Opening Statement of Chairman Bingaman
“In recent years, a number of factors have combined to raise the prominence of natural gas as a resource. Let me mention five of those factors. First, the new application of technologies such as horizontal drilling and hydraulic fracturing has led to an increase in domestic natural gas production and a reassessment of the size of the U.S. technically recoverable resource base. Second, the international focus on reducing greenhouse gas emissions to address climate change has favored the lower carbon intensity of natural gas for power generation. The third factor is the recent tragedy in Japan at the Fukushima nuclear plant has led both Japanese and German officials to speak strongly about fuel switching to natural gas to replace, or at least supplement, their remaining nuclear fleet. The fourth factor is concerns about our dependence on foreign oil, which have led some to propose switching our cars and trucks from imported gasoline and diesel fuel to domestic natural gas. Fifth, proponents of domestic manufacturing have argued that a larger, more stable gas supply at competitive prices will lead to a resurgence of investment in manufacturing and job creation, which is very much desired.
“So, in the past several years, there has been an increase in the estimates of natural gas resources available at relatively low prices, leading many experts to suggest that we may now be entering ‘a golden age of gas.’ I’ll leave those specific projections to our witnesses. But, I believe there is agreement that there is a greatly expanded unconventional gas resource available domestically, with potentially 100 years or more gas available if current rates of usage are maintained. This change in the resource base has already had significant impacts on investment decisions in the power sector, in manufacturing and in transportation, and many expect it to continue doing so far into the future.
“There are many reasons to be optimistic about the natural gas resource that recently have been discussed, but recent history suggests we should be cautious as well.
“During the 1990s, for example, projections of a high supply of natural gas at low prices led to tremendous investments in new, natural gas fired capacity for electricity generation. Much of that capacity continues be underutilized today. During the early 2000s, the optimism over supply was replaced by the concern that we would not have enough natural gas. As a result, significant investments were made in infrastructure to import liquefied natural gas from other countries to meet our needs, and those import terminals now operate at very low capacity as a result of the current low price of domestically produced natural gas.
“The promise of expanded domestic gas resources comes with the responsibility to address environmental concerns about their exploration and production. Recently, the public has expressed concerns that relate to the wastewater management of flowback fluids from natural gas wells, as well as potential for groundwater contamination. The issue of induced seismicity from oil and gas extraction-related activities has been raised. And the National Academy of Sciences study is now being undertaken both at Secretary Chu’s and my request. I expect that the environmental concerns related to developing unconventional gas resources can be managed, but only if they are addressed through a transparent and diligent and safe approach to wellsite management throughout each stage of the gas extraction process.
“The hearing today is intended to shed light on many of these high-level issues about the current and future role of natural gas in meeting our energy needs.”
# # #