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From Louisiana, a gumbo of good news about the manufacturing benefits of shale gas

Thanks to the state’s enormous supply of bountiful and inexpensive shale gas, a manufacturing renaissance is alive and well in Louisiana, according to a new study by Louisiana State University’s Center for Energy Studies.

To date, some $62.3 billion in new capital investments in petrochemical and other manufacturing facilities have been announced in Louisiana over the last two years and are likely to be developed during the next five to eight years, the LSU study found. The majority of manufacturing projects will be located in southern Louisiana, projecting a potential output of $22.5 billion, which translates to more than 160,000 jobs and $7.4 billion in wages.

“These are not ‘flash in the pan’ investment announcements” because construction of these new plants is already underway in some instances, David Dismukes, the report’s author and the center’s associate director, wrote in a recent op-ed:

[quote]These natural gas-supported investments have the ability, in a very short amount of time, to erase almost three decades worth of national frustration with the ‘offshoring’ of manufacturing jobs that previously served as the economic backbone supporting the modern American economy and middle class.[/quote]

It’s quite a reversal of fortune from the last decade, when natural gas prices were soaring and manufacturing was withering. “At the time, U.S. natural gas prices were considerably higher than many other places in the world creating considerable competition issues and incentives for offshoring and redirecting new incremental investments away from the Gulf of Mexico region,” the report said.

The manufacturing boom has been driven by an annual 34 percent increase in onshore natural gas production in Louisiana since 2008. This boost is fueling the new projects, which includes $22.5 billion in gas-to-liquids facilities; $14.8 billion in ethane crackers and polymer plants; and $3.1 billion in methanol and ammonia plants, the report found.

The LSU study complements the findings in an American Chemistry Council study on the potential benefits of abundant and affordable supplies of natural gas on Louisiana’s chemical industry. In the nation’s second largest chemical-producing state, the ACC study calculated a multibillion dollar investment in expanded ethylene capacity would grow the industry by $10.9 billion and create 35,000 new jobs, putting $2.3 billion into the wallets of Louisiana workers and boosting state revenues by roughly $3 million a year.

Both studies demonstrate that increased production of natural gas from shale provides benefits across Louisiana’s economy, not just for the exploration and extraction industries. As Dismukes wrote:

[quote]As we grapple with finding ways to move an otherwise challenging economic recovery forward, policy makers need to recognize that the economic benefits associated with unconventional natural gas development are not limited to just upstream drilling and production jobs. Unconventional natural gas is also leading to a manufacturing investment renaissance not seen since the decades of the 1950s and 1960s. Upstream policy and regulatory stability will be critical determinants in maximizing the probabilities that all of these downstream manufacturing investments materialize.[/quote]

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