Senator Murkowski Remarks: 2013 Energy Outlook

Dentons and Navigant Consulting

Remarks: Energy Outlook Event (Dentons and Navigant Consulting)

Senator Lisa Murkowski

July 16, 2013


Good afternoon and thanks for the opportunity to join you here today. It’s not every day that I get to speak with such a large group of top-notch legal and analytical thinkers, so a special thanks to Dentons and Navigant for organizing this series of panels on the world’s energy outlook. As the Ranking Member of the Senate Committee on Energy and Natural Resources, I’m glad that all of you are engaging on this issue.


Many of you may have seen the Energy 20/20 blueprint I released back in February, laying out a vision of America’s energy future. I know your panels this morning have touched on many of the themes in that document. To give you the Twitter edition – in 140 characters or less – I believe that energy is good, and that it should be abundant, affordable, clean, diverse, and secure.  And I’m glad you seem to be coming at this from the same perspective.


I’ve come here from a full Committee hearing on gasoline prices, where we discussed many of the themes included in Energy 20/20.  Chief among them was our unconventional oil and gas boom, which one of our witnesses observed should truly be called a “renaissance” or “rebirth” – since “booms” are usually followed by “busts.”  Whatever we decide to call it, there is little disputing that rising domestic production has had a tremendous range of positive benefits for our country.  So I would like to spend some time examining them, and sharing with you some of the things we’re thinking about on the Hill.


Our Committee is by no means alone in recognizing the significant impact that production will have.  The National Intelligence Council, the long-range analytical unit of the U.S. intelligence community, publishes a document called “Global Trends” every few years. In the latest edition, it presents a number of “tectonic shifts” that it sees for the globe over the next couple decades.


The aging of the world’s population, the growth of cities and a global middle class, and shifting economic power are undeniable game-changers that we’re all familiar with. But also on that list is something called “U.S. energy independence.” That phrase is worth spending some time on, to think about it carefully.


First of all, on energy, as a nation we are already more independent than not. According to the Energy Information Administration, in 2012 we produced about 79 quadrillion Btu’s of energy – from fossil fuels, from nuclear power, from renewables, from everything. And we consumed about 95 quadrillion Btu. In other words, we get over 83% of our nation’s energy needs from home-grown sources.  This is largely due to the diversity of our energy supply, especially beyond the transportation sector.


Second, we produce so much energy of different types that we are able to export some of it to our friends and allies around the world. We sell more coal to Europe than we do to Asia, and at record levels. Amid all the debate over whether we should export liquefied natural gas is the fact that we already sell more natural gas to our North American neighbors via pipeline than the capacity of a typical LNG export terminal. Thanks to our world-class refineries, we’re selling more petroleum products abroad – gasoline, jet fuel, diesel – than ever before. We’re even selling very small amounts of crude oil.


So when we talk about energy independence, we’re talking about the United States emerging as an even more powerful player in global energy markets, as a producer and exporter, not just a consumer and importer. We’re talking about net terms. This is important to reiterate: if we become self-sufficient, it will mean that we’re still importing certain types of energy, like heavy crude oil, that we can’t produce as much of here at home – even as we export our surplus of other fuels.


The United States will not be the “hoarder of first resort,” if you will. The opportunities that we have from the unconventional oil and gas boom are found in the role we can play on the world stage, not in some private Lower 48 sideshow. We should not, will not, and cannot turn our backs on the world.


How exactly this tectonic shift will unfold is unclear. But we do know a few things. As we produce more light sweet crude, we will import less. Those imports will go somewhere else. The burgeoning global gas trade will evolve – new sources, new contracts, new relationships. We’ll see more pipelines as North America heads towards self-sufficiency, innovative technologies will come online, and the energy mix will continue to adjust in this dynamic system.


That is the big picture.


As much as I enjoy looking forward, as a Senator I’m also focused on some nearer-term priorities. I know Congress isn’t the most popular institution these days, but I have the distinct pleasure of serving on a great Committee. Chairman Wyden and I have spent a great deal of time and effort on returning to what we call “regular order,” which is the way things are supposed to work. And for the most part, it’s working. Bills are introduced, we hold hearings, we vote on them as a committee, and report them out. According to a recent count from National Journal, we have passed more measures than any other committee in the Senate.


Our efforts this year include an energy efficiency bill introduced by Senators Shaheen and Portman. It cleared committee by a vote of 19-3, and has Democratic and Republican co-sponsors.


We also sent two hydropower bills to the floor after a unanimous vote back in May. Companion bills for these have also passed in the House of Representatives, with over 400 votes each.


I’ve also introduced a nuclear waste bill with Senators Feinstein, Alexander, and Wyden. There are thousands of tons of waste that are stored at various sites around the country. Our bill presents a plan for dealing with all of it.


If you’re sensing a pattern, that’s because there is one. These are bipartisan, sensible bills that tackle problems we’ve been trying to solve for years. In comparison to the “silver bullet” approach, these are manageable bills that actually stand a chance of being enacted into law.


As we look forward to the United States as a major energy exporter, we should bear in mind that the legislation governing much of what we do is actually quite old. The Natural Gas Act is from 1938. The laws governing crude oil exports date back to the 1970s. To put all this in perspective, the Department of Energy was formed in 1977, the same year the first Star Wars movie was released.


We need a massive “re-think” on so many different assumptions, even our mindset – moving from a psychology of scarcity to one of abundance. However all this may play out, we stand the best chance of enacting sensible, effective, and helpful laws if we do so in an analytical, bipartisan way. These issues are bigger than one branch of government, and certainly bigger than one administration. And our decisions must stand the test of time.


Being careful and considered does not mean being slow and fickle. Being analytical does not mean being indecisive. Take, for instance, the debate over LNG exports. The administration took 29 months to approve the second export facility. That’s a little much for me, and if we’re going to capitalize on this opportunity, there really is a narrowing window.


There’s a narrowing window for the United States in general, as our competitors – many of which are genuine friends of ours in Canada and Australia – move forward on their own export projects. The demand for LNG is not infinite, and if others move first, we may miss out.


There’s a narrowing window in another sense, too. Gas contracts are long-term. We’re talking twenty or thirty years, not your typical apartment lease or cellphone plan. Pipelines and terminals are enormous undertakings. As our potential customers in Asia, Europe, and perhaps elsewhere look to the future, they have their own contracts to renew.


The faster we move, the sooner we can help them – either by supplying gas to them directly or by bringing more flexibility to the market. Our allies in Japan are particularly eager for us to move forward, given their very tight energy situation. But the Japanese are not alone. Diplomats come through our offices frequently with the same message: Please don’t delay.


Finally, there is a narrowing window for my own home state of Alaska. The geography and economics of LNG export are obvious. We’re the closest to Asia. We’re the longest-running existing exporter of LNG in the United States. We have our own gas supplies already, and historic ties with the Pacific region. If the 21st century is the Pacific Century, Alaska should be front and center. And yet there are enormous challenges – political, financial, and technical – to building out more export capacity in the state.


Our future is certainly bright. We didn’t even have time to cover the technology angle – from marine hydrokinetics and geothermal to methane hydrates and oil shale. Hardly a week goes by without the Energy Information Administration reporting some record-breaking statistic, whether product exports or production increases. Energy is the brightest sector of our economy.


That’s why I’m glad you’re engaging on these issues, and holding events like this one.  Thank you for your time. I’d be happy to answer some questions.


# # #