American Oil and Gas Reporter - October 2024 - 27

Advantages From Natural Gas
Show Sizable Promise For
Reshoring U.S. Manufacturing
Natural gas must be top of mind for policymakers in discussions
about reshoring manufacturing, indicates a new report from the
Center for Strategic and International Studies, " Strategic Equilibrium:
The United States' Manufacturing Resurgence and the
Role of Natural Gas in a Carbon-Competitive World. "
Exponential growth in semiconductors and electric vehicles
demand has prompted a renewed effort to invest in U.S. based
manufacturing. The CSIS report explores such reshoring and
how U.S. natural gas can provide dispatchable, cost-efficient
energy for manufacturing in a carbon-competitive world.
Spending across sectors of computer and electrical manufacturing
facilities has increased nearly four times since 2022. " By April
2024, project announcements reached $367.9 billion for semiconductor
manufacturing and $84.4 billion for EV manufacturing, "
the report explains. " These industries now account for nearly
60% of all manufacturing investment in the United States. "
The reasons behind this increased domestic investment are
multifaceted, with many companies looking to diversify their
supply chains from East Asia, automakers responding to EV
demand, as well as federal government initiatives including the
Creating Helpful Incentives to Produce Semiconductors and Science
Act and the Inflation Reduction Act, which provide incentives for
semiconductor and EV projects. The Biden administration aims
for the United States to produce 20% of global leading-edge logic
chips and for EVs to comprise 50% of new vehicle sales by 2030.
This, of course, entails new and reshored manufacturing
stateside.
CSIS has defined natural gas as a key factor in this reshoring.
Natural gas supplied 43% of U.S. power in 2023, the report notes,
and the expansion of gas in the power sector during the last 20
years has helped promote global energy security and reduce emissions.
U.S. natural gas production has managed to continue reach
record highs even amid lackluster prices. The connection between
low energy prices and increased manufacturing is paramount,
CSIS explains. " A working paper for the Federal Reserve first
released in 2014 found that the decrease in natural gas prices
between 2006 and 2013 contributed to an increase in manufacturing
output by 2%-3% across the whole manufacturing sector. "
The North American Electric Reliability Corporation describes
natural gas as a " critical resource " for the U.S. electric power
supply. Similarly, Goldman Sachs says it expects " natural gas
to meet about 60% of additional load growth from expanding
data centers and artificial intelligence, " while recent polling
shows that majority of Americans support continued liquefied
natural gas exports and increasing natural gas production.
U.S.-produced natural gas enjoys multiple advantages over
alternative energy resources and natural gas sourced outside of
the United States. The first of these upsides deals with price.
Although there have been some competing narratives about the
relationship between increased demand, supply and consumption
of natural gas and natural gas pricing, Wood Mackenzie's
forecasts show " large increases in gas consumption-from data
manufacturing renaissance has begun and the " The bottom line is that a new
only way for the United States to keep pace is
to fully support our abundant, affordable and
competitive natural gas resources.
"
center operation, chip manufacturing and liquefied natural gas
exports-will not lead to a significant price increase. "
Natural gas also offers an emissions advantage, which includes a
leading and continuous role in reducing global carbon dioxide
emissions. Related to this is the emergence of emissions standards
from global governments restricting scope 1 and scope 2 emissions.
" While these measures will not immediately affect semiconductors
or EV batteries, they will apply to commodities such as
steel, aluminum and chemicals, " the report details. " In these
areas, U.S. producers have some carbon advantage over international
competitors such as China, but may trail producers in Europe. "
Technological advancements in carbon reduction technologies,
such as carbon capture and storage, carbon removal, and low
carbon intensity renewable natural gas, also provide pathways
for continued reductions in natural gas carbon intensity.
Of course, challenges remain. A burdensome regulatory
landscape in desperate need of reform has delayed and cancelled
projects and hurt natural gas supplies.
With this in mind, the CSIS authors conclude the report with
a few key observations and policy suggestions. These aim to
both reinforce and grow natural gas infrastructure and reliability,
but also seek to place natural gas in an even more competitive
position within this oncoming manufacturing renaissance:
· Encourage strategic manufacturing sectors to collect and
share energy usage data with a federal agency.
· Accelerate the reduction of emissions intensity from manufacturing.
·
Encourage CCS readiness at new gas power plants.
· Encourage infrastructure permitting reform.
The bottom line is that a new manufacturing renaissance has
begun and the only way for the United States to keep pace is to
fully support our abundant, affordable and competitive natural
gas resources.
❒
JEFF ESHELMAN is president
and chief executive officer of the Independent
Petroleum Association
of America and the founder/executive
vice president of Energy in
Depth. Along with more than two
decades at IPAA, he previously
worked at the Defense Logistics
Agency, the White House Office of
National Drug Control Policy and
three public affairs firms.
OCTOBER 2024 27
American Oil and Gas Reporter - October 2024

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