[Senate Hearing 118-318]
[From the U.S. Government Publishing Office]
S. Hrg. 118-318
THE ADMINISTRATION'S PAUSE ON LIQUEFIED
NATURAL GAS (LNG) EXPORT APPROVALS AND
THE DEPARTMENT OF ENERGY'S PROCESS FOR
ASSESSING LNG EXPORT APPLICATIONS
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HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 8, 2024
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
55-846 PDF WASHINGTON : 2025
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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 BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado CINDY HYDE-SMITH, Mississippi
ALEX PADILLA, California JOSH HAWLEY, Missouri
Renae Black, Staff Director
Sam E. Fowler, Chief Counsel
C.J. Osman, Senior Counsel
Justin J. Memmott, Republican Staff Director and Chief Counsel
Tripp Parks, Republican Deputy Chief Counsel
C O N T E N T S
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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
Panel I
Turk, Hon. David M., Deputy Secretary, U.S. Department of Energy. 11
Panel II
Watson, Dr. James, Secretary General, Eurogas.................... 86
Riedl, Charlie, Executive Director, Center for LNG............... 92
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Abraham, Spencer et al. (former government officials from the
national security, energy security, and diplomatic
communities):
Letter for the Record........................................ 189
Alaska Oil and Gas Association et al.:
Letter for the Record........................................ 24
American Exploration and Production Council et al.:
Letter for the Record........................................ 27
Asia Natural Gas and Energy Association:
Letter for the Record........................................ 30
Barrasso, Hon. John:
Opening Statement............................................ 4
Wall Street Journal editorial entitled ``Biden's Worst Energy
Decision'' published on February 4, 2024................... 5
Washington Post editorial entitled ``Biden's LNG Decision Is
a Win for Political Symbolism, Not the Climate'' published
on January 29, 2024........................................ 8
Chart entitled ``2016-2023: LNG Exports Bring $134B to U.S.
Economy'' 20
Chart entitled ``Projected Change in Natural Gas Demand for
All Countries Outside the U.S.''........................... 22
Branick, Jeff:
Letter for the Record........................................ 155
Cassidy, Hon. Bill:
Chart entitled ``Greenhouse Gas Intensity: Russian Gas vs.
U.S. LNG to Germany''...................................... 117
Cassidy, Hon. Bill et al.:
Letter addressed to President Biden and Secretary of Energy
Granholm, dated January 26, 2024........................... 157
Center for LNG:
Statement on White House Halt of U.S. LNG Export Approvals,
dated January 26, 2024..................................... 34
Official Response to a question posed by Senator King during
the hearing (question originally appears on page 110)...... 161
Climate Hawks Vote:
Letter for the Record........................................ 172
Distribution Contractors Association:
Letter for the Record........................................ 164
Energy Equipment and Infrastructure Alliance et al.:
Letter for the Record........................................ 165
EQT Corporation:
Letter for the Record........................................ 36
Eurogas:
Statement on European Union and United States Energy
Partnership: Exports of U.S. LNG and European Energy
Security................................................... 40
Letter addressed to European Commission President von der
Leyen and Executive Vice-President Sefcovic................ 168
Heidelberg Materials North America:
Letter for the Record........................................ 170
Industrial Energy Consumers of America:
Letter for the Record........................................ 174
International Association of Oil and Gas Producers:
Press release entitled ``U.S. Decision to Pause LNG Export
Approvals Could Put European Security of Supply at Risk''
dated January 30, 2024..................................... 42
International Gas Union:
Statement entitled ``The Announced Halt to the Review of Key
U.S. LNG Export Projects Sends an Unsettling Signal to
Global Energy Markets''.................................... 44
Katser-Buchkovska, Nataliya:
Statement for the Record..................................... 194
Kobach, Kris W. et al.:
Letter addressed to President Biden and Secretary of Energy
Granholm, dated February 6, 2024........................... 46
Manchin III, Hon. Joe:
Opening Statement............................................ 1
McNally, Robert:
Commentary entitled ``Climate Politics Neuters an Energy
Watchdog'' published in the Wall Street Journal, February
12, 2024................................................... 152
MET Group:
Statement for the Record..................................... 181
National Association of Manufacturers:
Letter for the Record........................................ 186
198 methods:
Letter for the Record........................................ 171
Partnership to Address Global Emissions:
Letter addressed to Secretary of Energy Granholm, dated
January 19, 2024........................................... 55
Riedl, Charlie:
Opening Statement............................................ 92
Written Testimony............................................ 94
Responses to Questions for the Record........................ 148
Skana Aluminum Co.:
Letter for the Record........................................ 193
Turk, Hon. David M.:
Opening Statement............................................ 11
Written Testimony............................................ 13
Responses to Questions for the Record........................ 121
U.S. Chamber of Commerce et al.:
Letter addressed to President Biden, dated January 26, 2024.. 58
Watson, Dr. James:
Opening Statement............................................ 86
Written Testimony............................................ 88
Responses to Questions for the Record........................ 145
Western States and Tribal Nations Natural Gas Initiative:
Letter addressed to Secretary of Energy Granholm, dated
December 6, 2023........................................... 60
Zukunft Gas:
Statement on the German and United States Energy Partnership:
Exports of U.S. LNG and the German Energiewende, dated
January 26, 2024........................................... 66
THE ADMINISTRATION'S PAUSE ON LIQUEFIED NATURAL GAS (LNG) EXPORT
APPROVALS AND THE DEPARTMENT OF ENERGY'S PROCESS FOR ASSESSING LNG
EXPORT APPLICATIONS
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THURSDAY, FEBRUARY 8, 2024
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 9:30 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.
Before we move to today's business, I want to extend
condolences on behalf of our entire committee and staff to
Senator Barrasso. As you might know, his beautiful wife was
laid to rest this past week, and our hearts are all broken.
Bobbi was something special, and it's clear that all the loved
ones of Bobbi are going to cherish her memory as a leader for
the great State of Wyoming and devoted wife and mother that she
has been.
So, buddy, we're with you, okay?
Senator Barrasso. I appreciate it. And to Gayle as well.
When you hear the story of what happened there in that car----
The Chairman. I was----
Senator Barrasso. A little bit of a different location of
where the impact was.
The Chairman. Yes.
Senator Barrasso. Instead of just having her sustain
significant injuries, it could have been a similar situation.
The Chairman. When John was going through his grieving and
loss, I was trying to get to Wyoming to attend the funeral, and
then my wife was in a very bad car wreck. It was just about
three feet and she would have not been here too. But by the
grace of God, she is fine and going to do well, but it just so
happened I called him, and he calls me, and back and forth, and
we're trying to lean on each other for a little strength. So
with that, our prayers are with you.
Senator Barrasso. Thanks, Mr. Chairman.
The Chairman. Turning to the purpose of today's hearing, we
are meeting to get to the facts of the Administration's pause
of new LNG export approvals to non free trade agreement
countries, like our friends in Europe. Of course, I believe
that our first priority is ensuring that none of our exports
harm our U.S. families, businesses, or our economy. Beyond
that, we also have a responsibility to our allies and trading
partners who may have no other choice but to turn to countries
that don't share our values if they can't count on American
support. The United States has shown that we can do both of
those things.
Over the past seven years, our LNG production has ramped up
from essentially no exports in 2016 to a peak capacity of
around 14 billion cubic feet per-day.
Yes, go ahead, remove them. Thank you so much. We
appreciate very much you coming.
[Protest interruption.]
The Chairman. Thank you very much for coming. We are happy
to meet with you later, sir, if you would like and if you are
more orderly.
Thank you very much. Thank you. Thank you, all.
It's a wonderful country we have.
I like the song.
Thank you all so much. We appreciate their attendance and
their input.
Beyond that, we all have a responsibility to our allies and
trading partners, as we have said, they may have no choice but
to turn to countries that don't share our values if they can't
count on American support.
Over the past seven years, LNG production has ramped up, as
I have said before, up to 14 percent of our current U.S.
production capacity and more than any other exporting nation.
To support these increased exports, we are producing more
energy than ever in our country--4.7 billion barrels of crude
oil and 37 trillion cubic feet of gas in 2023. We have never
hit those numbers before. And during that time, our domestic
natural gas prices have remained flat, on average. The average
Henry Hub price was about $2.50 per Mcf, and that is both in
2016 and 2023. But at the same time, as we are producing and
exporting more than ever, American consumers are using a record
amount of gas--now more than 32 trillion cubic feet annually is
consumed in our country.
So let me be clear--a lot has changed in a few years, and
there are sensible reasons to update the market assessments
that the DOE uses when reviewing export applications to ensure
the trajectory that we are on won't risk harming American
families and businesses. But these types of decisions should be
firmly based on facts, not politics. Unfortunately, the
Administration hasn't actually done its new market assessment
yet, as I understand, or presented us any facts that justify
this pause at all. They do throw around some data points. For
example, they tout that the U.S. is on track to export 26
billion cubic feet per-day by the end of this decade between
facilities currently operating and those now under
construction. But my question is this, where is the analysis
showing that 26 is the magic number, and that's all we can do?
It seems to me that 26 billion cubic feet per-day is just what
happened to be in the hopper when the White House made the
political calculation to pause exports.
The White House has gone out of its way to signal that the
pause is a political ploy intended to get votes in an election
year. It's all about politics, not economics, and we just saw
yesterday what that does for us. Between the two statements
issued by the White House announcing the pause, climate and
environmental issues are mentioned more than 35 times. All
combined, consumer costs, energy security, and helping our
allies are mentioned less than half as much.
In one egregious example that clearly politicizes the
issue, the White House statement accuses ``MAGA Republicans''
of willfully denying the urgency of the climate crisis. This
statement is just intended to antagonize, and it's not going to
help us solve any of our actual problems. It shows a disregard
for any efforts to build bipartisan support on a reasonable,
sensible approach to protecting both consumers and the
environment. Shockingly, in the White House statements, there
is no reference at all to the crisis created by Putin's
invasion of Ukraine, to the growing instability in the oil and
gas producing regions in the Middle East following Hamas's
attack on Israel, or to any other crisis that U.S. LNG exports
can help address. Again and again, the White House has shown
that it is so concerned with indulging radical climate
activists that it's willing to play politics with our energy
security and that of our allies. This reminds me all too well
the Administration's misguided and unlawful pause on oil and
gas leasing, which I know my fellow Committee members will
recall. Simply put, politicizing LNG exports is reckless and
dangerous and it could empower and enrich Russia, Qatar, and
Iran.
Deputy Secretary Turk, if I am correct, DOE is just now
beginning its new analysis of the economic impacts of our
growing export levels. If this is the case, I strongly urge
that this pause should be reversed immediately. Facts must come
before action, not the other way around. Unfortunately, it
seems that the White House has already sided with climate
activists determined to block any more LNG exports, and I am
deeply concerned that the White House will put its thumb on the
scale at the DOE to get the political outcome they want. And
with actions like this that have direct impacts on our own
economy and countries around the world, I am disappointed that
this Administration has attempted to avoid seeking the advice
and consent of the Senate by changing the title of their
climate envoy. I am confident that today's hearing will paint a
clear picture regarding the facts about the LNG market and
motivations behind the pause.
I am grateful that Deputy Secretary Turk has joined us once
again today to answer these serious questions. And Mr. Turk, I
commend you for always--and I say that--always being willing to
appear before this Committee, even on contentious topics such
as this.
I am also glad to have our second panel of experts from the
energy sectors in both the U.S. and Europe to help us
understand the facts about transatlantic LNG trade and the
impacts on each of our respective economies.
And with that, I will turn to our Ranking Member, Senator
Barrasso.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Well, thanks so very much, Mr. Chairman.
I agree with the comments you made. I want to thank you for
holding the hearing.
I remember in 2014, former Defense Secretary Robert Gates
wrote about then Vice President Joe Biden--he said he has been
wrong on nearly every major foreign policy and national
security issue over the past four decades. I'm sorry to say
that Joe Biden's record not only hasn't improved, in fact, it's
actually gotten worse. On every energy security issue facing
our country, Joe Biden has been terribly wrong for our nation's
security. As the Wall Street Journal put it, and this is from
just the other day, Monday, February 5th. This is based on the
President's announcement to stop approved liquefied natural gas
(LNG) exports. It says ``It is Biden's worst energy decision
yet.'' That is the President of the United States. Even the
liberal Washington Post called it ``Biden's LNG pause is just
political theater.'' You go through it and it says ``It's an
election year sop to climate activists.'' Because that's what
it is, Mr. Chairman, a transparent--very transparent election
year payoff to appease radical environmentalists who want to
end exports of American natural gas.
[The articles referred to follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. The President wants to appear reasonable.
He says, well, we just want to take a hard look at the impacts
of LNG exports on energy costs--you made the point on that, on
American energy security, and on the environment. It's
environment, environment, environment, but we already know the
impacts. The impacts on our economy, the impacts on all of the
issues related to this are overwhelmingly positive, including
with the environment. We shouldn't spend any time, let alone
the year that they want to spend, studying a question that has
already been asked and answered. And that's what makes
President Biden's decision, in my opinion, cowardly. He defies
logic to kiss up to the radical climate extremists. So why
would I say this? Well, the New York Times reported--this is
the New York Times--``The White House made the decision to stop
approving LNG exports based on the demands of a 25-year-old so-
called influencer on TikTok.'' The President of the United
States relying on some young man's TikTok account to set the
policy affecting our closest allies around the world.
So let's look at the facts. Critics have claimed that
American natural gas exports would raise natural gas prices
here at home. The data shows otherwise. In the eight years
since we began exporting LNG, the domestic spot price of gas
is, on average, much lower than the domestic spot price on gas
during the eight years before we were able to start exporting
LNG. Critics also say exports would reduce the supply of
natural gas here at home. But in 2023, there was 23 percent
more natural gas available to the U.S. economy than in 2015,
the year we began with exports. That's because American natural
gas exports stimulate additional natural gas production.
American natural gas exports have also improved our balance of
trade. From 2016 to 2023, LNG exports brought $134 billion into
our American economy. In that process, they have created
thousands of good-paying jobs for American workers.
On security, the answer is obvious. American natural gas
exports are vital to our nation's security. Without them, our
allies and partners across the world would be more dependent on
Russia's Vladimir Putin and on Iran's theocracy. Europe knows
the value of American energy. Two short years ago, our European
allies faced a horrible decision of either depriving their own
citizens of energy or buying gas from Russia. And of course,
the money to Russia would help fund Putin's war against
Ukraine. American natural gas exports allow Europe to cut
imports of Russian gas, while keeping their citizens warm and
the lights on. In 2021, 29 percent of U.S. liquefied natural
gas exports were shipped to Europe. Now, more than twice that
amount. If Joe Biden has his way, Europe and other allies will
now be on their own. They will be forced back into the arms of
Russia, Iran, the Middle East, anywhere but the United States,
and Congress would be spending billions of dollars protecting
Ukraine and Israel, only for Joe Biden to allow Russia and Iran
to generate billions more in the new natural gas sales. It is
utterly ludicrous and self-defeating.
Finally, there is no basis to the claim that American
natural gas exports are bad for the environment. The fact is,
American natural gas is among the cleanest in the world, far
cleaner than Russia, far cleaner than Iranian gas, and at last
year's climate conference, nearly 200 countries, including the
U.S., called out the role fuels like natural gas are playing in
reducing emissions, not increasing emissions, but reducing
emissions.
Mr. Chairman, the world needs and wants more American
energy, not less. And the President can break his 50-year run
of getting things wrong by waking up and reversing this
terrible decision, one that the Washington Post says is ``just
political theater,'' not really helping the economy or the
environment. If he doesn't, Congress and this Committee must
act.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Barrasso.
We have two panels today. In our first panel, we have the
Honorable David Turk, Deputy Secretary of Energy. And Mr. Turk,
it's now your turn for your opening remarks.
STATEMENT OF HON. DAVID M. TURK,
DEPUTY SECRETARY, U.S. DEPARTMENT OF ENERGY
Mr. Turk. Chairman Manchin, Ranking Member Barrasso, and
members of the Committee, thank you for the opportunity to be
with you again today.
The Natural Gas Act has given the Department of Energy the
responsibility to evaluate whether authorizations for the
export of liquefied natural gas (LNG) to non free trade
agreement countries is consistent with the ``public interest.''
Since 2018, when our last macroeconomic analysis was updated,
there have been truly transformational changes that need to be
fully incorporated into our analysis. While this analytical
update is being completed, DOE will pause review of pending
applications for additional export to non-FTA countries. Let me
just start with some numbers. And I think it's important to
know where we have been, where we are, and where we are going,
even under existing authorizations. In 2018, the last time we
updated our macroeconomic analysis, U.S. LNG export capacity
was less than four billion cubic feet per-day. Today, our
export capacity has more than tripled, to 14 Bcf/d, making us
the world's largest exporter of natural gas. By 2030, when
another 12 Bcf per-day of U.S.-sourced LNG export capacity that
is already authorized, already under construction, is set to
come online, a total of 26 Bcf per-day of export capacity will
be online from our country. In fact, a grand total of 48 Bcf
per-day has already been authorized, which is nearly half of
total current U.S. natural gas production.
There is no doubt that this dramatically increasing amount
of LNG export creates and will continue to create large numbers
of jobs, but our public interest determinations also need to
analyze potential price impacts to all U.S. consumers and all
U.S. manufacturers and industry. EIA's 2023 long-term outlook--
and this is EIA, our Energy Information Administration, an
independent part of our department--found that as the U.S.
exports more LNG, global and domestic prices converge. And
that, and I quote: ``Higher LNG exports create a tighter
domestic natural gas market, all else held equal, increasing
domestic natural gas prices.'' As a point of reference, in
2023, natural gas prices in Europe and Asia were five to six
times higher than they were in the U.S. Our updated
environmental analysis, of course, will need to focus on
methane leakage, as methane has contributed over 30 percent of
human-caused warming between 2010 and 2019.
But we also need to better understand the downstream
climate impacts of more and more volumes of U.S. LNG exports,
especially over the long term. Our DOE authorizations run
through 2050. As a point of reference, in the IEA's net-zero
scenario, global LNG demand needs to fall 75 percent by 2050.
This is the scenario that gets us to the goal that science
tells us we need to get to in order to avoid the worst
consequences of climate change. Our analytical update also
needs to better capture any and all health risks to our front-
line communities. Now, let me underscore--and I think this is
incredibly important as we begin this hearing--what this review
is not. It is not unprecedented. We have repeatedly updated our
analysis about every five to six years at the Department. And I
want to say this very clearly--it will not impact our ability
to supply our allies with LNG. U.S. LNG exports, as I have just
gone over, have already tripled over the past five years, will
double again by 2030, and could double yet again under existing
authorizations. This review and pause does not impact any of
these increased volumes.
At the same time, Europe's natural gas demand is forecast
to actually decline from 2021 to 2026 by 20 percent. LNG demand
has already peaked in Japan and is expected to peak in South
Korea by 2030. On the other hand, China's demand for LNG is
expected to increase a further 65 percent by 2030. The
Department of Energy is going into this ``take-a-step-back''
review process as a data- and science-driven organization with
questions, not answers. Given all these transformational
changes, DOE has the responsibility to assess additional
proposed exports using the most complete, the most updated, and
the most robust analysis possible. In fact, I would find it
irresponsible if we were not taking a step back and undertaking
this rigorous analysis. Once updated, our analysis will be
transparently shared for public comment. We very much
appreciate in advance all stakeholders--all sides of this
issue--submitting their feedback. The U.S. Department of Energy
remains committed to keeping energy affordable for all
Americans, strengthening energy security for us and for our
allies, and protecting against the worst impacts of climate
change.
Thank you. I look forward to your questions.
[The prepared statement of Mr. Turk follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you. Now we will turn to Senator
Barrasso for his questions.
Senator Barrasso. Thanks, Mr. Chair.
Mr. Turk, so Russia, Iran, and Qatar are ranked one, two,
and three right now on reserves of natural gas. Russia is
dramatically expanding its capacity to export LNG. Iran is
developing its own LNG export capacity. Qatar is already the
world's second largest LNG exporter. I think each would love
nothing more than to displace American LNG on the world market.
So are America's interests better served if the world is buying
LNG from the United States or from Russia?
Mr. Turk. So, better served by LNG from the United States
than the other countries.
Senator Barrasso. And are our interests better served if
the world is buying it from the United States or Iran?
Mr. Turk. Better from the United States than Iran.
Senator Barrasso. So Russia continues its brutal war in
Ukraine. We are debating now on the floor of the U.S. Senate,
aid. Iran's proxies are waging a terrorist campaign against
Israel. We are debating that aid as well. U.S. troops are
working across the Middle East. Americans are not only
sacrificing their money, but the lives of their sons and
daughters, as we just saw this past week, to support our
friends and allies.
You have served on the National Security Council. In times
of war, is it wise to give our allies and partners and neutral
parties across the world an excuse to do business with our
enemies?
Mr. Turk. So we are, as I said, a data- and science-driven
organization. I think it's incredibly important to look at the
numbers, look at what we have--we have already tripled, just
over the last five to six years, in terms of our export. We are
set to double in the new few-years period of time with LNG
facilities that are already under construction. And we have
already authorized a doubling beyond that. You look at that
huge growth and then you compare that with what our allies
need. Europe's demand, as I said, is actually decreasing. They
are decreasing 20 percent to 2026. Japan has already peaked
their natural gas need and their LNG need. So we need to look
at how much we have already authorized, how much we already
have in process, and compare that to what our allies actually
need.
Senator Barrasso. So let's take a look at this. You said
look at the numbers. So for six decades, the U.S. had been a
net importer of liquefied natural gas. Since 2016, the United
States has been a net exporter, and we take a look at the
revenue that has come in since 2016--$134 billion trade surplus
in LNG from 2016 through 2023.
[Displayed chart follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. Would you agree that trade surpluses are
good for the American economy and the United States as a whole?
Mr. Turk. I think trade surpluses are great. What Congress
has given us the responsibility to do is to take into account
the entire public interest, the entire economic implications,
including for our farmers, for our consumers, and for our own
industry and competitiveness.
Senator Barrasso. It does seem that this is a focus based
on climate, and we have seen the Washington Post--the LNG pause
is ``political theater,'' the Wall Street Journal--``Biden's
worst energy decision yet.'' So is the climate better served if
the world buys gas from the United States or from Russia?
Mr. Turk. I feel incredibly proud to be part of an
Administration that is taking head-on the climate challenge
that's facing our country, and we are making remarkable strides
along those lines. I also think, in addition to the climate
impacts of more and more exports of natural gas, we also need
to take into account the economic consequences for American
consumers, American farmers, and our American competitiveness.
And it makes me very nervous when our independent data nerds
come and tell us that prices are going to converge if we export
more and more volume.
Senator Barrasso. I am going to get to the data nerds in a
second, but your own boss, Secretary Granholm, has testified
that Russian production of natural gas is the ``dirtiest on
Earth.'' Studies have shown that greenhouse gas emissions from
Russian gas far exceed greenhouse gas emissions from the same
amount of U.S. LNG. So I think the climate is better served if
people around the world are using U.S. natural gas rather than
Russia.
But in your testimony, you argue that global natural gas
demand is declining, and you cited two International Energy
Agency forecasts. But I think you have ignored the forecast
from your own department, the Department of Energy. Here we
are--the EIA, Energy Information Administration, that's the
green line, 2020. In 2050, world demand for natural gas
according to your own Department of Energy. This is the chart,
it shows four leading energy models, all of which say that
demand outside the U.S. is going to increase through 2050.
[The chart referred to follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. Do you agree that natural gas demand
outside the United States is going to continue to rise for the
foreseeable future, as your own Department is predicting?
Mr. Turk. I think it incredibly important--as someone who
has worked with modelers for many, many years, to look at a
variety of models to question the assumptions going forward. I
am struck that if you look at where the International Energy
Agency--and I served as the Deputy to that organization and
know some of the modelers who are working there--for the first
time ever, their projections for overall demand across the
world, including in the U.S., natural gas demand will peak this
decade----
Senator Barrasso. So you are disputing the Department of
Energy. You are disputing your own Department's----
Mr. Turk. No, no, those are the----
Senator Barrasso. You said you go to different models and
look at a lot of them and others don't agree, but this is your
own Department.
Mr. Turk. I think it's important to look at all of those
scenarios and other scenarios. All of those scenarios are also
reference case scenarios. Those scenarios are not on track for
where we need to be for achieving our climate objectives----
Senator Barrasso. Mr. Chairman, my time is running out. I
appreciate your comments. I am just bringing out what the
Department of Energy of the United States is saying the global
needs are.
Mr. Chairman, I do have some letters from government
officials, dozens of small business groups from here in the
United States, all over the world, deeply concerned about
President Biden's decision to stop approving LNG exports, and
it's a big pile. I just ask unanimous consent to enter these
letters into the record.
The Chairman. Without objection.
Senator Barrasso. Thanks, Mr. Chairman.
[Letters regarding LNG export pause follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you.
What we have here is a situation where it's going to be the
United States' abundance of natural resources that are
displacing a lot of the parts of the world that are where the
reserves lie now, and they are going to produce more. I was
unaware that basically 15 percent of the gas being consumed in
Europe is still coming from Russia. I was thinking that we were
able to shut that down pretty significantly, and we have, but
still 15 percent, and we can displace that. What I think we are
sending is a real strong signal to other parts of the world
that we might not be in the game. And I don't know if 26 is the
right number. I don't know if it's 30, 40, or wherever we
stand. I know what our capacity is. I know what the shale
reserves are, and that we have the ability to produce it better
than anyplace else in the world. I think us producing the
amount of oil that we are producing has kept the world markets
a little bit more in check than they would have been. The price
of gasoline would have been out of sight right now with what
has been taken off the market and displaced.
So I don't know, has there ever been a pause on natural gas
before? Has there ever been a pause on LNG? You all have gone
through the reviews--2018, you said. You didn't pause then. You
saw us going right through the stratosphere and nobody said,
oh, wait a minute, better look at this. And now, we are at 13,
maybe 14 right now and we know what's in the hopper is up to
26, and we don't know what is basically in the queue. So if you
take everything in the queue and what's in the hopper right
now, maybe you are at 35? I think in that neighborhood. I am
not sure if that's the right number. Now, the only thing we are
saying, Mr. Turk, is rather than saying and sending a signal,
do the evaluation, come back, and show us how it would be
restrictive on our markets, how it would be harmful to our
consumers and citizens. We don't see that because the more we
have produced, the more we are able to put into the market, and
with doing that, we are basically stabilizing the price in
America.
Now, if you are telling me that we are going to run out and
the shale doesn't have the reserves and we are just about at
the end, we have done hit the Utica, the Marcellus--we got the
Utica, the Permian--all the things that are producing all these
resources for us, that those are gone--they are not. I have
seen the reserves. And I think you have too. So that's not fair
to the American consumer, what we are going to be doing to them
voluntarily. And that's what we are saying. This pause should
be basically eliminated now, not sending that signal. Finish
your review and then come back. That's all. We put the cart
before the horse.
So the areas that have the reserves that basically can take
up what the United States would be either drawing back or
cutting back--we know Russia has reserves, correct? We know
Iran has reserves. We know, basically, Qatar. Those three
countries are not our same values. That resource--the money
that comes from those reserves is going to be most destructive
to the United States and to the world. It will be used for
destructive purposes, proliferating, and supporting terrorist
supports, basically, uncalled-for wars on Ukraine and other
parts of our European allies. This is what we are worried
about. This energy that we have, the abundance, can really
stabilize and help our allies get through and basically not
turn to these resources. We have turned a blind eye to the
ghost ships of oil coming from Iran because we wanted to make
sure the markets were not going crazy. We let Venezuela, with
the dirtiest production of oil in the world, come back. We have
biomass being used in Africa and all the growing nations of the
world that we could replace with clean natural gas. We are not
going to be able to fulfill that.
I just think it's a terrible, terrible mistake. Again, I
said I want to see the facts. So what we are here for, and I
would say to you is that America's European partners are
looking at us, and if they see us hitting that pause button
right now, and they are going to say, well, can we really count
on them for our future growth here? I notice you said that the
growth in Europe might not be there. But you do acknowledge
where the growth in the rest of the world is coming from, where
the dirtiest consumption of energy today, or no consumption,
and they are looking for whatever--they will burn anything they
have in their backyard. They will burn anything they have. The
cheapest supply of any type of energy, they will use. And in
the last account I knew, it was called global climate. It's not
called U.S. climate. It's not called any other climate in any
other nation, except it's global. We are all responsible.
We have done a pretty good job, and we can do a lot better.
And the more that we are producing, the better we are helping
the climate. So I would say, if you would take back--I know
it's my statement, it's not much of a question right now. I
have more questions. I will get to them in my second round. But
if you would take the consideration of removing this pause that
sends a horrible signal, and if we could sit down with the
climate policymakers in the White House and the DOE and look at
something strategically that would make sense, but sending this
signal serves, I think, a wrong direction for our country, a
very wrong direction.
With that, I am going to turn now to, since we got out of
order there, I will go to Senator Cortez Masto, for her
questions.
Senator Cortez Masto. Deputy Secretary, thank you for being
here.
I think the challenge for me, and this is what I hope you
to please address--so we have been fighting in this Committee
to take back our economic advantage around the world in mining,
in manufacturing, right? And this is one area where we do have
an economic advantage, and there is a concern by, as you hear,
why would we cede that economic advantage. At the same time,
however, I am just seeing a chart showing record profits for
LNG, but I don't see the benefits coming to Americans in my
community. And so, there is a question about what is happening,
right, at the end of the day. So that's kind of where I am
approaching this to understand the Administration's position.
But my first question to you is, why the pause, and does the
pause truly have an impact on some of the projects moving
forward and our access to that LNG that we want here
domestically, or as we look to export it?
Mr. Turk. Well, thanks, Senator. And this is the public
interest. That's what Congress has given us the responsibility
to take care of. And I think you are rightfully focused, and we
are rightfully focused from the Department, on the economic
impact for all Americans. We have a phenomenal competitive
advantage in all sorts of ways in our country. One is the fact
that we pay five to six times less for natural gas right now.
These are consumers. This is farmers. Natural gas goes into
fertilizer. So this is our manufacturers and industry. It makes
me nervous when you have independent agencies, like the EIA,
saying that prices will converge as we export more and more
volumes. We need to take a hard look at that and understand the
full implications of this for Americans before we export even
more and more volumes.
To your question on the pause--when we have already
authorized and constructed, and we are already in the process
of constructing another doubling from where we are right now--
we are the world's largest natural gas LNG exporter right now,
14 Bcf per-day. Already under construction takes us to 26.
Already authorized could take us up to 40--half of our total
gas production. When I see that, I say take a step back. Let's
make sure we are doing the analysis. Let's make sure before we
authorize anything more to 2050, we have to do the analysis on
the economic implications, the climate implications, all of
that, to make sure we inform that public interest
determination. So that's why we are doing a pause right now.
Senator Cortez Masto. But does the pause actually impact
projects in the queue?
Mr. Turk. The pause does not impact what is already being
exported. It does not impact those projects that are already
being constructed. That's 14 to 26, another doubling. And it
does not even impact all of those additional authorizations to
48 Bcf per-day that we have already made.
Senator Cortez Masto. So the pause is on any potential
future requests to expand LNG, is that right?
Mr. Turk. Future requests, pending requests, but everything
that has already been authorized and is already in the queue
isn't impacted by this pause.
Senator Cortez Masto. And to what extent is your study
going to be looking at how we address the climate crisis piece
of that and lowering methane gas?
Mr. Turk. So we absolutely need to focus on that. And I
think it's incredibly important, not only to focus on the
climate impact over the next few years of additional exports of
our gas, but we need to focus on where we want to be 10 years,
15 years, 20 years from now. I am incredibly proud to be part
of an Administration where we have a net-zero goal by 2050.
Countries around the world are setting net-zero goals. As I
mentioned, a scenario consistent with achieving our net-zero
goals says we need 75 percent less liquefied natural gas
exports around the world by 2050. So those are stark numbers,
and we have to take that very much into account in the public
interest, absolutely.
Senator Cortez Masto. And how long do you think this study
and this pause will last?
Mr. Turk. We are going to do this as quickly as we possibly
can do it. We are going to do it right though, and we are going
to do it in a rigorous manner, given that these trends are
going on. The way we do this is, we ask our national labs. Our
national labs, as you know, Senator, certainly the Chairman
knows, other members of this Committee know, have phenomenal
expertise. We are going to ask several of our national labs to
take a look at the economic analysis, the climate analysis, the
national security analysis, and then, very importantly, we will
do this transparently. We will put this updated analysis out
there for public comment, at least 60 days, so that everyone,
all stakeholders can comment on it. We can improve the
analysis. And then we can be much more confident that we are
making these public interest determinations with this most
rigorous, most complete, most updated analysis possible.
So we will move as quickly as possible, but I can't set a
particular timeline on it. I don't think that would be fair to
the process.
Senator Cortez Masto. Thank you.
The Chairman. Thank you, Senator.
And now we have Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. Thank you, Mr.
Turk, for being here.
I have to tell you, I am--this whole place that we are in
right now, just is almost incomprehensible to understand why,
in an effort to review something, you are absolutely putting a
pause, putting a freeze on it, call it whatever it is, but
basically, you are stopping things. I notice that my friend and
a former chair of this Committee, Senator Landrieu is with us,
and it's actually interesting because I was provided a
statement that she made, apparently very recently, about the
decision coming out of the Administration, and she says, ``This
is surprising. It is disappointing and it is alarming. It is
completely contrary to the President's own climate goals. When
you stop exporting cleaner natural gas from the United States,
you only encourage countries all over the world to use more
coal, which is twice as dirty and has twice as much harmful
emissions. He's breaking his promise to our democratic allies
at a time when he is asking Republicans in Congress to support
money to the Ukraine. He is pulling the rug out from under the
frame. It doesn't make any sense.'' Well, Mary, note that I
agree. I think it makes no sense.
So you have just responded to Senator Cortez Masto that you
are going to have this very transparent process. People are
going to be able to have comment. It was kind of stunning. You
have to admit that it was kind of stunning that there was no
public process leading up to this. There was no Federal
Register notice. Just all of a sudden, one Friday--it's always
on a Friday--Friday afternoon, January 26th, we hear that there
is this pause. A pause in further LNG exports to non-FTA so
that you can do this review. I am trying to understand whether
there is actually a strategy in defining the scope of the
review, whether or not there was any direction provided for an
operating timeline because it's not just Senator Barrasso. It's
not the New York Times. You have to acknowledge that there is a
fair amount of skepticism and cynicism about this and the
politics of the timing with a President who is trying to get
well with the environmental community because he may have done
something right from an energy security perspective in
approving a project like the Willow Project up North. He did
the right thing there. The Administration did the right thing
there.
But now, blame it on TikTok or blame it on whatever, but we
are in a place that just doesn't seem to make sense. And it
doesn't make sense from an economic perspective, from a trade
perspective, but I want to follow on Senator Manchin, talking
about the national security implications, because right now the
world is crazy out there. And we know this all too well. We
need to be able to send a message to our friends and allies
that you can actually trust the United States to be true to
their word, that we are more than just talk, but that we will
actually be there with some substance. And we can send money,
or we can send natural gas, LNG. We can help our friends and
allies and that's where we have made an extraordinary
difference.
So, a couple questions here before I run out of time. First
of all, Under Secretary Crabtree, he was at a conference in
Italy last week. He stated that this review will be made in a
few months' time, that analysis will be available for public
comment, not just limited to public comment in the U.S.--our
allies, both in the government and industry around the world
can feel free to comment. It will be a robust analysis. Do you
agree with Under Secretary Crabtree that this is going to be
done in a few months?
Mr. Turk. So again, I am not going to put a specific
timeline on it, but we are going to do it as expeditiously as
possible.
Senator Murkowski. Do you think that he's being realistic
with that statement then?
Mr. Turk. I think when you see the kinds of--our
independent energy data nerds, EIA, telling us to take a look
at the convergence, the potential convergence in price, the
fact that we, right now, have such an advantage--we pay five to
six times less. What does that mean as we export more and more
natural gas? There are a lot of questions here, Senator. I
really feel----
Senator Murkowski. There are a lot of questions, but----
Mr. Turk. And that's what we need to answer. That's why we
are doing this kind of analysis and review.
Senator Murkowski. We were surprised when we saw this on
the Friday afternoon of the 26th. Were our allies equally
surprised? Were they given a heads-up or any indication as to
this action? We have allies--Germany, Japan. They currently
have offtake agreements with the CP2 export facility. That is
impacted by this review. Was there any forewarning to them?
They have considerable investments with regards to these
projects. We are going to hear from Eurogas on the next panel,
but it really begs the question, how does the Administration
respond to the statements that this policy change will cause
significant concern regarding the price volatility, the
economic turmoil, the barriers to decarbonization, and more
that can arise in Europe as a result of the pause?
And so, it's not just us, but does the Department consider
the security of our allies as a component to national security
and whether or not these were factored in before this surprise
announcement? I mean, this is impact to our economy, this is
impact to our trade, and this is impact to our national
security. And what we have now is, you are going to have a
robust process. It is indefinite in time. My guess, and I think
it's probably a pretty well-educated guess, is that it will
conveniently not be concluded prior to the election. It's
stunning to me that in an effort to, again, try to get well
with the environmental community, you would put so many
security components at risk.
Thank you, Mr. Chairman.
Mr. Turk. I am happy to answer that, if there is time.
The Chairman. Sure, go ahead.
Mr. Turk. On the national security piece, and certainly,
Senator, happy to have more conversations. When Chairman
Manchin called me, I was at the airport flying home on a trip,
and the Chairman said we want to have you come up as quickly as
possible in order to--I think the way you put it, Senator, was
take the temperature down. Let's get good facts on the table.
Let's actually talk about what we are doing with this pause and
review. That's why I am here. Happy to answer any and all
questions. I have really appreciated all our conversations over
many, many years, Senator. And anything that I can do, anything
that we can do to talk this through.
Senator Murkowski. We don't want to kill the messenger
here, but you are the one who is in the hot seat right now.
Mr. Turk. I will say, on the national security side, maybe
two points--one, I think it's incredibly useful, again, to go
back to the numbers, to go back to the fact that we have
already tripled our natural gas exports from our country. We
are on target with LNG facilities already under construction,
which won't be impacted by this pause at all, to double, again,
roughly to 26 Bcf per-day. And we have authorizations above and
beyond that. So our volume of natural gas exports is increasing
at the same time Europe's demand is actually decreasing.
And so, I feel very comfortable that we are taking care of
our European allies and our other allies, like Korea, like
Asia. And I think it's incredibly important to listen to the
governments themselves. I know we have a representative from
the European industry association for natural gas. That is a
perspective, but I think it's more important to listen to what
the Europeans are actually saying. The European Commission has
said publicly this pause will not have any short- or medium-
term impact on EU's security of supply. So again, I think it's
important to listen to everyone.
The Chairman. Let me add, if I may chime in real quick and
then I am going to go right to Senator Hickenlooper. You have
22 more in the queue. So if you have 26 right now, everything
that's basically under construction, with the 14, we will go up
to 26.
Mr. Turk. That's right.
The Chairman. You are saying we could go to 48?
Mr. Turk. That's the total number authorized at this point.
The Chairman. I think you have to be accurate on that, Mr.
Turk, that 22 has been in the queue for quite a while. It only
moves when the market moves. If we could have sent a signal and
said, listen, the United States is prepared to replace and
displace all the dirty fuel coming from countries that are
basically supporting terrorist operations, that's all we have
to say. That's all you had to say. But by doing the pause, it's
like we are going to harm the industry here and we really don't
care what happens in the rest of the world. And the rest of the
world is counting on us. Forty-eight might be the magic number.
I don't know. But 22 have not--they have been in the queue for
a long time. They might never be built until the market grabs
them and says we have got to have more. And we are going to
say, go do it. We are going to help our friends.
That's it, in a nutshell, where I am coming from.
Mr. Turk. Hey, Senator, if I could just, on that----
The Chairman. Sure.
Mr. Turk. I think the numbers are important. You are
absolutely right. The 26 is what's under construction.
The Chairman. Yes, right.
Mr. Turk. That is what is in the queue, in plans, to come
online in the next----
The Chairman. And that 22 might never come.
Mr. Turk. That 22 may or may not, obviously----
The Chairman. Yes, right.
Mr. Turk. Different investment decisions.
The Chairman. Sure.
Mr. Turk. Taking a look at that, it's also clear, and I
have not shared this number yet. We have pending, above and
beyond that 48 Bcf, already authorized another 11.2. That's a
significant additional amount of volume. That is what is being
paused now during the consideration.
The Chairman. I am just saying, the market pauses it
without you putting a political statement out that you are
pausing it. The market paused the 22. Definitely, the market
has really paused the other 11 because there isn't consumption
for it, okay? But we have the ability to produce that much. We
have the shale revolution like nothing else that has ever been
seen. That's all I am saying. I think just what we are talking
about--calm it down. Let's get out of the politics. Let's get
to the facts, and let the market do what the market is going to
do, but let the world know, we can help you. Don't turn to
Russia. Don't go to Iran, okay? And Qatar is playing games with
whoever they can. We don't need to have them going there. And
Qatar with Iran right now and that big gas fill they have
there, they haven't even tapped into that. We are really
concerned about that. There are a lot of concerns we have that
it's going to be harmful to the world and definitely to the
United States.
Senator Hickenlooper.
I'm sorry, guys.
Senator Hickenlooper. Thank you, Mr. Chair. And thank you,
Mr. Turk, for being here today, but also for all your work on
this.
And I, as you know, I am deeply concerned about climate
change. I have studied it since 19--since I was a graduate
student in earth and environmental science back in the 1970s.
And the thing that I have found so perplexing is that we don't
have a business plan--a coherent, integrated business plan on
how we are going to address climate change. And I don't think
we are going to do well establishing energy policy on a
project-by-project basis. So maybe you can elaborate on the
Department of Energy's perspective on the role of natural gas
in the long-term strategy, both domestically and
internationally.
Mr. Turk. Well, first of all, Senator, thank you for your
leadership. As someone who is also focused on climate change
and clean energy issues for the vast bulk of my career, thank
you for all that you have done when you were Governor and as a
Senator as well, including focusing on methane emissions.
Senator Hickenlooper. We will get to that. We will get to
that.
Mr. Turk. I don't know if there are many people here who
appreciate how much you have done in the methane emission cause
and the leadership on that, in particular.
I think your point is exactly why we are taking this pause,
taking this step back, updating our analysis. Congress has
given us the responsibility to look, in the public interest,
project by project, application by application. And the volumes
of what we have already authorized to export, that we are
already constructing, are so large, the climate implications,
especially as we look out, not only the next few years, but
decades, these are huge facilities that last for decades. That
is why we need to take a step back. That is why we need to
update our analysis with the rigor it deserves so that we can
make those project-by-project determinations, but in a broader
context, in a rigorous context, in an updated context.
Senator Hickenlooper. All right. Well, I look forward to
seeing that because I think it is crucially important to get
that plan and the more--the larger scale and more integrated
the plan can be, the better.
You mentioned methane, which, I remember when we first
starting talking with the industry in Colorado about measuring
methane and then regulating methane. And you know, in business,
the cliche is that what gets measured is what gets managed--or
what gets done, that sometimes is said. I think that's true in
science as well and certainly in the science of energy.
Regarding the climate impact of LNG exports, there are a lot of
issues around the energy and emissions that the future LNG is
going to displace. How does DOE plan to integrate the
uncertainties of these emission measurements into its climate
analysis for future LNG projects, and what is the current
understanding of the emissions intensity of U.S. LNG compared
to other nations? In other words, how are you are all working
to enhance understanding of emissions throughout the entire
supply chain? I mean, obviously a lot of this has to do with
how much methane escapes during discovery, production and
transportation, liquefaction, and then transportation as
liquid. How well can we measure that as well?
Mr. Turk. Yes, so our measurements are getting better and
better, but we need to keep working on that. We have satellite
technology. We are actually funding some companies to look at
it basin-wide, using lasers and other techniques to make sure
that we have the best numbers on it. Methane, as you know,
first and foremost, is a big, big deal. It's a huge challenge.
And we have to make near-term progress on methane if we are
going to be successful in our overall climate change strategy.
In fact, it has been estimated that if we want to achieve the
goals we have set for ourselves, we need to reduce methane
emissions around the world, not just from oil and gas, but from
agriculture, across the board, a third by 2030. So we have a
lot of work to do. I am incredibly proud the EPA has stepped
up, building off of terrific work that has been done in
Colorado and elsewhere and actually setting standards. We
should have standards here. There is no reason that we should
have leaking methane coming out throughout the life-cycle
perspective.
I have worked with a lot of modelers and analysts. I think
it's incredibly important, as we undertake an analysis, as we
update our analysis in this rigorous way, that we bring in a
variety of voices. We bring in several of our national labs to
come at this from different perspectives, different
assumptions. There is never one right answer about what is
going to happen five, ten years, fifteen years from now, and we
need to have different viewpoints coming in. That's why the
public comment period, I think, is so important as well. We
will put our analysis--we will do our homework, we will put it
out there for NGOs to take a look at, for oil and gas companies
to take a look at, everyone to take a look at so we have the
best, as you said, a comprehensive framework to make these
decisions.
Senator Hickenlooper. Right. I do appreciate that. I
appreciate some of the grants from the Inflation Reduction Act
that are going out to these large-scale projects to really
measure methane.
Mr. Turk. Absolutely.
Senator Hickenlooper. And so that we can actually have more
confidence on it.
I also do appreciate your looking at it from multiple,
different perspectives. When I was back as a geology student,
we used to call it the theory of multiple working hypotheses,
where you don't assume that one approach is the solitary,
correct way to do it, but you try to look at several possible
perspectives and figure out which one is exactly the best. So
that scientific approach is much appreciated.
Mr. Turk. Well, and just a data point, if I could, Senator,
on that. There is a scenario that has been done by the
International Energy Agency called their Announced Pledges
Scenario. It's a scenario that takes everyone at their word for
all the net-zero commitments that have been made and what does
that mean in terms of overall fuel supplies, emissions, et
cetera. Under that Announced Pledges Scenario, global demand
for natural gas--this isn't just LNG, this is all of natural
gas--would decrease four percent by 2030 and 37 percent by
2050. So again, we need to have multiple analyses coming at and
exploring these issues.
Senator Hickenlooper. Right. And it's so dynamic. I
appreciate that and how difficult that is when you look at
those expectations. We are not going to make all of them, and
which ones we make, which ones we don't, and how we have to
adjust our future, it's all interdependent.
Mr. Turk. And that Announced Pledges Scenario is not even
the scenario we need to be on if we are actually going to
achieve our objectives.
Senator Hickenlooper. Right, exactly.
Okay, I appreciate it. I am out of time.
The Chairman. No, no.
Senator Hickenlooper. But I might come back. I might come
back.
The Chairman. You are more than welcome.
Okay, let me just say this, let's go to six minutes. Forget
five. Go to at least six.
[Laughter.]
The Chairman. Senator Hyde-Smith.
Senator Hyde-Smith. Thank you, Mr. Chairman, and you know,
to no one's surprise, we are here again talking about the Biden
Administration just causing a train wreck for domestic energy
policy. And the U.S. exports more LNG than any other country in
the world, as we are well aware, which is a critical way of
aiding our allies against Putin's aggressions and combating the
Iran-backed forces. And however, with this new pause on pending
and future approvals, this aid could end. I mean, it's like,
you're welcome, Russia.
Deputy Secretary, back in July 2023, the Department of
Energy denied a petition from a highly recognized environmental
group regarding rulemaking for LNG export regulations.
According to the Department, one of the reasons for the denial
was that DOE already has rigorous standards for approving gas
exports. That was just six months ago. Now, in the first month
of the new year, DOE has done a complete 180 and paused LNG
exporting permits to perform a blanket review of its LNG policy
for climate change. So why shouldn't we believe that the sudden
change in tune from rigorous standards to a blanket review of
LNG export regulations is a result of any strategic political
play from the Biden Administration?
Mr. Turk. Well, thank you very much for your question,
Senator. And again, I think it's incredibly important to
appreciate what this pause is and what this pause is not. We
have already tripled our LNG exports just over the last five
years. We already have pending construction that doubles that
to 26 Bcf per-day. And we have already authorized--none of the
pause touches any of this--authorized up to 48 Bcf per-day,
almost half of our overall production in the U.S. right now.
Those are the kinds of numbers--as we have had conversations
with the Europeans, with the Japanese, with the South Koreans--
that increase their comfort level that those volumes are going
to be there at the same time that Europe's demand is going down
20 percent. Japan has already peaked their natural gas and
their LNG use. They are going down, including because they are
bringing more nuclear capacity back online. Korea's is going to
peak by 2030.
One country who has not peaked, and in fact, will increase
their LNG appetite, is China. China's LNG appetite is expected
to increase 65 percent to 2030. So these kinds of numbers give
me great confidence that we are taking care of our allies.
Again, when you look at the actual numbers and you listen to
the governments themselves--of course industry associations
would want even more gas and would want to have even more
exports coming from the U.S., and we are just asking questions
with this pause. We are asking questions with this analysis to
make sure that our experts at the national labs are coming at
this in a very rigorous way to inform those decisions once the
pause is lifted.
Senator Hyde-Smith. So how does this pause coincide with
the Administrative Procedure Act?
Mr. Turk. So Congress has given us the authority, and I
would say the responsibility, to make public interest
determinations. We take that incredibly seriously. When we have
seen these kinds of volumes, these kinds of trends, we think it
in the public interest to take a step back, to do the rigorous
analysis, and make sure we are doing our homework so that we
can be true to that responsibility. So I feel very comfortable.
I have had many conversations with our general counsel and our
legal team. We feel very comfortable of our legal position
here. And frankly, I think it would be irresponsible if we were
not taking a step back and doing this kind of rigorous
analysis.
Senator Hyde-Smith. Does this deprive the interested
parties of the ability to challenge the rule before it goes
into effect?
Mr. Turk. I am happy to have our general counsel talk to
you or others on the particulars of that. Obviously, we get
sued all the time for doing all sorts of things. It's a free
country. People can--I am always eager to hear a variety of
viewpoints on this issue. We will have the public comment
period. There is a reason we are doing that, to have this be
transparent, to make sure that our analysis is not only
informed by our experts in our national labs, but informed by
industry experts, by NGO experts across the board.
Senator Hyde-Smith. The industries that are contacting me
have a very different opinion of that, but I want to turn to
the trend that is happening across the board with our federal
agencies. In 2022, FERC issued policy statements citing climate
change to consider and approve future natural gas products.
This was met by so much blowback that FERC withdrew the
proposal. And just last year, EPA used the same strategy in its
power plant rulemaking. And the electricity generation industry
continues to remain in a state of uncertainty on how they are
going to meet these standards knowing that it will only worsen
supply chains, ultimately harming them further. DOE continues
to follow the same doom track without listening to industry
needs. And uncertainty just seems to be the name of the game
when it comes to the Biden domestic energy policy. What impact
will this pause have on the outlook for financing and carrying
out future LNG production, not to mention the uncertainty it
creates for our allies that increasingly rely on American LNG?
Mr. Turk. So let me again reiterate, this pause does not
impact those projects already under construction and those
projects that have already been authorized, up to a half of our
total natural gas production in our country. Secondly, I think
it's incredibly important to listen to industry perspectives. I
meet with industry folks all the time. I meet with NGO folks
all the time. But I think it's important to also appreciate
that they have a particular perspective. They have a particular
interest in these matters. What Congress has given us the
responsibility for is to look at the public interest,
especially how this impacts U.S. consumers, U.S. farmers, and
U.S. manufacturers in our competitive advantage right now.
You also mentioned the FERC. I think it's important to
point out that the FERC said in 2022, continued growth in net
exports, including from LNG export facilities will place
additional pressure on natural gas prices here in our country.
So it's important to look at everything everybody is saying.
The Chairman. Thank you, Senator.
Senator Hyde-Smith. My time is up.
The Chairman. Well, we have--we are not really paying a lot
of attention to times anymore it seems like, but no problem
about that.
Senator Hickenlooper. Especially you.
The Chairman. I know, I am the worst. That's why I am not
reprimanding anybody.
But I do want to make one correction. I think it would be--
for the whole staff, our whole Committee to know, and staff and
everyone here, that basically the reduction, as far as in gas
consumption in Europe, especially over in Europe, has gone down
because of the Ukraine war--the high prices that they had to
endure and the deindustrialization that they have gone through.
That will come back. You are saying that they are not going to
come back. I think that will be part of the evaluation, sir,
but I don't think it's accurate saying that you are expecting
their demand to be low. If they have stable pricing that they
can count on and rely on, not Russia, not foreign adversaries
that we can't count on, then you will see Europe come back, I
believe, strong. And that's what they are waiting for. That's
my statement.
And we will go to Mr. Padilla at this time.
Senator Padilla. Thank you, Senator Manchin. I, too,
believe they are going to come back, but when they come back
and when they rebuild their infrastructure and economy, it will
be in a much more efficient infrastructure and economy than the
infrastructure of decades past, and that needs to be part of
the consideration as well.
Mr. Turk, thank you for being here and always being
accessible to me and to my office. I appreciate the prior
questions on U.S. energy leadership and its impact on our
allies, our ability to help our allies and meet our
obligations, and I even more appreciate your responses to those
questions. A couple things I just want to add for the record--a
couple of data points. The United States is the global leader
of LNG exports today with 14 billion cubic feet per-day in
current operating capacity, and even more important to
underscore here, 48 billion cubic feet per-day in total
authorizations already approved by the Department of Energy. So
that's over three times our current operating capacity. So we
are putting the pause in that perspective of what has already
been approved, above and beyond what is already operating.
They have beat me to the punch in asking, not just the
broad questions of fulfilling commitments to our allies, but
again, I appreciate the specificity with which you address the
questions about Europe, the questions about Japan, the
questions about Ukraine, South Korea, and others. Just to round
that out though, would you spend another minute addressing
this? Given the already authorized tripling of our LNG export
output, how will the projected LNG exports compare to global
demand through 2050?
Mr. Turk. Yes, thanks for the question. You put it
incredibly well. You should be testifying here, Senator.
Anytime you want to work at the Department of Energy----
So again, you look at different scenarios, right, to look
at where the global demand is going to be, and it is important
to look at reference case scenarios, that is, basically a
prediction of where experts think things are going, but then
also look at where we need to go, given where climate change
tells us we need to be in terms of reducing our use on unabated
fossil fuels, including natural gas. So a couple numbers for
you that I think are useful here--EIA, again, that is the
independent data arm of the Department of Energy--in EIA's
reference case, for U.S. LNG exports in 2050, it expects
exports to be at 27.3 Bcf per-day, which again, is right around
the 26 Bcf per-day that are already under construction. So I
think that is a relevant data point to explore on that front.
S&P Global, if you want to look at an industry source, overall,
LNG supply growth from around the world could outpace demand
growth over the next five years. A lot of people are talking
about a potential glut in the market because of so much being
constructed, and demand numbers in Europe and elsewhere
decreasing along those lines.
The Senator makes an incredibly important point on Europe,
in particular, Senator, if I could pick that up for a second.
Europe had a traumatic experience when the gas was shut off by
pipeline from Russia. I feel incredibly proud that we were able
and we were in an opportunity to provide that gas, to work with
them on efficiency and other kinds of improvements going
forward. It is, of course, up to the Europeans to decide for
themselves what mix of gas, what mix of other fuels go forward.
They are making strides and they have an incredibly impressive
goal to reduce their overall emissions quite quickly to 2030,
into 2035, et cetera, along those lines.
Senator, just to round out the question, if you look at
actual climate scenarios, in terms of what is necessary if we
are going to be on the right path to get to where science tells
us we need to get to, again, the IEA--International Energy
Agency--scenario says we need 75 percent less LNG by 2050, if
we are actually going to be on the pathway we need to, to avoid
the worst consequences of climate change. So maybe too many
numbers, but I know you are a numbers guy, so I throw them out
there for you.
Senator Padilla. Absolutely. And again, a reminder to my
colleagues on the Committee and staff and everybody who is
concerned here, you know, we track volume, supply, demand, but
must keep in consideration conservation and efficiencies and
that impact on demand while we continue to grow our economy and
meet the needs of a growing population.
I also want to course-correct a little bit to some of the
comments that were made by some of my colleagues earlier. And I
have to say how embarrassing and insulting it is to suggest
that this is an Administration that is making decisions based
on TikTok influencers. I mean, it's the prior Administration
that denied science and prided itself in deleting data and
research that, you know, is important and is conducted by
professionals in a number of federal departments and agencies.
This Administration, and I know the Department of Energy, among
others, works hard to ensure that decisions are made based in
science and fact and that we are holding ourselves to that
important standard. And I hope the Committee sort of continues
to come back to that.
And in that spirit, Mr. Turk, how will the Department of
Energy leverage to get national labs as resources in the effort
to better understand the climate impacts of LNG exports? I
mean, you made broad reference to it earlier, but can you spend
some time elaborating on that?
Mr. Turk. Yes, happy to do so. And just for the record I
don't have a TikTok account, so I am not sure what all the
TikTok----
Senator Padilla. Neither do I.
Mr. Turk [continuing]. Discussion is all about, I have to
be perfectly honest with you.
So our national labs, and you know this, Senator, you have
a couple of our national labs in your--actually three national
labs--in your state. Phenomenal resource. Phenomenal talent.
Phenomenal expertise. Independent expertise. These are
government-owned labs, but contractor-operated labs, which
gives them an extra scientific integrity to them. That's who we
turn to when we do analysis like this. And some of the best
analysts--economic analysts, life-cycle analysts--in the world
are in our national labs. And so, we are working with them. We
have been working with them. We said take a step back. Let's
look at this. Let's look at the models that you have. Let's use
other tools to make sure we are incorporating and looking at
the economic consequences, national security consequences,
environmental and climate change consequences.
One thing we are asking for additional information on is
the health impacts for frontline communities as well. That is
an important consideration. All of this goes into our public
interest determination. That is what Congress has given us when
we do these case-by-case application reviews and analyses. And
again, this will all be put out publicly for public comment.
Everyone can comment on it. If you like this part of the
analysis, don't like this part of the analysis, and then we
will finalize and we will use that. So we actually have the
most rigorous, the most complete analysis and analytical
framework possible.
Senator Padilla. Thank you very much.
Mr. Chairman, my time is up.
The Chairman. Sorry. You stayed right on time. Thank you.
Senator King.
Senator King. Thank you, Mr. Chairman.
First, I think you captured this hearing very well. The
phrase you used was, I just want to see the facts. And I think,
Mr. Turk, isn't that exactly what we are talking about here, is
determining the facts? And your legal responsibility is to see
that export projects are in the public interest, not in the
interest of the oil and gas industry, not in the interest of
anybody else, but in the public interest. And that's your job.
And isn't what you are doing here simply looking before we
leap? You are saying we want to take some time and look at the
analysis both in terms of the climate, but also the economics.
Isn't that what this is all about?
Mr. Turk. Yes, 100 percent accurate. And Congress has given
us that responsibility, the public interest determination. And
I know the Secretary, myself, all of us who are fortunate
enough to serve in these roles, take that incredibly,
incredibly seriously. And we are an organization of data and an
organization of science, including and especially our national
labs.
Senator King. So all we are trying to do is determine what
the environmental impacts might be, including methane, so you
are looking at a life cycle, and that's an unsettled question,
and then also, at the economic impacts of going beyond where we
already are. I have to tell you, I was sitting right here in
2015, January, when we had a hearing with the natural gas
industry and we were talking about exports, and I expressed
concern about if we export too much, it will affect our
domestic prices. The witness for the industry said, ``It will
never go beyond nine percent of production.'' Today--and I
said, how about taking a friendly amendment, putting that in
writing? Today, we are at 14 percent. In 2028, we are going to
be at 26 percent, and as you have testified, by 2050, close to
50 percent. I am just a country lawyer from Maine, but I don't
understand how you will take 50 percent of the production of a
commodity and that won't affect the price.
And we don't have to speculate too much about this, we can
look at Australia. Australia's price has gone from $3.45 a
gigajoule in 2015 in Australian dollars to $17.93 because of
the gigantic increase in exports of liquefied natural gas from
Australia. So that should be a warning to us. And I don't know
the conclusion of this, but my understanding is all you are
trying to do is be sure, before we add additional commitments,
that we know what the effect will be on a manufacturer in
Michigan or a family in New England trying to heat their house.
Isn't that all this is all about?
Mr. Turk. Yes, absolutely. And when you are talking about
those percentages and those volumes, that should be a blinking
red light for all of us to take a step back, let's do the
analysis, let's focus on what the impacts are for farmers, for
consumers, for industry. Again, we pay five to six times less
than those in Europe and Asia right now.
Senator King. Which is a huge economic advantage.
Mr. Turk. That is a huge economic advantage. Do we want to
give that up as a country? Again, we need to analyze that. We
are answering questions here. We are raising the issue so that
we can do the analysis that allows us to make those sound
decisions going forward.
Senator King. Well again, to understand just exactly what
is being proposed, as I think you have said, no projects that
are under construction or have already been permitted are
affected by this.
Mr. Turk. That's right, including the jobs of those
projects. Those jobs are not at stake here. Those projects
continue.
Senator King. And they take us, just those projects that
are already approved, take us to 26, between 26 and 30 percent
of production, is that right?
Mr. Turk. That's right.
Senator King. So we are not stopping any construction. We
are not stopping any projects. We are just saying for future
projects that have been proposed but not approved, we are going
to see what the impacts are going to be.
Mr. Turk. That's exactly right, and look before you leap,
do the analysis now. Again, these are long-term decisions. When
we make an authorization, it goes out for a several-decades
period of time. Before we do that, make sure we take into
account the full implications--economic, climate, national
security.
Senator King. And we are getting a lot of representations
from various parties about what is going to happen and not
happen, whether it will affect prices, what the methane impacts
are. I go back to one of my philosopher guides, Ronald Reagan,
``Trust, but verify.'' And that's really all we are talking
about here is verifying. Is that correct?
Mr. Turk. Trust, but verify, and also look at who is making
what points, right? It's not a surprise that folks, and I am
not disparaging folks who are in the natural gas business,
whether in Europe or in the U.S., they have a certain
perspective, but that is not the public interest. We take into
account the full implications impacts for all Americans.
Senator King. Including the benefits to----
Mr. Turk. Including the benefits of those jobs, absolutely.
Senator King. Now, I think you testified that the
projections are--and these are not your projections--but IEA
projections are European demand will flatten, if not decline.
Didn't you testify at the very beginning that where the real
increase is going to be is in China?
Mr. Turk. Sixty-five percent projected increase between now
and 2030 in China for LNG demand.
Senator King. And isn't it true that Chinese companies are
financing some of these proposed projects, or the contracts are
based behind these projects?
Mr. Turk. Absolutely.
Senator King. So what we are really talking about here is
potentially exporting our economic advantage to China, where
they are paying much higher energy costs. It's one of the few
advantages we have vis-a-vis China.
Mr. Turk. That's why I say it's irresponsible if we didn't
take a step back, do the analysis and make sure, eyes-wide-
open, we know what we are getting into.
Senator King. But I am also aware that a strong argument
could be made that if we are replacing coal plants in China
with natural gas, that is a net benefit to the climate.
However, we have also got to understand what the life-cycle net
emissions are in terms of methane liquefaction, un-
liquefaction, transportation across the ocean, so we are
looking at apples to apples in terms of emissions. I have
always been supportive of natural gas as a cleaner fuel, but
only if methane is controlled, because if it isn't, as you
know, methane is--I have seen ranging between 30 and 80 times
as serious a greenhouse gas as CO2. So again, we
just want the facts, isn't that correct?
Mr. Turk. So we do. And right now, China has 1,109
gigawatts of coal online. They also have plans to bring on an
additional 392 gigawatts of coal. And so we need to be taking
into account what's the plan to reduce those emissions. That is
a huge amount of emissions. China's emissions right now,
globally, are about 30 percent of overall emissions around the
world. I think ours are 14, 13 percent from the U.S. side. So
we need to look near-term, but you are also right to look long-
term in terms of where we need to be.
Senator King. Well, reducing that in China would be a good
thing. I understand that. But we have got to be sure that it is
a true reduction when you take into account all the methane
side effect.
Mr. Turk. The methane emissions throughout the life cycle
and also long-term as well when we need to be much more carbon-
constrained, much more methane emission-constrained in a
decade, two decades, in getting to net-zero mid-century.
Senator King. Final question. The timing, and you asked
this, you are talking about months here, not years on this
analysis?
Mr. Turk. We are going to do it as quickly as we possibly
can. Months, not years, that's right.
Senator King. Thank you.
Thank you, Mr. Chairman.
The Chairman. The only thing I would say on this, if we
were talking about considering a pause, this is a great, great
panel for this. You have an executive order doing a pause.
That's the difference. That's the difference I have with my
Administration, our Administration, the country's
Administration. You have done an executive order. You put,
basically, you know, they put the cart before the horse. You
leaped. You really leaped before you looked. That's all we are
saying.
Senator King. I think it's just the opposite, Mr. Chairman.
They are doing their job. Their job is to see that these
projects are in the public interest----
The Chairman. No, I agree with you on that.
Senator King [continuing]. And there is no way to do that
without the data.
The Chairman. You can't do the pause first though. They did
an executive order on pause.
Senator King. Why not? So they are supposed to continue
approving projects?
The Chairman. But basically, do the pause, justify what you
are doing----
Senator King. Continue approving projects when you find out
five years from now it was a disaster. I don't think that's a
very good policy.
The Chairman. They're estimating----
Senator King. We are talking six months here, and these are
projects that won't be built for eight years.
The Chairman. Look at the prices you are paying in New
England right now. Why? Why are you paying the higher prices?
Senator King. Shortage of gas pipeline.
The Chairman. Okay, okay. That's what I am saying. So in
our own country we have this type of diversity and division.
That's the problem that we are running into. I am just saying
that the pause was ill-advised from a political standpoint of
sending it out to the world right now that we might not be in
the market. That's all. You might be justified at what you are
saying. Is it 26? Is it 48? Where is it? I don't know. I am
willing to find out, but you don't draw the brakes on
everything and send scare tactics around the world until we
know for sure.
Senator King. But shouldn't we find out before we make
those commitments that are then irrevocable?
Senator Murkowski. But they already do the reviews. Mr.
Turk said that about every five years you do reviews. But as
you do the reviews, the work continues, but you are still doing
reviews. But it doesn't necessarily mean that you have to halt
everything that is in the pipeline. I think that's where this
discussion is.
Senator King. But we're not--everything that's in the
``pipeline'' that has been approved or under construction is
grandfathered. This doesn't affect it.
Mr. Turk. That's right.
Senator King. We are talking about projects that are five
to eight years in the future.
The Chairman. Yeah, the bottom line, we are going to have
to get to the second panel and I just want to thank----
Senator King. This is a real debate in the U.S. Senate. I
like it.
The Chairman. I like it too.
[Laughter.]
The Chairman. We don't do much of this. You can see why we
are excited. We are excited.
Mr. Turk, thank you so much. You have always been so kind
with your time and being as direct as you always have been. I
appreciate it, your knowledge you have. We have a little
difference of opinion right now. That's what this is all about.
That's democracy. This Committee can work through it. We will
find the answer. And all we are asking for is to consider
removing the pause until we do the facts. Come back and ask for
your pause and show the facts of why you need it and what the
number would be. We are not there. We don't have that
information. I don't want to scare the bejesus out of our
friends. That's all.
So with that being said--I'm sorry, go ahead.
Senator Murkowski. Just very quickly. I asked for one
opportunity just for clarification on the record. You have
stated, but I want to hear it clarified that the Alaska LNG
project is not impacted by this decision. Is that correct?
Mr. Turk. That has already been authorized. That is part of
the 48 Bcf per-day. That is not impacted by this pause. And I
think what Senator King was saying is exactly right, and I
think this is why our allies have reacted----
Senator King. Could you say that again, for the record?
[Laughter.]
Mr. Turk. The part about Alaska or the part about Senator
King?
[Laughter.]
Senator Murkowski. But if I can just add further
clarification to that. What if an export project to a non-FTA
country that has been issued a DOE export license, but is not
yet constructed, and is in the need of a license extension of
the existing DOE export data authorization--are those
extensions impacted by the pause?
Mr. Turk. So let me be very clear.
Senator Murkowski. Okay.
Mr. Turk. And we have been answering this question for
folks who have been asking this question because this is----
Senator Murkowski. I just need it--I am curious about our
specific----
The Chairman. She wants you on record is what she's saying.
Mr. Turk. So just to be clear, this is stuff that has been
authorized, but sometimes seven years is not quite enough.
That's how long the authorization is for. If anyone needs an
extension, to be clear, this pause does not impact that
process.
Senator Murkowski. That extension. Okay, good.
Mr. Turk. So we came out last year, in May--April of last
year. You can get an extension beyond seven years if you meet
two criteria. One, you have physically commenced construction
and then secondly, and I quote, ``extenuating circumstances
outside of the control of the applicant.''
Senator Murkowski. Okay. Thank you and thank you also for
the efforts that you have made with regards to Cook Inlet
Natural Gas. I know you have talked to folks up there about our
looming natural gas supply challenges. But it might be good to
sit down with the folks at DOI because they have done the
review. If the concern is domestic prices, maybe you need to
look at the policies that are being enacted by the Interior
Department because they have done the analysis within their
memo. So thank you.
The Chairman. Thank you, Mr. Turk, very much. We appreciate
it. Now we are going to switch to our second panel. Second
panel, if they'd please come forward.
Okay, well first of all, we have Charlie Riedl, Executive
Director of the Center of LNG.
And we have Dr. James Watson, Secretary General of Eurogas.
And we are going to begin with your remarks, and Dr.
Watson, we will start with you and then we will go right over
to Mr. Riedl.
STATEMENT OF DR. JAMES WATSON,
SECRETARY GENERAL, EUROGAS
Dr. Watson. Well, first of all, I have to say thank you
very much for inviting me here today. We really appreciate it
to allow the European industry to have its views heard, and of
course, in this great hall of democracy. So it does mean a lot
to me personally, as a young guy from Wales, giving me a chance
to be here, it is a great pleasure and a great honor. And
obviously, my members are not sending me here for fun to enjoy
Washington, DC. We are very busy. We have a lot of things to
do. So I think that even by being here, it is very clear that
our industry feels quite concerned by the developments on this
side of the Atlantic.
We must say that since the Russian invasion of the Ukraine,
the situation in Europe has been very, very difficult.
[Protest interruption.]
The Chairman. We appreciate having you all, but this is not
going to interrupt us. So thank you so much.
Dr. Watson. Also, I would be very happy to talk to all
NGOs.
The Chairman. Yes, we will talk to them. Yes, we want them
to be here.
Dr. Watson. We are open to dialogue as Eurogas. We engage
with NGOs.
The Chairman. We appreciate very much you all coming here.
Thank you.
Dr. Watson. We work very, very happily with anybody who
wants to have a serious dialogue on the issues we face.
[Protest interruption.]
The Chairman. Thank you so much, ma'am. Appreciate you
being here.
Continue, Dr. Watson.
Dr. Watson. Yes, okay.
And so, I think that we have been in a very difficult
situation since the Russian invasion of Ukraine and the war. Of
course, the last two years have seen a tremendous amount of
focus on the energy that we use and we have to start by saying
we are grateful to the United States for stepping up and indeed
committing to send us 50 billion cubic meters of additional
U.S. LNG every year. And I think that is a big commitment.
Of course, it has not been met yet, Mr. Chairman, Senators.
We are at the moment looking at, in fact, a situation where we
have only seen a 40 billion cubic meter increase last year. So
we did find it very strange to be looking at a new situation
coming out of Washington where there was going to be a pause on
the LNG permitting situation. We feel that, indeed, the U.S.
and the EU and the UK need to stand together when we are
looking at Ukraine and the situation that we face there. And by
not being able, perhaps, to honor the commitments that have
been made in the United States towards its allies, you are
going to indeed force us to continue to do business with
Russia.
I have to say that I have a lot of sympathy for Mr. Turk
because I think he had been asked to explain the unexplainable,
which is not easy to do. From my point of view, he failed to
mention one very important statistic, and that is that Europe
is still taking 50 billion cubic meters a year of Russian gas,
and the LNG imports from Russia are increasing, even though we
have a stated aim to reduce Russian gas supply to zero by 2027.
We feel very strongly that the United States should support us
in this activity. We see it as a like-minded nation. We stand
together and we understand that we have to work together, also,
to achieve our climate objectives, which we take very
seriously.
This whole situation has created a lot of fuss in a sense
that if we don't know what the situation is--is the United
States going to honor its commitments? Is the outcome of the
review going to be not just a pause, but a total stop? Where
then shall we source our gas? In this regard, I think that when
we heard all the statistics that were put together, I think the
most important thing is what is said in the law. And the law in
Europe has been very clear, and it has just been passed. There
is no end or prohibition to the use of natural gas until 2049.
Long-term contracts will be permitted, and after that point,
they will still be permitted as long as they are abated. This
is yet to be defined, what abated means, but this means that
for at least 25 years, we are expecting to be using natural
gas. And that was something else that I think was also missing
from the testimony.
I think it is very important that we do look at this pause
and think, why is this pause being taken now? I would also make
a procedural point. In Europe, we often review our guidelines
and our regulations, but at the same time, we keep implementing
the ones that are currently running. Why do we have a pause?
Why do you not just create new regulations or guidelines and
then implement them once they are ready and replace the old?
For what purpose could a pause serve? This is not clear to us,
and so, I must say with my last 20 seconds that I have, it is
important that we remain stable in our relationship. We do not
need unnecessary surprises. This is a serious issue for us. We
do consider it to be one of such a significance and importance
that I have been sent from Brussels to bring our message today
to ask for your continued help. Thank you.
[The prepared statement of Dr. Watson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Dr. Watson.
And now, we will hear from Mr. Riedl.
STATEMENT OF CHARLIE RIEDL,
EXECUTIVE DIRECTOR, CENTER FOR LNG
Mr. Riedl. Good morning, Chairman Manchin, Ranking Member
Barrasso, and distinguished members of this Committee. I am
honored to testify before all of you today. My name is Charlie
Riedl, and I serve as the Executive Director at the Center for
LNG. Our organization is committed to advancing public policies
that promote the use and export of liquefied natural gas, and
we represent the full LNG value chain, giving us a unique and
comprehensive view of the ways in which LNG, as a sustainable,
abundant, and versatile energy resource, can be leveraged
globally. The United States, which is home to a vast natural
gas reserve, is now the leader in global LNG exports. The role,
however, extends beyond mere commodity trading, as James has
mentioned. U.S. LNG is a linchpin to a global effort to reduce
emissions, bolster economic growth, and enhance energy security
at home and for our allies in Europe and Asia.
With the Biden Administration's halt on LNG export
application reviews, I am here to emphasize the value of U.S.
LNG and explain why the Administration's pause is not only
unfortunate, but also shortsighted. When I last addressed this
Committee in 2019, there were three operational export
facilities. As I speak today, there are seven. Domestic
production of natural gas has also increased by seven percent
since that time, but that is only part of the story. Since the
shale revolution began nearly 20 years ago, production has more
than doubled according to EIA, which we heard Secretary Turk
discuss today. Over that same time period, since 2005, prices
have fallen by 71 percent for domestic natural gas, and the
resource of natural gas in the U.S. has reached an all-time
high, according to the U.S. Potential Gas Committee. Amazingly,
those resources have grown, even as production in the U.S. has
doubled and consumers have reaped the economic benefits as a
result.
Our domestic supplies of affordable natural gas have
created a manufacturing renaissance here in the U.S. Taking
just the last ten years, from 2018 and looking forward to 2027,
U.S. natural gas has spurred over 78 major industrial projects
in the United States, representing $128 billion in capital
investment here in the United States. Our industry is committed
to enhancing energy security while promoting sustainable
environmental practices. LNG is a critical element in the shift
toward a lower carbon energy future, and we emit 50 percent
less CO2 than coal. LNG's role is an essential piece
of the global effort to combat climate change, and this role
has only increased over the last decade, bolstered by
technological innovations such as methane emission monitoring
and carbon capture. The expansion of LNG exports is broad and
continues to bring about significant economic impacts here
domestically, creating over 450,000 jobs and adding nearly $73
billion to the U.S. economy by 2040. LNG exports are also
projected to reduce the U.S. trade deficit by three percent by
the end of the decade. Transitioning to natural gas here in the
U.S. has led to a 35 percent reduction in CO2
emissions from the U.S. power sector. And internationally, U.S.
LNG exports offer a similar pathway for other countries to also
lower their emissions.
LNG pairs well with renewable energy sources, which further
highlights the indispensable role that natural gas will
continue to play in facilitating our sustainable energy future.
The strategic importance of LNG exports in the realm of energy
security and geopolitics cannot be overstated. The abrupt
curtailment of Russian gas, as James mentioned, in Europe amid
the invasion in the Ukraine highlighted the crucial role of
U.S. LNG in maintaining global energy stability. The
Administration's commitment to replacing Russian gas with U.S.
LNG, made in collaboration with the European Commission, is
admirable, and it underscores the strategic value of these
exports. But the pause on the export applications contradicts
that commitment. It risks undermining our diplomatic relations
with these countries at a moment when energy security is so
critically important.
Regulatory certainty is essential for the continued
investment and development of the LNG sector. Building LNG
export terminals can take up to ten years and upwards of $20
billion per project. So projects of this magnitude require
extremely careful planning and investing. Any fluctuations in
that policy or the regulatory frameworks will slow innovation
and deter investments, which can potentially destabilize the
United States' leadership in the global energy market. Before
exports began in 2016, the effects of U.S. LNG exports at home
and abroad were theoretical, and they deserved thoughtful
analysis as part of the Department of Energy's public interest
review. Today, after eight years of U.S. LNG exports, the
benefits are no longer theoretical. The facts are clear: U.S.
LNG has been determined to be in the public interest. The
decision to pause LNG export approvals could have far-reaching
consequences, potentially jeopardizing international
relationships, economic stability, and progress toward our
environmental objectives.
I appreciate the time and opportunity to testify today and
look forward to your questions.
[The prepared statement of Mr. Riedl follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you very much.
We will start our questions right now. I will start with
Dr. Watson.
We all know that American LNG developers need to sign long-
term contracts. I have been to Europe. I have been working with
people on that. In order to finance these new export facilities
that Mr. Riedl so aptly gave you, the cost is quite enormous.
At some points in the past, it has been difficult for American
exporters to secure long-term contracts in Europe due to
European companies and officials questioning whether Europe
will need American LNG in the long run. And with everything
that has evolved in the last three years, we know that has
changed. So in some cases, this meant countries that do not
share our values, like China, have subscribed to American LNG
capacity instead of our allies in Europe where we would rather
make sure that we have this relationship. So how did the
Russian invasion of Ukraine shift your members' views about
signing long-term export agreements for American LNG, and what
impact does the Administration's pause have on the future of
your long-term agreements or contracts that might be needed or
are in the works? I would like to know that.
Dr. Watson. Yes, thank you very much for the question,
Chairman. I think that indeed what we have seen since the war
in Ukraine began is an increase in interest in doing business
with the United States. When we look to the numbers of long-
term contracts that have been signed, indeed, a lot of those
companies are now European. We would want to see more, but
everything depends on having a stable relationship. Of course,
there have been unfortunate situations where one company, in
particular, Venture Global, has not honored its long-term
contracts. That is an issue for us. We would like to see the
Administration also address that. But to be more general, I
think that there is a strong concern about the pause because of
what I have said--in essence, we still take a lot of Russian
LNG and piped gas. We would like to have the ability----
The Chairman. Do you all have long-term contracts with
Russia?
Dr. Watson. Yes, there are long-term contracts that are in
place. Those, though----
The Chairman. Did the war abdicate that?
Dr. Watson. Exactly. I was going to say----
The Chairman. Because of the war?
Dr. Watson. Those are not being honored by the Russians.
They are not being supplied. That is very clear.
The Chairman. If I may? And we will come back.
Dr. Watson. Yes.
The Chairman. Mr. Riedl, some in your industry have argued
that DOE should be completely removed from the LNG review
process because there should be no limit to how much LNG we
allow to be exported. If permits were not an issue, where do
you assess the exports would cap out at, if any? Where do you
look at that as far as when you find the ratio of what you
think should be here and there and how we serve both?
Mr. Riedl. That is a good question. I think getting to the
point of what I was talking about in my opening remarks around
supply, I think the point being the U.S. market has
demonstrated the ability to absorb the increase that we have
seen--the comment earlier that we are at 14 percent of current
production value here in the U.S.--that number--production will
rise to match that. The market will determine exactly just how
much more volume is brought on. When we start trying to pick
winners and losers and projects, I think, we are automatically
losers.
The Chairman. How about the 22 that are still in the queue?
Mr. Riedl. Yes, those 22 that are in the queue, some of
those might actually end up getting built, some might not,
right? I mean, the market conditions are----
The Chairman. The market would determine that, long-term
contracts coming from----
Mr. Riedl. That's right.
The Chairman. Dr. Watson, your reply?
Dr. Watson. Yes, just to say on that, because, in fact,
that's true, and I do have figures, in fact, right here where
we looked at the assessment of the projects that are in the
pipe, but still we see, in fact, that if you look at the amount
of gas that's going to be coming from those, we are still
talking around about 20 to 24 billion cubic meters a year,
which is not 50 billion cubic meters.
The Chairman. And Mr. Riedl, I would say, and to my dear
friend Senator King, a lot of the gas that we have been
basically tapped into, the 37 trillion cubic feet and growing,
has come a lot from the oil production. And the oil production
is needed to try to keep the world markets from getting in
flux. And the prices--we saw what happened. With that
production, there is an awful lot of gas that comes off of that
production. What happens to that gas if we don't? Does it stop
the production of oil? Isn't the really what some of our
adversaries want who don't want us to produce the gas, so if we
quit producing the oil, then it would have a negative effect on
us? Where does that gas go? Has it been flared in the past?
Mr. Riedl. Yes.
The Chairman. And now we are capturing it and sending it
for a commodity?
Mr. Riedl. Yes. Yes on both fronts. If we are not able to--
with the associated gas that's coming out of the major oil
plays--if we are not able to capture that gas through the
technology that we have developed----
The Chairman. That is a detriment to the environment.
Mr. Riedl. Right.
The Chairman. I don't know what it was before. We are
capturing it now.
Mr. Riedl. Right.
The Chairman. So that's why we say we produce it cleaner
than anywhere else in the world. And the appetite that you all
have, if you had a constant supply from us, knowing that we
were reliable and long-term, can you replace all of your
Russian dependency?
Dr. Watson. That would certainly be the objective, sir. I
think that this is really how we would like to see it. We do
see the great importance of the relationship with the United
States. We are doing more long-term contracts. That is
something that is growing. Of course, it's not going to be just
like that, overnight.
The Chairman. Sure.
Dr. Watson. And like you rightly pointed out, we do,
indeed, still have some of Russia. We have got our fingers
burnt. So it always takes a bit of time to get into new long-
term contracts. That's why this pause is relatively damaging
because it's about how you do business with a new partner on
long-term contract fronts. So we would, of course, prefer to
have had that stable regime. And I think that this is one of
the things that one of my members has said--it reduces the
confidence the EU industry has in the partnership that we are
trying to build with the U.S.
The Chairman. Well, the case has been made here. Basically,
we do not want to start exporting to China to supply their
energy needs. We want to make sure we have all of our allies in
the western world and all those that have our same values.
That's our desire to make that happen and we have the ability
to do that.
Senator Barrasso, your questioning.
Senator Barrasso. Thanks, Mr. Chairman.
Dr. Watson, earlier this week, Geoffrey Pyatt, a U.S. State
Department official, responded to widespread alarm over the
President's decision to stop approving new liquefied natural
gas exports. He said, ``There is no reason for concerns,'' from
the position of the Administration. Are you concerned about the
President's decision to stop permitting new LNG?
Dr. Watson. Yes, thank you very much, Ranking Senator
Barrasso. I indeed would have to say that is a concern for us
and that is why, indeed, I am here today to make that
testimony. We do see this as some kind of destabilization of
the situation, and that is very difficult for us to understand
and to take. And I think that we would like to have a better
understanding of why a pause has been declared in the middle of
winter, which is in Europe, the peak gas season. And also, to
understand, you know, how long this will take, what is the
likely outcome? Is there an outcome at one point that says that
actually no more gas will be coming from the United States?
From our point of view, it is very unclear.
We are in a situation where we are very close to the front
line of the war. We have four million Ukrainian refugees housed
in Europe at the moment. We are indeed suffering, certainly on
the economic front. Demand destruction has been mentioned by
your colleague, the Honorable Chairman. These are all realities
that we are facing. And we see the United States as a good
opportunity for us to work together to get us through those
difficult times.
Senator Barrasso. Do you believe that most officials in
Europe oppose what the President has done here in terms of the
decision to stop approvals of LNG exports?
Dr. Watson. I can only tell you this--there is no European
government that has welcomed this decision. The European
Commission, despite what Mr. Turk said, did not welcome this
decision. The European Parliament does not welcome this
decision, nor has the European Council. The United Kingdom has
not welcomed this decision. No country in Europe has welcomed
this decision. Maybe some have made noises, which I think are
necessary, and Mr. Turk alluded to it to say we shouldn't see
this as a crisis. That is correct. We don't want to create some
kind of new panic in our markets to send our prices haywire. In
reality, we have to be a bit stoic.
Senator Barrasso. Stoic. You don't hear that word around
here in the United States Senate very often.
Mr. Riedl, the Biden Administration claims its decision to
stop permitting new LNG exports is going to have minimal and
only short-term impacts. Would you explain how this decision is
actually going to hurt companies' ability to obtain financing
for new and existing facilities?
Mr. Riedl. Sure. Well, I think you just heard Dr. Watson
very clearly elaborate the concern from the other side. But I
think if we talk about the project investment here--I
mentioned, you know, the $20 billion of projects, right? No one
is going to finance a $20 billion project without firm
commitments on the long-term contracts that we have been
discussing this morning. A project relies on a non free trade
authorization as part of the idea that they have all of the
necessary permits from the United States to begin export. No
bank is going to lend a $20 billion loan to a project developer
on the idea that they might end up getting their permit at some
point down the road. So when we talk about the pause and what
that could potentially bring about, it is a slowing of the
ability to actually meet the needs from our buyers around the
world. And what would ultimately happen is, is those projects
that were going to make $20 to $25 billion investments just
simply won't be built and we won't be able to satisfy
international demand from the market.
Senator Barrasso. So talking about the timeline and all--
the impact there--so even before the President's recent
announcement, what we have seen from the Department of Energy
has been a slow-walking of the approvals of LNG exports under
this President. The average time to process these applications
jumped from about two months to over a year. Would you discuss
how Biden's recent decision has made actually a bad situation
worse?
Mr. Riedl. Look, I think the idea that we are dealing with
the unpredictability of a project waiting for a permit, to now
an indefinite pause, we didn't hear a timeline from the Deputy
Secretary today on how quickly they could complete the study. I
think our question is similar to the one that my panelist
shares, which is, why pause? We have looked at these studies
numerous times. We have done these studies multiple times in
the past. This will be the fourth time that we have looked at
the macroeconomic impacts and the third time that we have
looked at the life-cycle analysis. In every previous instance,
when we have completed these studies, we have continued to keep
working on processing permits.
Senator Barrasso. And in terms of long-term contracts and
the necessity for certainty, you are just not going to have it.
Dr. Watson, a substantial amount of LNG imported to Europe
travels through shipping lanes in the Middle East. Recent
events have demonstrated that Iran and its proxies are
threatening these supplies. Would Europe benefit from a greater
supply of U.S. LNG that doesn't have to travel through and
around active conflict zones?
Dr. Watson. Well, obviously, yes, I think if you are
traveling across the Atlantic it's a very safe part of the
world. So going from the United States to the European Union
and the UK, we wouldn't see any particular dangers with that.
On the other hand, if we are looking at what is going on in
the Gulf and the Red Sea area, of course, there is a lot of
danger to shipping. Though I have to say, I am not aware of any
Qatari-based ships that are being attacked. It makes some sort
of supposition as to why that is, but I don't think that I
should really, probably, go into that in too much detail. It's
speculating.
Senator Barrasso. All right, thanks.
Dr. Watson. But they haven't been attacked as far as I am
aware.
Senator Barrasso. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, sir.
Senator King.
Senator King. Well, first, my friend the Vice Chair has
migrated from pause to stop. Nobody is talking about stopping.
We are talking about taking a period of time in order to do the
necessary research to have the information. So I think it's
important that the language match the reality.
Dr. Watson, welcome. I don't know if you are aware but
Americans attribute roughly 20 points of IQ to anyone with a
British accent.
[Laughter.]
Senator King. So we are delighted to have you raising the
level here today. I appreciate that.
Mr. Riedl, you testified that where we are now is in the
public interest, 14 percent of production. My question is, as
it is already committed to 28 percent and then to 42 percent--
that's already in the pipeline for construction. That's not
affected by this pause. Do you have the same level of
confidence? It's hard for me to believe that if you have a
finite resource and you essentially divert half of it, that
that isn't going to affect the price of what is left. And you
have testified that there was an increase, but these estimates
of 42 percent going to 54 percent are based also upon
projections of increasing the level of production. Can you
assure the American consumers that they won't face an Australia
situation where the price has gone up five times?
Mr. Riedl. Sure. So let me note that that is an important
question that we discussed this morning. So I think the idea,
right, is the assumption that we are going to remain flat in
our production is just inaccurate, right? So I think that the
idea----
Senator King. But I don't think these projections assume
that. I think they do assume growth.
Mr. Riedl. In production, correct.
Senator King. In production.
Mr. Riedl. They assume----
Senator King. Fifty-four percent of assumed growth of
production.
Mr. Riedl. Correct, when you look at the resource base of
natural gas here in the U.S., the EIA, when they model these
forecasts looking forward, they do take into account in looking
at the increase in production caused by the increase in demand
for natural gas. Whether that's demand from the industrial
sector, electric sector, or LNG export sector. When you look at
those demand signals from the market, production then rises to
meet that. EIA, when they are forecasting out to 2050, are not
assuming that we are only going to continue producing just 100
Bcf a day of gas. They are assuming that we are going to
continue to increase the production on that gas.
Senator King. And I agree with that, but what I am saying
is, using that increased production base, the projection is
that the projects that are already approved or in construction
will go to about 45 percent of the increased production. Can
you assure me that that's not going to affect the gas prices
for manufacturers and businesses and consumers in the U.S.?
That's what I am worried about.
Mr. Riedl. Sure, I understand. So I think that the
confusion there maybe is the idea that it's actually going to
be 45 percent. That's not what they are suggesting.
Senator King. Well, that's what's in the pipeline.
Mr. Riedl. That's what's in the pipeline.
Senator King. That's the capacity that is either in
construction or authorized by the Energy Department.
Mr. Riedl. Correct, but that 45 percent number that you are
suggesting assumes that we are remaining flat----
Senator King. No, it isn't. That's what you just said. The
assumptions assume a growth of production. And these numbers,
42 percent is of a growing production base. It's not assuming--
I don't believe it assumes a flat production.
Mr. Riedl. I apologize if I miscommunicated that. That's
not assuming that we are going--that 42 percent number would be
if we remained flat at production, is what I am suggesting.
Senator King. Okay, we will have to check this. I disagree
with you.
Mr. Riedl. We can gladly follow up with that information.
Senator King. I would be happy to.
The other piece is, last year the Australians had to put a
cap on domestic natural gas prices. Nobody wants to go there,
but when their prices have increased five times--five times--
and all accounts are based upon the enormous explosion of--and
that's the wrong term to use in this context--the growth of
natural gas exports. Again----
Mr. Riedl. Sure.
Senator King [continuing]. I just want to ask these
questions and get the answers, and it seems to me this pause is
an opportunity to do those kinds of studies. And it's not the
end of the world, because it doesn't affect any projects that
are already in the pipeline for the next four or five years. We
are talking about projects eight or nine years--ten years from
now.
Mr. Riedl. So two points there. One, it does impacts
projects that are currently in the queue. There are two
projects that are immediately impacted by this pause.
Senator King. How?
Mr. Riedl. Because they are waiting for their permit and
they are going to need an extension.
Senator King. Oh, they are in the--well, but the testimony
of the prior witness was that the pause would not affect an
extension of an existing permit.
Mr. Riedl. Understood. I am happy to follow up and explain
further. I know that we are close on time here.
So the other piece in getting to the Australia side of
this, gas this morning in the United States is trading at a
$1.98. So when we start talking about putting caps on sort of
where we are at relative, and to the studies that----
Senator King. And that's about where it was in Australia in
2005.
Mr. Riedl. Right.
Senator King. Before they started their export boom. There
is another term I should not have used. And now, the prices
have gone up by five times. I am not contesting that. Right
now, it's all working.
Mr. Riedl. Right.
Senator King. I am saying it's okay at 14 percent. How will
it be at 28 percent, which is what is under construction, and
how will it be at 42 or 50 percent? That's all the question
here.
Mr. Riedl. Understood. And like I said, we are happy to
follow up to explain why that 28 percent number that you are
suggesting does not actually account for the production that we
are talking about from a gas perspective.
Senator King. I appreciate that.
Mr. Riedl. Sure.
Senator King. Thank you.
Thank you, Mr. Chairman.
The Chairman. Senator Murkowski.
Senator Murkowski. Mr. Chairman, I am going to defer to
Senator Daines, who has another commitment, and I am enjoying
this hearing so much I don't want to leave.
The Chairman. Senator Daines.
Senator Daines. Senator Murkowski, thank you for that, and
Chairman Manchin and Ranking Member Barrasso, thank you as
well.
Look, I didn't think I would live to see the day where we
would have an Administration work to pause and go backwards as
it relates to liquid natural gas. The Biden Administration's
recent pause on LNG exports approvals is an affront to the
American people. It's going to lead to fewer jobs, less
security, and bolsters our adversaries. Unfortunately, this
action, I think, only demonstrates how far out of touch this
Administration is from reality. Once again, the Biden
Administration is bending to the wills of an extreme green
agenda and turning its back on hardworking Americans. Less than
a year ago, the Department of Energy rightfully denied extreme
climate groups' petition to change the Department's process for
approving LNG export terminals. Yet, out of the blue, President
Biden just announced that he's pausing all applications and now
reviewing the process. What changed between last year and now?
Nothing. The only thing that has changed is that this
Administration has caved to the woke green agenda to appease
activists at the expense of working families.
Simply look at the White House website. Go look at it. They
are promoting quotes like ``hashtag stop LNG'' and ``this is
the most significant action taken by the President to curb
fossil fuel expansion.'' It is beyond a doubt that U.S. exports
of LNG are good for the economy, good for jobs, good for
national security, and good for our allies. This pause will do
nothing but hurt Americans. It will help Russia. It will help
Iran. It will help other adversaries.
Deputy Secretary, Mr. Riedl, and Dr. Watson, I have
questions for you. The federal law is very clear: ``The
government shall issue an approval for LNG exports,'' and I am
quoting, ``unless it finds that the proposed exportation will
not be consistent with the public interest.'' That's what it
says. It is very clear they are growing jobs, bolstering the
economy, reducing emissions. I will say that again--reducing
emissions and helping our allies are all in the public
interest. So I have a couple of simple questions to drill down
on this fact. A recent analysis showed that continued expansion
of LNG exports to our European allies will lead to an increase
of over 400,000 jobs through 2030. Do you agree that there will
be more jobs for American families and that it is in the public
interest?
Mr. Riedl. Simply, yes.
Senator Daines. Dr. Watson.
Dr. Watson. I would say that is probably correct. From our
point of view, of course, it's an American question. So I would
leave it to Charlie to answer.
[Laughter.]
Mr. Riedl. He sounds better when answering it.
Senator Daines. He does. Well, it's 20 points IQ
improvement when you answer, you know that, according to
Senator King.
The second question, regarding the economy: increased
development of natural gas in the United States provides
revenue for local, state, and federal governments and improved
energy security. Do you agree that increased revenue for local
communities to support education, support infrastructure, and
community services is in the public interest?
Mr. Riedl.
Mr. Riedl. Yes.
Senator Daines. Dr. Watson.
Dr. Watson. Again, it's for Charlie, but I would say yes.
Senator Daines. All right.
Next, regarding supporting allies. Export of U.S. LNG to
Europe has led to the reduction of European imports from
Russia. If the United States does not continue to meet the
global demand, then our allies will be forced to turn to
Russia. Here's the question: Do you agree that supporting our
allies--Dr. Watson, this is one that you'll be able to answer
here--do you agree that supporting our allies and reducing
Russia's influence is in the public interest?
Mr. Riedl. Without question.
Dr. Watson. Yes, definitely.
Senator Daines. Numerous studies have shown that the
increase of LNG exports has contributed to the reduction of
global emissions. Do you agree that reducing emissions is in
the public interest?
Mr. Riedl. Absolutely.
Senator Daines. Dr. Watson.
Dr. Watson. Yes.
Senator Daines. Well, thanks for giving clarity here to
something the Biden Administration seems to lack clarity on.
It's very clear to see that continuing to grow LNG exports will
bolster jobs, support our allies, and contribute to energy
security. I urge the Department of Energy to reverse course
immediately and return to reason.
Thank you.
The Chairman. Thank you, Senator.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman, and gentlemen,
thank you for being here before the Committee. Thank you for
making the trip across and for the representation that you
have.
I want to start with you, Dr. Watson, if I may. The
Administration's press release for this LNG pause states that
this policy, ``will not impact our ability to continue
supplying LNG to our allies in the near term and that
unprovoked acts of aggression cannot threaten the EU's
supply.'' Do you agree with the Administration's assessment,
what they have stated in their own press release? Would you
report that EU's supply and storage capacities are sufficient
and that the Administration's policy poses no risk to create
energy vulnerability within the EU?
Dr. Watson. I think the important caveat was in the short
term, and I think that we would probably agree with that, but
it's not just about the short term. The International Energy
Agency was quoted a lot this morning, and they are forecasting
a supply gap within two to three years. This means that Europe
will face a future problem if there is not the capacity there
to supply our needs, or, as you colleague, Senator, previously
said, we will simply have to continue beyond that 2027 deadline
taking Russian gas. There isn't really much choice for us.
Senator Murkowski. Well, I appreciate that you have
accentuated that because this is part of the challenge that we
are dealing with here, and you heard from Under Secretary Turk
that we don't know how long this pause will continue. You have
used some key phrases in your comments that Mr. Turk was here--
was put in front of us to explain the unexplainable. But you
also spoke to the risk that the Biden Administration has taken
with this pause. It impacts the way investors are looking at
the future. It impacts diplomatic relationships. It impacts
the--just our credibility, really. Our credibility in on the
line here. Will the United States honor its commitments? Right
now, we are trying to figure out how we are going to honor our
commitment to Ukraine, to Israel, to Taiwan, and we are--I will
just say it here--we are in a little bit of a mess right now in
sending a clear and concise message that the United States is
going to be there for our friends and our allies, whether it's
at times of security crisis--national security crisis--or when
resources are important to not only that trade relationship,
but also to that diplomatic relationship and to the stability.
You said that we don't need unnecessary surprises. Was this
an unnecessary surprise?
Dr. Watson. Indeed, Senator, and this is what I described
it as, and I think when we were first alerted to the situation,
as this was being developed--the position, I mean, of the
Administration--we did write to the White House and to DOE
because we wanted to express our alarm at the situation because
it isn't clear to us, at least, what will happen in this review
during this pause because it doesn't seem there is a particular
agreed outcome. Does it mean that there will be LNG available
for us after it, or not? I don't think that Mr. Turk could
answer that question either because he has to say--he has to
look at all the data and look at the many different things,
which, I think, of course, is concerning. And I think I would
use the word that was used, indeed, by one of my members here,
and he said it would erode confidence in doing business with
the United States. And I think that is quite--we should all be
concerned, not just us.
Senator Murkowski. We are very concerned.
Let me turn to you, Mr. Riedl. We don't know how long this
pause is going to continue. We know that this has created
certain uncertainty, but if this pause turns out to be more
than just a short pause, I tried to pin Under Secretary Turk
down to see if he would commit to the comments made by Mr.
Crabtree, that it was just going to be several months. He
couldn't commit to that. So I don't think we have learned
anything more from this hearing into the duration. But if it
turns out to be more of a long pause, and then a moratorium,
how do you think that this affects the energy security of some
of our allies in the medium and the long term here? Because we
are trying to signal that we are going to be there, but a pause
doesn't give you that. And the longer a pause draws out, the
more decisions are going to have to be made into the future
because our future here is not certain.
Can you share with me what concerns you have about a
lengthy pause and potentially the moratorium? I mean, the
moratorium is pretty tough. But are we already starting to see
impacts from this announced policy just in the few weeks that
it has been out there?
Mr. Riedl. So the short answer is yes, we have already seen
impacts. The additional sort of points that I would like to
make to that--one is, when we start to think about what this
message sends, you have heard sort of from my colleague here,
what he is suggesting on the impact on the European market, but
it's not just the European market that we are talking about.
There is the Asian market where we already are honoring long-
term contract commitments that have signed up for additional
long-term contract commitments that they are calling into
question already. Why? Why this pause? So, similar to the
Europeans, the Asian market buyers are asking the exact same
questions. The unknown of how long this pause takes while they
conduct this study is enormously problematic in trying to
answer, not only to the market, but to the investors who are
lined up to make large-sum investments in these projects.
So it not only hurts there, but then I want to sort of
touch on the geopolitical ramifications as well, right? When we
start talking about the idea that others who were thinking
about long-term contracts, buying from the United States from
LNG producers, turning to Russia, Iran, Qatar. Those countries
are not aligned with the same sort of thought process that we
share from a value standpoint, and it plays right into sort of
the hands of funding the geopolitical unrest that is already
happening around the world, to the point that you are making--
the mess that we are in is a real one. And so, if we start
taking U.S. energy off of the water and LNG off of the water
and looking at a longer-term pause, this is to the detriment
not only from a security standpoint, but also from our allies
and looking for that energy from the United States.
Senator Murkowski. Thank you, both.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Cassidy.
Turn your speaker on, sir.
Senator Cassidy. --Mr. Riedl, this is like a war on the
American worker. It's really amazing. This policy is a war on
the American worker. I think the fourth largest project in the
world right now is in South Louisiana building an LNG export
plant, and the number of jobs--good-paying jobs for people who
otherwise would not have that economic opportunity is
incredible. So can you comment a little bit, and keep your
answer tight, please, on the economic impact if we create
uncertainty--no, if the Administration, kowtowing to their
climate lobby for electoral politics, creates the uncertainty
associated with this, the impact that will have on working
Americans' jobs, not just in Louisiana, but across the country?
Mr. Riedl. Sure. So the average construction price of a
facility is $15 to $20 billion----
Senator Cassidy. That's billion, with a B?
Mr. Riedl. Correct, 6,000 to 8,000 employees at a job site
for upwards of ten years building these facilities. So those
facilities that don't get built, that is 6,000 to 8,000 jobs
that would ultimately not come to fruition. Not only that, when
you look at taking that LNG off the market, those production
numbers in upstream markets like Arkansas, Ohio, Pennsylvania,
and other places--production drops as a result of the demand
signal from the market going down when LNG facilities don't get
built.
Senator Cassidy. So there are the construction jobs, but
there also are the permanent jobs. This is a war on those
workers.
Now, let me ask, because this supposedly is being done kind
of because of climate policy. But I just want to put something
up there real quickly.
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Senator Cassidy. The greenhouse gas emissions life cycle
associated with U.S. LNG and with Russian gas. Clearly, we are
much cleaner. Now, Dr. Watson, they said you are more
intelligent because you have a British accent, but I will note
that you are named after an American biologist, so that said.
But is market demand going to go away because the climate lobby
decides that the Administration should create uncertainty in
the LNG export, but differently, will England and Germany still
need natural gas?
Dr. Watson. Well, I think it's very clear, at least for the
short- to mid-term, we are going to be using lots of natural
gas.
Senator Cassidy. And so, if the United States does not
provide it, the Qataris, the Iranians, and the Russians will
probably provide it.
Dr. Watson. We have to get it from somewhere.
Senator Cassidy. You have to get it from somewhere. And so,
they will use their environmental standards to supply Germany,
and instead of having fewer emissions, we will have more
emissions because of this policy.
Dr. Watson. I am very familiar with the study you are
referring to by the Rocky Mountain Institute and that is
exactly what we also believe at Eurogas.
Senator Cassidy. So this electoral politics is actually a
war on the climate.
Let me ask, Mr. Riedl, if magically China replaced one-
third of the coal they are burning with U.S. natural gas, can
you kind of give us a sense of the impact that would have upon
global emissions?
Mr. Riedl. I think when we talk about U.S., the combustion
of natural gas relative to coal, it's a reduction of anywhere
from 50 to 60 percent, when you think about that sort of
number.
Senator Cassidy. So it would dramatically decrease Chinese
emissions. By the way, I looked it up once. When China burns
coal, the SOX and NOX blow over the
Pacific Ocean and they land on our West Coast. And I think a
third of the sulfur in the atmosphere in California actually
originates in China. I hate to say it--this is kind of a war on
air quality in California. Not giving the Chinese the ability
to convert from coal to natural gas is going to make somebody
have an asthma attack somewhere in the Bay area. This is a war
on the health of our West Coast. Pretty amazing.
So let me just finish up with this: I don't get a sense
that there is a clear rationale if the rationale is that we are
going to decrease emissions by doing this. It doesn't seem like
either of you think that's the case. It clearly is going to
negatively impact workers in the United States. It is clearly
going to negatively impact our allies. And by the way, Dr.
Watson, you point out that it creates an uncertainty regarding
future dealings with the United States.
I don't know if the Administration could have made more
wrong decisions in one policy if they had actively sought to do
so, unless they were actively seeking to do so.
Thank you. I yield.
The Chairman. You want to go on? You can. Do you have
another question? Since you missed the first one. You are on a
roll there, brother.
Senator Cassidy. I am on a roll.
The Chairman. Let me just say to both of you, thank you for
your expertise and coming here. There is an awful lot going on
this morning. You just see members coming and going all along,
but I can tell you, your comments and giving us a view of
what's going on in the market is very, very helpful. We want to
make sure that the American market is protected, but that our
allies are protected also. We want to make sure that we are
displacing, basically, the Russians or whether it's the
Iranians or whether it's the Qataris from dominating these
markets because the resources they receive from that, the
money, is used for absolutely horrible things for our world and
that's what we are trying to look at.
So the only thing, and I have said this very clearly, the
Administration was so wrong in basically stating a pause by
executive order. They could have said we are going to have
hearings and listen to the concerns we have about maybe going
into a pause, if needed. That's where they basically jumped
before they looked where they were jumping. And we are trying
to get them to retract that. And I think your help in showing
how you can totally wean yourself off of Russian gas, which it
is our intention to stop the flow of revenue going to them to
be used against our allies in Ukraine and all over Europe. And
hopefully, we can take this message back and maybe change for
the better, if you will. We will put a real pause to the pause
is what I think we should do.
So with that being said, all comments will be taken into
consideration and this meeting will be adjourned.
Thank you.
[Whereupon, at 11:48 a.m., the hearing was adjourned.]
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