Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 10:00 AM

Senator Pete V. Domenici

Opening Statement
Hurricane Recovery Hearing
Thursday, October 6th 10:00am

Yesterday, Senator Bingaman, Senator Akaka and I returned from Baton Rogue.

We went down to see and learn first-hand about Hurricane Katrina and Rita damage to the energy infrastructure. 

We spent time at Exxon Mobil’s Baton Rogue Refinery, the second largest in the country with a capacity of 500,000 barrels a day. 

Although that refinery did not itself sustain major damage in the storms, its access to oil and its ability to move products was severely harmed.  In addition, loss of electricity set the refinery back.  Many times throughout the trip, we heard about the need to ensure a redundant and robust power grid. 

We met with Colonial pipeline, which is a 5,500 mile interstate pipeline that originates in Houston and terminates at New York Harbor and delivers millions of gallons of gasoline, home heating oil, aviation fuel and other refined petroleum products.

Right now, Colonial is operating at about 70% of its normal, mainline capacity from Houston.  Lack of supply and lack of commercial power due to both of the storms are major impediments to getting that pipeline back to 100%. 

We went to DOW’s St. Charles’ petrochemical complex and talked about how high natural gas prices are hurting our chemical industry.

Just at that single DOW facility, every $1 increase in the cost of natural gas means an additional $35 million a year in fuel costs. 

At each of these energy facilities, I was impressed by the employees’ dedication and the companies’ concerns for their employees’ well-being. 

There is a great deal of work to be done, and there is a great deal of courage and confidence that it can be done.
The complex and intertwined nature of our nation’s energy infrastructure is very evident in light of the two Hurricanes.

Hurricanes Katrina and Rita did not just hit the Gulf Coast region – those natural disasters impacted our entire energy chain in all regions of the country.

The ripple effects of the hurricanes are going to affect many parts of our economy.

We need to have realistic expectations about how long we should expect high prices and we need to prepare for potential shortages.

Earlier this week, Secretary Norton said that substantial portions of the oil and gas production in the Gulf Coast affected by Hurricanes Katrina and Rita could take several months to resume, with major repairs extending into the next year.  She also noted that some of the hurricane’s most significant energy impacts were to onshore natural gas processing facilities. 

Natural gas prices closed above $14 yesterday and uncertainty about supplies may keep those prices painfully high.

The storm impacts have also affected our inventories.  Yesterday, the EIA reported that total motor gasoline inventories fell by 4.3 million barrels last week and distillate fuel inventories, like diesel, fell by 5.6 million barrels last week.  Although our inventories are still within the average range for this time of the year, these kinds of drops cannot be sustained. 

Our purpose today is to hear from some of the industries that have been impacted by the Hurricanes.  They will tell us about damage assessments and recovery efforts.

In addition to learning about the physical damage, this Committee will told hearings on the economic effects of the hurricanes and price expectations for consumers this winter. 

I am also planning on convening a hearing where we can hear from Administration witnesses, like DOE and Interior, about emergency preparation and response as well as steps they can take to improve the supply demand picture. 

I am pleased that Secretary Bodman has launched a campaign to highlight how American families, businesses and the federal government can save energy in response to rising winter energy costs. 

The President has made it clear that conservation is going to be one of our most effective tools to deal with the present crisis.  I agree with that and hope we can continue our bipartisan efforts to strengthen conservation in the short and long term.

I thank our witnesses for being with us today.  We have --

• Mr. Red Cavaney, President and CEO of the American Petroleum Institute.

• Mr. Christopher Helms, President, Pipeline Group, NiSource, Inc. on behalf of the Interstate Natural Gas Association of America.

• Mr. Andrew Liveris, President and CEO of Dow Chemical.

• Mr. Kevin Curtis, Senior Vice President for Programs, National Environmental Trust.

• Mr. Curtis Hebert, Executive Vice President, External Affairs, Entergy.