Congressman Mike Turner (OH-10), who has introduced the Expedited LNG for American Allies Act (H.R. 580), submitted the following statement for the record as the House Committee on Energy and Commerce Subcommittee on Energy and Power held a hearing on “U.S. Energy Abundance: Exports and the Changing Global Energy Landscape.”
Turner’s legislation 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. Turner serves as the Chairman of the U.S. Delegation to the NATO Parliamentary Assembly.
House Committee on Energy and Commerce
Subcommittee on Energy and Power
“U.S. Energy Abundance: Exports and the Changing Global Energy Landscape”
Statement for the Record
The Honorable Michael R. Turner
Chairman Whitfield, Ranking Member Rush, and Members of the subcommittee, thank you for the opportunity to submit a statement for the record for this important hearing.
Helping our allies diversify their energy resources is important to strengthening our strategic partnerships and bolstering security. That is why I authored H.R. 580, the Expedited LNG for American Allies Act, which seeks to help bolster our alliances, reduce the trade deficit and boost job growth right here at home. Specifically, the bill streamlines the regulatory process to export natural gas to NATO countries, Japan and possibly others. H.R. 580, the House companion measure to Senator John Barrasso’s (R-WY) S. 192, is an updated version of legislation from the 112th Congress introduced by Senator Richard Lugar (R-IN) and myself.
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. In fact, last week, the Department of the Interior announced that there is three times the amount of shale gas in North Dakota, South Dakota and Montana than previously estimated.
As a result of increased production, the price of U.S. natural gas has fallen, making it competitive in the global market place. This presents significant opportunities to export U.S. natural gas and create American jobs. A recent Department of Energy-commissioned report found that increasing exports of natural gas would have positive economic benefits for our country. In my home state of Ohio, 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 energy security continues to play an important role in global relationships and dialogue, increased U.S. natural gas production also stands to benefit our strategic allies abroad. In my role as Chairman of the U.S. Delegation to the NATO Parliamentary Assembly, many foreign leaders and officials have expressed to me the need to diversify energy resources away from one source or from unstable regions. Several of the largest natural gas importers are also NATO members with strong national security ties to the United States.
In recent years, various disputes have caused several European countries to experience natural gas supply disruptions from Russia, the largest supplier of natural gas to Europe. Turkey relies on 20 percent of its natural gas from Iran. Earlier this year, Islamist militants attacked a natural gas facility in Algeria, which is the third largest exporter of natural gas to Europe.
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 its 2011 nuclear plant disaster. Japan already relies on 42 percent of its natural gas from Russia, the Middle East and North Africa. According to recent press reports, Japan is negotiating with Russia to import more natural gas.
Increasing natural gas exports would not only help reduce our trade deficit and create jobs for American workers, but also help our key allies diversify their energy resources, bolster their energy and national security, and strengthen our strategic alliances.
There have been several studies examining the geopolitical impact of exporting U.S. natural gas. A recent report by the Brookings Institute entitled “Liquid Markets: Assessing the Case for U.S. Exports of Liquefied Natural Gas” 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, the Brookings Institute report 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.”
A study by Deloitte entitled “Exporting the American Renaissance – Global Impacts of LNG Exports from the United States” 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.”
The surplus of U.S. natural gas production is already having an impact on global natural gas markets. Natural gas previously destined for the United States, but no longer needed as a result of increased production, was diverted to other markets. In 2012, nearly half of natural gas supplied to Europe was purchased under spot contracts. A recent article in the Wall Street Journal entitled “In Reversal, Neighbors Squeeze Russia’s Gazprom Over Natural Gas Prices” states:
“In Europe, where Gazprom once had a reputation for hardball tactics and dictating prices, customers are tapping new sources. Booming shale-gas production in the U.S. has freed up vast quantities of other fuel from around the world, including American coal no longer needed at home. With that new leverage, Gazprom's European customers have squeezed billions of dollars in discounts from the company, and they are pressing for more.”
Under section 3 of the Natural Gas Act, companies seeking to export natural gas must receive permits from the Department of Energy, which determines if such exports are in the public interest. Export permits to countries with which the United States has a Free Trade Agreement (FTA) are automatically approved. For non-FTA countries, there is a regulatory process to determine if such exports are in the public interest.
In general when it comes to exporting U.S. goods, we often talk about barriers in other countries our U.S. producers must overcome to sell their products overseas. In this case, we have, in fact, placed regulatory barriers on ourselves to sell natural gas to consumers willing and eager to buy.
There are currently 20 applications before the Department of Energy from companies seeking approval to export natural gas to non-FTA countries. As the Department of Energy evaluates these applications, 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.
At the same time, I believe we can do more to help our allies diversify their energy resources while creating job opportunities right here at home. My bill, H.R. 580, the Expedited LNG for American Allies Act, would make approval of export licenses to NATO countries and Japan automatic. The measure 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.
Mr. Chairman, exporting U.S. natural gas presents opportunities to create American jobs while helping to bolster our strategic alliances. Thank you again for the opportunity to submit a statement for the record. I look forward to continuing to work with you on this important issue.