FocusNatgas demand, LNG exports can benefit small businesses, jobs

02 May 2013 18:56  [Source: ICIS news]

Natgas demand, LNG exports can benefit small businesses, employmentBy Tracy Dang

HOUSTON (ICIS)--Small businesses and employment in the US energy sector can benefit from increased natural gas demand from both domestic and international markets, as well as potential exports of liquefied natural gas (LNG), a business organisation said on Thursday.

“From what we’ve seen so far, there has been a tremendous increase in production, obviously if you go through all the numbers in terms of jobs and business growth,” said Raymond Keating, chief economist at the Small Business & Entrepreneurship Council (SBEC).

“Anytime you have an expanded opportunity to meet a larger market, if you will, that’s certainly going to be beneficial and continue this growth trend,” he said during a conference call on the release of the SBEC’s new study on natural gas production on small businesses.

LNG exports has been a hot topic of debate in the chemicals industry, a business that relies on natural gas for about 85% of its feedstock requirements.

In December, the US Department of Energy (DOE) released a report that analysed the effects that LNG exports could have on the US.

Since then, several chemical producers have spoken out against the report, particularly with the argument that LNG exports would raise natural gas prices.

Keating said he does not buy into the argument that any price increase would be significant or would have a major impact, especially considering that the annual average price of natural gas had decreased by 55% between 2005 and 2011.

“It’s a strange new argument to be putting forth when you talk about international trade and exports, he said. “If that’s really the case, then my goodness, shouldn’t there be a whole host of businesses – that use for example chemicals and have inputs to their industry – be complaining about the chemical industry exporting things?”

He added: “It’s just a very, very strange argument to suddenly put on the political stage, and I think that’s what it is, more of a political argument than economical.”

Keating emphasised that there is probably going to be a slight impact on natural gas prices, but the international demand is going to drive prices, profits and other factors that businesses and investors respond to.

“As long as policymakers don’t put any restrictions with us going internationally, that’s exactly what we’re going to see,” he said.

“There’s tremendous opportunity here, not only to supply ourselves domestically, but to increase our presence on the world stage on the energy standpoint, and that’s all to the benefit of workers, small business and businesses, and the energy sector and obviously all of the businesses and individuals that serve the industry sector and the indirect benefits that ripple throughout the economy,” he added.

In its study, The Benefits of Natural Gas Production and Exports for US Small Businesses, the SBEC said that while total US employment declined by 3.7% between 2005 and 2010, jobs in the energy sector grew, mostly as a direct result of increased natural gas production.

Energy jobs grew by 27.6% in the oil and gas extraction sector, 15.1% in the drilling oil and gas wells sector, 38.5% in the support sector for oil and gas operations, 47% in the oil and gas pipeline and related structures construction sectors, as well as 62% in the oil and gas field machinery and equipment manufacturing sector.

In addition, total employer firms declined by 4.2% during that time period, but energy employer firms increased in all five sectors, which is “overwhelmingly populated” by small and midsized firms.

The study also examined natural gas impacts on several states including Arkansas, Colorado, Louisiana, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah and West Virginia.

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By: Tracy Dang
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