October 2016, Vol. 243, No. 10


How Domestic Natural Gas Production Bolsters U.S. Economy

By Steve Vitale, President, Midwest Industrial Supply, Canton, OH.

After a period of massive growth, domestic natural gas production has become a true pillar of the U.S. economy. Over the past five years, gas production in the country has experienced a major surge. Due to greater access to shale gas sources and other technological improvements to the extraction process, domestic natural gas production rose from 22,381,873  MMcf in 2010 to 28,814,300 MMcf in 2015 – a 28.7% increase.

During that time, demand for natural gas rose as well, as energy producers and consumers alike took advantage of the low prices that accompanied the increase in supply. In 2010, domestic natural gas consumption stood at 24,086,797 MMcf, yet by 2015, it had risen to 27,473,757 MMcf – a 14.1% increase.

Boon to Economy

The rapid expansion of natural gas production in the U.S. has put the country in a prime position within the global market. According to an IHS consulting report prepared for the National Association of Manufacturers (NAM), this rapid growth has represented a huge boon for the U.S. economy – and 2015 was a particularly successful year.

As the report states, “IHS estimates that economic benefits from increased domestic shale gas production and the accompanying lower natural gas prices include contributions of $190 billion to real gross domestic product (GDP), 1.4 million additional jobs, and $156 billion to real disposable income.”

In addition to stimulating the domestic job market and economy, increased natural gas production will bolster the industries that depend upon it: namely in the electric, industrial, residential, and commercial arenas. The electric power sector alone consumed 8,100,000 MMcf of natural gas in 2014, with a compound annual growth rate (CAGR) of 4.1% from 2004-2014.

Meanwhile, many industries, especially manufacturing, use natural gas as a fuel or feedstock for direct process and non-process uses. Industrial end users consumed 7.6 million MMcf in 2013, and accounted for 31% of consumption of delivered natural gas in the U.S. in 2014.

Additionally, natural gas serves the country’s residential needs, such as heating, cooling, and cooking, all of which together account for a relatively low portion of usage (5 million MMcf in 2014). The resource serves similar purposes for commercial businesses, with commercial consumption accounting for 3.5 million MMcf in 2014.

Investment in Infrastructure

The growth of natural gas production shows no signs of slowing down. With ongoing development of both “conventional and unconventional natural gas plays” projected to keep supply growth on track between now and 2025, as well as the surplus of natural gas available for potential sale to foreign markets, the natural gas industry is poised for even greater successes in the future. What’s more, other industries (especially manufacturing) stand to benefit enormously from the infrastructural improvements needed to support this increased production.

Specifically, the current domestic pipeline system is already strained by the volume of natural gas it transports on a daily basis; with production expected to continue rising in the coming years, new infrastructure – and lots of it – will be needed. Although they come with a hefty price tag, the construction of new pipelines will provide the clear benefits of creating jobs and further boosting economic growth.

This important work is already underway. In 2015, $25.8 billion was spent in the U.S. to construct 6,028 miles of new natural gas transmission pipelines, resulting in the temporary addition of 347,788 jobs, with 59,874 in the manufacturing sector alone. Similarly, pipeline construction spending contributed an estimated $34 billion to the national GDP and $21.9 billion to labor income in 2015. Looking forward, industry players have invested almost $30 billion in further additions to pipeline capacity.

Supporting Growth

As the infrastructure supporting the growth of the natural gas industry is built up further, operators need to use the most efficient methods possible to manage their worksites. And as natural gas production becomes even more essential to the U.S. economy, keeping the industry clean and efficient is of paramount importance.

With the implementation of processes to optimize natural gas production, from dust control for access and transport roads to the stabilization of compressor sites and multi-well drilling pads,  the natural gas industry can grow and infrastructure can expand at a rate that is both beneficial to the economy and safe for the environment.

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