f getting more money into the system. this is a way to save tremendous amounts of money. so we have examples. i've got to go visit the bridge that fell down and no walking. that thing was rebuilt in a year. that would be a 10 or 20 year project probably but the agencies work together and we didn't have a gotcha attitude. it was how can we help you get this thing done. ..

and i just want to make one further comment. i know this misunderstanding, but there is a reason we do this the way that we do. in my state of oklahoma we will list a number of projects. people going out in transportation districts in the state of oklahoma, make there own priorities so that my job is not so much to see

what can be done in a state of oklahoma but where the priorities come from the state. people just overlook that. that is one of the systems it does seem to work well. hopefully we we will be able to do a good a good job with this bill. any further comments you want to make. >> mr. chair, mr. chair, i want to thank you and the committee members. you you have a tough job and it is an incredibly important job. the governors will partner with you in any way that can be useful to get predictability, get the trust fund reauthorized and give a certainty. >> within your states. that is that is so important that we do that. >> absolutely. >> there is another thing that you can do apply the pressure necessary to our own elected people to let them no what the number one priority is. to use the constitutional argument that is what we

are supposed to be doing. and as i have heard it said many times before people were trying to make comments it's right down to transportation. i transportation. i have heard them say i wasn't talking about transportation. so it's something we are going to deal with something that does -- what i would not like to see is have a system change we'd take the states out of the system is you're the your the once you no where the priorities are what needs to be done, and where your elected officials live. that would be helpful. senator any further comment? >> chairman, i echo what you are suggesting. >> thank you both very much for being here. appreciate it. we are adjourned.

[inaudible conversations] [inaudible conversations] screeria

-- nigeria. - highway

trust fund. later, governor bill walker delivers the alaska state of the state address. thursday the senate energy and natural resources committee examined a proposal to increase exports of liquefied natural gas. the house has already passed a bill on the subject. this hearing chaired by senator lisa murkowski of alaska is about two hours.

meeting of the energy committee this morning. thank you to members and thank you to those on panel joining us. as you know, we've had kind of a busy week here on the committee. senator cantwell and i have logged a few hours standing up in chambers there trying to move a keystone bill through. and our hope is that we're on the final run of that. but i appreciate committee members coming a little bit earlier. we had initially noticed this for 10:00. but in an effort to try to get through this important hearing, then tndend to our business on the floor, we bumped it up. so thank you to our witnesses

for the accommodation. i want to recognize the lead bipartisan sponsors of s-33. we'll have some remarks this morning so i'll keep my comments brief this morning. i want to recognize, congratulate them and their co-sponsors, senator capito on the committee, hoeven and gardner, as well and senators udall, toomey. i have long argued that exports of liquefied natural gas should be expedited from the united states to our friends and allies overseas. i made the case in my energy 2020 two years ago and again in two more recent white papers. one called "america's opportunity to join the global gas trade," as well as "signal to the world." know from the outstart that i fully support the bill that we

have in front of the committee. i think it is the culmination of years of wroshg here in the legislative congress. i can remember when senator dick lugar introduced in december 2012 laid out concept exports for nato members should receive expedited treatment at the doe. as proposals came forth more countries were added. eventually the entire world trade organization. yesterday we voted on senator cruz's wto amendment as part of the ongoing keystone xl debate. last year thewe saw proposals to give the department of time limit for authorizations of these licenses with the clark starting start at various points. after final authorization, after prefiling and so forth. many colleagues co-sponsoring this current legislation were involved in those efforts as was our former colleague, senator

mark udall. i think we would all recognize that this legislation in front of us, ds-33 is a xromcompromise. imperfect in certain ways. but i do think it is the result of some very serious work by very serious people coming together to try to address an issue. i thank my cleegszolleagues for all that they have done together on this. i will turn to my ranking member for comments. >> thank you. as you said, we're on the floor on a pretty serious policy discussion on energy and we're having this hearing this morning. i think it is obvious to everybody we're two female committee chairs but we also have two female staff directors. i think the fact we're having this hearing and the floor debate at the same time just shows we are capable of

multi-tasking when it comes to energy policy. makes for a busy day. at this hearing we are here to discuss s-33. that is a bill to seek accelerated and more certainty to the process of determining natural gas exports. and whether they are in the public interest. as we consider this bill, and how to discuss it with be we obviously are interested in taking advantage of america's abundant natural gas and its ability to help transnorm our economy. it was only ten years ago when we were discussing how we would need to import narg gas and how many new term nals wreed's need to build to meet growing demand. today's natural gas has become so plentiful and inexpensive that we reverse the flow and turn those l and g import facilities into e port facilities. today we'll discuss some of my colleagues -- i think five members of the committee -- are looking for ways to speed up the export permitting process.

i appreciate that they are doing so in a way that respects the critical nipa process, maintains the legal requirements for exports to receive a public interest determination, and i would note however that the department of energy recently changed the process to approve these new projects and the goal of this was to speed up the overall approval process so as we consider s-33 and whether this legislation i'm interested in finding out whether these issues have actually been addressed. so is the new revised doe process actually working in the five months since the department of energy adopted its new policy it has issued four separate approvals for l and g export facilities. currently 32 are pending. we must consider whether the revised process the -- is the best way to evaluate throws

projects. and determination about the public interest. a fixed deadline is not necessarily always the best in the applicant's best interest as well. what if the authorization can't be made in 45 days but could be made in 60 or 90 days. it would be unfortunate the applicant would get turned out rather than from a public interest determination. third, is it appropriate to make the decision before the ferc process is completed. right now doe starts its process after approval. but that requires more than just review review. all of these are important questions that will have for today's hearing.

thank you so much for giving our colleagues a chance to be here to discuss this issue. i would say besides the five members who have very -- support for this legislation and some of it has already been implemented, we have great concerns about what is the impact of in as it relates to pricing midwest and to natural gas. i being from a hydrostate am always very aware of how energy is the lifeblood of the economy and how it has built the northwest economy over and over again. i want to understand how this will impact also our big industrial users and the impact. look forward to having questions from the panelists who are here today to testify. thank you. >> thank you, senator cantwell. i want to note for the record senator portman was added was co-sponsor to this bill as we appreciate his involvement as

well. >> thank you very much, clarm murkowski. thank you for holding today's hearing on lick wide natural gas export exploration. the lng permitting certainty and transparentscy act would expedite the permitting process for lng exports to countries that do not have free trade agreements with the united states. it would require the secretary of energy to make a final decision on an export application within 45 days after virnlt environmental reviews process is complete. it would provide for expedited judicial review for export projects. final finally, exporters will publicly be required to disclose.

the legal challenges to l and g export projects will be resolved expeditiously. in short our bill will give investors greater confidence that export projects will be permitted and built. our bill is carefully crafted and it is a bipartisan compromise. our bill offers congress the best chance to do something meaningful for lng exports. study after study has shown that lng exports will create good paying jobs across america, in states like oregon, west virginia coll next mexico and wyoming wyoming. it will reduce our nation's trade deficit. it will even help president obama fulfill his goal of doubling our nation's exports

which he set five years ago this week. finally, it is a powerful means to bring about positive change throughout the world. it will help increase the energy security of key u.s. allies in partners throughout europe and air shah asia. lnge ports will also give countries an alternative to energy from iran. in conclusion i'd like to thank senator hinrich for his leader ship on leadership on this bill. he's been a great leader on this project. finally i would like to thank the witnesses for their willingness to of it t here today. thank you. >> thank you for your lone leadership on this issue and that of senator hinrich's as well.

thank you for holding this hearing. i very much appreciate the work of senator brasso and his staff in putting together this bibill. i am incredibly pleased to join my colleagues, senators in sponsoring this bill.in sponsoring this bill. in sponsoring this bill. at chair mentioned, our bill follows directly from the work in the last congress of our former colleague senator udall and senator gardner. and my home state of new mexico, some of you flowknow, ranks seventh in the nation in good production. the main producing region in the region is san juan. in farmington, aztec.

the good news is we have large reserves of natural gas. but prices have been depressed to less than $3 per million btu negatively affecting the gas producing regions. i support the cautious approach taken at the department of energy. it makes sense for d ochltdoe to complete its review of application for exports after the review has been completed. recent studies show that the industry can fully support modest levels of exports of lng with minimal impacts on consumers while boosting the nation's economic output and jobs in states like senators brasso's and mine. i co-sponsored this bill because i believe it will help stimulate job opportunities for my state's gas industry while fully preserving both environmental

and safety reviews and doe's determination of public interest. including the authority to approve or deny applications to export lng. the bill will also provide much needed transparency by making available to the public the countries to which lng has been delivered. thank you again for holding this hearing and i look forward to hearing from our witnesses today. >> thank you. now we turn to our panel. we'll begin this morning with mr. smith and just go down the row. i will introduce everyone at outset here and then we'll move for five minutes presentations, then followed by questions from the members here.

we first have mr. christopher smith, assistant secretary for fossil energy at the department of energy. mr. paul cicio welcome. martin durbin. mr. ross eisenberg. and then our last panelist this morning, mr. david korunyi. welcome to each of you. >> thanks you, clarmhairman murkowski and members of the committee. i appreciate this opportunity to be here to discuss the department of energy's program regulating the export of lick wide natural gas and to answer questions about s-33. since 2010 when we began receiving long-term applications

to export lng to non-fta countries the department demonstrated its compliment to protecting public interest. we conduct a thorough public interest determination process, one that's expeditious judicious and fair. that includes ample opportunity for public input to evaluate in an export is in the public interest, a determination allows balancing a range of important factors including xlik impacts, international dynamics, security of natural gas supply environmental concerns and market dynamics and developments. i testified before this committee last july. and at the time we just announced a new procedure for processing lng applications. i told you that by focusing our efforts on the projects that had completed the safety evaluation process, that reviewed that it would help us to make our decision making more effective and efficient and that it would allow the department of in rg to focus on those projects that

were most mature and therefore most likely to be constructed. since the announcement of the new procedures the decision making process has been completed on two projects. in total the department has approved 5.7 billion cubic feet per day and long-term e baltimoration. we've issued thorough orders that can stand up to the scrutiny that they are sure to receive and we've done it within days of the project getting sign-off. i believe this demonstrates our commitment to act expeditiously and effectively in addressing the department's responsibilities under the flarl gas act requirements. in done seclusion i appreciate the xlit's interest in discussing this very important issue with the department of energy and i look forward to this discussion. we understand the significance

of this issue. i'll be happy to answer any questions the committee might have. >> thank you, mr. smith. >> chairman murkowski ranking member can't well and members of the committee, thank you for this opportunity to be here today. my name is paul cicio president of the industrial consumers of america. we are an industrial consumer advocate. we are not opposed to lng exports. however, today there is no energy public policy decision more important whether or not than to approve an export facility for 20 to 30 years. reason is all risks associated with the export of lng fall on consumer. the larger the ln ghchltg export volume, the larger the cumulative risk. today because of unfettered lng

exports, domestic prices have tripled in australia because the australian zbvlth aregovernment failed to protect the consumer. we do not want to see that here long term. if policy makers do not fully implement the act. lng objection ports create winners and losers. it explains how higher natural gas prices can be expected to have a negative effect on outfit an employment particularly by sectors that use large amounts of natural gas. that is us. figure 12 of our written testimony is directed from the report and shows how exports result in loss of labor income wages. capital income and indirect taxes. combined these accelerate wage disparity. the net economic gain at its

peak is a meager $20 billion in 2020 and declines from there. bottom line is that the bulk of the population is negatively impacted to the benefit of a few raising questions about how it can be in the public interest. >> announcer: the in their wisdom congress passed the natural gas act. congress understood that unlike so many other tradable products, natural gas is different. because consumers do not have a substitute and it is not renewable. congress felt a responsibility to act in their behalf to protect unknowing consumer who does not have the ability to understand the long-term implications of lng exports. for this reason the natural gas act includes a provision called the public interest

determination and it is completed for each application to export to non-free trade governments 37 governments. the government accountability office says the doe has not defined public interest. it is a glaring omission if not a legal issue. if the doe has not defined public interest how can they make decisions on 145 million consumers? without a definition of public interest, how much public hardship can be inflicted before the doe denies the next application? the defenses anything of public interest is not a macro economic number like the so ln called net economic benefit number of the report. the real definition of public interest was pioneered by justice brandice. the public interest is that which produces the most good for

most people. the national gas act specifically anticipates that adjustments to lng exports would be in the public interest when it states that doe "may from time to time, after opportunity for hearing and for good cause make such supplemental order in the premises as it may find necessary and appropriate." so the natural gas act creates an obligation for the doe to monitor and to do economic impact assessments at regular intervals to be sure that exports do not harm the economy and jobs long term. however, contrary to the natural gas act, the doe has stated it does not plan to monitor impacts and make such adjustments. to do the no do implies that u.s. policy is designed to protect capital investment of lng exporters around not u.s. manufacturing assets.

in closing we urge the support of this committee to conduct oversight and require the doe to conduct rule making to define public interest create up-to-date decision making guidance, to condition applications for monitoring conduct economic assessments at regular intervals and be prepared to protect the public. we urge the doe from refraining from further approvals until such time as it makes these necessary rule makings. thank you. >> morning chairman murkowski ranking member cantwell members of the committee. thank you for the opportunity to appear before you this morning. america's natural gas alliance strongly supports s-33 to establish a timely review process for export facilities. this will send a strong sflal to the investment community and a clear message to our allies and adversaries that the u.s. is determined to play a leadership role in global energy markets.

given the sheer magnitude of u.s. shale gas resources, there is no question that our nation can be a global energy leader without sacrificing our domestic advantage. now is the time to seize this opportunity. while some have raised concerns regarding supply and price the markets and experience speak for itself. as recently as 2009 the u.s. energy information administration forecast energy prices would rise to $13 by 2015. just this last year in 2014 and multiple interpend prot projection-- right now in the dead of winter peak season for natural gas demand, prices are less than $3. even lower if you are in pennsylvania. the markets are screaming for new and diversified demand outlets for natural gas.

l flchlt the u.s. is now world's leading producer of natural gas. the u.s. consumed 26 trillion cubic feet of natural gas in 2013. the only remaining uncertainty around natural gas supplies is -- where is the top? as technology continues to advance, reserve estimates din to grow. as a result public and private sector experts agree that the u.s. has enough natural gas at reasonable prices to sustain substantial increases in domestic consumption and significant levels of exports.

as a result, eia projects natural gas exports will account for less than 10% of demand for u.s. natural gas by 2040. those same global market dynamics underscore the sense of urgency. lng facilities cost billions of dollars and take several years to construct. unless we act quickly to provide greater certainty in the approval process we miss the opportunity to become an integral player in international markets. far from competing with domestic interests, lng exports markets will strengthen the u.s. economy. simply put, more dry gas production means more natural gas exports.

the chemical industry alone as listed projects representing $137 billion in investment all linked to natural gas. as markets scream for demand exports provide a win-win opportunity. of course lng export terminals are just one aspect of energy infrastructure. timely approvals of new and expanded pipeline projects also require the priority attention of policymakers at all levels. as several members of this committee know firsthand and it is particularly true if the northeast where expanded pipelines would unlock opportunities we see flourishing in so many parts of the country. thanks for working to ensure america's competitive advantage. i look forward to our continued work together to build this energy revolution in a sustainable economic mfrg and

environmental success story for nation. thank you. and environmental success story for nation. thank you.a and environmental success story for nation. thank you.n and environmental success story for nation. thank you.u and environmental success story for nation. thank you.f and environmental success story for nation. thank you.a and environmental success story for nation. thank you.c and environmental success story for nation. thank you.t and environmental success story for nation. thank you.u and environmental success story for nation. thank you.ri success story for nation. thank you. >> good morning. on belaugh of thehalf trade association in the united states, im'm dilateelighted to share our views. the departments of placed placed all license applications on temporary hold while it studied the macro economic impact of exporting lng. the study forecast the u.s. would gain net economic benefits. it urged the committee that the free market will find equilibrium here and exports should be governed by principles of free trade and open markets.

some witnesses at that hearing took the opposing view calling into question the validity of the doe study's findings and warning of constrained natural gas supplies "unfettered lng exports," and skyrocketing natural gas prices. fast food to today. doomsday predictions have not come true. only five of the terminals out of 37 are under construction. overwhelming numbers of economists who have looked at this issue including the doe have concluded the lng exports and a strong manufacturing sector can co-exist. as of last night, gas stood at $2.98, a full $2 lower than two years ago when i was here to testify. study after study has confirmed

and continues to confirm that manufacturers are investing in the united states thanks to a competitive abundant and secure supply of energy. manufacturers in arkansas california, coll iowa louisiana, maryland, minnesota, nerve, new york, ohio pennsylvania oklahoma, texas, utah, virginia and many others are taking part already in the explain chain to support terminals already under construction. in maryland 14,600 jobs, created across the supply chain.

we applaud the doe for taking look at the inefficiencies and trying to fix them. we once again find ourselves in a situation where the approvals are starting to lag. a project that received conditional approval as far back as 2013, now approaching the fourth month of deliberations on a final license. we believe s-33, is both timely and warranted. this bill ensures that the free hand of the marketplace will govern international trade by providing a 45-day deadline on the doe to approve or deny pending lng export applications.

it do is not affect any other requirements. but eliminating unnecessary delays, the bill protects rubbing arub ing -- running afoul of our obligations.running afoul of our obligations.running afoul of our obligations.rubrunning afoul of our obligations.running afoul of our obligations.running afoul of our obligations.unning afoul of our obligations. developers looking to build an lng facility must subject them soefsthem themselves to a multi-faceted permitting process. s-33 provides certainly while ensuring that all environmental laws will be complied with to their fullest extent. manufacturers support this bill and urge the committee to

approve this legislation. >> finally, mr. ckoranyi. >> thank you. i am honored to appear before you today to discuss the geopolitical implications of the act. i will make three brief points in support of the act. point number one. european energy security is matter of natural security for the united states. as mr. putin continues his aggression against ukraine that threatened the trangzsatlantic community as a whole. as a hungarian i witnessed firsthand devastating effects of 2006 and 2009 gas crisis in the region. we cannot be sure that another cut-off does not happen. if not this year, then the next. furthermore, compromising energy security and corrupting the energy sector are at the heart of moscow's strategy to divide

our alliance and render it ineffective. opec deals with the kremlin question the country's ability to conduct an independent foreign policy that is both in the national and in the allies interest. this is especially unnerving as the european union needs anonymity to upholdrussia. the good news is that europe is finally stepping up to the plate. but europe cannot succeed without the help of the united states. europe has access to multiple sources of pipe gases as well as lng supplies. but current and prospective supplies from both the south and the southeast face their own challenges due to the turmoil in north africa and across the middle east. most lng supplies outside the

u.s. are not without risk either. nigeria and yemen are facing terrorist and insurgent activity. producer such as egypt and indonesia have to grapple with increasing domestic demand that limit their export capabilities. qatar, the biggest energy producer to date, its energy tankers have to press to the strait of hormuz and suez canal. meanwhile, u.s. lng supplies do not face political qualms. u.s. energy would rely reliable and competitive alternative to the allies in central grurp and provide liquidity to the global gas markets. sending a critically important message ever strategic reassurance to a region that is under the most serious threat since the end of the cold war. point number two -- even if another single drop of gas makes it to europe, which i believe is a very unlikely prospect, u.s.

energy exports will nevertheless substantially improve european energy security including that of ukraine. u.s. energy is admittedly no panacea. in and of itself it will not solve europe's energy security problems but clarity in the lng export licensing procedure would put a downward pressure on gas prices abdz celebrate the interconnection between the european gas markets well before or even in the absence of a single american gas molecule reaching europe. that is because lng markets are global. markets are slapd by future expectations and the mere existence of a credible alternative will incentiveize infrastructure investment. terminals enable both greece and lithuania recently to ensure substantial gas discounts.

exports in particularly important. the u.s. has been promoting transparency and open markets. to the great benefit of the whole world. introducing that transparency into the export licensing procedure would be critical to bolster trust in america's global leadership. thank you, madam chair. >> thank you. all of you, this morning for your testimony, your comments. we greatly appreciate it. we'll now begin questions from the members. i would ask members to be sure to limit your time to five minutes as we've got a lot of folks to get through. and we've got votes that are theoretically going to begin around 11 111:00. mr. smith i would like to start with you. reading through both your

written testimony and the comments that you've provided here this morning, you you havehave outlined steps that doe has taken, that really get us to a point where there is -- there is less time between the approvals. i appreciate what you have done with re-alignment. your testimony states that this legislation is "not necessary." now, this is not saying that you don't support the legislation. i certainly understand that you have, again under your leadership, and with secretary moniz, you've issued several final tlorauthorizations. again, i appreciate the xlentscomments and direction that you are taking. but i think we here in congress

need to be thinking long-term. secretary moniz has made very clear that he wants to work through this process, but i worry that perhaps a future secretaryondretary of energy might not be as favorable to lng exports connelling out of this secretary around the administration. so i question that i would ask you very directly is whether or not you think s-33, as it is written, is workable and acheevl. achievable. >> thank you, madam chair, for the question. first of all, we understand the intents and interest of this legislation and in fact as i listened to many of the comments that have been made here in opening statements, we share many of these drives, many of these core values of transparency, make being prudent public interest determinations. so i think we have a lot in common in terms of what we want

to accomplish and we understand the intent of the legislation. in fact, the changes that the department of has made to our internal process has been along those exact same lines make sure we are making good, solid public interest decisions that withstand scrutiny. so we think we are currently moving in that direction and we're using the current statute in a way that protects the public interest. that said, your direct question about the workability of the legislation that's being proposed certainly if this legislation is passed as currently written the department will be able to accomplish the mission. we will, as always, accomplish the letter and spirit of the law. we believe there is a solution we will be able to comply with. >> well i appreciate that. what you're telling me is you can do it you have been doing it 45 dies is workableays is workable.

>> yes sfloertenator. if this is the legislation that is passed, we can comply with the law. >> i understand. let me ask you a question regarding lng and alaska. as you no he, the facility there as has been exporting lng since 1969. some forget that alaska has been engaged in the export business for a long long period of time. granted, these have been small amounts but it has britain a proeen a process without interruption, the longest export contract that we've had in the country. so i think it has laid the groundwork most certainly for things to come. of course we also have the bigger project, the alaska lng project that i believe merits a conditional authorization from doe on the basis of what the

department itself has described as these u niknique features of an lace alaska project but you have an 800-mile pipe. is it doe's understanding this legislation would no no way affect lng alaska ooh eleligibility to x port to non-lng countries and the project will receive an extended deadline. >> thanks for the question. i have actually visited the facility in alaska. spent time on the north slope. so we have a keen understanding of opportunities and some of the challenges with all of those projects. it is my understanding that we've already stated that we

have held the right to do a conditional authorization torefor projects coming out of alaska. it is my view this bill would not change that we still have the ability to issue a conditional authorization for both of these projects. the north slope project has additional complexities that might require additional authorization. in addition as we read the law as currently written, it doesn't appear to make any distinction between the lower 48 and alaska in terms of the time limit that two impose on the department. >> thank you. i appreciate you going out there and spending some time. >> thank you, madam chair. i want to be clear, i like natural gas juxtaposed to what we are discuss something on the floor. which is a dirtier source of fuel. dempbtly like exports. but i like something even better than those two bsh -- i like cheap domestic sores of energy. i think part of this discussion is how we ensure that we're

going to make sure that the u.s. economy takes best advantage of this. so i have a bunch of different questions. maybe i can cue it all up. mr. durbin, talk a little bit about the democratic natural gas markets. the potential for the transition of the maritime energying to natural gas as a fuel source again to dpli with environmental issues aurl up and down the coast. how do we get that right. mr. cicero what price point -- again, those were very exaggerated rates. but the aluminum industry an several other mineral industries just had no choice. the price pluck waitfluctuation came.

guess what? those factories shut down forever. those long-term prices get locked in for a preferential rate for a language period of time because the nature of those contracts. then the domestic market is based on that international market not locked in to long-term contracts. what price point do you start worrying about the impact to you industry? my guess is it is a lot narrowing than people might imagine. then the doors shut and factory is not open again. it is not like you turn the lights back on again. aluminum plants shut down forever and ever. okay? so this is very important to midwest industry issues. third point is mr. smith, i just don't know what happens when you get this list, you say okay we're to the done -- denied. sock. so is that denied now like you're back at the bottom of a 100 permit list? or denied and like maybe in two years i'll think about you gwen? my question is i think the

denial part of this legislation is a good idea in concept but i think what it might actually mean on projects that really shouldn't be denied is an interesting question. i wonder if you have -- as quickly as people can answer that that would be appreciated. >> to start with the markets on natural gas going forward. we think there may be some additional opportunities as an industry but nonetheless first is power generation. no question we'll continue to see natural gas grow in the power generation market. second is the industry and manufacturing. petrochemicals will be a luge part part of that.hge part of that.uge part of that. over the road -- rail, road, but

that's not a huge demand draw. then exports of course. >> on the price. >> my energy intensive consumers consume about 75% of all the natural gas of the entire manufacturing sector. their operating costs range from about 20% energy to as much as 80% of the cost of making anything from plastics chemicals, fertilizer cements, steel, glass. there's two parts to that answer to that question. there is no specific price point. but first on the table is the fact that natural gas is subsidized and regulated in so many countries across the world that is kept at a low price. for example china may buy last year they bought lng at $16 but they were providing that gas to mr. non-residential consumers -- manufacturers -- at 1.

$1.78. we are looking long-term, not short-term. the fact is there are uncertainties in the domestic market in terms of what price point can producers produce gas. okay? they can impact investments. no one forecasts that the price drop of crude oil. that was a surprise. that's impacting investment oil and gas going noordforward. that will impact the supply. no one forecast it. what we do know is from 2000 to 2008 the price of natural gas increased by over 200% in the united states. that was over a 20% increase per year. over that time frame we lost 44,000 manufacturing facilities. now those plants shut down were not entirely because of energy. but i have those types of companies and they were a major

part of the plant shutdowns. >> thank you. maybe mr. smith can get us a longer answer -- i mean a more -- that's a pretty big question. i mean our time is over. but we can either get a short answer and a longer written answer. however, madam chair, you want to proceed. >> i can give a quick answer. i think it is important to emphasize that when we look at each applicant we are being loolooking at each on a case by case basis. each order is a long, detailed document that we've endeavored to write in good clear common sense english that has to address all points made by the intervineeneors in each case. we get varied xlentscomments. some strongly pro, some strongly have to make our public interest determination based on a variety of factors. what we do subsequently to that would depend on the individual

case. so there's not a rubber stamp. there's not a particular answer that comes out of a spread sheet. it would depend on the case. >> thank you. >> thank you. i'm now going to turn to senator barrasso, going a little bit out of order with the early bird rule. next in order to those who have based on when they have to return to the committee. no, i understand that i said we would go to the sponsors of the bill for their questions, and then go to those who are next in line which would be senator davanau after that. >> thank you, madam chairman. mr. smith, you correctly state as to add regulatory insurance to the applicants for the lngx exports, and as you said the department does share the goal of transparency and certainty of

process. the -- one of the areas that we disagree a bit is the department you said is committed to act expeditiously, but i don't think we've gotten those results, because the d.o.e. has given final approval of final applications. there are 33 export applications pending at d.o.e. a dozen have been pending for more than two years. an additional 13 have been pending for more than a year. so could you explain a little bit this discrepancy that we're seeing here? >> thank you, senator. first of all, yeah, as we understand the intent of the legislation, there's some agreement. in terms of how far the process currently operates, the way the department's operating is there are two important things that a particular exporter needs in order to build a plant. they need to have to show they can build the plant in a way that it's safe. and with the department of energy to export the molecules and those two together create a project. our process now says that we

look at a particular -- an applicant after it's completed that first process to show they can actually build the plant safely. in that aspect we've moved very quickly. essentially as soon as these projects have come out of the queue, or out of the foot process, we've moved very quickly. with one of the applicants, we acted the next day, within 22 hours. so i think we've demonstrated that our intent certainly is to move quickly. but we also have to act in a way that's judicious and write these orders in a way that withstands the scrutiny they're sure to receive. there's a variety of views that we have to balance. >> so is it fair to say the department of energy would be able to comply with the deadline that's set in the bill? >> that's my view, yes. >> thank you very much. mr. carney it's my understanding 21 countries import more than 40% of their natural gas from russia. in your testimony, you say that

the united states is in an excellent position to improve liquidity on the global lng market, to european countries to access lng, and accelerated process, licensing would put downward pressure on gas prices in central and eastern europe well before even a single molecule of american gas might even reach europe. so could you further explain how u.s. lng exports help european nations if lng is not actually shipped to europe? >> thank you senator that's an excellent question. it actually already has. because the mere fact that the united states no longer imports in large quantities lng outside the u.s. actually put a downward pressure on european prices already. one of the reasons gas has to be negotiated long-term natural gas supply contracts in europe

and in central and eastern europe as well is that these countries built up terminals and they have access to the energy market. and supplies from qatar from nigeria, from other places that were supposed to go to the united states ended up in up. so this has already happened in the past couple of years. looking forward, if there are additional quantities on the international gas markets, that will put a further downward pressure on these prices, especially if central and eastern europe manages to complete its market integration into the eu. there is the single unified energy market. >> mr. eisenberg, you stated that the overwhelming number of economists have looked at this issue, including the department of energy itself have all repeatedly concluded that lng exports and domestic manufacturing sector can

co-exist. can you expand on your comments there? >> that's a really excellent point. i've read most of the studies at this point. i'm not an economist, i know a lot of smart ones and i've read most of them. the list is pretty long. they've basically all come out to the same place. they all come to the same spot. if i could read you something from the updated -- nara actually updated the study for the d.o.e. a couple of years ago. the last page of the executive summary has the title, u.s. manufacturing renaissance is unlikely to be harmed by lng exports. they say our analysis suggests there's no support for the concern that lng exports even in the unlimited export case will affect the renaissance in the united states. we're also seeing this in real life on the ground. everybody's winning here. >> thank you madam chairman.

>> thank you madam chairman. mr. durbin i want to start -- you've heard the claim that u.s. liquid natural gas exports could result in the kind of inflated lng prices that australia has experienced. can you talk a little bit about -- and explain to the panel where the australia example is not directly analogous to the u.s. markets, particularly in light of the dramatic differences in market size? >> sure. i appreciate the question, senator. i would say it would be like comparing apples and oranges. i'm not even sure they're both fruits. if you look at the size of the economy, you know, in gdp, we're more than ten times greater. our production of natural gas is more than 11 times greater. the infrastructure that we have in the u.s. for being able to produce natural gas, there is no comparison, which allows us to be able to produce the gas at a much lower cost. and i think the real important

point here is that right now, what australia is experiencing, is because they are exporting literally 50% -- more than 50% of what they're producing, they're exporting. even in the most -- in the eia projections. we'll be exporting between 9% and 10% of our production in 2040. i think there really is no comparison to make there. and no threat that the united states would end up experiencing the same type of thing. >> my understanding is our market is roughly about 40 times the size of australia? and we're talking about much lower levels of overall exports correct? >> that's correct. >> mr. smith i want to turn to you real quick. if it were enacted this legislation is passed and signed would you expect our bill to change the number of applications for exports to non-fta countries that would eventually be approved or

disapproved by the d.o.e.? >> thank you for the question, senator. i honestly think it would be impossible for me to determine based on the language if this is going to impact the number of final applicants. the applicants on the condition of the time et cetera. so i would demure from making any prediction or forecast, because these are case-by-case evaluations that we make. >> all right. as you know, our bill also requires d.o.e. to publish the list of countries that receive shipments of liquid natural gas from the united states. do you have a view as to whether or not that would be important information for the public to have access to? >> we think that more transparency is good. so we've endeavored to create a process that's open, that is transparent, and that makes all this information available to

potential intervenors. so we think that is important. >> great. i'll have one last question for you, and then i'll yield back the remainder of my time. one of my interests is making sure that we continue to grow jobs while sort of reordering our energy infrastructure to recognize the challenges that we have with carbon pollution and climate change. natural gas has a sort of unique place within those changes. we have limited capacity right now to do electrical storage for example but natural gas allows us to seam together different sources of energy in more realtime. much more effectively than old-fashioned coal generation just because of how fast you can ramp up and down the turbines. do you want to talk about -- a little bit about your thoughts about how relatively low natural gas prices that we have experienced with current

policies will affect the ability to deploy those other sources of clean renewable energies? for example solar and wind power? >> thank you, senator. i'll focus on the natural gas portion, the technology program that i oversee. one general comment that i'll make is that these are long-term important and decadal challenges. so we don't manage our technology programs based on the short-term fluctuations of the futures curve. we think these are important existential challenges, that it will drive the clean energy economy of the future. all of these solutions from wind to solar to natural gas and hence geothermal nuclear, they remain core and important parts of the department of energy's technology program. that said, we have seen big fluctuations in natural gas prices, that have come from a variety of sources. that is something that we have to take into account. we look at the importance of price when we look at public

interest determination. they impact the price on consumers, on manufacturers, and a lot 6 the issues that you heard here on the panel. that is something we're focused on. we think it is very important. but over time, as you look at our research and development program, in the area that i manage which deals with throughout the department of energy, we want to make sure we're pushing those technologies here in the united states. >> thank you again. >> thank you madam chair. i thank the witnesses for being here today. i'm very pleased to be here, and also to be a co-sponsor of senator barrasso's bill. many people think of the shelf as occurring in the western states, like wyoming. but that is not the case as we know. the eastern united states and my home state of west virginia have been blessed with shale gas reserves. and we're just discovering really how massive they are. if i could illustrate the point for a few minutes. let me share a few facts from

the december 2014 department of energy report on oil and gas reserves in the united states. in 2013, west virginia surpassed oklahoma to become the third largest shale gas reserve state. west virginia also had the second largest discoveries of natural gas reserves behind only pennsylvania and in fact a full 70% of the 2013 increase in proven gas reserves is because of west virginia and pennsylvania in the marcellus shale play. we have more than enough gas to power a renaissance back home in west virginia and to export liquefied natural gas, supplying lng to our friends and allies increases their dependence on hostile regimes, as we heard from the testimony, and a result will increase our own national security. not to mention a huge economic boon to certain areas of the country and certainly my state of west virginia. i would like to start with a question for mr. smith very briefly. as you know, the lng facility in

maryland has received a finding of no significant impact on november the 5th of 2015. that was nearly three months ago. can you give this committee an idea of when the d.o.e. expects to supply final approval of the lng application? >> thank you for the question, senator. so, under our current process, we move on these applications in the public determination once they've completed the first process. that includes all of the final notice for rehearing in that process. we watch these as they go through the process. it's our expectation that would be concluding probably in the february time frame. and so depending on ferc finishing that process, that would allow us to move forward with our final determination. >> thank you. as we all know, the estimates of what the actual reserves are is sort of a moving target.

it started slower and seems to be expanding greatly. i like the way mr. eisenberg framed it that everybody's winning. but i'm curious to know from you, mr. eisenberg and mr. durbin, as these estimates of the vast resource change, how do your projections on the economic impact that will have in job creation and manufacturing resurgence how does that change in your estimates and how closely are you monitoring that as we look at what the vast reserves actually provide? >> so we -- our policy, and frankly, the will of the manufacturers that i speak for is to have a stable secure, and consistent supply of natural gas. and so -- because we use it not only for electricity, but also as a feed stock for the many things that we do. >> right. >> that's a lot of what i do for a living. that's basically -- you know, we need to keep an eye on the policies that are coming out of

washington, and make sure that the manufacturers can still continue to do what they do. and so obviously, yeah, the supply matters significantly. you know we are now staring at a situation where eia every single year tells us we have more and more and more. >> right. >> we're very very optimistic, and continue to be optimistic. >> mr. durbin? >> yes in my written testimony, i show a chart that eia puts in there, showing the difference in the projections on reserves from 2009 through today. and i mentioned that. the point is, it's dynamic. and every year, it's increasing. but i think what's really important about this even this morning, eia put out a new paper, a new report, or i should say a statement talking about the vast increases in evidentthane crackers, all driven by the natural gas liquids produced with the greater reserves. >> we're seeing that in west

virginia, certainly. i should mention that the brazilian chemical manufacturing company is looking to cite a major cracker in west virginia, which would have a major residual economic benefit to that region, and hopefully a resurgence of our chemical industry, which has shrunk over the last several years because of the uses of the natural gas as a feed stock. you know i understand, mr. smith, just quickly, when you're looking at these -- well, i think my time's up. and we're under -- as a good former house member, i know i should quit when the red thing comes on. i'll learn to talk through it eventually, i'm sure. [ laughter ] >> we like that part, senator. you are more than welcome in this committee. thank you. >> thank you madam chair. you know this is a big deal here. we have this great new resource

for us in america that's giving us an edge that we haven't had in a long time in other areas. and how we make this decision is really, really important. i appreciate very much the different states' perspectives. but this is a big deal. and i want to first say thank you to the d.o.e., not only taking seriously the need to move forward but understanding that you need to update your study on economic impact for america. and the fact that you are doing that. and i don't know why we wouldn't wait for that to happen if we want to make sure we're doing this the right way. but i want to thank the secretary, and thank you for doing that. you know we know jobs are created when we build export facilities, right? but we also know according to the charles webber associates, that we -- using natural gas to increase american manufacturing

output is twice as valuable to the overall economy. just jobs in general. and creates eight times more jobs than exporting. so i don't know why we are not very concerned about what you're saying here. you're the end user, right? you're the guys that buy this. you're here, and you're buying it from industrial consumers. but we also have a whole lot of consumers that are concerned about heating oil and costs and so on. so the consumers, as you said, are taking all of the risks on this. i would like you to expand a little bit more on this from the standpoint of leveraging this great resource. and i get it from an oil and gas standpoint you want to sell to the highest -- user, the highest price. i get that. but from the american standpoint, i mean what i'm hearing, mr. cicio when you're

saying china buys it for $16 last year and subsidizes it, so their folks pay $1.78 now they're paying $1.78 and you're paying $16. so how is that good for americans' jobs? i'm desperately concerned about manufacturing jobs and getting that eight times leverage here for america. and i want american first policy. if you could speak to that. and also on australia, to me it's not the size of the country, it's how the government handled the issue. which is exactly what this bill does. this is australia-like in terms of the bill. and i am very concerned. i appreciate differences, but i have to say to me, in history, folks are going to look back at this and decide, now, what were we doing here in terms of americans, and american jobs.

>> well, thank you for that question. when we come to this issue we are not thinking short-term about -- and particularly looking at the nymex, and seeing $3 prices out for the next several years. that is not the point. we're looking out long-term. and there's references to how much gas we have. okay? now, we look at ten years out. and when we look at the eia technically recoverable resources, you know, we have a 58-year supply. we don't have a 100-year supply. in terms of jobs, you are correct. we can take that gas and create eight times more permanent jobs than if you export that gas. we recently looked at the permanent jobs created by the export terminals. any job is a good job okay? make no mistake. but construction jobs are short-term. these terminals the seven

terminals, first up, create 1,890 permanent jobs. and when that gas goes offshore it's gone, okay? all we're doing here is let's emphasize that we need to be looking long term, and each approval puts new demand on the marketplace that -- every study says the same thing, it will increase the price of gas and it will increase the price of electricity. we cannot forget that there's two parts. we're going to understand that, as i said earlier manufacturing is subsidized in these countries that we are competing with. the real world. and so we have to be -- it's not just the price that we're paying here in the united states that matters to manufacturers who compete around the world. so we need to come to this with great care. now, for those of you who feel that weather have never have to worry about a supply of natural gas,

then you should be all for putting in place the full implementation of the natural gas act that has these cautions the ongoing review of these terminals, the applications monitoring, and the d.o.e. having a requirement to revisit that, and be sure that it's not impacting the economy. if you feel we have so much gas, then you know then that trigger will never happen. so you should be supportive and not afraid of fully implementing the natural gas act. >> senator portman? >> thank you madam chair. thank you for having this hearing today. and thank you to the witnesses for giving us great testimony. i represent ohio, which is a state that didn't used to be viewed as a great natural gas producer. now we are, thanks to marcellus shale find, and utica. most significantly utica right now. i appreciate the fact that

national association of manufacturers is supporting this bill, the chamber of commerce supports this bill. i support this bill. i'm a co-sponsor now because i've looked at the alternatives and i think this is the best balance. shall it's in the legislation, a balanced approach. that's why so many manufacturers are supporting it. also, i would tell you, ohio does a lot of manufacturing for facilities, including lng export facilities. i noticed in your testimony this morning, you talked about chart industries, who testified in the ways and means committee, ohio based manufacturer involved in the lng supply chain. so it's going to help in the manufacturing as well. but i do think it's important that we have a balance in the legislation. i'm really interested in the legislation because of a broader interest that i have. i think this regulatory regime we have in this country is putting us behind in so many ways. back in the g