This week the INGAA Foundation released a report that claims midstream infrastructure development will economically benefit every region of the country. The report, titled “Jobs & Economic Benefits of Midstream Development,” stated that although regions with large natural gas plays that are economic to develop will reap the largest impacts, other regions supplying goods and services for these projects also stand to benefit greatly.

“Given the competitive advantage of being in close proximity to natural gas investment locations, midstream infrastructure development presents an opportunity for suppliers of materials used in such investments to reverse or at least slow the decades-long decline seen in most manufacturing in the U.S.,” the report said.

The report, which was prepared by Black & Veatch, added that studies have found that these construction projects will also help the U.S. in improved national energy security, lower emissions and lower prices. “These benefits can be brought quickly to the marketplace to benefit, by direct and indirect means, the entire U.S. economy.”

According to the study, natural gas midstream investments in the lower 48 states will total more than $205 billion from 2012 through 2035 with an additional $46 billion in capital investment for oil and liquids projects in the lower 48 states and offshore Gulf of Mexico.

These projects will add an average of 2,000 miles of new natural gas transmission lines and laterals, 1,300 miles of oil and liquids transmission pipe, more than 200,000 horsepower of compression, 24 billion cubic feet of gas storage, and 1.3 billion cubic feet per day of processing capacity each year.

These investments will help support an estimated annual average of 104,579 jobs with an average of $56,300 in labor income (including wages and benefits) worth a cumulative $141 billion. By comparison, the average position in 2011 was worth approximately $53,100 per job.

In all, the total cumulative economic output of these projects will be almost $425 billion added into the U.S. economy. The bulk of these expenditures and jobs will be concentrated in the Southwest ($131 billion and 33,342 jobs), Northeast ($111 billion and 24,753 jobs) and the Midwest ($96 billion and 21,507 jobs). However, even the region with the smallest level of investment, the West, will still reap $34 billion in investment and 7,791 jobs.

“Virtually all industries will be impacted by midstream investments; some (e.g., pipeline and compressor manufacturers) will directly supply equipment and materials for midstream construction and other industries (e.g., fast food and tourism) as workers spend their income on goods and services,” the study stated. The midstream infrastructure build-up from 2012 to 2035 will also result in $16.8 billion of state and local taxes being generated along with $30.9 billion in federal tax revenues.

Operations and maintenance associated with these facilities and pipelines will see $28.9 billion in cumulative expenditures from 2012 to 2035, generating an annual average of 20,760 jobs. These jobs will pay workers an average of $60,000 per year in salary and benefits. This will generate $3.3 billion in total state and local taxes and $6 billion in federal taxes.

The study found that with these significant economic benefits, state and local municipalities can minimize local impacts by utilizing some of the tax revenues generated by the projects in impacted regions. This is especially true given that the added revenue should be consistently generated because of the nature of the projects.

“What is interesting about the projected upstream and midstream investments is that the number and magnitude of projects projected to be built through 2035 are so large (and projects are generally contiguous) that, as a whole, the construction of upstream and downstream projects will tend to have a fairly steady impact on the national economy and many regions will experience sizable expenditures for decades to come,” according to the report.

Contact the author, Frank Nieto, at fnieto@hartenergy.com.