Just recently, The Wall Street Journal reported that, according to its analysis, the U.S. will become the world’s largest producer of crude oil and natural gas in 2013. Thanks primarily to unconventional reserves of oil and gas in shale, our domestic production of gas will top Russia for the first time since 1982, and our advances in drilling technology have the U.S. primed to overtake Saudi Arabia in tapped oil reserves as well.
Adam Sieminski, head of the U.S. Energy Information Administration, called it a “remarkable turn of events.” He added, “This is a new era of thinking about market conditions and opportunities created by these conditions that you wouldn't in a million years have dreamed about.”
The headline-grabbing story was one of the few developments not related to this fall’s government shutdown or debtceiling debate that resonated within the Beltway and will help set the agenda for policymakers in 2014.
This is very positive news for the U.S. economy. Indeed, the energy renaissance we are experiencing is nothing less than revolutionary. In a relatively brief amount of time, less than a decade, the U.S. energy narrative has flipped from one of scarcity and limitation to one of abundance and opportunity. Among its many other benefits, our new energy reality provides a fuller (and helpful) context in which to convey the contributions made by midstream energy master limited partnerships (MLPs)—and not just to lawmakers or regulators but to the public at large.
Fortunately, the growth we are seeing in the midstream sector is often tangible—it is calculated in terms of infrastructure projects, jobs and capital—these factors help make Americans see how our economy is being fundamentally transformed by an abundance of natural resources and technological innovation.
For instance, midstream MLPs now own approximately 310,000 miles of gas, natural gas liquids (NGL), refined product and crude oil pipelines—a vast network ranging from local gathering lines, to major interstate pipelines traversing thousands of miles. Today, it is increasingly MLPs that are building, expanding and operating pipelines and other infrastructure in the U.S.
It is MLPs that ensure that domestic oil and gas get from the places they are produced to the places where they are consumed, in the forms which consumers need. Most importantly, it is MLPs that will advance the potential for energy independence by allowing gas and oil produced from the recently discovered shale plays to be fully utilized.
According to the INGAA Foundation, it is estimated that during the next 25 years (2011-2035), North America will need to invest $251 billion in natural gas, NGL, oil pipelines and related energy infrastructure.
Those investments are being made to a large extent by MLPs. From 2007 through 2012, the largest MLPs have made non-acquisition capital investments of approximately $88 billion, many of them in the shale-play areas. This year they are expected to invest another $25 billion, bringing total investment to approximately $113 billion.
In addition, MLPs create jobs. A study performed for the National Association of Publicly Traded Partnerships by Quantria Strategies LLC found that midstream energy MLPs support approximately 323,000 U.S. jobs as of 2012, both directly and through supply-chain linkage. To the extent that growth in every sector of the economy depends on the free flow of energy supplies, MLPs may have an even greater impact on domestic employment.
Midstream energy companies have certainly done their part to show Washington the value in making policy choices in support of domestic energy. And with Washington’s continued support more infrastructure can be built, more energy resources can be secured and all Americans can benefit from the safe and reliable delivery of energy from the production fields to our homes, businesses and communities.
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