Congressman Mike Turner, a senior member of the House Oversight and Government Reform Committee (OGR), submitted the following statement for the record as the OGR Subcommittee on Energy Policy, Health Care & Entitlements held a hearing on “The Department of Energy’s Strategy for Exporting Liquefied Natural Gas.” OnFebruary 6, Turner introduced the Expedited LNG for American Allies Act.
This measure, which is the bipartisan House companion to bipartisan legislation introduced by Senator John Barrasso (R-WY), seeks to help strengthen our strategic partnerships with key allies, reduce the trade deficit and boost job growth right here at home by streamlining the regulatory process to export natural gas to North Atlantic Treaty Organization (NATO) countries, Japan and others. This bill is a modified version of the LNG for NATO Act, originally authored by Senator Richard Lugar (R-IN) and which Turner introduced as the House companion bill in the 112th Congress.
House Committee on Oversight and Government Reform
Subcommittee on Energy Policy, Health Care & Entitlements
“The Department of Energy’s Strategy for Exporting Liquefied Natural Gas”
Statement of the Honorable Michael R. Turner
March 19, 2013
Chairman Lankford, thank you for welcoming my participation at today’s hearing on the Department of Energy and liquefied natural gas (LNG) exports.
As we all know, over the last several years, exploration and development of U.S. natural gas, particularly shale gas, has increased significantly. The United States is one the largest producers of natural gas in the world, and according to the U.S. Energy Information Administration (EIA), has nearly a 100 year supply. This has created opportunities for job creation and economic growth, particularly in my home state of Ohio. According to an economic study commissioned by the Ohio Shale Coalition, exploration and development in the Utica Shale would have a $5 billion economic impact and create or support nearly 66,000 jobs in Ohio by 2014.
As a result of increased production, the price of U.S. natural gas has fallen over the last few years, making it competitive in the global market place. This presents significant opportunities to export U.S. natural gas. In fact, EIA estimates that by 2016 the United States will be a net exporter of natural gas.
As the Department of Energy works to determine if pending applications to export natural gas to non-Free Trade Agreement countries are in the public interest, I hope it takes into consideration not only the domestic economic benefits, but also the opportunities to strengthen our strategic partnerships with key allies and bolster our national security.
In my role as Chairman of the U.S. Delegation to the North Atlantic Treaty Organization (NATO) Parliamentary Assembly, many foreign leaders and dignitaries have expressed to me the need for energy diversification and its importance to strengthen our strategic partnerships. It should be noted that several of the largest natural gas importers are also NATO members with strong national security ties to the United States. Many of our allies are heavily reliant on natural gas from either one country or from unstable regions. For example, several European countries have experienced natural gas supply disruptions from Russia, the largest supplier of natural gas to Europe, over various disputes. Also, Turkey relies on 20 percent of its natural gas from Iran. Recently, Islamist militants attacked a natural gas facility in Algeria, which is the third largest exporter of natural gas to Europe.
In addition, Japan, a strategic ally in Asia and already the world's largest importer of natural gas, may need to seek greater imports of natural gas as a result of the fallout from its 2011 earthquake/tsunami/nuclear plant disaster. Japan already relies on 42 percent of its natural gas from Russia, the Middle East and North Africa.
Increasing natural gas exports to key allies would help them diversify their energy resources, bolster their energy and national security, and strengthen our strategic alliances. This would also help reduce our trade deficit and create job opportunities for American workers. In fact, a recent Department of Energy-commissioned report found that increasing exports of natural gas would have positive economic benefits for our country.
Two of the witnesses here with us today, Dr. Charles Ebinger of the Brookings Institute, and Mr. Thomas Choi of Deloitte MarkPoint LLC, have already written about the foreign policy implications of U.S. natural gas exports. The Brookings Energy Security Initiative report, entitled “Evaluating the Prospects for Increased Exports of Liquefied Natural Gas from the United States,” states:
“The risk of high reliance on Russian gas has been a principal driver of European energy policy in recent decades. Among central and eastern European states, particularly those formerly aligned with the Soviet Union such as Poland, Hungary, and the Czech Republic, the issue of reliance on imports of Russian gas is a primary energy security concern and has inspired energy policies aimed at diversification of fuel sources for power generation. From the U.S. perspective such Russian influence in the affairs of these democratic nations is an impediment to efforts at political and economic reform. The market power of Gazprom, Russia’s state-owned gas monopoly is evident in these countries.”
“…the addition of a large, market-based producer will indirectly serve to increase gas supply diversity to Europe, thereby providing European consumers with increased flexibility and market power.”
On our key partnerships in Asia, it states:
“Increased LNG exports will provide similar assistance to strategic U.S. allies in the Pacific Basin.”
“…the ability of the United States to provide a degree of increased energy security and pricing relief to LNG importers in the region will be an important economic and strategic asset.”
In the study by Deloitte entitled “Exporting the American Renaissance – Global Impacts of LNG Exports from the United States,” the report states:
“Maintaining market share and oil-indexed prices are major concerns for Russia.”
“Russia has jealously guarded its European market share through control of its pipeline transit capacities. By restricting access to its pipelines, Russia is able to prevent supplies from other countries…from reaching lucrative European markets and competing with Russian supplies.
“U.S. LNG exports will likely apply greater pressure on Russia and other gas exporters to transition to competitively set prices.”
Mr. Chairman, helping our allies diversify their energy resources is important to strengthening our strategic partnerships and bolstering security. That is why I authored bipartisan and bicameral legislation, H.R. 580, the Expedited LNG for American Allies Act, which seeks to help strengthen our strategic partnerships with key allies, reduce the trade deficit and boost job growth right here at home by streamlining the regulatory process to export natural gas to NATO countries, Japan and others. This is the House companion bill to legislation authored by Senator John Barrasso (R-WY).
Under section 3 of the Natural Gas Act, companies seeking to export natural gas must gain approval from the Department of Energy's Office of Fossil Energy, which determines if such exports are in the public interest. For countries with which the United States has a Free Trade Agreement (FTA) the approval is automatic. For non-FTA countries, there is a regulatory process to determine if such exports are in the public interest.
The Expedited LNG for American Allies Act would treat NATO countries and Japan similar to FTA countries, making the public interest determination automatic for natural gas exports to our key allies. The bill also creates a process that allows the addition of other foreign countries to this list if the Secretary of State, in consultation with the Secretary of Defense, determines that it would be in our national security interests. It should be noted that companies seeking to export natural gas must still seek approval from the Federal Energy Regulatory Commission.
Mr. Chairman, exporting U.S. natural gas presents opportunities to create American jobs while helping to bolster our strategic alliances.
Again, thank you for holding this hearing and for the opportunity to be with you here today.