Dan Reed

U.S. Natural Gas Production Becoming More Popular

Southerners today owe much to Willis Carrier.

Similarly, they – along with the rest of America – may soon come to hold George Mitchell in the same high regard.

Carrier invented modern air conditioning in 1902. Beginning in the 1950s, air conditioning became affordable and economically practical. It transformed the South from a sparsely populated agrarian backwater dominated by landed gentry (and worked mostly by impoverished descendants of both slaves and stubbornly self-reliant Scots-Irish immigrants) into a booming economic dynamo.

Today, the old South and the similarly hot southwestern states that together form the Sunbelt are home to nearly half of America’s 315 million people. The region continues to be the fastest-growing area for population, income, economic output, and political and cultural impact.

Mitchell passed away in July at the age of 94. He didn’t invent hydraulic fracturing or horizontal drilling, but he almost single-handedly drove the innovation that turned the two processes into the key breakthrough technology that is opening up huge new supplies of inexpensive, efficient and clean-burning natural gas.

A Change is Coming
Mitchell’s drilling technique is being incorrectly, unfairly and unwisely attacked by some environmentalists and the usual “not-in-my-backyard” crowd. Make no mistake; the shale gas that is being prodded to the surface by Mitchell’s innovative approach is creating the kind of energy self-sufficiency that, less than a decade ago, seemed a pointless pipe dream for Americans.

Now, beyond their energy self-sufficiency impact, fracking and horizontal drilling are beginning to have the kind of transformative economic, social, cultural and political impacts on the South – and, ironically, on the Northeast – that air conditioning did.

A new report from Bentek Energy, a division of the global energy information publisher and consultancy Platts, reveals that there’s been a stunning turnabout in the directional flow of the natural gas pipelines that, for the last 50 years, carried gas from the energy-rich South to the energy-dependent Northeast.

Today, more natural gas is flowing south out of places like Pennsylvania, where fracking and horizontal drilling have created a boom in the Marcellus and Utica Shale regions. It is headed south to the Gulf Coast region, where the industry is racing to take advantage of the combined benefits of cheap, plentiful natural gas and easy, inexpensive access to world markets via the South’s many efficient port facilities.

Indeed, the South last year became, for the first time ever, a “net demand” region in terms of the directional flow of natural gas.

More Funding, Trust Allocated to U.S. Natural Gas Production
The southward flow of gas is only getting started. More than one-third of the projected growth in U.S. natural gas production during the next ten years is expected to come from the Northeast.

Meanwhile, 62 percent of the recently announced $116 billion investments in major new industrial projects is taking place in the Southeast.

For example, Methanex, a Canadian company that is the world’s largest supplier of methane, is relocating two production plants from Chile to the U.S. Gulf Coast, primarily to take advantage of abundant, cheap, natural gas, much of it being pumped down from the Northeast. Additionally, nine liquefied natural gas projects are planned for the Southeast.

There’s a significant debate in Washington over whether the Obama Administration should approve up to 10 more new facilities that would export LNG (industrial users oppose granting more permits for such facilities because they fear increased exporting of LNG will drive up the price of natural gas paid by industrial users in this country.)

Whatever the outcome of that debate, it’s clear that technological innovation and advancement once again is dramatically changing the economic landscape of the south, and that such change almost certainly will trigger more – but unpredictable – social, cultural and political change in the region. This time, however, the South won’t be the only, or necessarily even the primary, beneficiary.

The Northeast, hammered economically by decades of industrial decline and desertion, and steady, significant population loss, is experiencing a boom in both energy-related employment and economic output. People from that region who have the trade skills and aptitudes to work in the energy sector won’t have to leave home to find work the way many members of the previous generation had to do.

Rocco Canonica, who led the team that authored Bentek Energy’s 10-year forward-looking report, says “the U.S. is embarking on a true sea change.” Not only has the South become a net demand market for natural gas, “the Northeast is poised to switch from the nation’s largest demand region to a new supply region.” In fact, there are now more than 40 Northeastern pipeline expansion projects in the works, and about half of them are being designed primarily to push natural gas southward, which is a 180-degree turnaround from past practice.

Innovation is Key
The good folks of Enterprise, AL, have erected a statue honoring the boll weevil, of all things. To outsiders it seems weird, but the people of Enterprise and Coffee County honor the pesky bug that nearly destroyed the town’s cotton-farming business in the early 20th century. Two men by the names of H.M. Sessions and C.W. Baston saw the threat as an opportunity and converted to farming peanuts. The change turned into a huge success, both for the two men and for farmers throughout the area. Eventually, cotton was grown again, but fields were rotated and crops diversified. Today, south Alabama celebrates the innovation that dramatically changed many lives for the better.

Maybe one day soon some other place down south – or maybe in Pennsylvania – will erect a statue to honor George Mitchell. They should put it right next to the statue of Willis Carrier.

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