Infrastructure and Harnessing U.S. Shale Energy
Posted January 28, 2016
The U.S. Energy Information Administration (EIA) reports that a number of recently completed and soon-to-be-completed pipeline projects are expected to increase access to natural gas from the Marcellus and Utica shale regions, providing valuable linkage between production centers and consumers or export terminals. Check the left side of this EIA chart:
We see the increase in natural gas pipeline capacity in the Northeast region, which is particularly critical because the Northeast has suffered negative effects from energy infrastructure limitations. EIA estimates that Northeast residents paid up to 68 percent more for electricity than the national average in the winter of 2014, while industrial users paid up to 105 percent more for electricity than the national average. Indeed, greater capacity is key to staving off economic penalties that could stem from insufficient infrastructure. One study estimated that failure to expand natural gas and electricity infrastructure in the Northeast could cost the region’s households and businesses $5.4 billion in higher energy costs and more than 167,000 private-sector and construction jobs between 2016 and 2020.
So this is good news for the Northeast, but also other regions. Projects coming online in late 2015 or early this year will increase connections between the rest of the country and the energy-rich Marcellus and Utica shale plays – whose combined growth of 12 billion cubic feet of natural gas per day since 2011 accounts for 89 percent of the United States’ total growth in gas production. EIA’s map of selected existing and planned projects associated with the two prolific shale plays:
Beyond the Northeast, investment in U.S. pipeline infrastructure is significant, with broad economic and energy impacts. EIA reports that over the past 10 years pipeline operators have invested more than $57 billion complete more than 400 projects adding about 15,200 miles of pipeline and approximately 151,300 MMcf/d of capacity – all to ensure that Americans have the energy they need. At the same time, according to EIA, operators have announced plans to invest more than $40 billion on 105 projects to add more than 7,500 miles and more than 72,650 MMcf/d in pipeline capacity.
Yet, more is needed. Policymakers at the federal, regional, state and local level can advance the country’s infrastructure with approval and permitting processes that are fair and that foster predictability for investors. That, in turn, can spur a number of positives. According to IHS, energy sector infrastructure needed through the middle of the next decade could drive $1.15 trillion in private capital investment, support more than 1.1 million jobs annually and contribute $120 billion to U.S. gross domestic product.
Investment in infrastructure is fundamental to advancing the U.S. Model of energy production growth, economic growth, benefits for consumers and lower carbon emissions. The engine of the U.S. model is increasing use of natural gas. Consumers and the broader marketplace are playing a role. EIA reports natural gas was the leading fuel for electricity generation for a fifth straight month in November, accounting for 34 percent of the U.S. power mix:
Abundant, affordable and clean-burning natural gas is fueling economic growth, benefiting consumers and helping the environment. With the infrastructure to make natural gas increasingly available to residences and businesses, it can advance these goals even more.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.
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