Energy efficiency: Mississippi already benefiting from U.S. moving toward energy self sufficiency
Published: February 14,2014
Not that many years ago there were concerns about “the end of oil,” the depletion of the oil reserves that fuel the world economy. One of the largest economic problems in the U.S. was the cost of importing so much oil. But drilling technology innovations including fracking now have some experts predicting that by 2035 the U.S. will achieve something almost unthinkable until now: Energy self sufficiency, making it no longer dependent on oil imports from unstable countries in the Middle East.
BP has forecast that the output of shale oil and gas will accelerate as domestic demand diminishes, making it possible for the U.S. to become a net exporter of natural gas by 2017 and to provide for all of its own energy needs by 2035. That picture has huge implications for the energy security, the balance of trade, increasing employment and the success of manufacturing in the U.S.
Until the fracking revolution, big investments were being made in terminals in the U.S. to import natural gas. One example is the $1.1-billion Gulf LNG (liquefied natural gas) plant in Pascagoula. But as domestic natural gas production jumped, the demand to import LNG never materialized. Gulf LNG and other similar facilities are now seeking permission to export LNG.
Mississippi is not known to have the huge reserves of natural gas and oil being discovered in other states, but the state has a very robust system of natural gas pipelines, and is home to the Chevron Pascagoula Refinery in Pascagoula, which is the largest Chevron refinery in the country.
Alan K. Sudduth, manager of policy, government and public affairs, Chevron Pascagoula Refinery, said because of American ingenuity and technology, the country is experiencing early indicators of energy affordability and energy security. While it is premature to speculate about specific benefits for the Pascagoula Refinery and Mississippi, he said the economic revitalization enabled by oil and gas development has provided benefits to the areas where Chevron operates, like Pascagoula.
“Moreover, as the Pascagoula Refinery celebrates fifty successful years of operation in Mississippi, the next fifty years look just as promising,” Sudduth said. “Chevron has upgraded its largest refinery to enable it to process some of the more challenging crudes the world has to offer. When you combine the refinery’s flexibility for processing crude with the upcoming addition of a new product slate – base oil, the foundational component of lubricants – the Pascagoula Refinery’s capacity and capabilities place it in the best position to provide top quality products for many years to come.”
By taking full advantage of the domestic energy resource base, the President and members of Congress could help turn the United States into a global energy superpower.
“To turn this opportunity into reality, we will need all sources of energy – oil, natural gas, coal, nuclear, renewables – to play a role in meeting energy demand even as we seek to improve our economy’s energy efficiency,” Suddeth said. “As our energy renaissance advances, we would also anticipate increased jobs, growth and tax revenues nationally and locally. Finally, our nation’s energy renaissance will give us greater flexibility on the international front even as we strengthen our domestic competitiveness\economic standing in the world.”
State Economist Dr. Darrin Webb finds this new technology and the growth it is generating fascinating. While he defers to the experts on whether it will lead to energy independence in the time frame projected, he believes it is has already proven to be a boost to an economy that was struggling.
“The continued growth of this industry will certainly help the national economy,” he said. “It will greatly help in the reduction of our trade deficit and, perhaps more importantly, could help stabilize and reduce energy prices. This will be a help to the entire economy. Energy intensive industries in Mississippi will certainly benefit.”
Patrick Sullivan, president, Mississippi Energy Institute, said it could be even sooner than 2035 when the U.S. achieves energy independence.
“Hydraulic fracking and horizontal drilling for domestic oil and natural gas production has totally changed the game almost overnight,” Sullivan said. “We do have more energy reserves due to our new ability to recover oil and natural gas over these tight formations. But to be the richest energy country, we have to factor in all of our reserves. That includes coal. There is a big economic and environmental debate over coal that has gone on for years. We have the largest fleet of nuclear reactors for energy production in the world.”
Beyond that, Sullivan said, there are other energy sources that have their place and have become more economical and more competitive such as bio energy, wind and solar, although the biggest source of renewable energy production in the U.S. has been and remains hydroelectric power.
“The key point is if we are going to say we have the most energy reserves in the world, we have to count everything,” Sullivan said. “That should be a promise to use everything. We are going to use it responsibly, but we are going to use everything.”
The energy independence revolution bodes well for Mississippi, which has a greater percentage of manufacturing jobs than average. Manufacturing is energy intensive, and natural gas is a raw material that can be converted to other products. Currently natural gas, which is used a lot in manufacturing, costs only 25 percent as much in the U.S. as Japan.
“The U.S. and our continent have a very significant advantage in having low cost energy, especially natural gas,” Sullivan said. “If you look around the world at some of our major manufacturing competitors in Germany, Japan and China, natural gas is much cheaper here and electricity is less expensive. The pendulum where manufacturing competitiveness left the U.S. in the past two decades has swung back. Energy isn’t the only reason, but it is a major reason. Now, for manufacturing in a lot of different sectors, it is more profitable to do it back in the U.S. Other reasons are that wage rates are going up in developing countries like China. Shipping rates are going up. Especially for products at the end of the day destined for America, it makes a lot of sense to manufacture here.”
He also points to Mississippi’s abundance of natural gas infrastructure. The state has some natural production, but where Mississippi really shines is in the volume of natural gas that goes through the state because of natural gas pipelines. That could create more jobs in the energy sector, which are two to three times higher paying than the average private sector jobs.
“These are exactly the kind of jobs we want more of here because they yield a higher economic outcome,” Sullivan said. “They are very good paying jobs. And they are jobs that can be filled by people at all education levels. Most of the jobs are technical level positions which can be filled by people with a high school education, but these industries also require degreed professionals.”
There is also a real opportunity to use that to add value in manufacturing producing petrochemicals, plastics, and possibly metals. Mississippi could be increasingly attractive for industries that are very energy intensive.
Imagine the impact on the balance of trade if the U.S. starts exporting energy, competing with the likes of OPEC for sales in areas like Asia where demand is expected to grow quickly.
“The country is moving to exporting more energy, and we have the enormous LNG import terminal built in Pascagoula just before the market totally changed with all the production in the U.S.,” Sullivan said. “There are concerns that if the U.S. exports too much natural gas, it will bring prices up closer to natural gas prices outside of the U.S. But hopefully that terminal will be converted to an export terminal.”
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