Posted on 12/09/2013 5:25:32 AM PST by thackney
The U.S. manufacturing renaissance may have an invisible hand guiding it along: the energy sector, which is in the midst of its own breakneck expansion. The heavily chronicled shale boom that has propelled U.S. oil production to historical peaks also may be greasing the wheels of manufacturing, which suffered for years as production moved to cheaper havens overseas. Now, however, the once-beleaguered sector is expanding briskly. Last week the Institute for Supply Management reported that manufacturing activity expanded at its fastest pace in 30 months in November.
While ISM does not break out energy-related manufacturing specifically, Brad Holcomb, chairman of its manufacturing business survey committee, said the rise of shale production has definitely had an impact on manufacturing gains "since energy affects everything."
The petroleum and coal industries have expanded each month since June, he added, representing about 10 percent of manufacturing growth.
Meanwhile, research firm IHS, which has analyzed how the U.S. energy boom is helping to create jobs, said that unconventional oil and gas supported 2.1 million jobs and added more than $283 billion to gross domestic product last year.
Mohsen Bonakdarpour, director of economic impact analysis at IHS, said that an additional $2.4 trillion of energy-related investment will find its way into gas and boost manufacturing over the next decade.
"The rise in production generates a tremendous amount in operating spending" and is spread out over a range of industries, Bonakdarpour said. "There definitely is a manufacturing story in all of this."
(Excerpt) Read more at cnbc.com ...
If we were allowed to develop all of our natural gas resources, including those in public land, energy prices would fall dramatically. We’d see families have a lot more disposable income to spend and help the economy.
But the same people making the decisions are those who won’t let us build pipelines to get oil from allies or develop the oil off the east and west coasts.
Dry Natural Gas leases are already going undrilled due to the relatively low price of Natural Gas.
Companies are making far more money going after oil and that is where they are spending money.
At this time, we don't lack for Natural Gas lease area. We won't see any sigficant growth in the drilling for Natural Gas until we see a higher price relative to oil. And we won't see that until there is a growth in the demand, or a drop off in the supply.
There are ~375 rigs drilling for Natural Gas while ~1,400 drilling for oil in the US today.
North America Rotary Rig Count (Jan 2000 - Current)
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjE0NDA3fENoaWxkSUQ9LTF8VHlwZT0z&t=1
see tab "US Oil & Gas Split"
Two years ago there were 820 rigs chasing Natural Gas.
Five years ago - 1,428
We don't lack for lease area, we lack for a faster growing demand. It is coming, but the producers got ahead of the consumers the last few years.
Our real long-term issue on the energy front is lack of refining capacity. Well, that and the Obama Administration’s War on Coal. That last has been blunted by cheap natural gas, but it is still a problem.
How much surplus capacity do you think is needed? We already refine more than we use ourselves.
We use 16.5~17 million barrels per day of refined product. Our refining capacity is 17.8 millionn barrels per day.
US Petroleum Product Supplied
http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_m.htm
U. S. Operable Crude Oil Distillation Capacity
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOCLEUS2&f=M
True. Am I correct to say that converting the DNG to liquid form would enable the export of this resource? If so, why isn't this happening?
Liquid form requires refrigeration to -260°F to make and keep the methane liquid, LNG.
That is expensive, compared to the US price of Natural Gas but affordable if shipping to Japan, Europe, etc where they lack enough Natural Gas and pay more.
Several LNG import facilities (planned/built before the shale gas boom) are building extra units to be able to export. A few have been granted export licenses, many more waiting for approval. The approval process for permits is very slow. It takes a couple years to engineer, procure and construct the liquification process units after approval.
US LNG export approval process costing US market share: economist
http://www.platts.com/latest-news/natural-gas/washington/us-lng-export-approval-process-costing-us-market-21894731
For example:
Freeport LNG’s Liquefaction and Export Project
http://www.freeportlng.com/Liquefaction_Project.asp
DOE Dashes Freeport LNG Export Hopes
http://oilprice.com/Energy/Natural-Gas/DOE-Dashes-Freeport-LNG-Export-Hopes.html
20 November 2013
Texas’ Freeport LNG terminal was given the conditional green light in May, but a new bid to ship more liquefied natural gas from the terminal has fallen short of expectations and the company is now facing excess capacity and expansion complications.
The US Department of Energy (DOE) late last week approved an additional 400,000 Mcf/d in LNG exports from the planned Freeport terminal, but the figure falls far short of the 1 Bcf/d the company had asked for based on capacity and future expansion plans.
Cheep energy helping domestic manufacturing? Free Traders must really be pissed about this.
When you add in geography, requirements for location-specific blends, blend switchover time, scheduled outages for maintenance and upgrades, unscheduled outages, etc., that is not much “excess” capacity.
Most refinery production is now generic blending components.
The components are typically mixed at a local blender, adding ethanol and the like to meet the local requirements.
We produce more than we use. We export the surplus. Not so much on the gasoline side, but refinery capacity is measured on the total, not a specific product.
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