Hearings and Business Meetings

SH-216 General Hearing Room 10:00 AM

Secretary Samuel Bodman

Testimony of Samuel W. Bodman
Secretary of Energy
Before the
Committee on Energy and Natural Resources
United States Senate
October 27, 2005
Chairman Domenici … Senator Bingaman … members of the Committee … I
want to thank you for the invitation to appear today. I am pleased to be joined by
Secretary Norton and appreciate the opportunity to talk with you about the
Administration’s response to Hurricanes Katrina and Rita.
The Department of Energy’s Office of Electricity Delivery and Energy Reliability
has put together a very succinct chronology of every action taken in this regard. This
timeline covers the two month period from when Hurricane Katrina first struck south
Florida, on August 25, up to the present week. It notes actions taken not just by my
Department, but by the White House, the Department of Homeland Security, the
Department of the Interior, the Department of Transportation, the Environmental
Protection Agency, the U.S. Coast Guard, the International Energy Agency and others.
I ask that this be included in the record, and refer Senators to this document as
well as the daily situation reports which have been sent to Congressional offices from the
Department since Hurricane Katrina made landfall.
Mr. Chairman, I would like to highlight just a few of the points spelled out in that
chronology.
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Hurricane Katrina struck the Gulf Coast on August 29, several days after first
landing in south Florida. It left an unprecedented amount of destruction in an area
totaling 90,000 square miles.
A total of 2.7 million electricity customers lost power.
Eleven petroleum refineries were shut down, representing 2.5 million barrels per
day – or nearly one-sixth – of U.S. refining capacity.
With Katrina, more than a quarter of U.S. crude oil production – 1.4 million
barrels per day –was shut in.
Nearly 9 billion cubic feet per day of natural gas production in the federal Gulf of
Mexico was shut in, representing 17 percent of U.S. gas production, with additional
production losses occurring in areas under Louisiana’s jurisdiction.
The Louisiana Offshore Oil Port (LOOP) was shut down, as were a number of
major oil and gas pipelines. As a consequence, pipeline deliveries of gasoline, diesel, jet
fuel, and propane supplies to the east coast and southeastern states were halted.
The Administration responded immediately by taking several critical actions.
Prior to the storm’s landfall, the Department of Energy dispatched employees to
emergency response centers throughout the southeastern United States to assist utilities as
they coordinated power restoration efforts.
We worked closely with state and local officials, first responders, and power
companies to assist in coordinating their efforts to begin restoring power and fuel
supplies as quickly as possible, wherever possible.
We engaged with Entergy and other utilities to help coordinate the work of over
13,000 utility crew personnel from all over the U.S. and Canada to restore power.
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We arranged for a shipment of fuel to two companies that manufactured
electricity poles, a move which was absolutely critical to efforts to restore power
throughout the region.
Those efforts were very successful in re-establishing electricity throughout the
affected areas. Within two weeks, the number of customers without electricity fell from
2.7 million to under half a million.
We also took a number of crucial measures to minimize the impact of the storm
on the nation’s energy supply.
We worked to get power to the interstate pipelines that were essential to ensuring
adequate supplies of refined products to the southeast and east coast.
We authorized loans from the Strategic Petroleum Reserve to refiners in the Gulf
region and the Midwest whose scheduled deliveries had been disrupted.
The President authorized the sale of oil from the Strategic Petroleum Reserve to
help keep markets well supplied at a time when there were widespread fears of looming
shortages.
We reached an agreement with the International Energy Agency for its members
to release an additional 30 million barrels of crude oil and refined products to world
markets.
The Environmental Protection Agency provided temporary waivers allowing the
early use of winter blend gasoline.
The Department of Homeland Security rescinded legal restrictions on tanker
transportation of fuel supplies.
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The Department of the Interior’s Minerals Management Service immediately
began to streamline processes for various permit approvals to resume production and
expedited reviews of requests for temporary barging of oil until pipelines could be
repaired.
The Treasury Department increased the supply of diesel fuel available for use on
the highway by waiving penalties for highway use of “dyed” diesel fuel.
The Navy and Coast Guard worked to clear shipping channels in the Gulf and the
Lower Mississippi River.
And we worked with European allies to provide extra cargo tankers, as well as
refined product to help supply the American gasoline market.
These steps had a positive effect and helped calm the markets. Though gasoline
prices spiked in the immediate aftermath of Katrina, they quickly eased in the weeks
following.
And then came Rita.
That storm made landfall on September 24, and did even greater harm to our
nation’s energy markets than Katrina. After Hurricane Rita, 19 refineries were shut down,
representing nearly a third of U.S. refining capacity. In the federal Gulf of Mexico,
virtually all crude production and eighty percent of natural gas production was shut in. 27
natural gas processing facilities were shuttered – representing half of Gulf Coast natural
gas processing capability. Offshore rigs and platforms suffered damage. The LOOP was
shut down once again, along with a number of major pipelines.
An extraordinary situation was brought on by the one-two punch of Katrina and
Rita. Energy markets have taken a big hit and consumers will continue to face high prices
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for gasoline, natural gas, and home heating oil this winter. However, many of the steps
we took after Hur ricane Katrina have helped us deal with the supply crunch caused by
Hurricane Rita, such as making crude oil from the Strategic Petroleum Reserve available
to the market.
The Administration has launched an energy efficiency and conservation campaign
aimed at educating consumers on steps they can take to reduce their utility bills. I have
been traveling the country, along with other senior Department officials, encouraging
consumer conservation efforts. We are also working with energy- intensive businesses
and industries on ways to conserve. And the President has called on the Federal
government to lead by example and conserve its own energy use.
Additionally, in front of you, please find a copy of the Department’s Energy
Saver$ booklet; an informative guide for your constituents with helpful tips on saving
energy and money at home. Both the President and I have encouraged Federal agencies
and employees to use these reference guides in their daily activities. Many Members have
requested copies for their constituents and an on- line version has been emailed to your
offices.
Mr. Chairman … Senator Bingaman … this concludes my statement. I’ll be happy
to answer your questions.
END