Washington D.C. – Rep. Eliot L. Engel, the senior Democratic member on the House Foreign Affairs Committee, gave the following statement, as prepared for delivery, at today’s full committee hearing “The Geopolitical Potential of the U.S. Energy Boom.”
“Mr. Chairman, thank you for holding this timely hearing.
“Events in Ukraine over the past few weeks have brought discussions about the future of American energy -- and specifically, whether or not the United States should export natural gas -- into the headlines and onto the opinion pages.
“Over the past decade, Russia has used its gas resources as a weapon to settle political disputes. And Ukraine has often been on the receiving end of these attacks. Just days into the current crisis, Gazprom announced that the prices it charged Ukraine would go up 37 percent the following month. And in 2009, Russia completely cut off Ukraine’s gas flows, leaving millions of people in the cold.
“The significant increase in U.S. natural gas production in recent years has generated new interest in US exports. To date, the Department of Energy has approved seven applications to export U.S. liquefied natural gas to countries in Europe, Asia, and South America – and that’s on top of other planned exports to countries with which we have a free trade agreement. So, just to be clear – American companies have been approved to export natural gas.
“When Secretary Kerry recently testified before the committee, he noted that already approved LNG projects would eventually produce 8.5 billion cubic feet of gas per day. That number is even higher now with this week’s approval of the Jordan Cove plant in Oregon. But let’s not forget it takes lots of time and money to construct these complex, multibillion dollar facilities.
“The first LNG export facility at Sabine Pass, Louisiana, is expected to go online next year. Exports from that plant could go to a number of countries, including Ukraine, Romania, Hungary or other Eastern European countries, provided they have the necessary import infrastructure.
“However, it’s not clear what impact U.S. exports would have on Europe’s energy relationship with Russia. U.S. gas production has already ended most gas imports into our country, expanding the supply available for other countries. Still, Russia will continue to be a major European energy supplier due to its large reserves and proximity to its customers. By contrast, U.S. natural gas must be chilled into a liquid and shipped across the Atlantic – which can be very costly.
“A Rice University study found that higher U.S. gas prices plus higher export costs could make shipments to both Europe and Asia unprofitable. In other words, the impact of American gas on European markets may be limited.
“As we weigh the pros and cons of increased energy exports, we must also carefully consider the impact on working people and small businesses here at home – including those in my district in New York.
“A 2012 study by the U.S. Department of Energy concluded that gas prices could rise by up to a third if the U.S. exported 12 billion cubic feet per day. Yet the total volume of all export applications currently pending at DOE is 36 billion cubic feet per day – three times as much. If that volume of gas were exported, then domestic gas prices could go much higher – and that would almost surely have a very negative impact on my constituents.
“On a related issue, I’d be interested to hear from the panel on what would happen to domestic gasoline prices if the 40-year old ban on crude oil exports were lifted.
“As we examine the future of American energy, we also need to consider the environmental impacts of extracting shale gas and oil. This process requires the injection of chemicals and other substances to unlock gas or oil deposits. I believe that companies should be required to disclose what they pump into the ground just as they must tell us what they put in our food.
“Using more natural gas in the United States to produce electricity could displace dirtier coal, thus lowering greenhouse gas emissions and the negative impact on our climate. We could also bolster U.S. national security by using natural gas as a transportation fuel, which helps reduce our reliance on oil. In fact, Rep. Ros-Lehtinen and I introduced bipartisan legislation last year -- the Open Fuel Standard Act -- that requires half of all new vehicles to run on non-petroleum fuels, such as natural gas or electricity. This bill would give consumers greater flexibility to choose more affordable fuel sources.
“Mr. Chairman, thank you again for holding this important hearing. I look forward to hearing from our panel on these complex and important issues.”