American Natural Gas Spurs Manufacturing Job Growth

America’s “manufacturing sector is experiencing a significant rebirth,” a new white paper by experts at FTI Consulting concludes. The key driver? Safe, responsible natural gas development.

That’s right. The new report — “The Economic Benefits of a Continued U.S. Manufacturing Renaissance” — cites affordable and reliable American oil and natural gas as a principle driver in America’s ongoing manufacturing renaissance that’s creating millions of jobs and generating billions of dollars into the U.S. economy.

Advances in technology, principally horizontal drilling and hydraulic fracturing, have unleashed low-cost oil, natural gas, and natural gas liquids (NGLs) for U.S. manufacturers to use in producing valuable products for domestic and foreign consumption,” the study’s authors write.

This latest report follows a recent White House study which likewise underscores the fact that “U.S. manufacturing is making a comeback” thanks to “the high productivity of American workers and the low energy costs as a result of abundant natural gas.”

Key FTI report takeaways:

  • $1.1 trillion invested: Thanks largely to shale development, from 2012-2015 “manufacturing firms poured $1.1 trillion of capital expenditures into the U.S. economy, representing a 40% increase from the previous four-year period of 2008-2011.”
  • New American manufacturing jobs: Energy-driven manufacturing renaissance will create 6.1 million new American jobs by 2020.
  • Boost to U.S. GDP: Strengthened U.S. manufacturing sector will inject $775 billion in incremental GDP to U.S. economy by 2020.
  • Increase in personal income: Results in $1,000 per capita increase in personal income by 2020.

Locally, we’re already seeing the benefits of this energy-driven manufacturing renaissance. As MSC’s Dave Spigelmyer and Washington Co. Chamber of Commerce’s Jeff Kotula wrote in a recent Observer-Reporter column, thanks to natural gas development, “Pennsylvania’s rich manufacturing heritage is making a roaring comeback.”

Here’s what they’re saying:

Community Benefits

  • Thanks to Local Natural Gas, “Winter Heating Costs Down for Most” Families: There was good news Monday on one important front: The price of natural gas, the most common heating source in this region, is going down. … Natural gas prices remain low because there’s a lot of it, thanks to the Marcellus Shale. … Natural gas prices are especially important in Erie Co., where more than 80% of homes are heated with natural gas, according to the U.S. Census Bureau. The news for those households is good, said Carly Manino, spokeswoman for National Fuel. “As we enter the winter season, rates are still the lowest they have been since 2000.” … Before production [from the Marcellus shales] local natural gas prices peaked in August 2008. At the time, average monthly gas bills climbed as high as $173.20 a month, more than twice the amount of the average bill today. (Erie Times-News, 11/1/16)
  • Shell: “Vast Majority” of Prep Work at Potter Site Given to Local Workforce: Shell has already given the “vast majority” of site preparation work to local construction and trade groups, and the company will strive to do the same when construction of the actual cracker plant starts late next year. … Mike McDonald, president of the Beaver Co. Building Trades, estimated Tuesday that about 95% of the work already done on site has gone to local workers. … “They might not all be from Beaver Co., but those are all local companies with western Pennsylvanian workers,” McDonald said. … The entire Horsehead site had to be lined with material to prevent runoff and spills from going into the Ohio River, and all of that work was performed from Beaver Co.-based trade unions. McDonald said he even attended a meeting Tuesday morning designed to give local Teamsters the first crack for future jobs. … It’s been very positive to see Shell give hiring priority to local workers, McDonald said. … McDonald backed that up and said Shell is very involved in helping create a local apprenticeship program that will train local residents for the work to come. The project will require nearly 2,000 steamfitters, 1,000 electrical workers and 1,000 carpenters alone. “Shell is community-oriented, and that shows with the apprenticeship program,” McDonald said. “(The cracker plant) is going to be a lot better than what most people think. There are a lot of very positive things happening around it, and most of it is very good for the county.” … Shell said in the conditional use application that the thousands of construction jobs created by the plant will result in $31 million in local and state income taxes over the life of the five-year construction process. In addition, Shell said the plant will add $900 million to the state’s economy once the plant is operational. (Beaver Co. Times, 11/1/16)

Job-Creating Infrastructure

  • Business Leaders: Pipelines Critical to Growth: For Braskem America , the choice of where to build a new $500 million polypropylene plant came down to two locations: Marcus Hook or Texas. The Delaware Co. site boasts proximity to the Marcellus and Utica Shale formations, which produce the natural-gas liquids that make a key ingredient in polypropylene. Marcus Hook also is close to Braskem’s customers, who convert the plastic into products ranging from carpet to yogurt cups. But Braskem decided earlier this year to build the new production unit at its plant in La Porte, Texas. The location near Houston had a critical advantage over Marcus Hook: a ready supply of raw material from a half-dozen nearby Gulf Coast petrochemical operations. “I was disappointed to choose Texas, but we had to choose the place where we had easy access to feedstocks,” said Mark Nikolich, chief executive of Braskem America. Nikolich’s message at an event Tuesday sponsored by the Greater Phila. Chamber of Commerce was that this region has not developed sufficient energy-hub infrastructure, such as pipelines, to attract big downstream investments in the shale economy. … The window of opportunity is shrinking to build capacity here to take advantage of Pennsylvania’s abundant gas production before the capacity is developed elsewhere. “We do have a competitive advantage,” said Joe McGinn, senior manager of public affairs for Sunoco Logistics. “But that can be lost quickly.” … Other industry leaders lamented the slow pace of building infrastructure, which they ascribed to regulatory delays and public misunderstanding of the importance of natural gas in power production and manufacturing. (Phila. Inquirer, 11/1/16)
  • Expansion of Gas Pipelines Will Help Pa. Consumers: We’re producing a lot of shale gas in Pa. That’s been great for workers and local communities, who are enjoying new revenue to pay for much-needed projects. Businesses and families have also benefited through lower energy prices. However, consumers could benefit even more if there were support for more energy infrastructure projects across the commonwealth. Expanding this infrastructure would make low-cost natural gas more widely available across Pa. … Consumers, workers, and our economy will be hurt if these anti-energy groups succeed. I hope Pennsylvanians will recognize the benefits that expanding our energy infrastructure will bring. We can’t let a small group of malcontents drive up our energy prices and destroy jobs in our state. (Express Times letter, 11/1/16)

Natural gas is clearly “Moving America Forward.” Connect with the MSC on Facebook and Twitter and visit our blog for more natural gas information, stories, and facts.