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                                                      Calendar No. 177
116th Congress      }                                    {      Report
                                 SENATE
 1st Session        }                                    {      116-75

======================================================================



 
              APPALACHIAN ENERGY FOR NATIONAL SECURITY ACT

                                _______
                                

                August 16, 2019.--Ordered to be printed

  Filed, under authority of the order of the Senate of August 1, 2019

                                _______
                                

  Ms. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1064]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1064) to require the Secretary of Energy 
to conduct a study on the national security implications of 
building ethane and other natural-gas-liquids-related 
petrochemical infrastructure in the United States, and for 
other purposes, having considered the same, reports favorably 
thereon with an amendment, and recommends that the bill, as 
amended, do pass.
    The amendment is as follows:
    On page 5, line 12, insert ``and'' after ``national''.

                                PURPOSE

    The purpose of S. 1064 is to require the Secretary of 
Energy (Secretary) to conduct a study on the national security 
implications of building ethane and other natural-gas-liquids-
related petrochemical infrastructure in the United States.

                          BACKGROUND AND NEED

    In November 2018, the Department of Energy (DOE) examined 
the feasibility of establishing an ethane storage and 
distribution hub in the United States, and issued a report 
entitled ``Ethane Storage and Distribution Hub in the United 
States.'' The report noted that domestic natural gas production 
is expected to more than double from 2017 to 2050. The main 
driver of total growth in domestic natural gas production is 
the continued development of the Marcellus and Utica shale 
plays in the eastern United States. If the Appalachian Basin 
were an independent country, it would be the third largest 
producer of natural gas in the world.
    The report highlighted the potential for the new hub to be 
built in Appalachia, as well as the economic and strategic 
benefits of such a hub. For example, the report noted that 95 
percent of current ethylene production capacity in the United 
States is clustered along the Gulf Coast in Louisiana and 
Texas. This geographic concentration of assets and operations 
may pose a strategic risk to the economy of the United States 
as extreme weather has significantly impaired domestic 
production in the past.

                          LEGISLATIVE HISTORY

    S. 1064 was introduced by Senator Manchin on April 8, 2019. 
The Subcommittee on Energy held a legislative hearing on S. 
1064 on July 9, 2019.
    The Committee on Energy and Natural Resources met in open 
business session on July 16, 2019, and ordered S. 1064 
favorably reported, as amended.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in 
open business session on July 16, 2019, by a majority voice 
vote of a quorum present, recommends that the Senate pass S. 
1064, if amended as described herein.

                          COMMITTEE AMENDMENT

    During its consideration of S. 1064, the Committee adopted 
an amendment to make a technical correction.

                      SECTION-BY-SECTION ANALYSIS

Section. 1. Short title

    Section 1 sets forth the short title of the bill.

Sec. 2. Findings

    Section 2 sets forth Congressional findings based on the 
2018 DOE study regarding the economic implications and 
feasibility of a potential hub.

Sec. 3. Study and reports on building ethane and other natural-gas-
        liquids-related petrochemical infrastructure

    Subsection (a) directs the Secretary to conduct a study 
within one year of enactment, in consultation with the 
Secretaries of Defense and Treasury, and the heads of other 
relevant Federal departments and agencies, regarding the 
potential national and economic security impacts of building 
ethane and other natural-gas-liquids-related petrochemical 
infrastructure in the vicinity of the Marcellus, Utica, and 
Rogersville shale plays. This subsection requires the study to 
identify the potential benefits of the proposed infrastructure 
to national and economic security, as well as the potential 
risks to national and economic security posed by foreign 
ownership and control of United States domestic petrochemical 
resources. It also requires an examination of the types of 
additional infrastructure needed to fully optimize the 
potential national security benefits of the hub; whether 
geopolitical diversity of export destinations would undermine 
or bolster national security; the necessity of evaluating 
public interest with respect to exports for national security; 
and the potential benefits of locating the proposed hub in the 
area near the Marcellus, Utica, and Rogersville shale plays.
    Subsection (b) provides that the relevant Congressional 
committees may request and receive periodic status reports on 
the development of the required study. This subsection also 
requires the Secretary to submit the completed study to the 
relevant Congressional committees and publish the report on the 
DOE website.

                   COST AND BUDGETARY CONSIDERATIONS

     The following estimate of the costs of this measure has 
been provided by the Congressional Budget Office:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    S. 1064 would require the Department of Energy (DOE) to 
conduct a study on the national and economic security 
implications of building petrochemical facilities for ethane 
and other natural gas liquids in the geographic area covered by 
parts of Ohio, West Virginia, Pennsylvania, and New York. DOE 
would be required to coordinate with several different agencies 
to evaluate the benefits and potential risks to economic and 
national security.
    Using information from DOE, CBO estimates that conducting 
this study would cost $1 million; such spending would be 
subject to the availability of appropriated funds.
    The CBO staff contact for this estimate is Madeleine Fox. 
The estimate was reviewed by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 1064. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1064, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 1064, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Department of Energy at the 
July 9, 2019, hearing on S. 1064 follows:

Testimony of the Honorable Bruce J. Walker, Assistant Secretary, Office 
               of Electricity, U.S. Department of Energy


                              introduction


    Chairman Cassidy, Ranking Member Heinrich, and Members of 
the Subcommittee, it is an honor and a privilege to serve at 
the Department of Energy (DOE or the Department), as Assistant 
Secretary for the Office of Electricity. DOE is charged with, 
among other important responsibilities, providing our Nation 
with premier energy research and development (R&D) activities. 
The work being conducted by DOE is setting the course for 
various advancements in the energy field and beyond. Issues 
like energy storage, improving energy efficiency, creating 
breakthroughs in how we extract and utilize our Nation's fossil 
fuels, and Artificial Intelligence are just some of the 
important areas of DOE research. These are also the topics 
being covered at today's hearing.
    Thank you for the opportunity to testify today on behalf of 
the Department regarding these various pieces of legislation. 
The Administration continues to review all eleven of these 
bills. Below are some highlights and perspectives regarding the 
legislation being discussed today.
S. 1064--Appalachian Energy for National Security Act
    The United States is now the top producer of oil and 
natural gas in the world, with an additional benefit in the 
form of increased natural gas liquids (NGL), including ethane. 
Ethane is particularly useful as a feedstock for petrochemical 
manufacturing.
    The Appalachian region has experienced near-exponential 
growth in natural gas production, and that production is 
expected to increase for decades to come. According to the 
Energy Information Administration, through April of this year, 
natural gas production in the Appalachian Basin has represented 
35 percent of total U.S. natural gas production, and that 
number is expected to increase. In addition, NGL processing and 
fractionating capacity in Appalachia has grown quickly to match 
this increase in natural gas production.
    S. 1064 requires a report to Congress on the ``national and 
economic security'' impacts of petrochemical infrastructure 
near the Marcellus, Utica, and Rogersville shale plays. Under 
the bill, DOE has the lead for preparation of the report, in 
consultation with the Departments of Defense and Treasury (and 
other agencies and stakeholders).
    DOE appreciates Congress' attention to the vast energy 
resources in Appalachia. This legislation builds upon current 
efforts by the Administration. In December of 2018, DOE issued 
a report to Congress entitled Ethane Storage and Distribution 
Hub in the United States. The report highlights the potential 
in Appalachia for the development of a new ethane hub based on 
the resource from the Marcellus and Utica shales, and the 
accompanying security and reliability benefits derived from 
geographic diversity in the nation's petrochemicals 
manufacturing base.
    This past April, the President issued Executive Order 13868 
(``Promoting Energy Infrastructure and Economic Growth''), part 
of which requires DOE to issue a report on economic development 
in Appalachia in the petrochemical industry. The Department is 
currently working on this report, and will share the results 
with Congress and other interested parties.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill as ordered 
reported.

                                  [all]