Report: Pipelines Key to Texas’ Economic Growth

Mon, October 26, 2020

Texas is home to a large portion of the prolific Permian Basin, as well as almost 20 ports along the Gulf of Mexico. Many of these ports include liquefied natural gas (LNG) terminals with the capability to export product to meet rising demand from overseas. Global oil and gas demand is expected to increase into the foreseeable future, but the Permian Basin will only be able to keep up with a significant increase in demand if infrastructure needs are met.

Despite Texas having fewer than two dozen oil and gas pipelines connecting the Permian Basin to LNG terminals along the coast, an updated study conducted by the Center for Energy Commerce at Texas Tech University revealed that the state’s pipeline industry does more than just carry product.

The study, commissioned by the Texas Pipeline Association (TPA), found that Texas’ pipeline industry provides a variety of economic benefits across the state. In 2019 alone, pipeline construction and operation attributed to more than 238,000 high-paying jobs and is expected to support almost half a million jobs for Texans over the next 40 years.

Total employment in the Texas pipeline industry has increased by 40 percent since 2013 when TPA’s original study on this topic was published. Concurrently, pipeline mileage throughout the state increased more than 13 percent, benefiting Texas counties as, on average, they receive almost $12,500 in property taxes per mile of pipeline.

“The activities of the Texas pipeline industry… are one vital component of the substantial job creation, investment and overall economic growth of the state’s economy.” – Bradley Ewing, PhD, Professor of Energy Commerce in the Rawls College of Business at Texas Tech University.

Beyond property taxes, TPA reports that Texas’ pipeline industry contributed more than $2.7 billion in state and local revenues in 2019. Investments in additional pipeline projects will only further contribute to Texas’ growing economy. For example, once complete, the Permian Highway Pipeline connecting the Waha hub in West Texas to the Gulf of Mexico will generate approximately $42 million in annual state and local tax revenue.

And the future is bright for the Texas pipeline industry. The cumulative benefits from Texas’s pipeline industry over the next 40 years includes $1.49 trillion in economic output, $903 billion in additional gross state product, and $84 billion in state and local government revenues.

Just as important as the economic benefits are pipelines’ environmental benefits. Pipelines are the safest, most efficient, and most environmentally friendly way to transport oil and natural gas. Increased pipeline capacity across Texas will help reduce flaring by providing an outlet for excess natural gas.

Global demand for oil and natural gas is not expected to slow down, and with proper investment into energy infrastructure, Texas holds the future of the state’s economy and export capabilities in its pipes.