[Congressional Record Volume 151, Number 38 (Wednesday, April 6, 2005)]
[Senate]
[Pages S3296-S3300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ALEXANDER (for himself and Mr. Johnson):
  S. 727. A bill to provide tax incentives to promote the conservation 
and production of natural gas; to the Committee on Finance.
  Mr. ALEXANDER. Mr. President, today I am introducing the Natural Gas 
Price Reduction Act of 2005 and the ``Tax Provisions for Natural Gas 
Price Reduction Act of 2005.'' I send to the desk two pieces of 
legislation. One is the substantive provisions of the bill and one is 
the tax provisions of the bill.
  Mr. President, I offer the legislation on behalf of myself and the 
Senator from South Dakota, Mr. Johnson, who is the lead Democratic 
sponsor on the legislation. I do so with appreciation to the chairman 
of our Energy and Natural Resources Committee, Chairman Pete Domenici, 
and the staff of that committee who have worked very closely with us on 
the development of this comprehensive piece of legislation, and with 
thanks to my own staff, Sharon Segner, who has worked on it for several 
months.
  This is a piece of legislation to address aggressively and 
comprehensively the rising cost of natural gas in the United States. 
This is legislation for the blue-collar worker, for the American 
farmer, and for the American homeowner.
  Natural gas prices in the United States are at record levels. We have 
gone from having the lowest natural gas prices in the industrial world 
to the highest. These high prices are threatening millions of our jobs. 
Our farmers are getting a 10-percent pay cut. Homeowners are having a 
hard time paying their heating and cooling bills because of our 
contradictory policies.
  Our policies boil down to this: We are restricting the supply of 
natural gas, and we are encouraging the use of natural gas. You do not 
have to go very far in an economics class at the University of Oklahoma 
or the University of Tennessee to know that if you restrict supply and 
encourage demand, the inevitable result is higher prices. And higher 
prices is a very serious problem for U.S. workers, U.S. homeowners, and 
U.S. farmers.
  Only an ambitious and comprehensive approach that both increases 
supply and controls demand can lower the price of natural gas and keep 
our economy growing. This is not a question of tweaking our natural gas 
policy. It is time, aggressively, to revamp it. We need aggressive 
conservation. We need aggressive use of alternative fuels. We need 
aggressive research and development. We need aggressive production. 
And, for the time being, we need aggressive importation of liquefied 
natural gas from other parts of the world.
  Here on this chart is an idea of where we are today. This is the 
United States of America: $7 per unit for natural gas--the highest in 
the industrialized world. Until recently, we had the lowest natural gas 
prices in the world.
  What that means is large parts of our industries--the chemical 
industry, for example--were built on the idea of $1.50 or $2 for 
natural gas, but today it is $7.
  A million Americans work in those blue-collar manufacturing jobs in 
every State in our country. Now, if they are paying $7 here, and it is 
$5.55 in Canada and $5.15 in the United Kingdom and $2.65 in Turkey and 
$1.70 in the Ukraine, where do you suppose,

[[Page S3297]]

though, a million blue-collar jobs are going to be 5 years from now, if 
we do not do something about the $7 price? They are not going to be in 
the United States. They are going to be moving out of the United 
States, to the United Kingdom, to Germany, to the Ukraine, to other 
parts of the world. And people are going to be writing their 
Congressmen and saying: Why didn't you do something?
  So here is what we can do. By aggressive conservation, I mean setting 
stronger appliance and equipment standards for natural gas efficiency 
so that a commercial air conditioner will cool the same while using 
less natural gas doing it. Those standards have been generally agreed 
upon by environmental groups with the industry. If they were put in 
place, by a rough estimate, they might save the equivalent energy that 
could be produced by 30 or 35 powerplants.
  By aggressive use of alternative fuels, I mean, for example, fully 
commercializing coal gasification. Coal gasification is taking this 
abundant supply of coal we have in the United States--we are the 
``OPEC,'' the ``Saudi Arabia'' of coal; we have a 400- or 500-year 
supply--and finding a clean way to use it instead of importing oil from 
a part of the world where people are blowing each other up.
  That means starting with support so we can have six coal gasification 
plants in this country by the year 2013. Coal gasification means, you 
burn the coal to create gas, and then you burn the gas to create power. 
If we can do that commercially, we will not only be passing a clean 
energy bill, we will be passing a clean air bill, because if you do 
that, you remove most of the mercury, most of the nitrogen, most of the 
sulfur. And by additional research, we may be able to find a way to 
recapture the carbon that is produced and put that in the ground and 
solve the carbon problems that a lot of people are talking about around 
the world.
  In addition to helping ourselves, we would help ourselves by helping 
others. China and India and other parts of the world are building 
hundreds of coal plants. We would much rather them build a coal 
gasification plant, one that is clean and does not contribute to air 
pollution. Because if China and India and Brazil build dirty coal 
plants, that air blows around the world, and it blows into Tennessee 
and it blows into South Carolina. It blows into Oklahoma.
  So aggressive alternative fuels is a part of a natural gas supply. 
Aggressive research and development includes investment and research in 
gas hydrates. Gas hydrates is gas that is in the ground. Methane 
hydrates hold tremendous potential to provide abundant supplies of 
natural gas. Hydrates are like ice solid structures, consisting of 
water and gases, mainly methane, compressed to greater than normal 
densities.
  Coastal U.S. areas are rich in this resource. The United States is 
estimated to contain one-fourth of the world's supply. We need to find 
a way to use that gas so we do not have $7 per unit natural gas prices. 
That sends millions of jobs overseas. That cuts the income of farmers. 
And that raises home heating prices and cooling prices for residential 
Americans.
  Aggressive production means, among other things, allowing States to 
selectively waive the Federal moratoria on offshore production of gas 
and collect significant revenues from such production. Let me give you 
an example. Within the last few weeks, the legislature of Virginia 
decided it might like to explore the idea of drilling for gas offshore. 
Now, why would Virginia want to do that? Because there is probably a 
lot of gas offshore. What would that mean for Virginia? Well, they 
could put a gas rig out in the ocean, beyond 20 miles, so nobody in 
Virginia or North Carolina could see it, run a pipeline underground to 
Virginia, and take their share of the revenues. And they can lower 
taxes in Virginia and put the rest of the money in a trust fund to 
build the best colleges and universities in America. That is what they 
could do in Virginia.
  If Tennessee had a coastline, and I were Governor of Tennessee, that 
is what I would be asking the Congress to let me do.
  I think as other Governors and other legislatures and other people 
look at Texas and Louisiana and Alabama and see what they are doing and 
decide that they can in an environmentally sensitive way exercise a 
State option to drill for gas in Federal waters so far out you can't 
see it, that they will find that a good option because it will help 
lower the price of gas. It can build up the schools and keep taxes 
down, and it can avoid other worse forms of energy.
  For example, you would have to have 46 square miles of windmills, 
these things that are 100 yards tall, in order to equal one gas rig 
that you couldn't see out in the ocean. This is a State option. 
Aggressive importation of liquefied natural gas starts with giving the 
Federal Energy Regulatory Commission exclusive authority for siting and 
regulating what we call LNG terminals. This means importing liquefied 
natural gas from other parts of the world. There is a lot of it around 
the world. They freeze it and put it in tankers, and they bring it here 
and put it in our pipelines, and then we have it.
  That seems like a pretty big waste of effort when we have plenty of 
natural gas here in the United States that we don't have access to. But 
if we want an adequate supply of natural gas, we are going to have to 
import some from around the world, and that means we are going to need 
terminals to which to bring it. Some of them may be offshore. They 
might be 10, 12, 14 miles offshore. Some of them, like the four we have 
today, may need to be onshore. There is no silver bullet. There is no 
single answer. That is why we need aggressive conservation. If, for 
example, the United States adopted the conservation attitudes towards 
natural gas that California did a few years ago, it might equal what 50 
powerplants could produce in the United States. If that is so, we ought 
to do it today. That would begin to bring this $7 figure down.
  Aggressive use of alternative fuels such as coal gasification. I also 
would say nuclear power is the most obvious alternative fuel to natural 
gas. If we had more nuclear power, we would use less natural gas. In 
our country today, what do you suppose we are using to create 
electricity when we need more electricity even though the cost of it is 
$7 a unit, the highest in the world? Natural gas, because natural gas 
plants can be built for a few hundred million dollars, and we have 
created an environment where we can't use nuclear.
  We haven't built a new nuclear plant since the 1970s, even though we 
invented the technology, even though France has 80 percent of its power 
now produced by nuclear power, even though Japan builds a new nuclear 
plant every year or so. We invented it. Our Navy has operated nuclear 
reactors since the 1950s without ever having a single accident. It is a 
clean, obvious alternative to $7 natural gas, and we haven't built a 
plant since the 1970s. So we need to think seriously about aggressive 
conservation, aggressive use of alternative fuels, aggressive research 
and development for solar, for methane hydrates, aggressive production, 
and that includes giving States the option of deciding whether they 
would like to drill offshore and take some of the revenues and put some 
of the revenues into a conservation fund, and aggressive importation of 
liquefied natural gas from overseas at least for the time being.
  In March of 2002, the Secretary of Energy requested that the National 
Petroleum Council undertake an extensive study on the natural gas 
crisis. That advisory council produced a study. It talked about the 
results I have described. Our Senate Energy Committee, under the 
chairman, Senator Domenici, has paid a lot of attention to that report. 
Senator Domenici hosted what we called a natural gas roundtable that 
was well attended by Senators and went on for 3 or 4 hours. There were 
more than 100 proposals presented.
  I am chairman of the subcommittee of that full committee, and so my 
purpose today is to take many of the ideas that we heard that made the 
most sense, some of which people haven't been willing to advocate, and 
put them into the discussion. Again, because I do not want to be a 
Senator who 10 years from now somebody comes up to and says: How did 
you let farmers get a 20-percent pay cut because of $7, $8, $9 natural 
gas; how did you let millions of jobs in the chemical industry, the 
auto industry go overseas because of $7, $8, and $9 natural gas; how 
did you let prices of natural gas for home heating

[[Page S3298]]

or cooling get so high that middle-income Americans can't even afford 
to heat their homes? I don't want to be that kind of Senator. So I am 
here today with a comprehensive proposal across the board even though 
some of the ideas will create that kind of controversy.
  I have summarized in a few words the provisions of a 250-page piece 
of legislation.
  We were ambushed in the United States on September 11, 2001. Even 
though you could argue that we might have known it was coming, 
terrorism wasn't new on September 11, 2001.
  I remember being in a meeting with Prime Minister Rabin of Israel in 
1994. At the end of a long day, I asked him: What is the greatest 
challenge threatening the world? And he said terrorism. That was many 
years before we were attacked. He was right. He was dead within a few 
months at the hands of terrorists within his own country. We didn't see 
the terrorism coming. We were ambushed, and we have paid a terrible 
price--in lives, in dollars. We have had to create whole new 
departments. We have had to interrupt the lives of thousand of national 
guardsmen and Army reservists and send them overseas, some to die and 
some to be wounded, because of terrorism. Maybe we couldn't have seen 
exactly that act coming, but we knew it was out there.
  We are about to have another big surprise. That is to our standard of 
living. We are 5 to 6 percent of all the people in the world. Yet we 
produce a third of all the money in the world. We could wake up 10 
years from now and that picture could be very changed. One way is if we 
lose our brainpower advantage. And we could lose it. Half of our new 
jobs have been created by science and technology since the end of World 
War II. And if we go through our budget balancing, deficit controlling 
exercise for the next 10 years and we don't double investments for the 
physical sciences and retake the lead in advanced computing, and if we 
don't see that we have plenty of graduate students in science and 
engineering, we are going to find most of the R&D will be done in other 
parts of the world. We are going to find most of the engineers who 
produce this brainpower that creates jobs in other parts of the world.
  They are thinking in China, and they are thinking in India. There is 
no real good reason why the United States should make a third of all 
the money in the world every year with just 5 or 6 percent of the 
people, and we have so little. So they are keeping their bright people 
home. They are building up their universities. They are doing what we 
need to keep doing. That is one place we could get a big surprise.
  But the other is in energy. We have taken energy for granted for a 
long time. I know I come from Tennessee. We have had the Tennessee 
Valley Authority. It has sat there since the 1930s, and it has produced 
reliable, low-cost electricity. Homes that have never been lit, barns 
that have never been lit, rural areas that have never been lit have 
enjoyed that. That is within my lifetime.
  And then while I was Governor in the 1990s, I remember that one of 
the big attractions for Saturn and Nissan and the automobile industry 
coming into Tennessee was low-cost reliable power. But when I had a 
natural gas roundtable last fall in Tennessee, there was the president 
of Saturn, the president of Nissan, the head of the Tennessee Farm 
Bureau. There was the head of the University of Tennessee. They were 
all saying: We can't live in Tennessee on $7 natural gas. What do they 
do if they can't? It is very easy what they do. They don't have to have 
those jobs in Tennessee or South Carolina. They can move them to 
Germany, they can move them to Mexico, they can move them to Canada, 
and they are doing it every day.
  And Tennessee Eastman in the upper part of east Tennessee, which we 
think is just like the great Smokey Mountains, has been there so long. 
There are 12,000 people there, real good incomes. What do they use to 
make chemicals there? They use natural gas.
  How long are they going to be there? If we have $7 gas and they have 
$3 and $4 gas in other parts of the world, I am afraid they are not 
going to be there too long. And somebody is going to say to me: What 
did you do about it? At least my answer is I stood up on the floor of 
the Senate and said this is not the time to tweak our natural gas 
policy.
  We do not need to sit around and wait for a big surprise on energy 
like we had a big surprise on September 11 on terrorism. We need an 
aggressive policy. We need a comprehensive policy. We need aggressive 
conservation. That is where we should start. We need aggressive 
alternative fuels. That means nuclear and that means coal gasification. 
We need aggressive research and development, whether it is hydrogen or 
whether it is solar, or whether it is methane gas hydrates. We need 
aggressive production. We have lots of gas in the United States. We 
should be using it if we have $7 gas.
  For the time being, we need to create the terminals that will permit 
us to import enough liquefied natural gas to get that $7 price down to 
$6 or $5 or $4.
  Mr. President, I thank Senator Johnson from South Dakota for joining 
me in this comprehensive aggressive approach. I thank Senator Domenici 
for taking the lead on an energy bill. I thank Senator Bingaman, who is 
the ranking Democrat on our committee, because I notice on our 
committee a greater sense of urgency, a greater sense of bipartisan 
cooperation on coming up with an energy bill this year. Our blue-collar 
workers, our farmers, our homeowners in Tennessee and across this 
country expect it from us.
  Senator Johnson's and my contribution today is to introduce this 
comprehensive 250-page bill and to get on the table all the aggressive 
ideas we can think of that make sense about how to reduce the price of 
natural gas for workers, for farmers, and for homeowners. We hope it 
contributes to the discussion. We hope we find lots of these provisions 
in an ambitious energy bill.
  I look forward to working with my colleagues, as I know Senator 
Johnson does, on a bipartisan basis to help lower the price of natural 
gas, keep our jobs, keep our homes cool and warm, and make it possible 
for farmers to make a living.
  Natural gas prices are at record levels and the highest of any 
industrialized country. High natural gas prices are threatening our 
jobs, our farms, and hurting Americans who are trying to heat and cool 
their homes. Only an ambitious, comprehensive approach that both 
increases supply and controls demand can lower the price of natural gas 
and keep our growing economic recovery from becoming recent history.
  This is not a question of tweaking our natural gas policy. It is time 
to aggressively revamp it. We need aggressive conservation, aggressive 
use of alternative fuels, aggressive research and development, 
aggressive production and for the time being, aggressive imports of 
liquefied natural gas.
  Aggressive conservation, for example, means setting stronger 
appliance and equipment standards for natural gas efficiency so that a 
commercial air conditioner will cool the same while using less natural 
gas to do it.
  Aggressive use of alternative fuels, for example, means fully 
commercializing coal gasification, starting with support for the 
deployment of six coal gasification plants by 2013. Coal gasification 
means that you burn coal to produce power but get the much lower 
pollution output of using natural gas.
  Aggressive research and development includes investment in research 
of gas hydrates. Methane hydrates hold tremendous potential to provide 
abundant supplies of natural gas. Hydrates are ice-like solid 
structures consisting of water and gases, mainly methane, compressed to 
greater than normal densities. Coastal U.S. areas are rich in this 
resource. The U.S. is estimated to contain one-fourth of the world's 
supply.
  Aggressive production means, among other changes, allowing states to 
selectively waive the federal moratoria on off-shore production and 
collect significant revenues from such production.
  And aggressive importation of liquefied natural gas starts with 
giving the Federal Energy Regulatory Commission exclusive authority for 
siting and regulating LNG terminals, while still preserving states' 
authorities under the Coastal Zone Management Act and other acts.
  In March 2002, Secretary of Energy Abraham requested that the 
National Petroleum Council undertake an extensive study on the natural 
gas crisis.

[[Page S3299]]

That council, a Federal advisory committee to the Secretary of Energy, 
produced in late 2003 one of the most extensive policy studies and 
recommendations on the natural gas crisis to date. Since that time, 
other prominent groups, such as the National Commission on Energy 
Policy, have also produced extensive studies on the natural gas crisis. 
In October 2004, I held a roundtable on the impact of soaring natural 
gas prices on Tennessee farmers and jobs. The Senate Energy Committee 
has held numerous hearings over the last 2 years and recently held an 
extensive natural gas roundtable on the subject on January 24, 
2005. Over 100 proposals were submitted to the Senate Energy Committee 
on natural gas issues.

  The conclusion of all of these forums has been clear.
  High natural gas prices are threatening our country's economic 
competitiveness and costing us jobs. For example, high natural gas 
prices have been the equivalent of a 10 percent pay cut to American 
farmers.
  The situation is urgent.
  There are no silver bullets. We cannot conserve our way out of this 
problem, nor can we drill our way out of this problem. We will need to 
be aggressive on all fronts, in order to keep our industries 
competitive.
  High natural gas costs are also tied to high oil prices. We need to 
address both natural gas and oil prices in order to lower natural gas 
costs.
  Our country has contradictory policies on natural gas--on one hand, 
we encourage its use. On the other hand, we limit access to its supply. 
We need to amend our contradictory natural gas and environmental 
policies.
  That's why I am introducing the ``Natural Gas Price Reduction Act.'' 
It is an aggressive, bold approach to tackle this issue. This 250-page 
legislation is an attempt to start a very difficult, but balanced, 
legislative discussion in the United States Senate on natural gas 
prices. I have taken the best ideas that I have heard in these 
roundtable discussions and from the various policy studies. I have met 
with hundreds of people in the past year discussing natural gas prices. 
This legislation is an attempt to be more aggressive on all areas 
impacting natural gas prices--energy efficiency and fuel diversity, 
natural gas supply, and improved infrastructure for importation of 
liquefied natural gas.
  Half our Nation's increase in natural gas demand in the last decade 
has come from the power sector. So to conserve natural gas, one must 
not only reduce consumption of gas itself, but also of electricity. 
And, as I noted, since oil prices affect natural gas prices, conserving 
oil is also important. My bill addresses conservation in five ways.
  The bill creates a 4-year national consumer education program on the 
urgent need for energy conservation. A statewide California effort to 
educate energy consumers resulted in savings of 10 percent at peak 
usage--the equivalent of five-and-a-half 1,000 Megawatt coal-powered 
power plants. My bill aims to take that effort to the entire nation.
  The legislation sets higher appliance and equipment standards for 
natural gas efficiency. These standards have been negotiated between 
consumer and industry representatives and are codified in the bill. For 
example, the standards would require a new kitchen oven to produce the 
same heat while using less natural gas to do it. The American Council 
for an Energy-Efficient Economy estimates that these standards will 
reduce natural gas use by about 125 BCF in 2010 and 525 BCF in 2020. In 
addition these standards will reduce peak electric demand by about 
33,500 MW in 2020, equivalent to 34 coal power plants of 1000 MW each, 
and will save consumers and businesses more than $60 billion.

  The bill creates tax incentives and provides regulatory relief to 
enable manufacturing facilities to more easily produce their own power 
and steam from a single source--a process called cogeneration or CHP 
which saves money and energy while also reducing pollutants. A CHP 
system can produce the same electrical and thermal output at 75 percent 
fuel conversion efficiency as compared to 49 percent separate steam and 
power. This is a 50 percent gain in overall efficiency, resulting in a 
35 percent fuel savings. Large industrial plants, such as International 
Paper, Alcoa and Eastman in my home State of Tennessee all use 
cogeneration in their manufacturing processes. More companies could do 
the same, and the bill particularly focuses on providing incentive for 
smaller cogeneration projects.
  The Alexander bill provides incentive for public utilities to utilize 
their natural gas plants based on efficiency. The process of activating 
different power plants to meet demand during a given day is called 
``dispatching.'' For example, on a hot summer day in Tennessee, the 
demand for electricity, for air conditioning, might be highest in the 
early afternoon, so then a power company would have to dispatch the 
most power plants to provide the energy. But during the cooler night, 
they might dispatch less plants since less power is needed. If power 
companies dispatched their most efficient plants first, this would save 
us a significant amount of natural gas. As you can see, the highest 
saving will be in the medium-term--2010-2015--but real savings continue 
for many years.
  Our reliance on foreign oil is the silent elephant in the room when 
it comes to high natural gas prices. My legislation includes a 
provision that requires the President report to Congress annually on 
efforts to reduce U.S. dependence on imported petroleum 1.75 million 
barrels a day from projected 2013 levels, almost 10 percent. As I noted 
earlier, oil and gas are usually produced together; and, typically, 
there is a 6:1 ratio between natural gas and oil prices. Reducing 
dependence on foreign oil will help bring natural gas prices down.
  Conservation of natural gas and related energy sources is critical to 
lowering prices and keeping our manufacturing and farming jobs here in 
the United States. But conservation alone is not enough. The second 
focus must be to develop alternative sources of energy. The ``Keep 
Manufacturing and Farming Jobs in the United States Act'' encourages 
the use of three alternative fuels:

  The bill initiates a national coal gasification strategy. Eastman 
Chemical in Kingsport, TN, has been using coal gasification with a 95% 
availability factor for the past 20 years. Tampa Electric has 
successfully demonstrated large-scale coal gasification. It is time for 
this process to be more widely used. Coal gasification is a process 
whereby gas derived from burning coal is used as a source of energy or 
a raw material. When used in a power plant, coal gasification means 
that you burn coal but get the much lower pollution output of using 
natural gas. My legislation provides up to $2 billion in tax or other 
incentives to support the construction of six new coal gasification 
power plants. Similarly, the legislation provides up to $2 billion in 
assistance for industrial gasification projects. The bill also provides 
streamlined permitting for coal gasification facilities. Coal is an 
abundant resource in the United States; we should use it to produce 
clean energy and raw material for industrial applications.
  Solar energy is another clean, alternative fuel source that could be 
developed further. Solar energy can be used directly for heating as 
well as to create electricity. To push an aggressive solar energy 
strategy, the Alexander legislation provides tax incentives for 
investment in solar power generation. Specifically, it provides 
businesses a tax credit for investing in geothermal or solar heating 
and/or power generation--10 percent heating, 25 percent for generating 
or displacing electricity.
  My bill also contains language to invest in new technologies to use 
hydrogen to power fuel cell vehicles. The language in this bill mirrors 
language I offered in the last session of Congress on the Energy Bill 
that would have enacted President Bush's Hydrogenl/Fuel Cell 
Initiative. When I visited Japan last year, I visited a hydrogen fuel 
station--that looked much like a gas station--and saw fuel cell 
vehicles that range from small cars to SUVs. These cars not only allow 
us to use an alternative fuel source but are also great for the 
environment--their only byproduct is water vapor. The bill invests in 
research and development of technologies and infrastructure for 2 
hydrogen and fuel cell vehicles.
  Methane hydrates hold tremendous potential to provide abundant 
supplies of natural gas. Hydrates are ice-like solid structures 
consisting of water and

[[Page S3300]]

gases--mainly methane--compressed to greater than normal densities. 
Coastal US areas are rich in this resource--the U.S. is estimated to 
contain one-fourth of the world's supply. My bill invests $200 million 
over the next 4 years in research for this promising new resource, a 
number consistent with recommendations from the National Commission on 
Energy Policy.
  Conserving natural gas and using alternative fuels will take us a 
long way to reducing gas prices and keeping jobs here in the U.S., but 
we must also address the other side of the equation: supply. As Energy 
Committee members learned at our Natural Gas Roundtable, our current 
policy encourages consumption of natural gas while restricting the 
supply. We need to stop putting unnecessary restrictions on production 
and supply of natural gas, and my legislation does so by addressing 
production off-shore and in the Rocky Mountains as well as the 
importation of liquid natural gas from abroad.
  We have plenty of natural gas here in the U.S., we just cannot get to 
it. There are large fields off the coasts, especially the Atlantic, and 
in the Rocky Mountains. There is no reason for natural gas prices here 
in the U.S. to be so high when we have so much available here--if only 
we would use it.
  Today, there are two moratoria on our outer continental shelf, OCS--a 
congressional moratorium and a Presidential moratorium. The Atlantic 
Coast--40 miles off the coast is believed to be largely natural gas-
prone. The Pacific Coast is believed--to be mainly oil-prone. The Gulf 
of Mexico is both. Today, when production is greater than 9 miles 
offshore, a State that has oil and gas production gets zero percent of 
the production revenues. This is radically different than onshore 
production; on Federal lands, States get 50 percent of the production 
revenues. Alaska gets 90 percent of the production revenues. In order 
to have a constructive dialogue on OCS production, the right framework 
needs to be established.
  My legislation provides the Department of the Interior with the legal 
authority to issue natural gas only leases. Currently, Interior can 
only issue combination gas and oil leases. Since there is greater 
hesitation about the environmental impact of producing oil off-shore, 
issuing natural gas-only leases may alleviate some concerns.
  It also instructs the Secretary of the Interior to draw the state 
boundary between Alabama and Florida regarding Lease 181--a disputed 
area off the coast of both states in the Gulf of Mexico in which 
Alabama may wish to permit production while Florida may not. The 
boundaries shall be drawn using established international law. Under my 
bill, portions of Lease 181, which are not in the state of Florida and 
greater than 30 miles off of the coast of Alabama, shall be leased by 
December 31, 2007. However, of those portions of Lease 181 that are in 
the State of Florida, the State of Florida may keep the moratoria. 
Leasing would not be allowed to interfere with U.S. military operations 
in the Gulf Coast.
  Finally, under the bill, States will have the authority to request 
studies of natural gas resources off their coasts and be permitted to 
waive Federal moratoria on offshore production. The states shall not 
have the authority to lift the moratoria at National Marine Sanctuaries 
or National Wildlife Refuge Area. The State of Virginia recently 
engaged on this issue, and the state ought to have the ability to 
license off-shore production--especially if it is far enough off-shore 
that you cannot even see it from land. My bill also allows States to 
collect significant revenue from such production, and designates that a 
portion of revenues also go to a conservation royalty. The conservation 
royalty would be shared equally by the Federal land and water 
conservation fund, state land and water conservation fund and wildlife 
grants.
  Importing liquefied natural gas--LNG--requires the infrastructure to 
receive it. LNG comes to the U.S. by ship, and terminals to receive 
these ships and unload LNG must be built and appropriate infrastructure 
developed to transport gas from those terminals to users across the 
country.
  My bill streamlines the development of offshore liquefied natural gas 
terminals. The siting of LNG terminals has become a difficult issue 
since we all want cheaper natural gas, but no one seems to want an LNG 
terminal in ``their backyard.'' The Alexander legislation gives FERC 
clear authority for regulating liquid natural gas terminals, but, 
unlike a related House bill, still preserves States' authorities under 
the Coastal Zone Management Act and other acts. I hope this will 
provide some balance so that LNG terminals can be sited, but 
environmental concerns will play a significant role in choosing their 
sites. In an effort to speed the siting of pipelines that allow natural 
gas to reach all parts of the country, the bill also requires that FERC 
grant or deny a terminal or pipeline application within one year.
  Our country is facing an energy crisis. We are consuming more and 
more electricity. Gasoline prices are poised to reach all time highs. 
The price of oil is up. And so, too, is the price of natural gas.
  The bill I introduce today, the ``Natural Gas Price Reduction Act,'' 
addresses high natural gas prices. Natural gas is not just used for 
heating homes, a source of electricity, it is a raw material for 
industries, and it is an important component in fertilizers used by 
farmers. High natural gas prices have cost farmers a 10-percent pay cut 
and are shipping manufacturing and chemical jobs overseas. We can not 
afford to let this problem fester any longer.
  Bold action is required, and that is what my legislation provides. 
This bill takes a comprehensive approach to addressing the problem by 
encouraging conservation, developing alternative fuel sources, and 
reducing roadblocks to the production and importation of natural gas. I 
urge my colleagues to support it.
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