Moniz: US should review energy security policy to address changes

Sept. 26, 2016
It is time for the US to take a fresh, comprehensive look at its energy security policies so they reflect 21st century energy market changes, challenges, and needs, US Energy Sec. Ernest G. Moniz told a US House Energy and Commerce subcommittee.

It is time for the US to take a fresh, comprehensive look at its energy security policies so they reflect 21st century energy market changes, challenges, and needs, US Energy Sec. Ernest G. Moniz told a US House Energy and Commerce subcommittee.

"Our energy security investments and policies should be viewed in a broad sense to value and include the resiliency, reliability, and modernization of key energy infrastructures, energy efficiency, responses to climate change, and the collective needs of our allies and partners," Moniz said during a Sept. 15 Energy and Power Subcommittee hearing.

Such an energy security view should not discount oil, Moniz said. "Indeed, the [US Strategic Petroleum Reserve] remains a highly valuable tool for meeting US energy security needs in 21st century global markets," he said.

Despite changes in the US oil production profile, the economy will remain vulnerable to significant international supply disruptions in the future, and the SPR will remain an important aspect of the national energy security strategy, Moniz said. Those production profile changes, particularly in their effects on the pipeline system, have reduced the SPR's ability to respond to a future disruption, he added.

"There are vulnerabilities not only in wires and pipes, but also in inland waterways and other key parts of our national energy transportation system," Moniz said.

His testimony came a week after DOE released a congressionally mandated long-term strategic review of the SPR that examined its surface and subsurface infrastructure, bottlenecks that could restrict distribution, costs and benefits of options, modernization requirements, and issues with the SPR's authorization under the Energy Policy and Conservation Act.

"The whole point of modernizing the SPR has been to improve the distribution of crude oil which has been compromised by our increased production," Moniz said. "We have submitted our request for the modernization's first tranche to build new marine distribution infrastructure in the Gulf region. We seek $800 million to modernize distribution equipment and another $1 billion to improve marine capabilities. We should complete work on this in about 3 years."

LNG concerns

Abundant natural gas resources and large production increases have created global, regional, and domestic market opportunities for US producers, Moniz said. "Indeed, US exports of LNG can make a major contribution to the evolution of world gas markets," he said.

Europe's more-flexible gas systems and well-developed markets make it an attractive US LNG export destination, although flat-to-soft demand there suggest intense competition for customers will develop, Moniz said. There are competing pipeline and LNG system proposals in the Eastern Mediterranean to support regional demand, with the present focus on developing regional gas pipelines, he said.

"Finally, it should be noted that the widening of the Panama Canal is taking place coincident to the growth of LNG exports from the US," Moniz said. "This multibillion dollar infrastructure improvement could help facilitate and lower transportation costs for the US LNG trade with Asia and possibly to destinations on the west coast of South America."

Asked about a provision that would require DOE to decide within 30 days whether an LNG export proposals is in the national interest as part of broader energy policy reforms before a Senate-House conference, Moniz said he does not believe it is needed.

"Since we changed our process in 2014, we have approved-quite speedily-all the export applications, sometimes as short as one day after [the US Federal Energy Regulatory Commission] approved its permits to a few weeks. We have been committed to address these applications expeditiously," he told the subcommittee.

Addressing climate change also will be a crucial component in developing modern, effective energy security policies, Moniz said. "Just this week, a number of military leaders pointed out that climate change can have an impact on our national security, including energy," he said. "As we go into a low-carbon transition, we're addressing this, but we also need to address threats to our energy infrastructure and response to interruptions. We need to think about addressing our security and climate issues in an integrated way."

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.