An unprecedented midstream infrastructure building boom offers the potential for tens of thousands of jobs and a $511 billion cumulative boost to the U.S. economy during the next 23 years, according to the Interstate Natural Gas Association of America (INGAA). The infrastructure is necessary to deliver domestic natural gas, liquids and crude oil from domestic shale plays.

Produced by engineering consultants Black & Veatch for the INGAA Foundation, the report “Jobs & Economic Benefits of Midstream Infrastructure Development: U.S. Economic Impacts through 2035” predicts significant near- and long-term benefits that would spread to all regions of the United States. It concludes that the gas, gas-to-liquids and crude supply-to-markets sector would average 125,000 jobs annually from now through 2035, providing nearly $57 billion in federal, state and local tax revenue during that period.

Project investments and operations and maintenance (O&M) expenditures would average 159,653 jobs and $18.4 billion in cumulative worker income for next the two years and 135,633 jobs and $38.3 billion in cumulative worker income during the next five years. Tax revenues would be $6 billion and $13 billion, respectively, during the two periods, the study said.

The majority (83%) of the projected investments come from natural gas infrastructure, the report said, with oil investments (10%) and natural gas liquids (NGL) (7%) accounting for the rest. In 2010 dollars, U.S. and Canada midstream capital investments for the next 25 years break down as $205 billion for natural gas and another $46 billion for oil and NGL pipeline infrastructure.

Midstream investments in the Lower 48 states of at least $200 billion for each of the three energy sources would include gathering pipeline, laterals, mainlines, compression equipment, processing facilities and gas storage facilities, according to the INGAA report. The study focused on only the Lower 48 and offshore Gulf of Mexico (GOM) investments, dividing them into six regions (West, Southwest, Central, Midwest, Southeast and Northeast) with the bulk of the jobs and investment concentrated in the Southwest, Northeast and Midwest.

INGAA Foundation CEO Don Santa said the sector’s infrastructure development supports “operations and management positions that are higher-paying compared with average national wages,” along with creating a consistent stream of construction jobs. “This midstream investment also helps local economies as well as federal, state and local governments.”

INGAA said many studies before have looked at the economic multipliers from the exploration and production of oil and natural gas, but this is the first comprehensive look at the economic drivers coming out of the takeaway infrastructure in terms of jobs, labor income, value added, economic output and governmental tax revenues at all levels.

“The economic impact will be widespread due to the economic linkages between natural gas and oil pipeline companies and suppliers of materials and services (pipe, compressor, etc.),” the report said. Regions having high levels of investment (the Northeast) and having a strong employment base for natural gas (the Southwest) will benefit the most from the midstream investments.

The report is based on data compiled by the INGAA Foundation report, “North American Midstream Infrastructure through 2035 — A Secure Energy Future,” which was published last year (see NGI, July 4, 2011). More details and copies of the INGAA Foundation study are available at the INGAA website. A recent report by Bentek Energy LLC and Turner Mason & Co. also predicted an investment boom in midstream infrastructure, driven by production from shale plays (see NGI, Oct. 3, 2011).

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