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INGAA Foundation study outlines midstream gas development pluses

A study commissioned by the INGAA Foundation concluded that $229.1 billion in projected US midstream oil and gas investments and operations and maintenance outlays through 2035 would support an average of 125,339 jobs/year; generate nearly $57 billion in federal, state, and local taxes; and add $511.5 billion in total economic output.

The midstream infrastructure benefits would come in addition to upstream, downstream, energy security, and air emissions benefits associated with greater domestic production, researchers at Black & Veatch said. Benefits would come not only from constructing and installing pipelines, but also from maintaining them, they said during a Feb. 16 briefing at the Interstate Natural Gas Association of America.

“The benefits are diverse and spread across the country,” said B&V Executive Director Scott Smith. “A lot of equipment is manufactured in different areas from where construction is taking place.” Average investments would be much higher in 2012 and 2013—about $13.4 billion/year—than later, he added.

Direct construction costs will include supplies as well as crew payrolls, noted John Wynne, an economist at B&V. “Given the thousands of projects that have been announced, the impacts will be fairly constant despite each project’s relatively short construction period,” he said.

The estimates may be conservative, he suggested. “It’s highly likely that, as you get further out, there will be other projects built which haven’t been announced yet,” Wynne said.

There’s also a question of whether gas to meet future demand will come from a dry gas environment than from one associated with oil and liquids, Smith said.

“In addition to creating a constant stream of construction jobs, this investment also supports operations and management positions, which are higher paying compared to average national wages,” said INGAA Pres. Donald F. Santa. “This midstream investment also helps local economies as well as federal and state governments.”

The new report was based on data from the INGAA Foundation’s 2011 report, “North American Midstream Infrastructure Through 2035—A Secure Energy Future,” which ICF International prepared. Because gas represented the largest part of the projected investment (83%), it also represented the largest share of midstream economic benefits in the new study. Oil pipeline (10%) and natural gas liquids (7%) accounted for the remainder, INGAA said.

Contact Nick Snow at nicks@pennwell.com.


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