Source: SNL Financial
Manufacturing companies, which depend on natural gas as a fuel and feedstock, plan to ramp up their advocacy efforts on behalf of pipeline projects, especially in the Northeast.
Having watched pipeline opponents cripple pipeline projects working through permitting, a group representing the manufacturing industry said it intends to argue for the economic and environmental benefits of the infrastructure.
“There is a clear need for new pipeline,” Ross Eisenberg, vice president of policy for the National Association of Manufacturers, said during a May 3 conference call. “[Gas] supply will keep pace, and then some, but the midstream piece is missing.”
Eisenberg, speaking on a call to discuss a study about gas pipelines released by the association and IHS, said manufacturing companies around the world are moving operations and investment dollars to the U.S. because of a steady supply of affordable gas and electricity. He forecast continued growth, but said the forces trying to stop new pipeline construction could affect international competitiveness.
Eisenberg observed that resistance to pipelines was acute in the U.S. Northeast, while the Gulf Coast is building infrastructure and manufacturing is surging. “The Northeast is one of the most difficult places to access energy in the United States,” he said.
In recent weeks, New York blocked development of the Constitution pipeline by withholding a Clean Water Act permit in an April 22 decision, Kinder Morgan Inc. shelved development of the Northeast Energy Direct pipeline project after running into commercial difficulties and environmental and landowner opposition, and several other pipeline projects have run into delays. Eisenberg told the story of one manufacturer that has gas compressed and then trucked to its facility at “great expense for them” because no pipeline exists.
Talking about the Northeast and the Constitution case, Eisenberg said that “we are very disturbed that what should be a relatively simple infrastructure approval process was completely held up, essentially, by the not-in-my-back-yard crowd, and [this] is preventing the Northeast United States from taking advantage of a resource that is so close.”
Joe Eddy, president and CEO of Eagle Manufacturing Co., said Northeast pipeline constraints can hurt companies such as his that are based in the middle of the Marcellus and Utica shales, as production gets stifled in response to depressed regional prices. Efficient gas markets are especially critical to the chemical manufacturing sector, he said.
“The more natural gas we can produce and supply, the more natural gas liquids we can produce, which gives us the ability to grow the chemical industry, and that growth … is quite significant,” Eddy said. One of the largest employers in the Northern Panhandle of West Virginia is Eagle Manufacturing, which makes safety and hazardous material-handling products.
During the call, Eisenberg made sure to note that his association supports renewable energy as well as gas. “We need all of it,” he said.
In the study, “The Economic Benefits of Natural Gas Pipeline Development on the Manufacturing Sector,” IHS found that shale gas production and lower gas prices have contributed $190 billion to real gross domestic product, stimulated 1.4 million additional jobs and added $156 billion to real disposable income. IHS forecast steady supply growth between 2016 and 2025, keeping pace with domestic demand.
“The rapid growth of [gas] production in some of the major shale plays has created bottlenecks in some parts of the U.S. where there is insufficient transmission pipeline capacity to move the [gas] to market,” according to the study. “IHS estimates that approximately $25.8 billion was spent in the U.S. in 2015 to construct 6,028 miles of new natural gas transmission pipelines, resulting in a temporary increase in employment of 347,788 jobs, with 59,874 in the manufacturing sector. Similarly, the construction spending is expected to have contributed $34 billion to GDP and $21.9 billion to labor income in 2015.”
“In a nutshell,” the study said, “the combination of increased access to shale gas and the transmission lines that move that affordable energy to manufacturers across America meant 1.9 million jobs in 2015 alone.”
U.S. consumers used over 24.4 Tcf of gas in 2014. About 7.6 Tcf of that gas, or 31.3%, went to industrial users, and manufacturers make up about 80% of that industrial demand, according to U.S. Energy Information Administration figures cited in the study.
The Natural Gas Supply Association supported the study’s conclusions, noting that low gas prices have helped put money in the pocket of American consumers. “What makes the report so valuable is that it details how much-needed pipeline development contributes to that economic success story,” NGSA President and CEO Dena Wiggins said in a statement. “Demand for natural gas is growing, as is natural gas supply, but we must have the right policies to support infrastructure to connect the two.”