U.S. Energy Infrastructure Needs

By SBE Council at 2 January, 2015, 6:43 pm

The energy revolution in America cannot be undermined by inadequate infrastructure. There’s an opportunity to improve and streamline federal permitting when the new Congress convenes. These needed reforms will encourage and unleash investment in critical infrastructure projects.

by Raymond J. Keating-

Investment and innovation in hydraulic fracturing and horizontal drilling have generated an energy revolution in the U.S. over the past decade. But even more investment is needed to fully capitalize on this revolution. That not only means further efficiencies in extraction technologies, but in infrastructure, i.e., the means to get U.S. and North American oil and natural gas to the market.

And much of that is progressing. Consider the following key points from a December 27, 2014, report from the StarBeacon.com on natural gas infrastructure developments in Pennsylvania:

• “Wells are producing more as drillers become more adept at using hydraulic fracturing — a method of using high-pressure liquid to break apart underground rock formations to access reservoirs of gas. But the industry needs infrastructure to get the gas to market, [David Spigelmyer, president of the Marcellus Shale Coalition,] said.”

• “The federal Environmental Regulatory Commission is poised to give final approval to a pipeline that would stretch 124 miles from the Marcellus region of northern Pennsylvania into New York. A number of other pipeline projects are percolating and would fill looming gaps in service, [Spigelmyer] said.”

• “There currently is no pipeline to move natural gas from the region to Philadelphia, Spigelmyer said. Another plan on the boards would get the gas from western Pennsylvania to Philadelphia. UGI Energy Services announced Monday that it will spend $150 million to run a pipeline 35 miles from the Marcellus region to the site of a former coal plant in Snyder County that is being converted to natural gas power.”

A Columbus Business First piece from August 12, 2014, noted infrastructure developments in Ohio as well:

• The parent company of Columbia Gas of Ohio says it has two new projects in the works and one will help ship gas from Appalachia to the Midwest and Gulf Coast. In total, it’s a $1.75 billion investment, according to Columbia Pipeline Group, and up to 1.5 billion cubic feet of natural gas per day will be transported.”

• “It seems like a new major pipeline project for the Utica and Marcellus shales is announced every week… Exploration and production in the Utica is outpacing the necessary infrastructure, leading to new pipelines, especially in the Gulf Coast.”

It was noted in another Columbus Business First article from August: “Spectra Energy Corp. is seeking drillers for four pipelines to take natural gas from the Utica and Marcellus shale plays to the Southeast, Northeast, Midwest and Canada. If the company’s pipelines attract enough customers and are approved by federal regulators, up to 3.5 billion cubic feet of natural gas will be shipped from the region throughout North America.” A Spectra pipeline stretching from Ohio to the Gulf Coast received approval from federal regulators in early December.

These investments are crucial for the energy sector, and for growth and jobs. It’s also critical to keep in mind that the energy construction sector is dominated with small to mid-size businesses. Specifically, among oil and gas pipeline and related structures construction businesses, 65.5 percent of employer firms in 2011 had less than 20 workers, and 95.3 percent had fewer than 500 employees.

Small businesses and innovative entrepreneurs are helping to meet U.S. energy needs, and enhancing America’s ability to become a major energy exporter. Unfortunately, delays in the permitting process are holding businesses, entrepreneurs and investment back.

In November 2013, the U.S. passed H.R, 1900 (252-165), the Natural Gas Pipeline Permitting Reform Act, a bill to speed up natural gas pipeline approvals. On federal permitting reform in general involving major capital projects across all sectors, bills were introduced in the previous Congress (including a bipartisan one led by Republican Senator Rob Portman of Ohio) to streamline and improve the permitting process. These important reforms have a real chance of advancing in the new Congress.

On a related issue, the green light to approve the Keystone XL pipeline is long overdue. The massive and needed infrastructure project will create thousands of jobs, with small businesses playing a major role in the pipeline’s construction and maintenance. The Senate Energy and Natural Resources Committee is expected to vote on legislation to force the project’s authorization on January 8. The full Senate will act on the bill soon thereafter, with the House following suit. Hopefully, a veto-proof majority in the Senate will put an end to needless delays by the Obama Administration, although the President has not yet issued a veto threat. As with past bills in the Congress, SBE Council strongly supports this legislation. (See the House Committee on Energy and Commerce’s timeline of Keystone XL here.)

On a final note, lifting the ban on crude oil exports, and allowing for increased LNG exports will further boost our energy sector, and better leverage energy investments. (See SBE Council’s letter supporting House legislation to lift the crude oil export ban here.) SBE Council looks forward to positive legislative activity on these issues in the 114^th Congress as well.

Expediting energy and other infrastructure projects, along with encouraging energy exports, will strengthen our economy and boost opportunities for entrepreneurs. Hopefully in 2015, our government will play a more constructive role in supporting the energy sector and the small businesses that are leading the America’s energy revolution.

Read SBE Council’s latest report about the historic energy revolution in the U.S., and how small and midsize businesses in particular are adding jobs – and entrepreneurs forming new businesses – at a far greater pace than the overall economy. 

Related SBE Council Resources: 

The Energy Outlook and the Agenda to Expand Opportunity, December 16, 2014 

Who Benefits from America’s Energy Revolution, November 14, 2014 

Delays on Keystone Undermine U.S. Economic Growth and Trading Relationship With Canada, October 10, 2014 

U.S. Energy Exports: A Big Economic Plus, August 13, 2014

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.