchin III, Hon. Joe:
    Opening Statement............................................     1
Medlock III, Dr. Kenneth B.:
    Opening Statement............................................    49
    Written Testimony............................................    51
    Responses to Questions for the Record........................   113
Michot Foss, Dr. Michelle:
    Opening Statement............................................    14
    Written Testimony............................................    16
    Responses to Questions for the Record........................   107
Wyden, Hon. Ron:
    Rhodium Group report entitled ``U.S. Policy Options To Reduce 
      Russian Energy Dependence'' dated March 7, 2022............    85

 
                     HEARING TO EXAMINE THE USE OF
                     ENERGY AS A TOOL AND A WEAPON,
                    AND ENSURING ENERGY SECURITY FOR
                    THE UNITED STATES AND ITS ALLIES

                              ----------                              


                        THURSDAY, MARCH 10, 2022

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:05 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin 
III, Chairman of the Committee, presiding.

          OPENING STATEMENT OF HON. JOE MANCHIN III, 
                U.S. SENATOR FROM WEST VIRGINIA

    The Chairman. The Committee will come to order.
    We are here today to talk about energy and how it can be 
used as a tool or a weapon. Vladimir Putin's unlawful invasion 
of Ukraine is the latest and most extreme example of his 
willingness to use European dependence on Russian energy 
exports as leverage to disrupt the peace, and in the process 
violate international humanitarian law. But what Putin did not 
expect was the extent to which his belligerence would unite the 
free world to take action. Despite the tragic circumstances of 
this situation, the U.S. and its allies have an opportunity to 
work in concert with a reconstituted resolve not seen since the 
outbreak of World War II. It is time for us to disarm Putin and 
other countries that have the ability to wield energy as a 
weapon. That includes the supply chains our energy systems rely 
on. I applaud the President's decision on Tuesday to use the 
authority he has to impose a ban on imports of Russian oil, 
petroleum products, LNG, and coal. There was broad support in 
Congress to take that step across various pieces of 
legislation, earning 44 Senate co-sponsors in all. That is 
unheard of.
    The bill Senator Murkowski and I introduced had 37 co-
sponsors. That was a necessary action to stop funding Putin's 
brutal war on the Ukrainian people, but now it is time for us 
to hone in on how we strategically use energy as a geopolitical 
tool and for our national security. We must use this moment to 
our advantage to rebuild our energy systems in a way that makes 
us less reliant on actors attempting to subvert democracy and 
who would undermine or threaten our allies and partners. This 
requires a three-pronged approach focused on domestic energy 
production, energy infrastructure, and supply chain security. 
This approach must include a near-term, mid-term, and long-term 
strategic focus; work in concert with the European approach; 
and operate in reality, including the existential necessity of 
addressing climate change. The International Energy Agency 
(IEA) recently released a 10-point plan to cut EU dependence on 
Russian energy imports. This plan appears to be realistic and 
serious, not aspirational, and it happens to mesh well with my 
mantra of ``innovation, not elimination.''
    We, too, need a realistic and reasonable plan that is 
responsive in the immediate-term to our domestic needs and 
those of our allies while being forward-thinking in the short- 
and the long-term. The first immediate action item is to 
increase our domestic oil and gas production on both federal 
and non-federal lands. This is going to take both the 
Administration and industry to step up to the plate, stop 
pointing fingers, take action, and just get it done. The 
Administration has been pointing to 9,000 onshore drilling 
permits that have already been issued for federal leases that 
have not yet been drilled. What I am told is, that while this 
number is a little bit higher than normal, it is not extremely 
out of the ordinary, especially considering that 7,600 of the 
9,000 permits have been extended past their initial two-year 
term by the Bureau of Land Management. A leaseholder has to 
apply for this drilling permit months--if not more--in advance 
due to the review process, and there is no guarantee that 
conditions will be right in the market or in the ground to 
drill with a given permit. With the oil prices going negative 
in April 2020 and the COVID pandemic, it is not surprising that 
companies asked for extensions and slowed down over the last 
few years. However, as I said with the leasing pause, it is 
well past time for the pause to end, and for well drillers and 
the Administration to move forward.
    So yes, I am calling on industry and the shareholders to 
invest and put production before profits. We need you to ramp 
up on these existing leases and with those existing permits 
because that is the fastest thing that we can do. But industry 
also needs signals from the Administration that they will 
support oil and gas development and production. That includes 
taking concrete steps, like working on a new five-year plan for 
the Gulf of Mexico, since we know the current plan expires at 
the end of June. The Administration's failure to act on the 
five-year plan, combined with the failure to appeal the vacated 
lease sale, means that we are almost certainly looking at no 
offshore lease sales until sometime next year, to say nothing 
about the failure to hold onshore sales. The fact of the matter 
is that Gulf oil is the heaviest we produce, and our refineries 
are well-calibrated for it. It makes no sense at all to me that 
the decision was made by Interior to not appeal a ruling 
throwing out the largest Gulf lease sale, particularly when 
that decision was made several days after Russia invaded 
Ukraine. We cannot take a short-sighted approach that pretends 
two years without lease sales will have no impact on our 
domestic oil and gas production. Just because the brunt of 
production impact from the lack of leasing hasn't hit yet does 
not mean we can ignore them.
    We also need to make sure that the infrastructure we need 
to get product to market is able to get built. This means 
pipelines and export terminals and supporting the corresponding 
infrastructure build-out in Europe and elsewhere. And I know 
some might bristle at investing in fossil-fuel infrastructure 
as a long-term asset, but let me tell you, the Mountain Valley 
Pipeline could be completed in four to six months if it was 
finally given the green light, and I have legislation that 
would do just that--would do exactly what we just said. That 
would add two billion cubic feet per day into the market for 
domestic use, for export, and to have next winter when we will 
all need it the most. It would help get prices down, and it 
would help reduce emissions, allowing for utilities to continue 
to transition. And for long-term, it is a 42-inch pipe that can 
be sleeved and used for hydrogen in the future without building 
yet another pipeline. It is not locking us into a fossilized 
version of the past, it is infrastructure that is flexible. It 
is a total no-brainer to me. We just need to get out of our own 
way and get it done. We also need to be supporting our allies 
and partner nations who do not have the LNG hubs, pipelines, 
and terminals they need to get natural gas to end-users without 
relying on Russia. That is a real problem, as the European 
Union is heavily dependent on Russian energy, which accounts 
for 38 percent of its natural gas and 30 percent of its oil 
consumption.
    We need to keep that back-of-mind as we look ahead to, and 
more importantly, start planning for next winter. But this 
problem is not limited to natural gas or oil. In fact, while we 
are properly focused on Russia, we also need to be thinking 
about our long game. We also rely on Russia for a significant 
portion of our nuclear fuels and some of our minerals, notably 
titanium and palladium, and our reliance on critical minerals 
and materials produced in China and other nations hampers 
broader energy security and climate goals. These minerals are 
subject to price volatility, just like oil and gas. Just a few 
days ago, nickel, which is used in many energy applications, 
including batteries, skyrocketed. If you can believe this, it 
skyrocketed to over $100,000 per metric ton--$100,000 per 
metric ton. And lithium prices are also up. In fact, right now, 
a nickel in your pocket is worth more than a dime based on the 
metals that are included in it. A nickel is worth more than a 
dime with the minerals that are in it. Don't start melting your 
nickels down--not yet. The mining and refining of these 
minerals is extremely geographically concentrated, much more 
than oil and gas.
    I have heard calls for EVs as an answer for how we are 
going to pivot away from oil. I feel very strongly that it 
would be a major mistake to allow us to end up in the same 
situation where those minerals are weaponized against us, not 
just for our clean energy technologies, but also for our 
satellites, cellphones, and more. That is in part why I have 
been such a big advocate for hydrogen, which we can produce 
right here at home with CCUS, nuclear, or renewables. I want to 
see State and Department of Energy work together to establish 
bilateral and multilateral agreements in reliable countries 
that produce critical minerals. Additionally, the Department of 
the Interior needs to prioritize the USGS's critical minerals 
effort while making sure that the Department's role in 
permitting new mining helps facilitate that process rather than 
throwing up more roadblocks.
    Now, let me close by making it clear that I am not saying 
to hell with our climate goals. These actions are not all 
mutually exclusive. I am a firm believer in an all-of-the-above 
energy mix and that we can and should be leading the world 
through innovation. We need to get the robust funding out the 
door that we included in the Energy Act and Bipartisan 
Infrastructure bill for research, development, and 
commercialization in the areas of CCUS, advanced nuclear, 
hydrogen, transmission, renewables, storage, advanced 
materials, and other energy technologies to meet our emission 
goals. We must also increase the manufacturing of energy 
products, including wind turbines, batteries, solar panels, 
nuclear materials, technology, pipelines, and dual capability 
of natural gas and hydrogen, advanced materials, and anything 
else that will help us and our allies. That is a longer-term 
plan, and the one that Congress has clearly supported through 
these two historic pieces of legislation. And as the energy 
transition continues, we must be eyes-wide-open and responsive 
to solving the problems before us today while working toward 
the vision we have for our future and doing our best to solve 
these problems before they are used as weapons against us or 
our allies.
    Finally, as we boost production here, which we must do, I 
want the United States to lead in deploying the technology that 
makes sure that our producers have the cleanest gas and barrels 
of oil possible. So I appreciate our witnesses for being here 
today to talk about these critically important issues, and I 
look forward to this discussion about an active, American 
energy strategy that enables us to better hone our energy as a 
tool. It is certainly going to take all of us--Congress, the 
Administration, and our industry partners--to respond today and 
to plan for our future.
    With that, I am going to turn to Senator Barrasso for his 
opening remarks.

           OPENING STATEMENT OF HON. JOHN BARRASSO, 
                   U.S. SENATOR FROM WYOMING

    Senator Barrasso. Well, thank you so very much, Mr. 
Chairman. Thank you for your strong opening statement. Thank 
you for holding today's hearing, because last year President 
Biden inherited an energy-dominant America. He spent the last 
13 months squandering it. Since day one, the President has 
sought to end American oil, natural gas, and coal production, 
and that is the source of nearly 80 percent of our energy. He 
has banned new federal leases for oil and gas. He has ground to 
a halt the permitting of natural gas pipelines and storage 
facilities, and he has made it much more difficult for energy 
producers to obtain financing. The results have been 
predictable: sky-high energy prices, the highest inflation in 
40 years--new numbers out today--highest in 40 years. And of 
course, he has emboldened our adversaries. The price of a 
barrel of crude oil recently reached $129. The last time oil 
prices broke $100 was in 2014, and at the time, Joe Biden was 
Vice President of the United States.
    The geopolitical importance of U.S. energy dominance cannot 
be overstated. In 2018, the United States was able to sanction 
Iranian oil over that country's ties to terrorism. Since we 
were energy dominant, those sanctions did not increase the 
price for Americans at the pump. Now, the President wants to 
cut a deal with Iran. Boy, how times have changed. We should 
not be bankrolling Iran's war machine, just as we should not 
have been bankrolling Russia's war machine. We have all heard 
about the atrocities that Putin's troops are committing. Where 
do you think this barbarism has been paid for? It has been paid 
for by Russian energy. Energy is the single largest source of 
revenue to the Russian state.
    In 2021, Russia was our third largest foreign supplier of 
oil after Canada and Mexico, and as Senator Murkowski has said 
in this hearing, that at a point Russia was providing more oil 
to the United States than was Alaska. Last year, we imported 
nearly 700,000 barrels of Russian oil each and every day. 
Russia is also among the largest suppliers of uranium to the 
United States, as the Chairman has mentioned in his opening 
remarks. Make no mistake, the money spent on Russian energy 
helps support Russia's invasion of Ukraine. A State Department 
official in a Foreign Relations Committee hearing even said 
that the sale of Russian energy was the cash cow that has paid 
for Putin's war machine.
    Before the invasion, President Biden was begging OPEC and 
Russia to produce more oil to sell to the United States. He has 
now followed Congress's lead and banned imports of Russian oil, 
natural gas, and coal. He should also ban Russian imports of 
uranium.
    Despite skyrocketing prices, the President is still hostile 
to American energy production. He wants to turn to Venezuela. 
He wants to turn to Iran. This is his pattern. The President 
was willing to plead with Russia and to let Russia build 
pipelines, like Nord Stream 2, but no, he will not let 
Americans build pipelines--not Keystone and not pipelines today 
for gathering lines and to allow us to produce and use American 
energy. The contrast is astonishing.
    Russia's invasion of Ukraine shows just how shortsighted 
the President's energy policy has been, yet, the President said 
not a single word about increasing American energy production 
in his State of the Union speech. He said make this in America, 
make that in America, make the next thing in America, but not 
American energy--not a single word. The idea that America 
should be producing more energy does not appear to have crossed 
this President's mind.
    Rising energy costs are punishing American families, 
especially those on low and fixed incomes. President Biden 
wants us to believe that his policies are not to blame. And his 
solution continues to be to stop using fossil fuels. He wants 
to force Americans to drive expensive electric cars and 
insulate their homes. This is a fantasy--a fantasy in his mind 
and in that of some of the members of his Administration. The 
reality is this world still largely runs on oil, natural gas, 
and coal, and that is not going to change in the foreseeable 
future, no matter how the work goes to reduce greenhouse gas 
emissions. Killing American oil, natural gas, and coal 
production is not going to change that, it will just enrich our 
adversaries and leave America weaker and more insecure.
    The President announced that he is releasing another couple 
days' worth of oil from the Strategic Petroleum Reserve. Others 
want a gasoline tax holiday. We do not need gimmicks. We need 
more American energy.
    No other major energy producing country shuts off its own 
reserves to production--not Russia, not Iran, not China, not 
Saudi Arabia. Why should we?
    Mr. Chairman, I am glad you called attention to this 
talking line of the Administration about the 900 leases.
    The Chairman. Nine thousand.
    Senator Barrasso. Oh, I'm sorry, 9,000 leases. As you know, 
the leasing is just the first area where you get permission 
from the government, and you pay for the lease. But then you 
have to apply for permission to drill. It is like you paid the 
rent for the apartment, but the government won't give you the 
key to get in the door because they haven't given you the 
permission yet to drill. And then, of course, once you are able 
to produce energy from there, they won't allow the production, 
they won't give you the permission to put together the pipeline 
to move the oil or the natural gas specifically from where it 
is coming out of the ground. Look, America is a world energy 
superpower. It is time, once again, that we start to act like 
it.
    Thank you, Mr. Chairman, for this important hearing.
    The Chairman. Thank you, Senator, I appreciate it.
    I would like to turn to our panel of witnesses that we 
have. First, we have Jonathan Elkind, Senior Research Scholar 
and Adjunct Professor at the Columbia School of International 
Public Affairs.
    We have Dr. Foss, Fellow in Energy at the Baker Institute 
for Public Policy at Rice University.
    We have Colette Hirstius, Senior Vice President of Shell's 
USA Gulf of Mexico operations.
    We have Melanie Kenderdine, Principal at the Energy Futures 
Initiative.
    And we have, by web, Dr. Kenneth Medlock, Director of the 
Center for Energy Studies at the Baker Institute for Public 
Policy at Rice University.
    Mr. Elkind, we are going to start with you.

 STATEMENT OF JONATHAN ELKIND, SENIOR RESEARCH SCHOLAR, CENTER 
          ON GLOBAL ENERGY POLICY, COLUMBIA UNIVERSITY

    Mr. Elkind. Thank you, Chairman Manchin, Ranking Member 
Barrasso, and members of the Committee.
    Over the past two weeks, the world has watched tragic 
events unfolding in Ukraine. We see utter brutality--a war of 
choice that the Russian President, in Orwellian fashion, will 
not even acknowledge for what it is. Energy and many other 
foundations of everyday life are reverberating from this war. 
As the Chairman said, ``Today's Russian economy runs on 
energy.'' The oil and gas industries represent roughly half of 
the country's export earnings. Moreover, oil and gas are a tool 
that Russia has used on several occasions to place political 
pressure on its neighbors. For example, in 2006, 2009, and 
again in 2014, real or threatened cutoffs were used to 
destabilize Ukraine's economy and politics. Ukraine was not the 
only country so treated. It is true that northwestern European 
companies purchased Russian gas for decades without major 
problems, but Russia's treatment of less powerful central and 
eastern European customers revealed something important--
Moscow's willingness to use market power for political 
leverage. We should, therefore, assess our own and Europe's 
energy security with care.
    Though far from perfect, the energy security of the United 
States enjoys key strengths. For one, the U.S. oil and gas 
industry is strong. It leads the world in production, and 
growth is continuing. It would be a mistake, nonetheless, to 
view oil and gas as a silver bullet for energy security. East 
coast gasoline consumers faced huge uncertainties last May 
after the cyberattack on the Colonial Pipeline system. Just 
this week, we see news of a mid-February cyberattack on U.S. 
natural gas companies. We benefit from having diversified 
energy systems, and we should celebrate the dramatic growth of 
wind and solar power from the West Texas hills to the New York 
Bight, and from the plains of Iowa to mountaintops in 
Appalachia. These projects, however, do emphasize the need to 
modernize our electric transmission grids. Nuclear power, as 
has been noted, also enhances our energy security, but it is 
under stress. Many reactors will go offline unless we institute 
policies that value carbon-free electrons. And we need to focus 
now, as the Ranking Member has said, on the fuels for advanced 
reactors that can enter service later this decade. Let me also 
note that we need a comprehensive approach to innovation, 
commercialization, and deployment of everything from direct air 
capture to CO2 pipelines, from hydrogen to long 
duration storage, to enhance our energy security and sustain 
American competitiveness.
    Turning to Europe, in the past two decades, the EU created 
and strengthened integrated energy markets, but it grew 
steadily more reliant on Russian natural gas supplies. Today, 
as a consequence, Europe confronts real vulnerability. This 
week, EU leaders are debating both old and new ideas--mandatory 
gas storage requirements, new LNG import capacity, alternative 
fuels, accelerated renewables development, even coal reserves, 
and perhaps extended lifetimes for German nuclear power plants. 
Europe will hope to buy additional LNG from the United States, 
Qatar, and elsewhere but these purchases will only happen if 
European companies outbid other buyers. Europe and the United 
States face a number of common energy security threats, but in 
the interest of time, I will just mention two key issues in 
passing--cybersecurity and critical materials supply chains.
    Let me close with one last observation. The full energy 
impacts of Russia's war in Ukraine are not yet clear. Some, 
therefore, argue that the United States and Europe must 
deemphasize climate protection and instead focus exclusively on 
security of energy supply. This is understandable, but 
shortsighted. Last week, the IPCC's impacts report found that 
as many as 3.6 billion people today live where they are highly 
vulnerable to the impacts of a changing climate. All across our 
country, we have witnessed devastating climate impacts--the 
loss of American lives, the destruction of American homes and 
businesses. We therefore need to respond to two kinds of risk 
simultaneously--the all-too-visible challenges to our energy 
security, and the already clear damage from human-caused 
climate change. We do not have the luxury of worrying first 
about one and then about the other.
    Thank you.
    [The prepared statement of Mr. Elkind follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, sir.
    Now we have Dr. Foss.

   STATEMENT OF DR. MICHELLE MICHOT FOSS, FELLOW IN ENERGY, 
MINERALS AND MATERIALS, BAKER INSTITUTE FOR PUBLIC POLICY, RICE 
                           UNIVERSITY

    Dr. Foss. Thank you, Chairman and Ranking Member, for the 
invitation to be here today. As you all pointed out, there is a 
rush to try to find solutions around all of this, and many of 
them are very popular--very strong emotions around those--but 
we have to face the realities, and that is what I really want 
to point to in my testimony this morning.
    The first one is that energy density matters. It really 
matters a lot. Human beings have gravitated toward higher 
energy dense materials, fuels, and technologies, for a very 
long time--for good reasons. When we move nuclear and fossil 
fuels out of the picture, it takes more to replace that. When 
you need more to replace the equivalent amount of energy that 
you are removing from the picture, that means more materials, 
more equipment, more infrastructure that has to get built, and 
more that has to be managed in terms of the energy supply 
chains--nor do you fully get away from using materials like 
hydrocarbons--oil and gas. We still need them for backup. We 
need them for balancing to ensure reliability on power grids, 
and also because from those molecules we get both energy and 
materials. And there is no other place where we have access to 
two things at once. Greater materials-intensity means a 
potentially large call on new materials that, in accelerated 
scenarios, will stress supply chains, put pressure on prices, 
and increase geopolitical tension. We sure got a lesson on that 
this week.
    I was a peer reviewer for the International Energy Agency's 
report, ``Mineral Requirements for Clean Energy Transitions.'' 
In my opinion, their estimate of a quadrupling of demand in 
minerals understates what we are looking at as we try to 
accelerate energy transitions, because we use these minerals 
for lots of things, and everyone forgets that. Base demand for 
non-fuel minerals has grown faster than petroleum and natural 
gas, almost as fast as electric power. Plastics and resins, 
which make up a lot of alternative energy technology equipment, 
have grown faster than some of the metals. Without plastics and 
resins, you wouldn't have wind turbine blades, you wouldn't 
have Plexiglass for solar PV, you wouldn't have upwards of 50 
to 60 percent of the content of the electric vehicles that 
everybody wants to make. So this is a real issue. We have 
distinct opposition to mining and minerals processing in our 
country. Fitch and other credit rating agencies have taken note 
of this. Quality matters--not all minerals and metals are the 
same. When it comes to things like electric vehicle batteries, 
semiconductors, and other sensitive industries, purity is a 
really big deal, and that puts a lot of pressure on mineral 
supply chains and processing and sourcing.
    China is all over the place in this business. We are 
spending an awful lot of time tracking Chinese dominance across 
the minerals supply chains in the countries where they are 
making investments. They represent about a quarter of the 
world's production on non-fuel minerals. Their outbound 
investments are all over the place--Africa, South America, East 
Asia, and Russia. We are very, very concerned about their 
control of sensitive minerals, like rare earths--there has been 
a lot of conversation about that. The Chinese formed a 
monolithic, state-owned enterprise to control their own rare-
earth resource, which the rest of the world depends on. They 
also control the bulk of electric vehicle battery manufacturing 
and the bulk of battery manufacturing in general, also capacity 
for wind turbine and solar PV equipment, and many other things 
that everybody needs to rely on to get all of this stuff done.
    One of the really big concerns I have is how we think about 
the math around the oil and gas part of the picture. When the 
industry makes investments, upstream is funded by the sale of 
every molecule that gets produced. When you start locking out 
the sales of molecules, you impact the revenue that is 
available to the industry to do all the things that everybody 
would like it to do, including diversity and its capital 
investments, and that is a really important point. One of the 
issues is going to be how to reduce supply--if that is what we 
want to do--and maintain the amount of hydrocarbon-based 
materials that our lives depend on so dramatically.
    Energy demand is increasing in a lot of interesting ways, 
which the Chairman pointed out. In all of this, thinking about 
how we should go forward and all the risks that we face scaling 
up these businesses, building the ecosystem for alternative 
energy technologies, and diversification--one recommendation 
from me would be to not push fossil fuels out of the mix at 
such a fast pace. We would do that at our peril. You would be 
exposing consumers and voters to risks that are unnecessary at 
this time. The industry needs access to locations. It needs 
capital for investment. It needs services to support those 
investments. We need creative thinking about managing 
emissions. We have ideas about that at Rice University that I 
hope my colleague Ken Medlock touches on related to hydrogen 
production and carbon sequestration. And we need to put 
materials first in your thinking. Please do that. Without 
putting materials first, every other thing that gets discussed 
becomes less stable, less promising, and less certain.
    Thank you.
    [The prepared statement of Dr. Foss follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you.
    Ms. Hirstius.

 STATEMENT OF COLETTE HIRSTIUS, SENIOR VICE PRESIDENT, GULF OF 
                    MEXICO, SHELL USA, INC.

    Ms. Hirstius. Chairman Manchin, Ranking Member Barrasso, 
and members of the Committee, thank you for the opportunity to 
testify today. My work as Senior Vice President for Shell's 
Gulf of Mexico operations fits within a global marketplace 
affected by the invasion of Ukraine. We are disturbed, and I am 
personally heartbroken by this unprovoked attack, which 
threatens global security and stability. In response, Shell has 
announced its exit from Russian joint ventures and withdrawal 
from all Russian hydrocarbons. Although right, it is not easy. 
It carries serious consequences. Europe relies on exports from 
Russia to heat homes, drive cars, and aid the defense of 
Ukraine. This crisis powerfully highlights the need to move 
away from fossil fuels. Shell is committed to provide more and 
cleaner energy solutions, and to help the world transition to a 
net-zero system by 2050.
    Our dilemma now is how to restore the energy security while 
making the transition. We can and must do both. Today's hearing 
is about how quickly we can resolve supply constraints, bring 
more natural gas to Europe, and produce enough energy to ease 
prices at home. Gulf of Mexico production has amongst the 
lowest greenhouse gas intensity in the world. For years, Shell 
has been working as fast as we can to bring that production 
online. For example, a new field will begin producing in the 
next few weeks. It is worth noting that Shell's carbon 
environmental footprint continues to shrink as we use existing 
infrastructure and innovation to produce energy more 
efficiently. Regarding this dilemma of energy security and 
transition, we offer three thoughts: number one--diversify 
energy supply with lower carbon sources. Two--immediate 
government action to bring supply online sooner. And three--a 
comprehensive medium- to long-term energy policy.
    First, diversifying energy supply and increasing lower 
carbon sources is essential. Shell is making substantial 
investments in American renewables, like our recent $380 
million investment for New York wind leases. We have made new 
investments in solar, renewable natural gas, hydrogen, and CCUS 
projects.
    Second, both federal and state governments can take 
specific actions to address the ongoing crisis, including 
release of Strategic Petroleum Reserves along with 
international partners to provide some near-term relief; 
address a backlog of LNG export permits so the United States 
can supply allies, especially those in Europe; and move forward 
with permitting oil and gas infrastructure and projects that 
could come online within weeks or months. From my perspective, 
these permits are needed to bring additional volumes online in 
the Gulf of Mexico, which remains key to our shared objectives 
of stabilizing supply and accelerating the transition to net 
zero.
    Third, America needs a comprehensive, long-term energy 
policy that includes the thoughtful production of lower carbon 
intensity oil and gas as a responsible element of the 
transition. The Interior Department should address the fact 
that no federal oil and gas leases have been issued in over a 
year, and urgently work to restart federal leasing.
    Shell's position is clear. Climate change is real. Energy 
security is fragile. World demand continues to rise. We must 
find a way to meet the urgent supply needs while reducing the 
carbon intensity of our energy system. This is an inflection 
point. How we balance security of supply and transition in this 
crisis will determine our nation's energy future. Let us rise 
to this moment and use the unparalleled resources of our 
hardworking American people and their American ingenuity, not 
simply to meet the current supply crisis, but to build a more 
diverse, lower carbon energy system while we do so.
    Thank you for the opportunity to be here today.
    [The prepared statement of Ms. Hirstius follows:]
    
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    The Chairman. Thank you.
    Ms. Kenderdine.

               STATEMENT OF MELANIE KENDERDINE, 
              PRINCIPAL, ENERGY FUTURES INITIATIVE

    Ms. Kenderdine. Thank you. Mr. Chairman, Ranking Member 
Barrasso, members of the Committee, thank you for this 
opportunity to testify.
    First, let me extend my support for the Ukrainian people. 
Their strength and resolve in the face of Russia's brutality is 
inspirational. This crisis and the global response crystalizes 
critical energy security imperatives. The immediate focus on 
the need for gas and oil supplies underscores their current 
importance for the health, safety, security, and economies of 
the U.S. and its allies. At the same time, we cannot lose focus 
on the need for deep decarbonization by mid-century. The crisis 
and the world's response underscore the need for a thoughtful, 
informed, and sequenced strategy for the transition from fossil 
fuels to a deeply decarbonized future. In 2014, we received an 
early warning signal about the current Russian designs on 
Ukraine when in February of that year, it invaded then annexed 
Crimea. The response of the U.S. allies was swift. The G8 
became the G7. We kicked Russia out. DOE put together a set of 
modernized energy security principles--not oil-centric, as it 
had been to that point. Those were adopted by the G7 leaders. 
The principles focused, in part, on flexible gas markets and 
emissions reductions, not surprisingly. The leaders also 
recommended an immediate focus on promoting low-carbon 
technologies, renewables, nuclear, and CCS, and promoting a 
more integrated liquefied natural gas market around the world.
    My remarks are focused on two of these--global LNG trade 
and metals and minerals needed for low-carbon technologies. 
Replacing Russian gas in Europe via supply source 
diversification will be difficult in the near- to mid-term. 
Many countries in Europe are 93 to 100 percent dependent on 
Russian gas. Fortunately, the U.S. is in a strong position to 
provide major assistance in the LNG space. The U.S. is now the 
number one natural gas producer in the world and the world's 
largest exporter of LNG. Clearly, we need to do all we can to 
supply our allies in Europe, but we also have allies in Asia. 
Our largest consumers of U.S. LNG are Japan and South Korea. So 
satisfy the Europeans now--we have other allies we need to 
worry about as well. It is also clear that in the near- to mid-
term, more supply and additional export capacity is needed. 
Existing global LNG import regasification facilities--including 
those under construction--totaled 1,102 million tons per year. 
Sixty-four percent of that demand is in Asia. On the flip side, 
our LNG export capacity, existing and under construction, is 
576 million tons per year. The difference between demand and 
supply is 525 million tons per year. So importantly, we do not 
want Russia to fill that gap, and it is surely looking for 
other markets for its natural gas right now. Fortunately, we 
have planned supply in the U.S. and the world of another 571 
million tons per year. Forty-eight percent of that is in the 
United States. We need to expedite decisions on that planned 
capacity and fill that gap and make sure that the Russians 
don't.
    We also cannot lose sight of the fact that the LNG 
production and consumption will increase greenhouse gas 
emissions, depending on what it is replacing. The industry 
needs to dramatically reduce its methane emissions. Just do it. 
We have the technologies. Do it. Others have mentioned carbon 
capture and hydrogen, and so I will leave it at that--they are 
important.
    Now, a few words on energy security issues raised by the 
growing need for metals and minerals for the clean energy 
transition. In 2017, the UN's environment program concluded 
that low-carbon technologies will need over 600 million metric 
tons more metal resources in a 2 scenario compared to a 6 
scenario. USGS has categorized 50 metals and minerals as 
critical. The U.S. is 50 percent import-dependent on 27 of 
those, and 100 percent import-dependent on 13 of them. And we 
get a lot of them from China. So we need to be very careful. We 
need to engage our allies and trading partners through all 
available forms to protect those supply chains. They are new 
supply chains, and we need recycling. IEA says that we can get 
nine percent of the materials we need for batteries by 2040 via 
recycling.
    Let me just say, in closing, raise a couple of suggestions. 
We have a LEED standard for buildings. I think we need a LEED 
standard for mines. I would call it ``Leadership in Equitable 
and Environmentally Responsible Mining (LEERM).'' Such a 
certification could provide a carrot, not a stick, and provide 
a key differentiator for mining businesses. And so I think that 
that is something we should do. This raises an important issue 
about the energy transition as well--creating additional and 
critical jobs that focus on rural America. Auto repair is 
currently a major--if not the major--center of commerce in many 
small towns in rural America. EVs will diminish that commercial 
activity. Creating recycling centers for batteries and other 
key materials in rural areas could help replace that commerce. 
And finally, we tend to think of energy security in terms of 
fuels. Beyond the cost of commodities such as copper, the 
metals and minerals used for clean energy technologies are 
capital costs, not fuel costs. The lifespan of all of these 
clean energy technologies defines the draw on the metals and 
minerals that we are talking about. So the lifespan of those 
technologies is a measure of our energy security. Manufacturing 
warranties aside, we need to assess and understand and get 
honest assessments of the lifespan of those technologies.
    So thank you very much.
    [The prepared statement of Ms. Kenderdine follows:]
    
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    The Chairman. Thank you.
    Now, Dr. Medlock, via web.

STATEMENT OF DR. KENNETH B. MEDLOCK III, JAMES A. BAKER III AND 
  SUSAN G. BAKER FELLOW IN ENERGY AND RESOURCE ECONOMICIS AND 
SENIOR DIRECTOR, CENTER FOR ENERGY STUDIES, BAKER INSTITUTE FOR 
PUBLIC POLICY; DIRECTOR, MASTER OF ENERGY ECONOMICS, ECONOMICS 
                  DEPARTMENT, RICE UNIVERSITY

    Dr. Medlock. Thank you, Chairman Manchin, Ranking Member 
Barrasso, and the rest of the Committee. I am glad to be here 
virtually. I wish I could be there in person, but scheduling 
didn't permit.
    The topic of this hearing is very interesting and it is an 
issue that tends to rise up and bite us every so often. The 
issue around Russian natural gas, in particular, has been 
something that has been explored ad nauseam over the last two 
decades and there have been many recommendations made by 
various parties with regard to Europe's dependence on Russian 
gas and what it could actually bring forth, yet, they have 
largely been ignored. In fact, if you think about dependence on 
Russian natural gas--and I think Jonathan referred to this 
earlier--but in 2012, it was roughly 26 percent of market share 
in Europe. Today, it is about 38 percent. So despite the 
obvious warning signs, dependence has actually grown, not 
declined.
    And that raises a really interesting point about the 
concept of energy security that I want to refer to. It is 
important, first, to recognize that the definition of energy 
security has changed over the last three decades. It has 
broadened substantially to incorporate environmental concerns, 
social concerns, et cetera, and all of those definitely matter. 
As an economist, what I tend to focus on and what the economics 
literature generally tends to focus on in talking about energy 
security are the macroeconomic implications of unexpected 
shocks to supply or increases in price. And typically what we 
see historically is a massive amount of macroeconomic malaise 
that ensues as a result of these unexpected outages or 
unexpected price shocks, and then we tend to think about what 
sorts of hedging tools we can deploy to minimize those shocks 
in the future. There have been tremendous strides taken by 
policymakers, if we go back over 50 years now, in this 
dimension. The Strategic Petroleum Reserve is a great example 
of something that was created in an effort to mitigate the 
negative impacts associated with unexpected outages. And 
certainly, that is one that should be on the table in the 
short-term right now, given what is transpiring in global 
energy markets and how it is impacting U.S. consumers at the 
pump currently.
    But one thing that is really important to recognize is that 
energy security, in particular, has shifted dramatically since 
2000--just over the last 20 years, and that is largely the 
result of the ``shale revolution'' as it is often referred to. 
The shale revolution is one of the single largest drivers of 
transitions in global energy systems that we have seen in a 
long time, and it has dramatically shifted geopolitical 
discourse. It has changed lines of trade. It has changed 
investment patterns.
    Of course, demand growth in Asia over the last 20 years has 
been equally dramatic in terms of its implications for the 
global energy system. But without a doubt, shale has 
transitioned the U.S. from a position of becoming more energy 
import-dependent to becoming less. In fact, back in the 2011-
2012 time frame, the U.S. State Department had, on the Bureau 
of Energy Resources website, declared the U.S. to be an energy 
superpower. And I can tell you, we see that as well. We 
actually hosted, pre-COVID--and it is starting to pick up again 
now, thankfully--an average of 23 different delegations from 
different countries around the world every year. And in every 
case, when those individuals walked through the door, they 
wanted to talk about U.S. energy--understand what was happening 
in the shale patch, understand how policy was influencing the 
ability to access those resources through trade. So a lot of 
interest. The world watches what we do, without a doubt.
    Now, I want to point something out about shale because this 
is really important and I think it rings with a lot of remarks 
that have been made so far today. What drove shale? It was a 
combination of legal structures, of regulatory architecture, of 
property rights. But at the core of it, it is innovation. And 
if we want to think about how the world of energy is going to 
transform over the next 30 years, innovation is going to be 
critical. So as we think about the future and we think about 
the geopolitical prowess that shale has brought to the front of 
the stage, in particular, it is a blunt-force tool that we can 
use to hedge against Russian hegemonic intent. I have some 
colleagues that have written about this with regard to the 
situation in Lithuania, where once that terminal was actually 
under construction, the Russians renegotiated gas price terms 
with Lithuania because they realized that the potential to 
bring in LNG, largely from the U.S., was a credible threat to 
their ability to use gas as a weapon.
    Things like that are incredibly important to internalize, 
but at the core of it is innovation, and I said to this 
Committee, I think, three years ago, that we need to have a 
long view when we talk about innovation because the next great 
innovation is in the mind of a four-year-old somewhere playing 
with Legos. We don't know what it is, but we have to create 
platforms that encourage it so that it can actually begin to 
make meaningful transitions that are commercially viable and 
don't really require tremendous government support to move 
forward because, quite frankly, when those innovations 
materialize, they are game-changing and they actually have 
tremendous implications for our ability in the United States to 
impact outcomes everywhere. So it is a tremendous foreign 
policy tool.
    Thank you very much.
    [The prepared statement of Dr. Medlock follows:]
    
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    The Chairman. Let me say thank you to all of you. It was 
extremely important for us to hear the expertise you all have 
and also your opinions on this. We are at a critical time right 
now and we are going to start with our questions. I will start 
and then we will go around.
    We are at a critical junction, I believe, as far as in the 
world and our country, what role we play in the world. We are 
looked to as a leader. I think there are some of my friends and 
colleagues that believe that we are going to throw caution to 
the wind and just double down on fossil and forget about the 
cleaner environment that we are responsible for and how we do 
it with technology. That is the furthest thing from the truth. 
I think we can do both. We can walk and chew gum at the same 
time, and we have to. We are at a critical stance right now--
how quickly can we get back into production and get up to where 
we cannot only defend ourselves and keep ourselves independent, 
but how can we support our allies, who are going to need 
energy. We have no idea how this thing might end. No one ever 
thought that we would be in the situation we are in now and 
Ukraine would be faced with the unbelievable war going on now. 
Atrocities are happening to innocent people. I do not think the 
world will stand for that, but it could go further than this 
without further provocation.
    So what I would ask all of you--the only thing I know that 
we can get back in and quick--we talked about leasing not being 
done, pipelines not being built, this and that--can you give me 
your opinion on the Defense Production Act? Is this a time for 
us to consider the Defense Production Act to get things done so 
we remain energy independent and also can support our allies so 
they do not have to go back--even though they don't want to--to 
being reliant on Russia or areas of the world where we have 
very little influence and it is to our detriment for them to 
supply the energy?
    I mean, we are hearing all the criticism--talking to Iran, 
talking to Venezuela. The Saudis are sitting on the sidelines 
doing nothing right now because of the strained relationships 
we have with them. But the only way that we can do something is 
to get back into the game. So I will just go down quickly. If 
you can give me your opinions on that, and Dr. Foss, I will 
start with you because it looks like you are ready.
    Dr. Foss. I am not a DPA lawyer----
    The Chairman. Give me your opinion.
    Dr. Foss. I would like to consult one on your question.
    The Chairman. What is the quickest way to get back in, and 
how--do you think it is important? Do all of you think it is 
important for us to move quickly?
    Dr. Foss. What I was going to say is that one of the 
interesting DPA procurements is the minerals procurement in 
partnership with Australia.
    The Chairman. Okay.
    Dr. Foss. To the extent that we need to rely on 
international sources, we do have friends out there and if DPA 
can be used with procurement to help move things along--it is 
not going to solve the problem tomorrow, but it gets things in 
the works that will make a difference 10 years down the road in 
an important way. So you could think about that.
    The Chairman. Thank you. I appreciate that very much.
    Mr. Elkind.
    Mr. Elkind. Thank you, Chairman. I, too, am not a DPA 
expert, so I can't comment----
    The Chairman. I think what I am really asking is about the 
urgency. That is the only thing I know that we can use to have 
the urgency, that we need the products.
    Mr. Elkind. The even more urgent feature----
    The Chairman. Okay.
    Mr. Elkind [continuing]. That you need to really be aware 
of is the cyber threat to the energy systems. We are seeing it 
all the time in the press in the United States. Europe, 
likewise, has to be in the crosshairs of those that would like 
to complicate their energy security and their ongoing economic 
operations. This is a hard area because of the sensitivity and 
the intelligence that is underlying most of the actions, but 
intensifying collaborations there, it seems to me, would be an 
important and really near-term step.
    The Chairman. Ms. Hirstius.
    Ms. Hirstius. Yes, Chairman, I think the answer is yes. 
There is clear urgency and we need to move quickly on many 
fronts. I think there are tools that are in our hands today. We 
can increase production. We can increase infrastructure, which 
will really help with the flexibility that we need.
    The Chairman. Under normal conditions right now--you are in 
the private sector--what would it take you to get up and 
running right now? Just as things have happened in the past--
the permitting process, getting things ramped up and 
everything. We are in unusual times right now.
    Ms. Hirstius. Indeed. So in my sector, in the Gulf of 
Mexico, seismic permits is something that we need to get after 
to make sure that we can continue to drill wells, and also in 
the longer term we need to make sure that we have the stock of 
leases that are coming in so we can continue to sustain the 
supply.
    The Chairman. Thank you.
    Ms. Kenderdine.
    Ms. Kenderdine. As I mentioned, there are a lot of LNG 
projects in development. Whatever we can do to expedite those 
projects and get them done--I have checked into the 
availability of LNG tankers. There are tankers available. I am 
going to be the third person who said I am not an expert on the 
Defense Production Act, but I have a little bit of concern 
about declaring emergencies. I know we had to do that to use 
the Strategic Petroleum Reserve. We are drawing that down. We 
could do an SPR exchange right now without declaring an 
emergency, and I think the market is pretty backwardated, I 
have been looking into that as well. So get oil onto the 
market----
    The Chairman. Right.
    Ms. Kenderdine [continuing]. In addition to getting gas 
onto the market. I think there are a lot of things that we 
could do, but expediting those projects that are under 
development, and the ones that are under construction, 
expediting those projects----
    The Chairman. Thank you.
    Dr. Medlock, do you have a thought on that?
    Dr. Medlock. Yes, I think urgency is critical and I think 
it is critical that we work hand-in-hand with our allies in 
Europe. And something that hasn't been mentioned yet, but the 
use of floating storage and regasification units--offshore 
units for LNG--should be on the table. You can actually view 
those as short-term fixes to advance more supply of natural gas 
into Europe, which needs it dramatically right now. Longer-term 
though, yes, anything that can be done to accelerate or 
expedite permitting and production would pay massive benefits.
    The Chairman. The only reason I am saying that is because, 
sitting in different committees, hearing different proposals, 
with what is going on, this is a critical time for us. We do 
not know where it is going, but we have a full-fledged war 
going on in Ukraine with Russia with no end in sight. Where do 
they stop? What is the endgame? We do not know.
    The bottom line--what we do know is that Russia has 
weaponized energy and they have used it as a geopolitical 
weapon, and the only thing I know about an adversary or a bully 
is that if they have a weapon, you better have one that will 
match or will be better than theirs, and we do. We just haven't 
used it. How quickly we get it in production is going to 
determine whether we are able to thwart this or not, and that 
is the concern I have.
    With that, I am going to turn to Senator Barrasso for his 
questions.
    Senator Barrasso. Well, thanks, thanks so much, Mr. 
Chairman. I think you are absolutely right when you talk about 
Russia. Ms. Hirstius, over the years, Shell, an international 
company, has made significant investments in Russian oil and 
natural gas production. The company is also part of a joint 
venture which built Nord Stream 2. Last Friday, Shell purchased 
100,000 metric tons of Russian crude oil at a massive discount. 
Shell has since apologized for the purchase and has announced 
that it will stop buying Russian oil. This is the right 
decision. I understand Shell now also intends to exit its joint 
ventures with Gazprom, including Nord Stream 2. Could you just 
give us an update in terms of the status and progress of 
Shell's efforts to divest these assets?
    Ms. Hirstius. Yes, thank you, Senator Barrasso. And indeed, 
we did purchase a tanker of Russian crude, and since then 
announcements have been made. Our CEO has made it very clear 
that we apologize for that and are taking all steps to withdraw 
from our joint ventures. That includes upstream, it also 
includes our lubricants business in-country, it includes our 
downstream gas stations, and also extends to all purchases 
outside of country of any hydrocarbon products.
    Senator Barrasso. And when should we expect the divestments 
to be complete?
    Ms. Hirstius. As far as a date, I am happy to provide an 
update to you or to the Committee. You know, you can imagine it 
is a pretty detailed process that needs to be executed to make 
sure that we can do that safely and the withdrawal is clear and 
it will be expedited.
    Senator Barrasso. Thank you.
    Dr. Foss, the Administration is claiming that rising gas 
prices are all the fault of Putin's invasion of Ukraine. But 
gasoline prices had been rising well before that invasion. The 
President does not want to take any responsibility. Instead, he 
claims it is simply not true that Administration policies are 
holding back domestic energy production.
    There is a chart here. I want to get that into the shot, 
with the camera, if we could. I just want to make sure that the 
witnesses can see it as well.
    [The chart referred to follows:]
    [
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Senator Barrasso. So looking at the average weekly prices 
from the point of Biden's inauguration, which was here--at the 
time, talk about $2.48 a gallon. Biden's inflation accounts for 
about $1.14 of that. Putin's invasion of Ukraine adds 58 cents 
to that. So has the Biden Administration's energy policy 
affected current and future oil and gas production here in the 
United States?
    Dr. Foss. We have already talked about leasing. Colette did 
a really wonderful job on that. Let's talk about how perception 
is reality. This is my really, really, really, big concern. And 
when you are deep in the oil and gas patch, this is what you 
hear about the most. You do not take a lease, you cannot 
execute on the lease unless you have capital available to you. 
There are threats against capital for the industry that are 
just simply not constructive. It is not necessary. It is really 
silly in many respects. The idea is to starve the industry of 
capital to keep it from operating to force us off of oil and 
gas before we can viably move forward with other things. 
Investors see that. Financial markets see that. Regulators see 
that. A lot of this is coming from nominees who are being 
proposed for key regulatory positions in financial markets. 
That gets out there. It creates uncertainty. Companies can deal 
with risk. You can quantify risk. Uncertainty is open-ended. It 
is very tough to deal with--whether your government is with you 
or against you. That is a big amount of uncertainty that 
affects decisions--what am I going to invest in? What kind of 
project and when? Over what time frame?--and other things.
    So those are my biggest concerns. It is the things that are 
in the background that are contributing to gasoline prices 
today because this has gone on for a while. For over a year, we 
have been seeing these pressures build in financial markets. We 
have been hearing this discussion. It has been coming at the 
industry from all directions. And that takes its toll 
eventually, and you have to add that into the mix.
    Senator Barrasso. Can I get to one other thing that you 
talked about in your testimony? So there are 260 million cars 
and light-duty trucks in the United States today. If you wanted 
to move to all electric vehicles in America tomorrow, do we 
produce enough critical minerals? You know, where are we going 
to get the minerals from? Can we do it without relying on 
minerals from Russia, China, Chinese-controlled mines? I mean, 
the Secretary of Transportation the other day said, ``well, put 
everybody in electric vehicles.'' Can you kind of run down the 
possibility of doing that, what it would take? How many years 
and what it is going to cost to get those minerals?
    Dr. Foss. We couldn't do it ourselves. There is no way we 
can do it ourselves. The U.S. is currently about 12 percent of 
total nonfuel minerals tonnage, and a lot of that is aggregate 
for construction. We do not produce enough to support what 
companies are trying to build out now in terms of battery 
manufacturing capacity, or for that matter, semiconductor fabs 
and manufacturing to support all of the other things that are 
needed.
    I mentioned Chinese dominance. I have talked about this in 
House Energy and Commerce testimony and other hearings. The 
mining industry is as much under pressure as other basic 
industries are to make investments and to be able to find 
opportunities to execute on to be able to bring those into the 
market. And it does not help when you have an uncertain 
political context in your own market. So this is really an 
issue.
    There are best practices for the mining industry out there, 
by the way. The mining industry responds to what comes out of 
the World Bank, to the ICMM, which provides crosscutting 
standards for companies, for ESG and best practices in mining 
operations. So it's not like the industry is not responsible or 
not looking at how to be responsible going into the future. But 
it is the same problem. You have to have access to the 
minerals. You have to have the capital to develop the minerals. 
You have to have the supply chains to support them.
    One last point about this--everything that we are planning 
in the United States--the announcements, the joint ventures--
invariably include partners that have supply chains that they 
can bring into our country. That means international sourcing. 
So we are going to continue to rely on metals and materials 
that are produced outside of the United States because it is 
the fastest way for the industry to try to accelerate given all 
the time frames that are under discussion.
    The Chairman. Thank you.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Mr. Chair.
    Let's talk facts, because what I hear coming from some of 
my colleagues are more of the politics than the true facts. 
Crude oil and natural gas prices are primarily determined by 
global markets and international events, which is why American 
families are hurting right now in Nevada and across the country 
under these high energy prices. I am hearing this conversation 
about threats against capital in the industry, but here is a 
fact--oil and gas companies certainly are not hurting. The six 
largest publicly traded oil and gas companies, including Shell, 
reported combined profits of $90 billion for 2021. And on top 
of that, the oil and gas industry already receives an estimated 
$3.1 billion in taxpayer subsidies each year. In recent days, 
major oil companies in the United States have said that they 
would rather use their earnings from higher prices to boost 
payouts to shareholders and expand their operations slowly 
rather than rush to drill new or develop existing wells.
    So Ms. Hirstius, my question to you is, can you explain, at 
a time like this, why your company would be prioritizing 
payouts to shareholders rather than working to increase our oil 
supply?
    Ms. Hirstius. Yes, thank you, Senator, thanks for the 
question. At this time, I think it is important that we 
continue to proceed to increase all of the energy sources that 
we have, and that includes looking at what are the levers that 
we have to make sure that we can add additional electrons into 
the system, because when we add electrons, we----
    Senator Cortez Masto. Thank you. I only have so much time. 
But my question is this, directly--why are you prioritizing 
your payouts to your shareholders instead of working to 
increase the oil supply? Let me ask you this: would your 
company be willing to forgo paying out dividends to pass along 
that relief to consumers who are seeing high prices in my state 
and across the country?
    Ms. Hirstius. Yes, so the prices are something that we do 
not control. I think that you said that yourself. The way in 
which we prioritize----
    Senator Cortez Masto. So you would not be willing to pass 
off your dividends actually to consumers, who are hurting right 
now?
    Ms. Hirstius. We are committed to continue to invest and 
make sure that our production does not decline.
    Senator Cortez Masto. All right. I only have so much time, 
so let me move on here because I did not get an answer to my 
question. Let me just say this--it is false to lay blame on the 
Biden Administration's energy policies for the cost and the 
cause for the high gas prices that are currently facing 
Americans right now. And I see some heads nodding here. That is 
absolutely right.
    In fact, the data that I have--and please tell me if this 
is incorrect--the BLM, under the Biden Administration, approved 
more permits to drill last year than it did in the first three 
years of the Trump Administration, and oil production on 
federal public lands is higher now than at any point since at 
least 2003. We have heard this statistic--the oil and gas 
industry has more than 9,100 approved permits to drill that 
have not yet been put into use, and 14 million acres of leased 
public lands that have not been put into production, and I keep 
hearing that we have to increase production, but there is the 
opportunity to already do that.
    Mr. Elkind, can you explain to me why oil and gas permits 
are going unused if they could help lower costs? And then, 
could you also distinguish between federal and public lands? My 
understanding is that 90 percent of oil production in the U.S. 
takes place on private and state-owned land, and we are only 
talking about 10 percent on federal land. So can you answer 
those questions for me? If that is true? And if it is not, 
please clarify for me.
    Mr. Elkind. Senator, I do not have a different 
understanding of the current ratio of federal to non-federal 
lands, but I think it is really important that we take a look 
at two things here. One is that the financial discipline, you 
know, has come from Wall Street, from investors that are 
putting capital into these companies. John Hess, the Chairman 
of Hess petroleum, was quoted as saying earlier this week that 
``Investors have been telling oil companies not to invest so 
much. Well, this is a crisis. We should be investing more as an 
industry. We have had five years of underinvestment and we are 
paying for it now.''
    I do stress the five years----
    Senator Cortez Masto. And explain that. Five years of 
underinvestment in what? In new drills? In new sites, right?
    Mr. Elkind. In new upstream drilling, yes.
    Senator Cortez Masto. That's right.
    So the oil companies----
    Mr. Elkind. But the part that I'm----
    Senator Cortez Masto [continuing]. Have been listening to 
Wall Street, right? And not actually investing in new drilling 
sites.
    Mr. Elkind. The investors keep them alive, so from that 
perspective, that is understandable. I also think it is 
important to note that the price increases that one has seen in 
the last year also reflect the massive upswing in economic 
activity as we recover after COVID. So this is a really 
important thing to keep in mind as a backdrop to retail prices.
    Senator Cortez Masto. So let me ask you, and this is my 
final question, because this is why--this is just driving--I 
think it is just a false narrative that somehow this 
Administration is responsible though. You just said that for 
the last five years they have been underinvesting, and so is it 
true, investment in new wells has dropped more than 60 percent? 
That's nearly 25 percent just as the COVID virus hit. And so 
now they are trying to play catch up. Is that correct, based on 
the demand?
    Mr. Elkind. Look, it is only natural that oil companies 
reduced their production when demand cratered, and demand did 
crater. So I think as an economic matter, that only makes 
sense. It is pretty tough for American consumers now to be 
looking at the prices that we are seeing today. That is really 
hard stuff, but the fact that the production went down when it 
did in 2020 should not surprise us.
    Senator Cortez Masto. Right. And that was prior to this 
current Administration, correct?
    Mr. Elkind. Yes, Ma'am.
    Senator Cortez Masto. Thank you.
    The Chairman. Senator Lee.
    Senator Lee. Thank you, Mr. Chairman.
    Ms. Hirstius, do you believe the Biden Administration has 
been withholding lease sales specifically to raise costs for 
consumers? And before you answer that, I want to explain a 
little further what I am getting at.
    In the Cook Inlet sale, the Administration, in issuing its 
draft EIS in October of last year, stated that by withholding 
leases--this is on pages 46 and 47 of the draft EIS, as I 
recall--that if they were to proceed with not doing this, that 
the result would be a decrease in demand, resulting in lower 
emissions, because as the price of oil and oil-related 
products, including gasoline increased, people would diminish 
consumption. Now, I also want to add here that prices of 
gasoline are up considerably, and so too is consumption up. So 
a twofold question--do you think the Biden Administration has 
been withholding lease sales in order to raise energy costs, 
perhaps with an environmental objective in mind? And do you 
believe that doing that produces environmental benefits?
    Ms. Hirstius. With regard to lease sales and has it raised 
the cost to consumers--I do not think that not having lease 
sales has raised the cost to consumers. I think that Mr. Elkind 
describes it very well--some of the elements that have heavily 
contributed to the prices that we see today.
    Senator Lee. And do you think that part is deliberate in 
order to discourage and diminish consumption and therefore, 
emissions?
    Ms. Hirstius. I mean, I think the leases that we need to 
retain and bring into the system--there is a bit of a 
misconception about it. These leases--this idea of an idle 
lease does not really exist. There is an evaluation period that 
is required after we bid on the lease. And there really is no 
benefit to holding onto a lease. So once we bring it into our 
portfolio--so given in Shell's portfolio--we begin an 
evaluation process. We submit permits that will allow us to 
conduct activities on those leases, and then if we like what we 
see--and really about 10 percent of the remaining leases in the 
Gulf of Mexico we estimate to have oil and gas--so in many 
cases, we acquire a lease, we do technical work, and then we 
determine that we do not want to drill on those leases. In some 
cases, we decide we do want to drill on those leases, and when 
we do, we are either successful or unsuccessful. And if we are 
unsuccessful, we relinquish that lease and put it back into 
circulation. If we are successful, then it takes additional 
time, and while no activity is going on physically on the 
lease, there is a large amount of evaluation and interpretation 
that is required to determine how best to develop those natural 
resources.
    Senator Lee. So not every lease results in a drilled well. 
Not every drilled well ends up being a smashing success.
    Ms. Hirstius. That is correct.
    Senator Lee. And so as a result of that, there is a 
connection. You have to have a flow of approved leases in order 
to keep it moving, is that right?
    Ms. Hirstius. That is correct.
    Senator Lee. Without that, you shut it down.
    Now, it appears to me that this is a feature, not a bug, 
for the Biden Administration. They want to keep supply low so 
they can bring costs higher. This business of saying, ``oh, 
we're surprised, we're upset that the prices are this high.'' 
That is a feature, not a bug, based on what they are saying, 
and that is deeply concerning to me because that harms the 
American people. And it harms them in a way that does not 
improve the environment. There is still demand for that. That 
demand goes somewhere. It goes to other people producing oil 
and gas in a way that is less environmentally responsible than 
it is here, resulting in even more emissions as they move it 
across oceans or otherwise in order to get it here. And I think 
that is unfortunate.
    Now, the Biden Administration recently announced a ban on 
Russian energy imports. We have to keep in mind that Russian 
oil, while a small percentage of our overall oil consumption, 
does include a fair amount of heavy crude, and heavy crude is 
an important feedstock for many U.S. refineries. I am worried 
about this because I wonder how this ban will interact. I mean, 
I think it was probably the right thing to do to not buy heavy 
crude from them--not buy products from them--especially at this 
moment, but we do have to know where we are going to get heavy 
crude from. And so I worry about the interaction of that ban 
with the Biden Administration's still undeterred, unchanged 
policies discouraging domestic production. If we cannot produce 
and distribute that critical feedstock, we would have to turn 
to a number of places outside the United States where we would 
rather not be propping up vile dictators, horrible human rights 
abuses, and reckless environmental practices--places like 
Venezuela, Iraq, and China are among the world's leading 
producers.
    Now, we do have some that we can produce in the United 
States, including the Uinta Basin. It is one of the reasons why 
the Administration must sign the Record of Decision approving 
the Uinta Basin Railway, especially now. This has never been 
more important than it is right now. They need to approve that, 
but they haven't. They have blown past the anticipated time 
when they should have approved it. We have never needed that 
more than right now. This is good oil. It is oil that is very 
useful that we desperately need right now. Thirty percent of it 
that would be transported on that is owned by the Ute Indian 
Tribe. It needs to be approved. But if we cannot get that done, 
where would we have to go, and what would we do to get the 
heavy crude we need to maintain our feedstock?
    Ms. Hirstius. Yes, so I think the decisions that have been 
made in the past were under a different context. And I think it 
is important that we look at the decisions that need to be made 
now in the context that we have now. It is a crisis that we are 
under, and the solutions to this current crisis need to be very 
quickly thought through, and urgent action needs to be taken 
now. And I think that spans the spectrum, from looking at what 
are some of the solvable problems of permitting and approvals 
that can take place that allow LNG exports to begin flowing 
more freely, both to Europe as well as our Asian allies. It 
also includes looking at pipelines. It also includes making 
sure that we continue to progress against our energy transition 
objectives, which include CCUS as well as leasing and 
permitting in the Gulf of Mexico, as well as onshore. And I 
think with all of those combined, we do have the resources and 
need to really stay focused on how we can move quickly to make 
sure that we both have energy security for the U.S. and our 
allies, as well as making sure that we are progressing against 
our energy transition objectives.
    Senator Cortez Masto [presiding]. Senator Kelly.
    Senator Kelly. Thank you, Madam Chairwoman.
    Ms. Hirstius, I want to follow up on Senator Lee's and 
Senator Cortez Masto's questions here. Like everywhere else in 
the country, in my state, Arizona, folks are paying way too 
much for a gallon of gas. It is really hurting families. They 
are having to make some really tough decisions. I am one who 
believes that we currently need an all-of-the-above strategy 
that includes increased domestic production of crude oil. You 
mentioned that this is a crisis. We need urgent action now. You 
started to outline a couple of the, I would say, more global 
options here, but I want to hear specifically from you more 
about your company's plans to increase production here in the 
United States. How much more can you increase it? When can you 
do it? And do you think you will be successful?
    Ms. Hirstius. Yes, thank you, Senator Kelly.
    Yes, I think we will be successful, but let me describe a 
bit of what it looks like to be successful in that growth. Our 
largest production comes from the Gulf of Mexico. In the Gulf 
of Mexico, we have a 15 to 20 percent average decline rate. 
That means that if we just continue to produce from the wells 
and reservoirs that we have, year on year, that production will 
decline by 15 to 20 percent, and that just has to do with the 
dynamics of the reservoirs from which we produce. In order to 
maintain flat, we need to continue to drill wells, and we need 
to continue to acquire seismic data, and we need to continue to 
acquire leases that allow that conveyor belt of activity to 
continue. And that will sustain our production.
    So this year, we will be bringing on a new field in the 
next couple of weeks. That is new growth, new production that 
will come online very soon. We have 10 rigs that we continue to 
run across the Gulf of Mexico that continuously drill 
exploration and development wells to make sure that we are 
replenishing against our total production. We have a new 
platform, Vito, that has just sailed into the Gulf of Mexico. 
It is sitting on Texas shores being fitted out with the final 
fittings and will sail out into the Gulf of Mexico so that it 
can begin producing--either late this year or early next year 
are what our ambitions are. So there are many things that we 
continue to progress with to make sure that we are maintaining 
the production and adding new production day in and day out.
    Senator Kelly. A year from now, where do you think you will 
be as a percentage compared to where you are today?
    Ms. Hirstius. So percentage-wise, because we have this 
decline, our objective is to remain about flat. Now, the levers 
that we have to significantly increase production--and we were 
talking about oil and gas production, as Mr. Elkind described--
is really the flexibility that we have onshore. We can bring 
production onstream from our onshore activities more quickly 
than we can in the, say, Deepwater Gulf of Mexico.
    Senator Kelly. Okay, well, please let us know what you need 
from us to facilitate that.
    Ms. Hirstius. Thank you, Senator. That is greatly 
appreciated.
    Senator Kelly. Thank you.
    Mr. Elkind, Senator John McCain used to say, and I love 
this quote, ``Putin's Russia is a giant gas station pretending 
to be a real country.'' On Tuesday, the President signed an 
Executive Order banning imports of all Russian fossil fuels. I 
supported that as one of 10 members of this Committee. We 
proposed legislation to do that, and he took those steps.
    Mr. Elkind, I would like to get your thoughts on how 
American energy production compares to Russia's 
environmentally, and Senator Lee alluded to this. So for 
example, the International Energy Agency reports that Russia's 
oil and gas production is about 30 percent more methane-
intensive than the United States. Does Russia's fossil fuel 
sector, which is, as I think we all know, rotten with 
corruption, have environmental monitoring and enforcement 
practices anywhere close to that of the United States?
    Mr. Elkind. Senator, thank you for that question.
    I do not think that, looking at the history of the Russian 
oil and gas industry, the first feature you would call out 
would be the environmental performance of it. This, in fact, is 
one of the downsides of the withdrawal of the major 
international oil companies from their activities there, is 
that also what will go away is some of that environmental 
performance that is core to their operations. Now, having said 
that, in the United States we have a big honking problem, and 
that is called methane emissions. Yes, I think it is a 
reasonable suspicion to say that Russia's methane emissions 
exceed those of our own, but if we want for our LNG to be 
purchased on global markets, as I do, we need to make sure that 
we are able to improve and radically reduce the methane 
emissions from the value chain. This is an area of huge 
unfinished business that needs to be attended to, sir.
    Senator Kelly. All right, well, thank you. I certainly 
agree we need to work on that.
    Thank you, Madam Chairwoman.
    Senator Cortez Masto. Thank you.
    Senator Daines.
    Senator Daines. Thank you.
    Today is an opportunity for us to discuss something the 
whole world is focused on, and how energy plays a pivotal role 
in global politics. The importance of energy security and 
global energy dominance cannot be overstated. It is something I 
have been vocal on since I first came to Congress in 2013. The 
United States has an abundance of energy--vast oil, natural 
gas, coal, water, wind, solar, and strong nuclear energy 
programs. This abundance should be used as a tool, not only for 
our own energy security, but also for supplementing and 
supporting our overseas partners. We do it the right way here 
in America in terms of environmental stewardship. The more 
energy that can be produced in America, the better we are 
overall in terms of global environmental stewardship because we 
do it the right way. We have the most stringent environmental 
standards.
    This abundance should be used as a tool to drive more 
energy production in America to secure our future economically 
and geopolitically, but instead of growing this all-of-the-
above energy portfolio and diversifying and strengthening our 
domestic supply chains, this Administration has taken action 
after action to weaken domestic energy and advance a very one-
sided, very ideological climate agenda. This effort has 
weakened America's ability to respond globally, and has further 
emboldened Putin's weaponization of energy. Now, I have heard 
the White House say again and again that they have done nothing 
to weaken American oil and gas production. That could not be 
further from the truth. That is a lie. Since day one in office, 
this Administration has sent a chilling message to traditional 
energy production. Whether it is official actions from the 
Administration or statements by his appointees, he has made it 
clear that he intends to shut down domestic oil and gas 
production and mining.
    Don't just take it from me, here are the facts. In the 
Democratic primary debate on CNN, President Biden himself made 
it a campaign promise to stop all oil and gas production, 
saying, and I am quoting the President, ``No more drilling on 
federal lands. No more drilling, including offshore. No ability 
for the industry to continue to drill, period.'' Those came 
from President Biden. On day one of his Administration, he 
personally killed the Keystone XL Pipeline. Then he took action 
to halt federal oil and gas lease sales. By the way, Montana 
still has not had a lease sale despite federal law and a 
federal judge requiring it. Then, he revoked existing, already 
purchased leases in Alaska's 10-02 area.
    Following all that, the Biden Administration began a 
regulatory deluge of rules limiting domestic production. The 
EPA is increasing regulations on methane emissions. The 
Administration is creating even more uncertainty for WOTUS 
regulations. FERC recently passed rules to make it more 
difficult to permit new natural gas pipelines and facilities. 
Then there was the tax-and-spend bill that the President was 
strongly pushing that included higher royalty rates, new 
methane fees, higher taxes, and more roadblocks. President 
Biden has also appointed a long list of far-left, anti-energy 
nominees that want to destroy oil and gas, close off capital 
markets, and stoke climate fear. John Kerry, the U.S. Special 
Presidential Envoy for Climate, is more focused on the 
emissions of the war in Ukraine than the war himself, saying--I 
am quoting Mr. Kerry--``Obviously, you are going to have to 
have massive emissions as consequences of the war, but equally 
importantly,'' he said, ``You are going to lose people's 
focus.'' And said later that the Ukraine refugees--this is what 
he said in the last couple of days--``will be nothing like the 
climate refugees we will see.''
    Secretary Haaland, Secretary of the Interior, has said, and 
I quote her, ``I am wholeheartedly against fracking and 
drilling on public lands.'' Gina McCarthy, former EPA Minister 
under Barack Obama, now the White House National Climate 
Advisor, said, and I quote, ``This is a day of reckoning for 
the oil and gas sector.'' Sarah Bloom Raskin, the nominee for 
the Federal Reserve, urged the Federal Reserve to stop 
investing in traditional energy. This was not a term paper from 
college. This was a New York Times op-ed she wrote in March 
2020 saying, and I quote her, ``Fossil fuels are a terrible 
investment,'' and the feds should not, quote, ``prop up and 
enrich oil and gas.'' Ms. Omarova, the former nominee for 
Comptroller of Currency, said she wanted small oil and gas 
players to go bankrupt.
    All these actions and statements have real-world market 
consequences. They chill the capital markets. They chill the 
risk and reward equation as we are looking to expand and 
explore new areas for American energy. Fertilizer prices are 
out of control. You talk to your farmers and ranchers, as I do 
back home in Montana--they have more than doubled. Some cannot 
even get it, and some are wondering, ``Can I get the fertilizer 
in the ground this spring so I can even plant?'' Investments 
are trending down. Domestic oil production was lower in 2021 
than it was in 2019. Since President Biden's first day in 
office, oil prices have steadily gone up, up, and up, and when 
oil prices skyrocketed and gasoline prices spiked, instead of 
calling on the United States--if I was President Biden, 
watching what's going on, like $5 a gallon plus gasoline--
rather than reach out to Venezuela or rather than reach out to 
Iran, why wouldn't the first instinct of this President be to 
call the oil and gas producers across America to the White 
House for an emergency summit and talk about how to get another 
three to five billion barrels a day here in America or in 
Canada--I mean, from trusted allies.
    When his instincts were to reach out to adversaries, that 
tells you a lot about how captivated he is and held hostage to 
the climate change ideology, which is wreaking havoc right now 
in the global energy markets. Why on earth would the United 
States want to increase imports from unstable and adversarial 
countries? We could increase production here. Work with Canada 
as well as U.S. producers to increase our energy trade. We can 
and should be energy dominant. And by the way, this challenge 
is not going away in the next three to six months. We have to 
get back on track of a made-in-America energy strategy because 
peak oil--we are still 15, 20, 30 years away from peak oil in 
the world, not to mention in our country as well. We can do it. 
We should do it.
    Mr. Chairman, I am going to ask one question here for Ms. 
Hirstius, and that is, what action can the Administration and 
Congress take today to spur investment in production of an all-
of-the-above energy portfolio that includes oil, gas, coal, 
nuclear, hydro, wind, solar, and more?
    Ms. Hirstius. Yes, thank you, Senator Daines.
    I think that I fully agree that this is a moment in time 
where we can and we must do both. We need to look at the energy 
system as a whole. We need to invest heavily and continue 
against our objectives in the energy transition and make sure 
that we are looking at how we move forward, really in a 
fundamental way to get CCUS projects up and running, how we 
make sure that we are bringing more molecules as well as 
electrons into the total system. And much of that has to do 
with actions that can be taken on permitting and on leasing, as 
well as looking at infrastructure to make sure that we have the 
ultimate degree of flexibility that we will need and do need 
right now to continue to look after the totality of the energy 
system as a whole.
    The Chairman [presiding]. Thank you so much. And we will 
have a second round if you need it, okay?
    Senator King.
    Senator King. Thank you, Mr. Chairman.
    We have been, I think, talking around the primary problem 
here, which is a lack of supply. I may be the only person at 
this dais who remembers the Arab oil embargo of the early 
1970's, and the price went up because the supply went down. You 
were a little kid, Barrasso, don't give me that.
    [Laughter.]
    Senator King. The price went up because the supply went 
down. The price went down because we had more supply than 
demand during the pandemic, and production went down because of 
the collapse in demand. The demand came back but the supply 
didn't come back. Why didn't the supply come back? Because the 
oil industry made a conscious decision to invest in their 
shareholders rather than their production capability. This past 
year they have announced almost $40 billion of stock buybacks, 
which does nothing for production or anybody else except 
shareholders and perhaps the executives, and about $50 billion 
of dividends. That is money that could have gone into 
investment for production. And that is the reality. That is 
what is driving this. It is not lease pauses on federal land 
and it is not the Keystone Pipeline. My mother used to say, 
``you're straining at gnats and swallowing camels.'' The lease 
pause is a gnat. The Keystone Pipeline, which was mostly for 
export, is a gnat. The camel is the failure of the industry to 
respond to the increase in demand since the decline of the 
pandemic. An executive in the industry put it, I think, 
absolutely perfectly, when he said just a few weeks ago, ``You 
have made a promise to be more disciplined''--a promise to his 
shareholders, getting cash back to shareholders with these 
dividends--``The question is, are you going to keep your 
promise or are you going to be patriotic?''
    Well, we all know what they chose--not to be patriotic. And 
the production is not there. And I understand some reluctance 
because of the hammering that they took during the pandemic. 
But that is really the fundamental problem here. And what is 
hampering the growth of production is not federal policy and it 
is not scary statements from the White House about climate 
change, it is a failure to invest in the production capability. 
And that is really what is driving this.
    Mr. Elkind, you made this point, that it was the COVID 
recovery that has driven the increase in demand. Supply has not 
kept pace, and therefore prices are up. And now, the war in 
Ukraine has further strained supply, or at least has affected 
the international market. Again, prices have gone up almost 50 
cents or a dollar just since the beginning of the war in 
Ukraine. This is all about supply and demand. And in response, 
I just, parenthetically, want to say, the estimate by the World 
Bank for climate migrants by 2050 is 200 million people. That 
is a national security disaster. So if anybody questions what I 
am saying, just Google oil buybacks and you will read about the 
stock buybacks and the dividends that are being paid rather 
than investment in production.
    Mr. Elkind, am I on the right track here?
    Mr. Elkind. Senator, the interaction between investors and 
the oil and gas industry is a pretty nuanced one, and I would 
stress that it is not a really elective kind of an interaction. 
The oil and gas companies cannot thumb their nose at the 
concern of investors or investors will walk away from them. So 
I think that----
    Senator King. But there is a difference between--they made 
the highest profits in eight years last year. So it is not a 
question of thumbing your nose. It is a question of 
proportionality. And there certainly could have been greater 
investment in increased production rather than--and I mean, 
that is really what we are talking about here.
    Mr. Elkind. Well, and I think that my expectation is that 
you will see a change in the production levels that, in part, 
reflects the really acute sense that this time is different. So 
you know, these discussions that are taking place this week, 
for example, at a major conference in Houston--I think you are 
going to see a reply, a response. The last point that I would 
make is that for big companies like one represented at this 
witness table, revenues off their hydrocarbon activities also 
support, in a critical way, what they are trying to do in the 
decarbonized space.
    Senator King. I don't question that. I think that is a 
great output. My problem is the diversion of the record 
profits, or the highest profits in eight years, to non-
production or non-fossil fuel alternatives.
    One other minor point--not a minor point, but a separate 
point--everybody is talking about LNG. We are talking about LNG 
as we are exporting. We are helping our European allies. I just 
want to note, increased LNG exports beyond some certain point--
which is very rapidly, we are about 15 percent of production 
now--is going to indubitably affect domestic prices. Again, 
supply and demand. If we diminish the supply available in the 
United States by exporting 15, 20, 30 percent, which is in the 
construction pipeline, domestic prices for natural gas are 
going to surge. That happened in Australia. It is going to 
happen here. And it just seems to me we need to be clear-eyed 
about this and understand it. It bothers me that everybody is 
on the LNG bandwagon without taking cognizance of the effect on 
domestic gas prices, which affects manufacturers and, lord 
knows, consumers all over the country.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    And now, we have Senator Murkowski.
    Senator Murkowski. Mr. Chairman, thank you.
    I am going to go back to a phrase that you used in your 
opening statement. You said we need to be operating in reality. 
And I think part of the challenge that we have faced is 
everybody has really quick easy answers. Just produce more. You 
have leases. Just dial it up like there is some easy button 
that we can increase production in this country, or that, 
really, any other producing country can. And I want to focus in 
a little bit on how we operate in reality, and you used the 
term, Dr. Foss, we need to face reality.
    So you indicated that industry knows how to deal with risk. 
They deal with that every day, but it is the uncertainty with 
policy that really puts handcuffs on the ability to move 
forward. So I want to understand what it is that could be done, 
could be said, could be messaged from this Administration, 
whether it is President Biden or the Secretary of the Interior. 
What is the message that reduces some of the uncertainty? 
Because when you have uncertainty, investors do not invest. The 
producers are not going to look at these leases that perhaps 
are a little more speculative. They are not going to be moving 
out as quickly as they might want. We are all agreeing that we 
need to get production up. Everybody has said we need to get 
production up. But you can't. There is no easy button here, and 
they need some level of certainty with the message that comes, 
because you said perception is reality.
    If President Biden came out today and said that we, as an 
energy producing nation, need to ramp up our production--yes, 
we need to ensure that we are focused on lower carbon 
intensity, because he ran on that. But I do not think that this 
is a mutually exclusive proposition here. What is the signal? 
What is the message that could be sent that is going to help my 
state, as a producing state, and those in the Gulf of Mexico? 
What do you need to hear, Ms. Hirstius?
    Ms. Hirstius. Yes, thank you, Senator Murkowski.
    I think a very strong message would be to quickly progress, 
and within the next few months have a proposal around a five-
year plan. At this point, we don't have line of sight. We have 
gone through a period of time where we have not acquired new 
leases, and I think both for the funnel and the pipeline, this 
conveyor belt of activity, but also the very strong messages to 
companies like Shell and others that there is certainty that we 
will be able to obtain leases and continue to progress with our 
activities would go a long way.
    Senator Murkowski. So five-year plan.
    Dr. Foss.
    Dr. Foss. I'm going to try to answer your question by 
giving some support to my colleague to my right. Jonathan is 
trying to get people to understand, I think, the role of the 
investor community in all of this. For Shell to be able to 
continue to build a portfolio of leases to at least hold 
production flat, their large institutional investors need to 
have confidence that they are not a sunsetted industry.
    Senator Murkowski. Right.
    Dr. Foss. And out there, that is the opinion. And that is 
why companies are under pressure to buy back shares and return 
money to investors. And this is a hard thing to talk about and 
deal with. I mean, this is not easy. We can't capture it in a 
data point. But we have memos. We have letters from CEOs, 
opinions of large fund managers, testimonies, and op-eds of the 
things that are going on and all of that creates an 
environment. I want to correct something that I said, because 
earlier I said for over a year this has been going on. This has 
actually been going on for several years. There has been 
growing pressure to try to use the financial markets----
    Senator Murkowski. Right.
    Dr. Foss [continuing]. To try to discipline energy policy 
or influence energy policy in ways that are making responses 
difficult now.
    Senator Murkowski. Well, the financiers on the East Coast 
are telling Alaskans anything in the Arctic, we are not going 
to finance, period.
    Dr. Foss. And Senator, as you well know, to be able to get 
the rigs there, to be able to get the services there, the 
service community has to have the same level of confidence. 
Stepping out of the White House and saying we have confidence 
in the oil and gas industry. We want the financial markets to 
support them. Sending that message could actually be an 
interesting thing.
    Senator Murkowski. It is kind of a dream, but you know 
what? We have been told these are extraordinary times that 
deserve extraordinary measures. In the meantime, you have war 
in Ukraine. You have hospitals that are being indiscriminately 
blown up. You have children dying and we are trying to decide 
whether or not we should participate in this war over energy.
    Thanks, Mr. Chairman.
    The Chairman. Thanks, Senator.
    Senator Hirono.
    Senator Hirono. Thank you, Mr. Chairman.
    Really interesting discussion. I do agree with Senator 
King's description of what is causing gas prices to go up. When 
the supply goes down, the prices go up, and he referred to the 
oil embargo of 1970. You know, more recently, in 2008, for 
example, the average national price of regular gas reached 
roughly $5.37 when adjusted for inflation, which is above the 
current national average of $4.22. Back in 2008, Biden was not 
the President. So all these efforts to blame President Biden do 
not make sense--very totally misplaced. And in fact, if anybody 
is to blame for the current situation, it should be Putin.
    So the 2008 oil price shocks solidified Hawaii's commitment 
to move toward renewable power because we were the most oil 
import-dependent state in the entire country. Our effort to 
become energy self-sufficient is now at 30 percent, with the 
goal of 100 percent self-sufficiency to renewables and 
alternatives by 2045. So Hawaii got it. I am wondering when the 
rest of the country is going to get it, that we need to become 
energy self-sufficient. At the same time, it is very clear that 
our approach is all-of-the-above, which is to also rely on 
fossil fuels, but at the same time, to acknowledge, as Ms. 
Hirstius said, climate change is real. We cannot keep pumping 
carbon into the air. We have a responsibility, I would say, to 
get a better handle on that.
    So Mr. Elkind, do you think that at a time like this we 
should be accelerating the development, for example, of 
electric vehicles and other zero-emission transportation 
options, so that we will eventually not have to worry about gas 
prices or give Putin and other oligarchs the ability to use oil 
as a weapon?
    Mr. Elkind. Senator, thank you for the question. As I said 
in my remarks, I do think it is incredibly important that we 
realize both the emergency situation in which we find ourselves 
with war going on in Ukraine, and that we are setting the stage 
for another problem that we will have seen coming but we will 
not have responded to. So yes, continued investment in 
decarbonized energy systems is vital. And in fact, I think it 
is worth bearing in mind that underinvestment, which has 
rightly been focused on in this conversation today as a real 
issue for the oil and gas industry, is not limited to the oil 
and gas industry. We are underinvesting in all of our energy 
systems, and we do so at our peril.
    Senator Hirono. So, for example, I note that on March 6th, 
Germany's Finance Minister stated that Germany is now planning 
to spend 200 billion Euros, or about $220 billion to fund 
industrial transformation between now and 2026, including 
climate protection, hydrogen technology, and expansion of the 
electric vehicle charging network. I do not consider going to 
electric vehicles as some sort of a pipe dream. I think it is a 
necessary step. So do you think--and again, this is for Mr. 
Elkind--the United States should take a similar step by passing 
the over $550 billion in clean energy incentives that the House 
has passed and the Senate Committees have put forward?
    Mr. Elkind. Senator, speaking personally, yes, I strongly 
support that. I would note that the move to electric vehicles 
is not uncomplicated. Melanie Kenderdine very strongly 
highlighted one feature of this, but this is where the industry 
is going. Our own companies want to go there. We should be 
four-square behind it.
    Senator Hirono. This is for Ms. Hirstius. So Senator Cortez 
Masto and Senator King both addressed the earnings of the oil 
companies, but don't you have a fiduciary responsibility to 
your shareholders to maximize your profits?
    Ms. Hirstius. No. Our shareholders want to be able to 
invest in us for the short-, medium-, and long-term. It isn't 
just a short-term gain that they are looking for. And so, while 
it is very important that we foster and look after the 
shareholders and make sure that we are looking after the short-
term, they really are very interested in the medium- and long-
term, and that includes our oil and gas production, and we 
continue to invest heavily--multi-billion dollars on an annual 
basis--in our oil and gas business to make sure that we are 
continuing to supply the needed energy to the world today. And 
we do take the profits that we make in the upstream, as Mr. 
Elkind has described, and those are invested back into 
businesses that do not make money today. It is invested back in 
research. It is invested back in CCUS. It is invested back in 
wind--offshore wind leases in New York that we recently bid on 
for almost $400 million, and that is just for the lease. And to 
compare that to the amount that we exposed in the last lease 
sale, which was $20 million in the Gulf of Mexico, so you see a 
significant difference there in the amount that we are 
investing in renewables to make sure that we are looking after 
the longer term as well as the short-term in total revenue and 
profitability of the company.
    Senator Hirono. Well, Mr. Chairman, perhaps that story 
needs to be better told, because Shell reported earnings of 
$19.29 billion for 2021 and laid out plans to raise dividends 
and spend $8.5 billion to buy back shares. Exxon, BP, and 
Chevron laid out similar share buyback programs. And the four 
companies, including Shell, reported $75 billion in profits for 
2021. It is no wonder that the oil industry is being looked at 
as really engaging in not exactly what we would a call long-
term approach to this current crisis.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    And now we have Senator Lankford.
    Senator Lankford. Mr. Chairman, thank you.
    I would note that President Biden's EIA numbers for the 
next 30 years show that oil and gas usage worldwide will 
continue to increase past 2050, that even President Biden's 
numbers from his Administration as they look at oil and gas 
usage and the importance of oil and gas for the next 30 years, 
lists globally that we are going to continue to need more oil 
and gas. So I am grateful that companies are still exploring, 
are still taking the risk, are still trying to be able to find 
capital when people are being squeezed out from capital, 
because quietly the Administration is saying we need more, we 
need more, because the world needs more, but publicly they are 
saying we need less, we need less, we need less. So at some 
point we have to address that doublespeak in the middle of 
this.
    Dr. Foss, you made an interesting statement at the 
beginning of this. You ended your opening testimony saying we 
have to remember that we need to put materials first. Can you 
expand on that some?
    Dr. Foss. Well, I want to, again, support another witness 
here--Jonathan's point about the amount of effort that it is 
going to take to do something like put electric vehicles on the 
road. This all-of-the-above portfolio, or idea that people walk 
around with, is very uneven. There are pieces of that that are 
going to take a very long time to do. There are some things 
that might take a little bit less time, but generally speaking, 
we are talking about really, really large changes. We need 
supporting infrastructure. To put an electric vehicle together, 
you have to have the raw materials coming into the 
manufacturing processes to be able to do that. You have to be 
able to source them. As I said, they have to be the right 
quality. When you make batteries, purity is a really big deal. 
You have to be able to deliver them cost effectively. Before 
the run up in nickel prices this week, automakers were already 
worried about the cost of nickel--$30,000 a ton. And everything 
looks different when you are trying to manufacture EVs. Same 
thing with copper, with aluminum, with manganese, with cobalt--
you name it. There are like 30 different minerals, and those 
associated industries and processes that we have to pay 
attention to, which really complicates the picture when, you 
know----
    Senator Lankford. It does.
    Dr. Foss [continuing]. We are talking about oil and 
petroleum fuels, and refining seems so simple in comparison.
    Senator Lankford. Right.
    Dr. Foss. And they're complicated enough.
    So you have to be able to charge EVs. You have to have a 
power grid to support charging of EVs. If you want to use 
electric vehicles for demand response, for storage, you have to 
be able to have the equipment to do that. People have to know 
how to use the vehicles. There is a whole host of things that 
has to happen to be able to make it work. But if you cannot get 
the materials, you are never going to get there.
    Senator Lankford. Right.
    Dr. Foss. So materials policy is the first place to start.
    Senator Lankford. And we have already seen China use their 
ability to be able to limit access to resources to Japan, to 
Australia, to--they'll cut off a country if they decide they do 
not like a country at that point. We are extremely vulnerable 
the more dependent we are on any other nation for our energy 
production, to be able to make sure that our energy is such 
that if a nation decides they are going to be upset with us--
especially a communist country or an authoritarian government 
like Russia--is that if they decide they are in a bad mood that 
day, they murder their neighbors or they cut off people in the 
supply chain just because they can. That cuts off America.
    Dr. Foss. Most of the minerals we rely on, sir, come from 
fragile states that we have no ability to deal with, we have no 
proper responses for, we do not engage with them, they are very 
difficult to engage with. And trying to influence them and 
their actions, trying to bring them into the global community 
is very, very difficult.
    Senator Lankford. Thank you.
    Ms. Hirstius, I want to ask you about crude coming from the 
Gulf. If we are replacing Russian crude or Venezuelan or 
Iranian or whatever it may be, there is a lot of conversation 
about heavy crude versus light/sweet that we are often getting 
in the United States on land. In the Gulf, we are getting more 
heavy crude. Can we supply what we need for the blending that 
is asked for, for our refineries from what is coming from 
Canada, Mexico, and our own Gulf if we actually tap into those 
resources?
    Ms. Hirstius. Yes, so thank you for the question. Across 
the U.S. there is a variety of different types of crude that we 
can process in our refineries. And currently, the setup that we 
have right now is for the types of supplies that those 
refineries and those manufacturing facilities have been geared 
to process. There are changes that can be made within that, but 
there is an important piece of being able to move product 
around the country more easily that will help and aid in that 
total situation.
    And maybe just to come back to a question that you asked 
around the need to continue to produce more oil and gas, and 
specifically with strong demand needs beyond 2050, I think 
within that there is an important part to remember that carbon 
capture sequestration and how we take the carbon that will be 
emitted from production, and use of oil and gas, which there 
are many needs that exist beyond just combustion in a car, many 
products that we are going to need for the future.
    Senator Lankford. Right.
    Ms. Hirstius. We need to make sure that is a robust piece 
of policy that we have and that we have the tools in place, not 
from a technical perspective, because technically we know how 
to do it. This is more from the land usage and overall how the 
system works and that it can be incentivized to make sure that 
consumers are acting in a way that is consistent with reducing 
our need for oil and gas.
    Senator Lankford. Thank you.
    Mr. Chairman, I would just make one comment to our 
Committee as a whole. Six years ago, we, as a Congress, voted 
to allow the export of natural gas. This industry that we have, 
the exporting, is only six years old. It is very, very young in 
the process, but if we were not exporting natural gas, I cannot 
imagine what Europe would be facing right now and the pressure 
they would be facing right now, well above and beyond what they 
are already facing, with 38 percent of their natural gas coming 
from Russia. But if we were not exporting natural gas--and we 
had made that decision six years ago--this day would be even 
worse than it already is. So I am grateful that we made that 
decision. We need to make some more long-term decisions that 
will help our energy future.
    The Chairman. Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman.
    The Washington constituents I represent have always paid 
very high gas prices. We have been in an isolated market, 
mostly oil coming from Alaska and then refined in our refinery. 
So all these issues become very interesting, even when we see 
various impacts--when we have high costs because we are an 
isolated market and then we have high costs because we are 
still impacted, even though we are an isolated market. So that 
is why I am very ardent about trying to diversify off of that 
vulnerability. At $4.63 a gallon, my constituents are already, 
you know, seeing the impacts and so, to me, this is an issue 
about our challenges in a world market. And this Committee has 
had lots of hearings about price and what impacts price on a 
global basis. But clearly, OPEC, even though a country like 
Saudi Arabia and the UAE have significant swing capacity, they 
seem to always figure out a way to not be as helpful on this 
issue.
    The top six oil companies made $90 billion in profits last 
year. So Mr. Chairman, I believe in getting them in here and 
getting them to raise their right hand and asking them 
questions about this issue, which the Energy and Commerce 
Committees have done before. Maybe we should do a joint hearing 
and do that.
    The Chairman. I am with that.
    Senator Cantwell. Because I think we find out a lot of 
answers about what is going on. I will never forget the Exxon 
Chairman being in front of one of our committees and he 
basically said yes, there is no reason that oil shouldn't be at 
$60, because that is exactly what it costs to produce it plus 
some. And that was when oil was being manipulated in other 
markets and he was very concerned about that. They were 
concerned at $150 a barrel. They weren't the ones who were 
making the money, but Wall Street was driving that price up, 
and it was affecting our economy and ultimately undermined our 
economy. So I think that these record profits are something to 
discuss with them as we all try to tighten our belts and try to 
have an impact on a big sector of the Russian economy.
    I know that for us, thousands of dollars to fill up rigs 
when you are in the transportation business, which so many 
people in our state are, is also a big concern, and that this 
is about America's long-term national security. President Bush 
was brave enough to say this in his State of the Union address 
15 years ago, but we are still here in this vulnerable 
position, making some traction, but not enough traction, to 
figure out how to get to be really, truly energy independent. 
As long as OPEC and the cartel can manipulate the world supply, 
we will definitely have challenges here at home. So to me, that 
is why I believe that we need to do everything we can to 
diversify off of the source and move forward.
    In reality, President Biden's Administration approved 34 
percent more permits for oil and gas in public lands in the 
first year of office, more than what was done in the Trump 
Administration. And so to me, I look at it and say, now I have 
one of the highest install rates of electric vehicles in the 
country, and instead of filling up at $4.00 or $4.50, I can 
fill up for a dollar a gallon. So that is what my constituents 
want to see--the reality of that and the reality of moving 
forward on higher adoption rates. We need to make our gas-
powered cars more efficient. We need to make our boats and 
trucks and planes look at hydrogen. There are so many of these 
issues that, I believe, Mr. Chairman, we need to move forward 
on.
    But I would like to ask the witnesses a question, because 
every time we get into one of these areas, and we have been 
here several times, lots of ideas are thrown on the table. And 
for the most part, they have nothing to do that is going to 
affect the price at the pump today. So I just want to bring up 
a few issues. The Occidental Petroleum CEO said this week that 
because of challenges like aging wells, labor shortages, supply 
chain crush, U.S. producers cannot ramp up production even in 
response to skyrocketing oil prices. Do you agree, Mr. Elkind 
or Ms. Kenderdine? Do you agree that U.S. production cannot be 
meaningfully increased, say, by 20 percent or so just to help 
us in the short-term?
    Ms. Kenderdine. Me?
    Senator Cantwell. Yes.
    Ms. Kenderdine. I think that there is obviously capacity to 
increase production, but I have been listening to all of this--
--
    Senator Cantwell. That would affect the price right now?
    Ms. Kenderdine. If you increase production, yes.
    Senator Cantwell. No, would it affect the price right now?
    Ms. Kenderdine. Increasing production would affect the 
price. I would say that the price of oil is set on global 
markets. It is not only about U.S. demand. And so----
    Senator Cantwell. So my point about OPEC being the big----
    Ms. Kenderdine. I worked at DOE for eight years in the 
Clinton Administration and four years in the Obama 
Administration. I spent a lot of time in OPEC countries. The 
U.S. oil production--and it is basically shale oil--has 
diminished the power of OPEC to set global prices, which, I 
think, is a good thing. But I think that we could fairly 
rapidly ramp up production in response to demand, and that is 
how oil and gas prices get set. It is a supply and demand 
thing. I would say one other thing about high prices. I have 
been listening to a lot of this. We have had COVID. We have 
Ukraine. One hundred thirty countries have net-zero targets. So 
the financial community is very worried about additional 
investments in fossil fuels around the world. There are a whole 
lot of things that are creating uncertainty in energy markets 
right now, and so I am not sure that we can make hard and fast 
conclusions about what is going on in markets because of that.
    Senator Cantwell. Okay, Mr. Elkind, did you have a comment 
on that? My time is expired, I guess. I guess I talked longer 
there on the front end.
    The Chairman. Go ahead, respond, sir.
    Senator Cantwell. Oh, okay, apparently all my colleagues 
have. So go ahead, let's get an answer on the record on this, 
this issue about can we really do something today that would 
affect the price today, or are we just constantly going to be 
jawboning with OPEC over these issues?
    Mr. Elkind. Senator, I understand Vicki Hollub's comment as 
being that there is no overnight fix, right? But these are 
issues that all of the companies, as I understand it, are 
dealing with and are prepared to, you know, try to respond to. 
But there are workforce shortages and there are supply chain 
issues and, yes, there is a capital issue. So overnight change? 
No. Directional change? Yes.
    Senator Cantwell. Thank you. Thank you, Mr. Chairman. And 
just to be clear, I believe in the directional change and 
getting my constituents the $1.00 per gallon instead of the 
$4.00 per gallon. Thank you.
    The Chairman. Thank you, Senator.
    Senator Cassidy.
    Senator Cassidy. Thank you, all.
    First, I want to say with great pride, I have two of the 
panelists with strong Louisiana ties, Dr. Michot Foss--I am the 
only one to put in Michot before your--and you are a graduate 
of the University of Louisiana. And Ms. Hirstius, a graduate of 
Tulane. And so just thank you both.
    I do not think it is accidental. Louisiana is kind of an 
epicenter of oil and gas. I say that, by the way, Republicans 
have now become known as the working-class party. I am very 
aware that the workers required to develop these rigs have been 
dispersed because of the downturn in the oil market. And to say 
just ramp up, just ramp up production, when the workers are now 
doing something else is just kind of, frankly, standing on the 
shore and telling the waves not to come in. So I want to credit 
our workers, but also point out the kind of disingenuousness 
that you can just reassemble that so quickly.
    Second, I think what has been missing in the Biden 
Administration, I think it is a fair statement, there is a 
nexus, a nexus between energy, national security, climate, and 
the economy of a country and the economy of a family. Just to 
put in a plug for what we have been doing--we just put out 
yesterday something which should be online on my website that 
attempts to address that nexus. It is what the five of you have 
been discussing. And of course, if you have a chance to look at 
it, we would love your feedback.
    And then now, Ms.--I won't be the only one to stumble over 
your last name--Ms. Hirstius.
    Ms. Hirstius. Hirstius.
    Senator Cassidy. Hirstius. Hirstius. Ms. Hirstius, the crux 
of this conversation has been: is the regulatory environment of 
this Administration inhibiting the production of U.S. oil and 
gas resources, and frankly, the deployment of CCUS capability 
and other things, the deployment of renewable, et cetera? Is 
there an inefficient, even hostile regulatory environment? Let 
me ask you, in the Gulf of Mexico, are you waiting on permits 
that are preventing you from drilling new wells?
    Ms. Hirstius. Thank you, Senator Cassidy. And there are 
actually three people on the panel who have very close 
Louisiana ties.
    Senator Cassidy. Who is the third?
    Ms. Hirstius [gesturing toward Mr. Elkind]. Married to a 
Louisianian.
    [Laughter.]
    Senator Cassidy. Clearly, he's a social climber.
    Ms. Hirstius. Yes.
    [Laughter.]
    Ms. Hirstius. Let me just reinforce a couple of things that 
you said. One, you mentioned our workforce and you gave credit 
to our workforce, and I couldn't be more proud of the people 
who continue to support our industry. And the Shell employees 
as well as many other industry employees who have really gone 
above and beyond through COVID to make sure that we continue 
producing and operating. So a huge credit to them.
    Second is that, on your question about are there things 
that are inhibiting us to produce----
    Senator Cassidy. No, no, no. Do you have permits right now, 
before the Federal Government, upon which you are waiting, and 
until you receive them, you cannot begin to drill?
    Ms. Hirstius. So we do have seismic permits that----
    Senator Cassidy. How many of those do you have pending?
    Ms. Hirstius. We currently have four seismic permits that 
we are waiting to get approval on.
    Senator Cassidy. And how long have you been waiting on them 
so far?
    Ms. Hirstius. I don't know exactly the amount of time we 
have been waiting.
    Senator Cassidy. Ballpark? A week? A month? A year?
    Ms. Hirstius. Longer than the normal amount of time.
    Senator Cassidy. And what is the normal amount of time?
    Ms. Hirstius. It depends on the size of the survey, but 
some of this has to do with the environmental----
    Senator Cassidy. But for these particular permits. Help me 
out. I am running out of time. How long? When would you expect 
this to be done, and how long have you been waiting?
    Ms. Hirstius. I think that there can be a way forward 
through this----
    Senator Cassidy. You're ducking--I don't know why you won't 
tell me. And I don't mean to be mean. How long have you been 
waiting on these permits?
    Ms. Hirstius. I don't know the exact amount.
    Senator Cassidy. Got it. And how long would you typically 
wait on these permits?
    Ms. Hirstius. Sometimes seismic permits can take--depending 
on the size of it--they take different amounts of time and that 
has to do with the environmental----
    Senator Cassidy. I get that, but what--okay----
    Ms. Hirstius. It can take months--one month to six to eight 
months.
    Senator Cassidy. If you had those permits approved today, 
how long would it be until you are actually producing oil and 
gas?
    Ms. Hirstius. We have rigs that are on contract, and in a 
very short period of time we can begin to drill those wells----
    Senator Cassidy. Could you have oil and gas hitting the 
shores of Louisiana for our refineries within 12 months if you 
had the permits today?
    Ms. Hirstius. We could.
    Senator Cassidy. You could. And do you anticipate getting 
these permits tomorrow?
    Ms. Hirstius. We don't have line of sight to that. We may 
get one.
    Senator Cassidy. You do not have line of sight to, which is 
a euphemistic way of saying ``no.''
    Ms. Hirstius. We may get one.
    Senator Cassidy. You may get one out of the four.
    Ms. Hirstius. Correct.
    Senator Cassidy. But if you got all four, you could 
increase it even more. What is the holdup on getting the rest 
of those approved?
    Ms. Hirstius. The holdup has to do with the environmental 
assessment and the marine mammal life in the area.
    Senator Cassidy. What marine mammal in particular?
    Ms. Hirstius. This has to do with whales in the Gulf of 
Mexico.
    Senator Cassidy. There are not that many whales in the 
north of Mexico. Is that really what is holding it up? Because 
I am from Louisiana. There are not that many whales in the Gulf 
of Mexico.
    Ms. Hirstius. That is my understanding.
    Senator Cassidy. And so we are not getting seismic--if you 
had it, we could have gas being produced in 12 months, but you 
are not getting it, and you do not know when you are going to 
get it. Now, I just want to say for the record, when Secretary 
Granholm says that permits are not a factor here, I think we 
have an example of where--and by the way, you are being 
incredibly diplomatic--I suspect you fear retribution, but 
still, nonetheless, we have a clear example of that.
    Let me just quickly say one more thing. Oh, I have one for 
Dr. Medlock.
    Dr. Medlock, there has been a lot of conversation about the 
profits of the super majors as regards that somehow they are 
being nefarious by not doing more oil and gas and that is why 
we have a problem. But it is my understanding that about 90 
percent of the oil that is produced is actually produced by 
independents--not the super majors, but the Apaches of the 
world. I have also understood in 2020, about 100 of them went 
bankrupt. So we have been talking about the role of the 
investor community, the ESG community that is putting pressure 
upon the independents with their need for capital. Seeing how 
they apparently control 90 percent of the production in the 
U.S., can you comment, as others have, upon the role of the 
investor community in inhibiting the development of new oil and 
gas leases by the group of folks that do 90 percent of it, 
which would be the independents?
    Dr. Medlock. Well, it is actually not a simple answer, but 
the investment community is probably the most powerful arm in 
determining what future production looks like. Everybody has 
referred to the pipeline and permits and whatnot that need to 
be in place so that you could actually develop oil and gas 
resources and deliver them to market. And that is actually 
something that needs to be, I think, brought farther up to the 
surface here because it has been alluded to, but you go back to 
2020, all these companies lost a lot of money. In 2021, yes, 
they made tremendous profits, but they are also dealing with a 
tremendous amount of uncertainty with regard to what is the 
future direction of oil. What are the pending legal cases 
against them? We know, actually, of the Dutch court ruling 
about Shell and its decarbonization efforts. You look at how 
that all manifests through concerns about new variants of the 
pandemic, with IEA actually talking about demand reductions, 
perhaps, as these new variants actually emerged.
    You are talking about operating through an environment that 
has tremendous uncertainty, and it is very difficult to 
convince investors to pull the trigger on massive new 
production options when they do not know whether or not the 
returns will be there. So that all is incredibly important. It 
is not as simple as taking a snapshot view of the oil and gas 
market thinking about production. And you know, the last thing 
I will say, what you actually have seen over the last year and 
a half or so is an increase in production in the U.S. alone of 
over a million barrels a day. So it has not been static. It has 
actually grown. A lot of that growth has been focused on 
deploying the ``DUCs''--or the drilled-but-uncompleted well 
inventory. And so a lot of that is quite frankly because the 
capital is not there to go out and drill the new wells, and 
there is reluctance to do so because you do not know actually 
what the near-term brings.
    And so we are in a really strange environment, and Russia's 
invasion of Ukraine just sort of was the final match that lit 
the fire to push us well over $100 a barrel.
    Senator Cassidy. Got you. I yield back and thank you for 
your indulgence.
    Senator Wyden [presiding]. I thank my colleague.
    Before Senator Murkowski leaves, this reminds me of the 
days when I was Chair and you were Ranker and we were always 
doing things together and calling a lot of audibles, and that 
is what is going to happen now.
    So I am going to recognize myself and then we will go to 
Senator Hyde-Smith and we will go to Senator Hickenlooper and 
then we'll go to Senator Hoeven, and that will complete the 
first round, but I gather some of our colleagues would like a 
second round and we are just going to keep this thing going. 
Okay? All right, colleagues, thank you.
    I am going to touch briefly on two topics. This week, I 
introduced a bill that will modernize existing domestic mineral 
production. And the bill focuses on increasing the domestic 
supply of critical minerals, reducing our reliance on foreign 
energy, and supporting domestic manufacturing, which I think we 
all understand is critical to building the next generation of 
clean energy products and fueling the kind of red, white, and 
blue clean energy that we want with good American jobs on 
American soil. And the heart of my legislation is to turn 
existing leases--existing leases--into energy-producing sites. 
If we are going to wean ourselves off foreign oil and gas 
imports and transition to clean energy--this is a national 
security issue. It is an environmental issue. I look forward to 
talking with my colleagues about it in the days ahead, and the 
legislation was just introduced this week.
    The other matter I want to touch on is our Clean Energy for 
America Act, which passed the Senate Finance Committee, which I 
chair, some months ago. And there has been a development this 
week. I just want to briefly describe the bill and talk about 
the development this week. This legislation was years and years 
in the making, something that Chairman Manchin and I talked 
about when he invited me to West Virginia. And what we 
essentially did is take the 40-some energy provisions in the 
federal tax code and we threw them in the garbage can. We said, 
``this is basically about yesteryear.'' We need something that 
rewards innovation, and Senator Manchin and I agreed that one 
of the keys to the bill was to be technologically neutral. And 
the reason that made sense is because nobody even knows, 
decades from now, which will be the best carbon emission 
reducers.
    So let's give everybody a chance to hit that kind of 
target--reducing carbon emissions. So the bill is tech-neutral. 
It is market oriented. And what it does is, it takes that 
technological neutrality and says, the more you reduce carbon 
emissions, the bigger your tax savings. All right? The House 
has advanced it. We are going to advance it here. I would 
really like to work with all my colleagues on this. And this 
week, there is a report with fresh evidence on the importance 
of this legislation. The Rhodium Group, a well-thought-of group 
of energy analysts, said that these proposals would reduce how 
much money the United States spends on oil by nearly a quarter, 
and increase our capacity to export oil by nearly 30 percent, 
and natural gas by 15 percent. So this is an economic winner. 
It is an environmental winner. It is a winner for our kids and 
our grandkids.
    So without objection, I am going to put that into the 
record at this time.
    [The Rhodium Group report referred to follows:]
    
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    Senator Wyden. And the order for the completion of the 
first round will now be our colleague from Mississippi, Senator 
Hyde-Smith, and Senator Hickenlooper would be the next to 
follow--I hope he can return, and then Senator Hoeven.
    Senator Hyde-Smith.
    Senator Hyde-Smith. Thank you, Mr. Chairman, and I want to 
thank all of our witnesses today. You have done a tremendous 
job and this is long and enduring, but I certainly appreciate 
your willingness to come and testify before the U.S. Senate. 
That says a lot about you.
    Long before Putin ever invaded Ukraine, last fall--and this 
is for you, Dr. Medlock--President Biden finally began 
recognizing the high gasoline prices paid by families and 
businesses last fall. But instead of increasing production here 
at home, the President blamed U.S. energy companies, OPEC, and 
Russia for weeks before releasing 50 million barrels from the 
Strategic Petroleum Reserve, or about two and a half days' 
worth of U.S. consumption. Last Tuesday, the President again, 
instead of increasing U.S. production, announced another 
release of 30 million barrels.
    Dr. Medlock, briefly, what is the short- and the long-term 
impact we can expect from pulling from the Strategic Petroleum 
Reserve?
    Dr. Medlock. Well, use of the SPR is actually warranted, I 
would argue in this case. So it is a stopgap measure. It is 
really meant to bridge the very near-term needs of the 
marketplace to sort of help quell price hikes and volatility. 
But longer term, there does need to be an increase in 
production because, you know, absent that, you can deplete the 
SPR very quickly and then where are you? So it is really a 
short-term mechanism. It is a classic inventory withdrawal sort 
of discussion.
    Senator Hyde-Smith. So do you believe it is wise and in the 
best interest of our national security to repeatedly return to 
the emergency stockpile just to lower gas prices for just a few 
days?
    Dr. Medlock. Well, the impact in terms of a few days, it is 
really wise to use it to help bridge the gap until you can 
actually get new production online, because at the end of the 
day, if you are going to use inventory, as an inventory it has 
to be replenished as well. And I think Melanie actually 
referred to backwardation on the curve as an argument for 
actually pulling more crude into the present, which means 
withdrawal from inventory and then refill later. So it is a 
wise move, absolutely.
    Senator Hyde-Smith. Thank you for that.
    And Ms. Hirstius, I find it difficult to believe we would 
not be facing an energy crisis if we had maintained greater 
independence, including exporting significant amounts of LNG. 
After President Biden's ban on new oil and gas lease sales on 
federal lands and offshore, the Administration continually 
gaslit Americans by saying there are 9,000 approved drilling 
permits not being used. However, we know it is one thing to 
have a lease, it is another for it to actually have the green 
light to produce on the lease after jumping through the ever-
increasing regulatory hoops. All this to say we are nowhere 
close to realizing our nation's full potential as a global 
energy producer. And how would that maximize oil and gas 
production help stabilize these markets right now?
    Ms. Hirstius. Thank you, Senator, for the question.
    I think the environment that we are in, and I will speak 
about the Gulf of Mexico with regard to permits--we get permits 
on a regular basis. Every activity that we have has oversight 
by the regulator and requires a permit, and currently we are in 
an environment where the majority of those permits are issued 
regularly and do not disrupt our business. There are a few 
areas where, like I mentioned before, like in seismic 
permitting, where we do see a disruption, and on the leasing--
the leasing is very important to keep this conveyor belt of 
activities going and make sure that we have the feedstock of 
opportunities that we can evaluate to determine where we need 
to explore and where our barrels of tomorrow will come from. So 
it is very important that we keep the conveyor belt going.
    As far as additional supply that we can bring online and 
how to do that more quickly, I think there is an important step 
that needs to be taken to look at how we can accelerate the 
permitting and approval process because that will result in 
faster activity and more oil and gas coming online. And that is 
really across all aspects of our industry--oil and gas, as well 
as renewables, because really everything has a permitting 
component to it. So I think that is a consistent thread that 
can be improved, and really those are solvable problems. There 
are not technical aspects that stand in the way of improving on 
that aspect to the system.
    Senator Hyde-Smith. Thank you very much.
    And Dr. Foss, before the President announced a U.S. ban on 
Russian oil, the United States was importing about 700,000 
barrels per day of Russian crude and petroleum products. 
Europe, which has a much heavier reliance, imports about four 
million barrels per day. With this ban in place, what vacuum 
are we going to see in the oil and gas market and how best can 
the United States contribute to stabilizing and returning 
domestic and global prices back to a more economically 
sustainable level?
    Dr. Foss. In fact, our Russian import history is even more 
interesting than that. We have been talking about it 
internally. I was looking at it the other day. We imported for 
a few years, 2010 to about 2014. Then we were flush with our 
own production and nothing arrived. Then we started taking a 
bit more to close gaps because of what everyone has pointed 
out. We had a surge that caught a lot of people off guard and 
economic activity, as people started coming out of the COVID 
closets and, of course, you know, we have the issue with 
Ukraine now affecting that.
    What companies are doing to make up that gap is--
fortunately, it is a small one--they are striving to source oil 
from different places. A lot of that is going to come from 
domestic production because there are ways of doing that. As 
Ken pointed out, we have managed to grow domestic production, 
other suppliers around the world--other inventories are 
available around the world. We haven't talked about the trader 
component of this. They also own physical inventory, and they 
are actively in the market looking at how to move some of those 
short-term cargoes into some of the refiner's locations for 
use.
    The two places that happen to be most impacted are the East 
and the West Coast because most Russian oil was going to the 
eastern refineries and the West Coast refineries to close gaps 
there. That is where most of those barrels were going, and 
those locations are not well served by pipelines that can 
deliver our own domestic supply. So that puts the pipeline 
conduit picture back on the table. What can we do to help de-
bottleneck? How can we better serve our own communities? Over 
what time period could we get that done? We have efforts 
underway that people have been working on for a while to try to 
expand capacity out of the Permian, out of Texas, out of the 
Gulf Coast. We have had a lot of changes in how oil flows 
around the country with our own domestic production growth.
    And then we have one more thing that I am going to put on 
the table, and I know that it is really controversial. We could 
sell more of our own oil to our own markets if we could ship it 
in our own waters. So I know that talking about the Jones Act 
is not anything that anyone ever wants to do, but we have to 
acknowledge it is there and at a time like this, you know, we 
have to put everything on the table.
    And I want to say that in light of the conversation today, 
and especially since we are going to have a second round--what 
if it gets worse? None of us have talked about that. I am sure 
you all are thinking about it. I have all kinds of personal 
scenarios of what could happen with this event or what could 
dovetail with it. We may be in an extended, protracted period 
that we need to be thinking about for quite a while. We have to 
deliver to our defense forces. We have to be able to be sure 
that we can run the global fleets of cars, trucks, trains, 
railroads, everything else. So thinking about how we move our 
own production to ourselves is something that we could be doing 
along with other things.
    Senator Hyde-Smith. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Hoeven [presiding]. Thank you, Senator.
    So I think you covered it, but Dr. Foss, we need to produce 
more oil and gas in this country--things we can do right now 
that would move the needle far.
    Dr. Foss. Well, again, we have put a lot of things on the 
table with regard to leasing, helping all of you and everyone 
here in town and in state houses around the country and 
governor's offices to understand all the things that the 
industry has to do to be able to get wells drilled, get them on 
production, get them hooked up, you know, logistically, so that 
production can get delivered, you know, understanding what it 
takes.
    Let me talk about the private producer side for a minute--
the small producer side, smaller than the publicly traded 
independents like Apache and Pioneer and so on because there is 
a large fleet still of independent producers active in the 
United States. We probably still have, oh, 7,000--it gets 
smaller every day--of small producers who have to go out and 
contract for services, lease land most of the time. They are in 
the private minerals market, but they have to be served. They 
have to be able to borrow money. They have to be able to 
finance their activities as well. Do not forget about them. 
They could actually move pretty quickly, except that one of the 
issues is getting the service industry to be able to supply 
locations that are not well-served because the service industry 
contracted in 2020 in such a harsh way. So we do have that that 
we have to think about. But the independent producers--many of 
them are drilling and pursuing projects that will make a 
difference at the margin. If they could get a vote of 
confidence as well, you know, stepping out of the White House, 
giving a vote of confidence to the industry--the service 
industry, the service suppliers, the financial community--would 
go a long way.
    Senator Hoeven. So if the Biden Administration would remove 
a lot of these restrictions and so forth, that would help 
galvanize our industry right away--have both an immediate 
impact as well as a medium- and longer-term impact in terms of 
more energy production, specifically as regards both oil and 
natural gas.
    Dr. Foss. Yes, and I think it can be done responsibly. I 
agree with Colette on that.
    Senator Hoeven. You would agree we have the best 
environmental standards in the world, wouldn't you?
    Dr. Foss. Yes.
    Senator Hoeven. In terms of our energy production?
    Dr. Foss. I think that we are responsible anyway, you know?
    Senator Hoeven. Right.
    Dr. Foss. The industry is a very responsible industry.
    Senator Hoeven. Right, and thank you.
    Dr. Medlock, wouldn't you agree that that is also not only 
vitally important for getting at inflation here at home, but 
very important in terms of working with our allies as well, 
specifically relative to what is going on in Ukraine?
    Dr. Medlock. Yes, I 100 percent agree with that. Working 
with our allies, I mean, look, I mentioned in my opening 
remarks that for the last 10 years, except for the last two of 
course because of COVID, you know, we had hosted 23 different 
delegations from countries all over the world. These are 
ministerial level delegations, and the one thing they all had 
in common, because the things were different, but they wanted 
to talk about U.S. oil and gas, and it had a lot to do with 
their own energy security motivations and what moving product 
from this country out into the open water actually meant for 
the diversity of supply that's available on the global scene 
because they all view that as critically important to their own 
energy security, even if barrels or molecules of gas are not 
landing in their country, it actually increases liquidity in 
the entire global atmosphere, and that bears energy security 
benefits like nothing else. So anything we can do, particularly 
in this current environment, to continue to increase production 
in a responsible way is going to pay dividends.
    Senator Hoeven. Thank you.
    Ms. Hirstius, did I say your name reasonably close to 
right?
    Ms. Hirstius. Pretty close.
    Senator Hoeven. Okay. How do you say it?
    Ms. Hirstius. Hirstius.
    Senator Hoeven. Hirstius, thank you. I'm sorry.
    You know, we have seen states that have historically been 
large energy producers of oil and gas--for example, 
California--that have throttled way back. Doesn't it make sense 
for us to be producing the energy here at home, even in states 
like California? Again, we have the best environmental 
standards, versus going to Maduro in Venezuela or going to Iran 
or going to OPEC or anywhere else?
    Ms. Hirstius. Yes, thank you for the question, Senator.
    I think it is a moment in time when we need to look at all 
options domestically, and I agree with you that I think we do 
have the highest environmental standards, and need to feel 
comfort in that, and to know that a barrel that comes from the 
Gulf of Mexico has amongst the lowest greenhouse gas intensity 
of a barrel in the world. And that is something that is really 
important to us. Specifically with regard to California, I 
think that there are things that we need to look at across all 
of the states to determine what actions can be taken to 
increase supply, and California does have a significant amount 
of natural resources--oil and gas--that we can be able to bring 
onto the market if the conditions are right.
    Senator Hoeven. Thank you.
    And then, finally, Ms. Kenderdine, isn't it true that we, 
in fact, have the best environmental standards? So for example, 
if we send LNG to our European allies, I believe, on a life 
cycle basis, they have 41 percent less greenhouse gas emissions 
than getting natural gas from Russia. So again, isn't the 
argument not only that we can produce more energy, but we will 
actually have better environmental stewardship rather than 
relying on other parts of the world who are antagonistic to us?
    Ms. Kenderdine. Senator, we do have excellent environmental 
standards and I think that that's a given. The Russian system--
the gas pipelines leak methane like crazy. It is highly 
problematic. And so I think that our exports, relative to 
Russian exports, are much more environmentally responsible and 
sensitive than you would get from Russia. I would also say that 
in many parts of the world--and we are sending our LNG to 
Korea, Japan--our biggest customers. A lot of it--and India is 
now a fairly significant importer of U.S. LNG--depends on what 
it's replacing as well. So India has a lot of coal generation, 
and they now allow the use of imported LNG for power 
generation. So if you were replacing that coal generation with 
gas generation, you are getting lower emissions as well.
    And so we do have much better environmental regulations, 
much better than Russia, for sure.
    Senator Hoeven. All right. Thanks to all the members of the 
panel. I appreciate the responses.
    At this point I'd better check, is there anyone else that 
wanted questions on a second round?
    [No response.]
    Senator Hoeven. Okay. Then, if not, thanks again to our 
witnesses for joining us this morning.
    Members will have until the close of business tomorrow to 
submit additional questions for the record.
    And with that, the Committee stands adjourned. Thank you.
    [Whereupon, at 12:36 p.m., the hearing was adjourned.]

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