The abundant output of natural gas in the United States over the past decade, particularly from the Marcellus and Utica shale strata, are providing economic benefits across the country, according to a study released Tuesday by the American Petroleum Institute.
The study, conducted for the institute by ICF International, examined the economic benefits and opportunities from the entire natural gas value chain, including the production of natural gas, its transportation and end uses such as power generation and manufacturing.
And despite the current and projected savings for U.S. consumers of natural gas for heating, one of the biggest growth areas is expected to be in domestic manufacturing of petrochemicals.
The study, which looked at the domestic natural gas industry spectrum from 2015 and made projections to 2040, also foresees the benefits continuing well into the future for all 50 states, as the United States has achieved status as one of the world’s leading natural gas producers.
The report from API comes during a time when other industry groups, particularly the U.S. petrochemical industry, are also reporting growth as a result of shale gas, the liquid portion of which provides feedstock for numerous petrochemical and plastics applications.
The ICF study found there were 4.1 million jobs in the United States related to natural gas in 2015, with the top three sectors supporting activities for oil and gas operations, chemical manufacturing and oil and gas pipeline construction. The contribution to the U.S. economy in terms of direct, indirect and induced value added in 2015 was $551 billion, of which $272 billion was related to the end-use segment, $168 billion from the infrastructure segment, and $111 billion from production.
During a Tuesday teleconference to introduce the report, API chief economist Erica Bowman noted while U.S. consumers are expected to be saving an average of $655 a year by 2040 because of cheap, abundant natural gas, “it’s already producing great benefits.”
She noted, as of 2015, it was supporting 3 percent of the U.S. economy. “It’s not just limited to the states that produce the resource,” she said.
But in states like Pennsylvania that are in the heart of the Marcellus, the impact is more palpable.
“We are now the nation’s second-largest producer of natural gas,” said API Pennsylvania Executive Director Stephanie Catarino Wissman.
According to the study, in 2015, there were 178,100 jobs in Pennsylvania related to natural gas, representing 3.1 percent of total state jobs. The top three sectors with the greatest number of jobs supported activities for oil and gas, freight trucking and crude petroleum and natural gas extraction.
The contribution to Pennsylvania’s economy in terms of direct, indirect and induced value added in 2015 was $24.5 billion, of which $11.1 billion was related to the end-use segment, $8.16 billion from the infrastructure segment and $5.21 billion from the production segment.
In 2015, Pennsylvania consumed 1.07 trillion cubic feet of natural gas in the residential, industrial and consumer segments. The value of natural gas delivered to consumers was $5.65 billion.
Wissman added despite the capital expenditures already being made on pipeline infrastructure, “Pennsylvania needs more infrastructure to get natural gas to market,” adding while gas-fired electricity reached 5.3 million homes in the state, New York, and Massachusetts also need to import natural gas for home-heating demand there.
And while natural gas for heating of homes, factories and commercial operations accounts for much of the product sold in the United States, Bowman noted natural gas liquids are used in feedstocks for a variety of petrochemical and plastic products.
Last week, Dow Jones Newswires reported the U.S. petrochemical sector’s investment “is staggering” as a result of the shale revolution, citing American Chemistry Council figures that show $185 billion worth of new projects is in construction or planning.
One of those is Shell Chemical’s $6 billion ethane cracker plant under construction in Beaver County. When completed in the next several years, the plant is expected to supply ethylene feedstock from some 70 percent of Shell’s customer base that is within 700 miles of the plant.
“There is a lot of opportunity in the United States to use the feedstock in industrial applications in the U.S.,” Bowman said.