[Congressional Record (Bound Edition), Volume 151 (2005), Part 17]
[Senate]
[Pages 22591-22594]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           NATURAL GAS CRISIS

  Mr. DOMENICI. Mr. President, this week, Senator Bingaman, Senator 
Akaka and I returned from Baton Rouge.
  We went down to see and learn firsthand about Hurricanes Katrina and 
Rita damage to the energy infrastructure. There is a great deal of work 
to be done, and there is a great deal of courage and confidence that it 
can be done. We need to find ways to make that recovery go right.
  Yesterday, my committee held a hearing where we heard from energy 
industry witnesses who have been impacted by the hurricanes. The main 
message of that hearing was we are in troubled energy times, 
particularly on the natural gas front. The CEO of DOW Chemical Company 
painted a very bleak picture for American industry.
  Our industries that rely on natural gas both as a fuel and a 
feedstock have hard choices before them about how and where they will 
base their operations. In the U.S., natural gas prices are close to 
$14. In China, it is less than $5. In Saudi Arabia, it is about $1. If 
we translated gasoline prices to the level of increases faced by 
natural gas--we would be seeing $7-a-gallon gasoline at the pump right 
now.
  At DOW's St. Charles petrochemical complex that I saw in Baton Rogue, 
I learned that every $1 increase in the cost of natural gas means an 
additional $35 million a year in fuel costs for that single facility. 
Our manufacturers have to compete in global markets. At those prices, 
they can't.
  The energy bill we just passed took some good steps forward to 
address these challenges but did not secure more natural gas supply 
that we have available right here at home.
  In the area on the Outer Continental Shelf known as the nonleased 
portions

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of Lease Sale 181 which is not under moratorium, but which we are not 
allowing leasing, there is approximately 7.2 trillion cubic feet of 
gas. In the areas more than 100 miles from any state coastline, 2 
resources are estimated to be approximately 6 trillion cubic feet of 
gas.
  This area can be leased administratively, without any legislative 
action. At our committee hearing and during yesterday's press 
conference I urged the administration to reconsider this policy in 
light of our Nation's natural gas crisis, which has seen a 121-percent 
price increase in just 1 year.
  I will continue to work to cure more domestic energy supplies, but in 
the short term all the witnesses the committee heard from yesterday 
said conservation is the most effective tool we can use to deal with 
the present crisis.
  If every American turns down their thermostat just 2 degrees this 
winter, it could free up 3 billion cubic feet of gas per day.
  According to the DOW witness yesterday, that kind of conservation 
would be equal to having 3 LNG terminals. In addition, we need to focus 
our efforts on organizing the recovery on the energy infrastructure, 
our witnesses all stressed the need to give priority to restoration of 
natural gas processing plants.
  The Congress and the administration must provide the leadership to 
make this recovery move quickly and smartly.
  Our witnesses all emphasized that we are in an energy crisis.
  Mr. President and fellow Senators, the country is facing an enormous 
problem. I might even say, without reluctance, that it is a crisis. 
People might say: Well, Senator, you are talking about Katrina, Rita. 
No. Katrina and Rita have pointed out to us a crisis well beyond those 
two hurricanes, and that is that we have a very significant shortfall 
in the natural gas that is needed to run our businesses and to use for 
our people during this ensuing winter. If something is not done, it 
might be for a very long period of time.
  Now, it sounds almost impossible, if not incredible, that I would be 
here on the floor saying this when just 4 or 5 years ago, those who 
were in the business of producing natural gas and those who knew about 
America's energy situation were saying: There is plenty of natural gas. 
Don't worry about that marvelous product.
  So what we have done in the last 15 years is to say, since we don't 
know how to clean up coal sufficient to meet our standards and because 
we worry about global warming, we will not build any new coal-burning 
powerplants.
  We have not built a nuclear powerplant in over 20 years. So for the 
last 15 years, at least 13 years, every new powerplant--that is these 
big monster powerplants that generate electricity, 500 megawatts, 1,000 
megawatts--is fueled by natural gas. Then the people of our country 
have found this is a marvelous fuel for our kitchens, for houses, so 
more and more people are using natural gas for our way of life, our 
great standard of living. But what isn't understood is that natural gas 
is such a great product that when you change its chemical makeup, you 
use it for a lot of things. The entire fertilizer industry of America 
is based upon natural gas as one of the components. People don't know 
the entire chemical and plastic industry is built around and predicated 
and dependent upon natural gas. That means not only is it imperative 
that we have it, but I am here today to suggest it is also imperative 
that it not be so high priced that it puts our businesses out of 
business.
  I had the luxury, as a Senator, to go down and see the aftermath of 
Katrina and Rita with my colleagues Senator Bingaman and Senator Akaka 
of Hawaii. We looked at the damage and the energy infrastructure of all 
types that were destroyed or put out of business. They are going to 
have an immediate impact because supply has been interrupted, both in 
the generation of electricity and in putting natural gas into pipelines 
to deliver it to the United States and to deliver it to our numerous 
petrochemical plants, plastics plants, and other things. Also the 
feedstock, you convert things from natural gas, you convert it into the 
basic things that are used as feedstock for these industries. We are 
going to be in short supply in the short term because supply has been 
interrupted and the capacity to deliver has been interrupted. Those are 
going to get fixed in due course, but in the meantime, we have 
dramatically used down our reserves, because they are there to pick up 
when we don't have natural supply coming. The offshore wells aren't 
producing, so you have reserves to take their place. But the reserves 
are being depleted, so we are going to have much less reserve capacity 
which means we may have interim difficulties.
  But what has happened is, all of this has pushed the price of natural 
gas up. Believe it or not, at the beginning of this week, the bid price 
was $14, where just a few years ago it was $2, and 10 days ago it was 
$7. Understand that it doesn't sound like much if you are talking about 
2 cents or 7 cents. There isn't much difference between that 14 cents. 
That is just a little change.
  Here is the problem: We had a hearing in the Energy and Natural 
Resources Committee. I must say, as chairman of that committee, it 
lasted 2\1/2\ hours. It was probably as informative a hearing as I have 
ever presided over. Eight Senators participated. They stayed there and 
listened to five people talk about the crisis America has with 
reference to natural gas, not only because of the aftermath of Katrina 
and Rita, but because we are using so much natural gas and we don't 
have enough production to meet the need.
  We can't sit around and listen to people who say: We don't need any 
more supply. That is these old industry companies that want to scare 
us, and they don't need more supply.
  We need more supply. It is imperative that we find more natural gas 
some way. I will quickly tell you the little bit we can do in that 
regard. I will acknowledge this hearing was attended by witnesses 
representing the entire industry of oil and gas, a leading 
environmentalist, three other people who know the problems of Katrina 
very well, and they were in harmony that we must conserve. So I don't 
want anybody to think conservation isn't a very important part of this 
problem I am telling you about, this pending crisis of the rising cost 
of natural gas and the shortages that might occur. Every chance I get 
and by every means available, I am going to try to remind the Senate 
and anybody who will listen that we must understand this fantastic 
commodity called natural gas is not abundant in the United States. The 
price is going to go through the roof if something isn't done.
  I don't have an answer right now. I am working at it, but I don't 
have an answer. I want everybody to know, so they are not surprised, 
that we understand anything that can be done should be done because the 
crisis is imminent. If the price stays at $14, the crisis is imminent.
  Let me tell you how important it is. One of the largest employers in 
America of high-paying, skilled, professionally trained jobs is the 
petrochemical industry, the chemical industry, Dow Chemical, a huge 
plant down there in the middle of Katrina. We went to see it. I won't 
talk today about the heroics of trying to bring it back and save it and 
save their people. That is another story. But yesterday the president 
and chief operating officer of that great company came to our 
committee. He is reported in the morning's Washington Post in the 
business section with a detailed story about this crisis I am talking 
about. This gentleman, Andrew Liveris, is a terrific executive. He gave 
us a very simple example which I want everybody to listen to. At this 
plant are 3,500 professionally trained, skilled Americans with terrific 
jobs. How good? The average is $70,000 plus great benefits for each and 
every person there. They produce huge things. They gave us a little box 
of them. They produce all kinds of plastics, things you could never 
imagine that they produce and sell. The principal ingredient in making 
their product is natural gas.
  Without natural gas, all those workers can go home. They can go home 
and

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say goodbye because they can't operate, not only without natural gas, 
but if natural gas gets too high, petrochemical plants can be located 
anywhere. They are not inherent to a piece of geography in the United 
States. They are being sought after by everyone in the world. That CEO 
told us on the record: When I leave you, tomorrow I am going to China. 
You can't tell him: Don't go to China. China wants to build a 
petrochemical industry. They think the greatest in the world is this 
one. Do you think he is going over there to have a birthday party? He 
is going over there to talk business.
  This is not a question of cheap labor. It is a question of natural 
gas prices. You understand, there may be natural gas in China for $1. 
He is now going to have to pay, if this price stays where it was bid 
Monday, $14. Do you think he will stay here? He can't stay here, not 
only because he wants to go somewhere, he will go out of business here. 
These are the numbers. Already 100,000 American jobs are gone, because 
100,000 jobs were for their export business. They can't export because 
they are totally out of competition. The price is too high because of 
natural gas. So that part of American employment is gone. But now there 
are almost 800,000 additional Americans. How many jobs can we lose and 
say it doesn't matter?
  It was suggested by this gentleman, who had a terrific analytical 
ability--he told us how all this works--if the price of natural gas 
continues as we are talking about, 800,000-plus jobs will go. They will 
not be able to stay open.
  Add to that the fact that everybody must understand you don't see 
natural gas on a gasoline pump. You don't see day by day the price 
going up. When you see gasoline go from $2 to $2.50, $2.80, $3, you 
say: Something is going wrong. The increase in natural gas price from 
where it was a year ago to where it was Monday of this week, if you 
transfer that into gasoline prices, gasoline would be priced at $7 a 
gallon. Think of what would happen to the American economy and to 
everyday people if gasoline were $7. Everybody who uses natural gas, in 
particular the industries that use it, are suffering from that kind of 
an increase. Two years ago gasoline was at $1.69. What if it went to 7? 
That is what has happened to natural gas.
  I am going to include in the Record a statement that gives further 
details about this problem. But I suggest that we must come to grips 
with the conservation. We are going to put some ideas together.
  Let me say, if the American people this winter were to reduce their 
thermostats by 2 degrees, do you think it would be hard on everybody? I 
mean just imagine, unless somebody is sick and the doctor prescribes 
it, it would be an enormous savings of natural gas for the United 
States and for this pipeline to deliver natural gas. Do you know the 
pipelines that come out of Louisiana down there in that gulf, these two 
giant pipelines go all the way from Louisiana up into the United 
States, with legs off in Ohio, all the way to New York, delivering 
natural gas from that area so loaded with hydrocarbons? They put them 
in these pipes and have generating pusher stations all the way up into 
America and deliver it.
  If we conserve the way I have described and other ways, which we are 
coming to grips with, it will make a big impact on how much those 
pipelines have to deliver to meet the demand. We have to find a way to 
do the best we can by American industry or they are going to close. And 
while we have some natural gas to heat our houses, we will be without 
jobs for the people who live in those houses.
  The one thing they all suggested, when they were sitting around that 
table talking to us, was: There is one major source of natural gas that 
is American that we ought to get. I must say to those States who are 
coastal States, they must understand they are Americans first and 
coastal States second. The largest supply of American natural gas is 
off the coasts of our country. No doubt about it. The United States 
cannot sit by with the technology we have developed--we can go way 
offshore so that you cannot even see them. So those States that are 
worried about their visibility, if they are worried about oil spills, 
there are no oil spills from those platforms that drill.
  Do you know that during the time we had this crisis not one major 
oilspill occurred. Those giant platforms with 20 wells drilled 
underground, with drilling that goes parallel and with one that was 
turned upside down, the oil did not come out. So nobody has to worry 
about that. We can handle that. That is where the natural gas is.
  I close by saying that we have been told by the experts that the best 
way to reduce this crisis would be to have an immediate supply of 
natural gas. That is not possible. We are going to have to open a 
substantial number of liquefied natural gas platforms or ports around 
our country. And where they are being delayed, we have tried to solve 
that in our Energy bill. We are going to push those local governments 
to quit the delay for delay sake and get on with letting us put some of 
those in so natural gas can come from foreign countries, which I hate 
to say, but at least we can look at it and expect it.
  In the meantime, it is said that if we were to say to those who pay 
for natural gas that we are opening parts of the Outer Continental 
Shelf, just the section 181 off the coast of Florida and Alabama, which 
I say now to the President of the United States, Mr. President, you 
ought to sit down and figure out a way through your Executive order, 
through your pen, to open section 181, or portions of it, off the coast 
of Alabama and Florida. Do it, Mr. President. It might take a couple 
years to produce. It is ready, so it will be very quick.
  We are told that the mere fact that the market understands that is 
ready, that huge entrance of natural gas into the areas for delivery, 
the pipeline system, that it will reduce the pressure on the cost of 
natural gas. I think the occupant of the Chair can understand that. The 
marketplace will say: Oh, it is not going to continue in this crisis 
state because here comes this huge natural gas that is now released and 
is ready to come. We must do that. Until it is done, at least this 
Senator--I have to worry about my State, but I am also a Senator for 
America, and I am not going to let up until that is done.
  Secondly, the States in this country that refuse to recognize that we 
can drill off their shores on land that is owned by the Federal 
Government--it is not their land; they only have a few miles, and then 
it belongs to Americans--you can drill way out there, do no harm, and 
bring gas into this country to get us through the next 10 or 12 years 
while other sources of energy that are clean, such as nuclear and very 
clean coal, come on to keep America alive.
  The next thing we are going to do is to find out how we can pass 
legislation to get those other coastal States in the position where 
they are either willing to accommodate this in exchange for us giving 
them substantially more royalties, or we are just going to have to bite 
the bullet.
  It is going to come down here, and the people are going to have to 
say no, or filibuster, but they are going to have to know what they are 
doing. They are adding to the crisis status of our country and job 
market and to one of the few major industries that is left in this 
country that we are great at. We are not going to be there very long. 
China is going to catch up, and then it is not going to be cheap labor. 
It is going to be high technology and national gas. India is doing the 
same.
  I was at an event last night. We used to say how powerful we were. We 
know where it is; it is in India. Reliance Energy has the largest 
refinery of crude oil to refine into gasoline-related products. We sit 
here thinking we are the leaders of the world in everything. We have 
been sitting somewhere for a long time. I hate to say on what. But we 
surely have not been doing anything. If anything, we have been going 
backwards. There have been no new refineries in the United States for 
more than two decades. That is almost incredible.
  I thank the Senate for listening. I will say again, this is probably 
the most significant event confronting us.

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I regret to say there are no easy answers. If there were, we would have 
done it, but we finally have come to the understanding that it is 
major, it is big, it is serious.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  Mr. DODD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, what is the business before the Senate?
  The PRESIDING OFFICER. The Senate is in morning business.
  Mr. DODD. I thank the Chair.

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