ICF study for LNG Allies projects potential US economic, jobs growth
Thursday, April 19, 2018
The cumulative contribution to US economic growth from the addition of more LNG plants will range from $716 billion to $1.267 trillion between 2013 and 2050 under three cases, an ICF Inc. study commissioned by LNG Allies projected. It also projected 2-3.9 million job-years from US LNG plants during that period. One job for 1 year is a job-year.
Considering the whole value chain (LNG and US gas supply), the cumulative domestic economic benefits from LNG exports could range $1.664-3.255 trillion and 7.346-15.459 million job-years during the 37-year period, the study indicated.
“This updated report shows LNG exports also provide important economic benefits to the US by stimulating job creation, increased economic activity, and tax revenue,” LNG Allies Pres. Fred L. Hutchison said at an Apr. 17 Capitol Hill event where the study was released.
The study began with the reference, high oil and gas, and high oil cases in the US Energy Information Administration’s 2018 Annual Energy Outlook, noted ICF Vice-Pres. Harry Vidas, who directed the research.
“Technology evolution was a relatively new major influence,” he said. “EIA basically told us that in a higher production technology environment, US LNG becomes more competitive on global markets. Higher oil and gas prices also create more opportunities for it to compete.”
The study measured US LNG contributions in two ways: during construction and operation of a terminal, and value added from US-produced gas, Vidas said. As a whole, when the two components were combined, the cumulative contribution to the US economy was about $50 billion/year, he said.
Identified employment measurements included direct, indirect, and induced jobs not just from construction and operation of LNG terminals, but also for manufacturing and selling components, Vidas said.
“In calculation terms, we started with EIA volume numbers,” he said. “By assuming 85% utilization, more plants would be built than with 100% utilization. But there are variables, such as demand, which might fluctuate. An estimated 84% of construction costs would be domestic. Certainly, the biggest demand for components would be immediate.”
Asked if global gas prices are uncoupling from those of crude oil, Vidas said that could be happening since long-term contracts which used crude prices as a reference are being supplanted by spot purchases in many cases. “The real question still will be whether there’s too much supply relative to demand,” he said.