The Importance of Natural Gas

Floor Speech

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Mr. BARTON. I thank Congressman Olson for his leadership as vice chairman of the subcommittee and a tireless leader on behalf of energy in this country.

Also, I want to thank Congressman Johnson for his strong efforts and also compliment him on his playing in last week's Congressional Baseball Game. Congressman Duncan was also on the team and played well as shortstop.

Oil was discovered in Pennsylvania back in the mid-1800s. As the oil industry began to develop, they more and more would run into what we would today call associated gas. Every now and then while drilling for oil they would hit a well that didn't have any oil, but all it had was what today we call natural gas.

They didn't know what to do with it. They used the oil to make kerosene, lubricants, and home heating oil and things like that, but they didn't have a real purpose for natural gas. So they would just flare it, just literally in the field, light a match, put a flare pipe up and flare it. As time went on, they discovered that it had a fairly high Btu energy content, and they discovered a way to contain it, to store it, and to transport it through pipelines. Because it was a gas, it was not a liquid in its natural state, so while it was not as valuable as oil, it had enough value that it was worth looking for and worth keeping.

You rock along and you rock along, and in the 1950s and 1960s, we began to set price controls on natural gas in interstate commerce. The Federal Government would regulate the price and as a consequence people stopped looking for it, because it wasn't economic to find it unless you could find a well that you could sell in intrastate commerce, within the State.

When I ran for Congress in 1984, I ran on the platform of repealing what was called the Natural Gas Price Act of 1978 where Congress had set a price control on interstate natural gas in some cases as low as 2 cents per 1,000 cubic feet. Gas in the intrastate market, deep gas, was selling as high as $15 per 1,000 cubic feet. There is a big difference between $15 and 2 cents.

One of my first accomplishments in Congress under President George Herbert Bush, the first President Bush, was to see the NGPA repealed. The Natural Gas Policy Act of 1978 was repealed, and it was my amendment that did that. So I was very proud of that.

Rock along a few more years, and in 2005, I was chairman of the Agriculture Committee, and we were doing a major energy bill, the Natural Gas Policy Act of 2005. We did a lot of things in that bill. We felt at that time that there was going to be a shortage of natural gas in this country. Some of the States, States like Massachusetts, California, and New York, were trying to prohibit import terminals for natural gas, for liquefied natural gas, LNG, being built. The States would not give the permits.

So in the infinite wisdom of the Congress, we passed, as a part of the Energy Policy Act of 2005, a section, an amendment to the bill, that gave ultimate decisionmaking authority to the Federal Energy Regulatory Commission, or FERC. Because we thought we were going to need to build these import terminals to import natural gas and the States were going to try to thwart it, we required a consultation with the States. The States had to be involved in the process, but the ultimate decision would be made by the Federal Government under the auspices of the Federal Energy Regulatory Commission.

A funny thing happened, Mr. Speaker. Some oil producers and gas producers down in Texas--one of them was a Texas Aggie, a guy named George Mitchell--decided that you had all these shale formations, and there were hydrocarbons in them, but they were like rock. Literally, if you look at a core sample of some of these shale formations, which you all had mentioned today in this Special Order, it is just like solid-- it is solid rock.

George Mitchell and others decided, by golly, we can get natural gas out of that if we fracture the rock under pressure and create tiny little cracks where natural gas can escape from. Come to find out it worked. Then they also decided: Do you know what? Instead of drilling the classic vertical well, what if we bent the drill bit at a 90-degree angle and drilled horizontally?

Son of a gun if that didn't work too.

So the combination of hydraulic fracturing with horizontal drilling made all of these shale formations economic, and the result was an absolute bonanza of natural gas available at economically recoverable prices in the United States of America.

Congressman Johnson has mentioned some of the formations up in his part of the country, the Marcellus and the Utica. Of course, Mr. Olson talked about the Eagle Ford shale down in Texas, the Barnett shale in my part of Texas. All over this country--Pennsylvania, even in New York, California, Colorado, Texas, New Mexico, Louisiana, Arkansas, Ohio, and Kansas--there are shale formations--literally almost everywhere in the United States--and in most of those shale formations, it is economically recoverable to drill for natural gas--and in some cases for oil also--but tonight we are talking about natural gas.

Funny things happened. We didn't need to import natural gas. We had so much of it, we could export it. We used that provision we put in the Energy Policy Act of 2005 to begin to license, not import terminals but export terminals. Congressman Olson, Congressman Johnson, and Chairman Walden have talked--and I am sure Mr. Bucshon and Mr. Duncan will talk later--about the economic consequences of that. We are exporting or going to export about 2 billion cubic feet a day this year of liquified natural gas.

We are going to quadruple that in the next few years. If you look at the economic value of that, if you assume that you are selling it overseas about $4 per 1,000 cubic feet, this year we will export three- quarters of a trillion dollars--a trillion dollars is a thousand billion. And not in the near future, we are going to be exporting several trillion dollars worth of natural gas every year, hundreds of thousands of jobs, just an economic--I don't know what you would call it--a bonanza. It is not a windfall because it is not luck. It is hard work. It is American ingenuity and American technology. It is revolutionizing the energy markets.

As has been pointed out, we are also beginning to export oil as a consequence of the ban being repealed for crude oil exports. That is a story for another Special Order.

The future for natural gas in this country as a source of fuel is unlimited. The economic benefits are obvious, but there is another benefit, and it is the ability to export freedom. When we export our natural gas, in many cases we are exchanging the source of the supply from a totalitarian--not quite totalitarian, but certainly not a totally democratic country like Russia--with a free country like the United States.

Now, it has been mentioned that Qatar, Algeria, and Saudi Arabia are also large exporters of natural gas, and they are allies of the United States, friends of the United States. But they don't have, as of yet, the purely democratic institutions, the totally free markets, and the free market capitalistic system that we have here.

So when we send our natural gas overseas, we are also sending to the countries that use it, economic, and in some cases, political freedom. They cannot be held hostage to sources of supply that don't have the same democratic values that we do.

So, as Congressman Johnson pointed out earlier, the World Natural Gas Conference is here in Washington next week. A number of us will participate in that conference. It is really a tribute to the natural gas industry in the United States that they have used the American innovative spirit and American technology to create a product which brings benefits economically not only here but overseas, and it really helps, in my opinion, put freedom in the driver's seat.

So this is a great Special Order.

Mr. Speaker, I want to thank Congressman Olson for leading it and the other members of the Energy and Commerce Committee for participating. I am proud to be a part of this group.

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