Low Natural Gas Prices Helping to Keep Customers Connected

Washington, D.C. – In cities and towns across the country, Americans are saving money and enjoying a better quality of life thanks to the nation’s abundant supply of clean, domestic natural gas delivered by local natural gas utilities. This year, according to a survey of American Gas Association member companies, the number of customers disconnected from their utility service fell by more than eight percent, indicating that the low price of natural gas is allowing more people to access the energy they need. Additionally, the total amount owed by natural gas customers fell by nearly 15 percent.

“Natural gas plays a key role in rebuilding our nation’s economy by saving money for homes and businesses and keeping our most vulnerable citizens from having to go without essential energy,” said AGA President and CEO Dave McCurdy. “The low price of natural gas also creates jobs, is boosting the manufacturing and chemical industries and is a driver for infrastructure expansion while offering tremendous value to the 177 million Americans who use it every day.”

Prices for natural gas this winter were nearly two percent lower compared to the year before, according to the Energy Information Administration, but the improvement in disconnect rates can also be attributed to the combination of an improving economy and assistance from federal, state and utility energy efficiency programs that all helped more households stay current on their bills.

Low domestic prices of natural gas have led to savings of almost $35 billion for residential natural gas customers over the past three years. Households that use natural gas appliances for heating, water heating, cooking and clothes drying spend an average of $654 less per year than homes using electricity for those applications. These savings are achieved not just through the comparatively low price point of natural gas, but also due to the efficiency of the delivery network operated by natural gas utilities. The direct use of natural gas maintains about 92 percent of its usable energy from production to the customer.

Natural gas utilities are committed to helping customers achieve even greater energy savings by investing heavily in energy efficiency programs. In 2011, natural gas utilities created total savings of more than $300 million for customers – about $107 per household – and offset 6.5 million metric tons of carbon dioxide.

Still, the need for fuel assistance in this country remains great, and many customers struggle to make ends meet. The latest U.S. Census data shows that the poverty rate in 2012 was 15 percent – meaning about 46.5 million Americans lived in poverty. While overall disconnects are down, the number of customers who are at least 30 days late in paying their utility bills stayed stable compared to last year and accounts for more than 18 percent of customers. The Low Income Heating and Energy Assistance Program (LIHEAP) is an essential federal program that can help ensure no Americans go without heat in winter or air conditioning in summer. To date, the Senate Appropriations Committee has approved $3.61 billion for LIHEAP in FY 2014. The House Appropriations Committee, however, has yet to set FY 2014 LIHEAP funding levels. While recognizing that Congress faces difficult decisions given the current fiscal climate, AGA continues to call for action ensuring responsible funding levels for LIHEAP. Greater certainty for overall LIHEAP funding and distribution timing is crucial to ensuring that states can plan budgets and receive funds necessary to provide assistance to Americans in need.

Unconventional Oil & Gas Revolution to Increase Disposable Income by More than $2,700 per Household & Boost U.S. Trade by More than $164 billion in 2020

WASHINGTON-The economic and employment contributions from U.S. unconventional oil and gas production are now being felt throughout the U.S. economy, increasing household incomes, boosting trade and contributing to a new increase in U.S. competitiveness in the world economy, a new study by IHS finds.

Unconventional oil and gas activity increased disposable income by an average of $1,200 per U.S. household in 2012 as savings from lower energy costs were passed along to consumers in the form of lower energy bills as well as lower costs for all other goods and services. That figure is expected to grow to just over $2,000 in 2015 and reach more than $3,500 in 2025, the study says.

U.S. trade position will continue to improve, owing to the significant reduction in energy imports and the increased global competiveness of U.S.-based energy-intensive industries, the study says. Driven by a rise in domestic production and manufacturing that will displace imports, as well as a favorable export position for these industries, the trade deficit will be reduced by more than $164 billion in 2020—equivalent to one-third of the current U.S. trade deficit.

The new study, entitled America’s New Energy Future: The Unconventional Oil and Gas Revolution and the Economy – Volume 3: A Manufacturing Renaissance, builds on previous IHS research on the economic contributions of unconventional oil and gas activity. The previous studies focused solely on upstream unconventional activity and found that that sector of the energy value chain currently supports more than 1.7 million jobs and will grow to nearly 3 million by the end of the decade.

The new study widens the breadth of the research to include the full energy value chain (upstream, midstream and downstream energy and energy-related chemicals) and the overall macroeconomic contributions on the manufacturing sector and broader U.S. economy. Midstream and downstream unconventional energy and energy-related chemicals activity currently support nearly 377,000 jobs throughout the economy, the study finds. Combined with upstream activity, the entire unconventional oil and gas value chain currently supports more than 2.1 million jobs. Total jobs supported by this value chain will rise to more than 3.3 million in 2020 and reach nearly 3.9 million by 2025, the study says.

“The unconventional oil and gas revolution is not only an energy story, it is also a very big economic story that flows throughout the U.S. economy in a way that is only now becoming apparent,” said Daniel Yergin, IHS Vice Chairman and author of The Quest: Energy, Security and the Remaking of the Modern World. “In addition to significant job and economic impacts from energy production and its extensive supply chains, the growth of long-term, low-cost energy supplies is benefiting households and helping to revitalize U.S. manufacturing, creating a competitive advantage for U.S. industry and for the United States itself.”

Energy-related chemicals and other energy-intensive industries such as petroleum refining, aluminum, glass, cement, and the food industry are some of the primary beneficiaries from secure supplies of low-cost energy from unconventional production, the study says. More than 70 percent of the cash cost of producing energy-related chemicals— which include major commodity petrochemicals such as olefins, methanol and ammonia—is the cost of raw materials and energy feedstocks.

The chemical manufacturing industry accounted for 13 percent of all U.S. merchandise exports ($198 billion) in 2012—compared to $152 billion in 2007. This trend is expected to continue as energy-intensive industries benefit from lower energy prices, lower electricity prices and increased demand for their products as growth in investment spurs domestic consumption, the study says.

In addition to measuring jobs supported by the full unconventional value chain, the study also quantifies the additional manufacturing jobs attributed to the broader macroeconomic contributions that begin with unconventional oil and natural gas. More than 460,000 combined manufacturing jobs (3.7 percent of all manufacturing jobs) will be supported in 2020, rising to nearly 515,000 (4.2 percent of total manufacturing jobs) in 2025. The manufacturing sector will become increasingly connected to unconventional development as a primary source to create and sustain jobs over the course of the study period. Manufacturing jobs will represent one out of every eight jobs supported by unconventional oil and gas development during that time, the study says.

“This study illustrates the extended contributions of the unconventional revolution to the U.S. economy as energy intensive industries move to capitalize on this newfound abundance and the contribution to overall competitiveness that it brings,” said John Larson, Vice President, IHS Economics. “It puts the unconventional revolution in context as an important, but little understood pocketbook issue for all Americans.”

Other Key Findings

  • The entire unconventional oil and gas value chain and energy-related chemicals will contribute $284 billion in value-added contributions to GDP in 2012, a figure that will increase to nearly $533 billion annually in 2025.
  • The full value chain of industrial activity and employment associated with unconventional oil and natural gas contributed more than $74 billion in federal and state government revenues in 2012. Tax receipts will rise to more than $125 billion annually by 2020 and reach $138 billion by 2025.
  • Workers’ earnings from all unconventional energy and chemicals activity were nearly $150 billion in 2012. This total will rise to $207 billion in 2015 and will be nearly $269 billion in 2025.
  • Industrial production increases directly resulting from lower feedstock prices and energy costs associated with the full value chain of unconventional activity will be $258 billion (3.5 percent increase) by 2020 and rise to $328 billion (3.9 percent increase) in 2025.
  • Between 2012 and 2025, IHS projects a cumulative investment of nearly $346 billion across the midstream and downstream energy and energy-related chemicals value chains. Close to $216 million of this will come in the midstream and downstream segments of the unconventional value chain, including 47,000 miles of new or modified pipeline infrastructure.
  • More than $31 billion in new capital investments will drive the addition of more than 16 million tons of chemical capacity by 2016. Cumulative investment will grow to more than $129 billion to support nearly 89 million tons of capacity by 2025.
  • Employment contributions from the midstream and downstream sector are at their greatest in the near term (currently supporting nearly 324,000 jobs), as expansions and other capital expenditures are made to increase capacity connecting the resource base with broader end-users.
  • Energy-related chemicals (currently supporting more than 53,000 jobs) will support a growing number of jobs in the long term. By the end of the decade, energy-related chemicals will support more than 277,000 jobs—a fivefold increase—and rise to nearly 319,000 by 2025.

America’s New Energy Future also includes a Low Production Case which measures the potential loss of economic contributions from a more restrictive regulatory environment than currently exists today. The results of this Low Production Case include:

  • 1.4 million less jobs supported by 2015 than otherwise expected. Nearly 2.8 million less by 2025.
  • $127 billion less in value-added contributions to U.S. GDP in 2015 and $300 billion less by 2025.
  • $29 billion less in federal and state revenues in 2015. The loss would grow to $72 billion by 2025. The cumulative loss for federal and state revenues over the entire 2012-2025 study period would be nearly $535 billion.
  • The benefit to U.S. trade position would be reduced to $94 billion — 57 percent of what is currently expected.
  • On average, disposable income per household would be $1,730 less per year than is otherwise expected.

“The availability of a long-term supply of low-cost feedstock derived from unconventional resources is revitalizing the petrochemical industry in North America,” said Mark Wegenka, Managing Director, Chemical Consulting at IHS, and a contributing author of the study. “Prior to the recent expansion of unconventional gas, the outlook for the industry was bleak—it was suffering from significant plant shut-downs and capacity reductions. However, as a result of these unconventional oil and gas supplies, we’ve witnessed a complete turnaround. The industry is not only competitive again, but it is attracting significant domestic and foreign investment and adding capacity that is resulting in more high-quality U.S. jobs that pay well.”

About The Report

America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy is a three-volume series based on IHS analyses of each play, which calculates the investment of capital, labor and other inputs required to produce these hydrocarbons. The economic contributions of these investments are then calculated using the proprietary IHS economic contribution assessment and macroeconomic models to generate the contributions to employment, GDP growth, labor income and tax revenues that will result from the higher level of unconventional oil and natural gas development. This research was supported by the American Chemistry Council, America’s Natural Gas Alliance, the American Petroleum Institute, the Fertilizer Institute, the U.S. Chamber of Commerce – Institute for 21st Century Energy, the National Association of Manufacturers, the Natural Gas Supply Association, Rio Tinto and the Society of the Plastics Industry. IHS is exclusively responsible for all of the analysis and content.

Note: The “full value chain” refers to the entire range of economic activity that begins with the development of oil and gas production (upstream), flows into the transportation of these resources (midstream), and then into their transformation into products (downstream) and then into industrial uses, such as the production of petrochemicals.

Download the complete report and methodologyAmerica’s New Energy Future: The Unconventional Oil and Gas Revolution and the Economy – Volume 3: A Manufacturing Renaissance.

How are NWGA Members Spreading the Word About Natural Gas?

We’re bombarded with a staggering amount of information every day, so what’s a natural gas utility to do in order to get their message out? NWGA members are producing some eye (or nose?) catching material to let customers know about the importance of natural gas safety and the many ways we use gas in our everyday lives.

First up, Puget Sound Energy is rolling out a scratch and sniff bill insert with an interesting aroma:

It’s a trip to the mailbox that could have heads turning. Billing statements from Puget Sound Energy arriving at more than 1.5 million homes and businesses now through October include a scratch and sniff pamphlet to remind customers of the smell that’s used to help identify natural gas leaks.

Meanwhile, NW Natural has rolled out a couple of new print ads this week, one pair with their recent TV ad, “Imagine.”

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NW Natural’s other print ad also refers back to a TV commercial, a favorite of mine, “Little Leaks.”  Both versions emphasize the importance of doing something if you happen to notice that rotten egg smell, sensing a theme here? To sweeten the deal, NW Natural has rolled out a Twitter contest asking participants to name the ad’s characters (limited to folks within their service territory).

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That wraps up our rundown, is your utility doing something innovative to keep you up to date on what they’re up to?


NW Natural Announces Twitter Contest to Name Characters in “Little Leaks” Ad

PORTLAND, Ore. –Northwest Natural Gas Company, is celebrating its new safety commercial, “Little Leaks,” with a Twitter contest where someone will win a new TV. To enter you must tweet your ideas for the names of four egg characters showcased in the new TV ad. Include the following hashtag in your tweets to enter: #SmellGoLetUsKnow.

“Little Leaks” is a creative safety commercial that teaches the public not to ignore even the faintest odor of what could be a small gas leak. It is the brainchild of local integrated marketing agency CMD, who partnered with Hinge Digital to execute the spot.

“Our goal was to turn a PSA-style commercial into something fun with broad appeal that sticks in your mind. The egg characters in the Little Leaks campaign have something for everyone, and at the end of the spot you walk away more informed and entertained,” said Jeff Nichols, creative director at CMD.

In order to be eligible to win the “Little Leaks” Twitter contest, participants must be at least 18 years of age and reside in Oregon or Southwest Washington. The contest ends Sept. 6 at 11:59 p.m. More information can be found in the official contest rules.

If you smell natural gas or rotten eggs, remember these simple tips: Smell. Go. Let us know.

* Do not use your telephone, cell phone or any electronic or battery-powered device.

* Do not light matches.

* Don’t operate any electrical switch including lights.

* Don’t create any other source of ignition or spark that could ignite the gas.

* Evacuate the area on foot.

* Call NW Natural’s 24-hour emergency hotline at 1-800-882-3377 away from the leak.

More information can be found at www.nwnatural.com.

Report – Natural Gas Utilities Continue To Modernize Pipeline Infrastructure

Washington, D.C. –America’s natural gas utilities are dedicated to upgrading and modernizing our nation’s natural gas infrastructure, as well as to increasing expertise in maintaining existing pipelines and assessing and managing risk. Their dedicated efforts over the past three decades have led to a nearly 90 percent decline in serious pipeline incidents and will help ensure that the industry’s longstanding record of safe and reliable service continues well into the future, according to a new report by the American Gas Association and its member companies.

Using a strategic and systematic risk management program formalized in 2011 by the Pipeline and Hazardous Materials Safety Administration (PHMSA), natural gas utilities employ a careful analysis of infrastructure to identify threats, evaluate and prioritize risks, measure results, monitor performance and take action to help reduce the greatest risks. Not all pipeline risk is necessarily related to age or material, and older pipe can still perform reliably; therefore pipeline should not be replaced solely to reduce the amount of a specific material when greater risk may lie elsewhere.

In the past decade, natural gas utilities have installed updated plastic lines at a rate of 30,000 miles per year, connecting new customers or replacing older pipeline infrastructure. Thanks to these efforts, there are nearly 1.3 million miles of plastic pipe – the leading edge of advanced pipeline materials – in the natural gas system today, along with more than 1.1 million miles of cathodically-protected steel pipeline. There has been a 46 percent decrease in the amount of cast iron main since 1985, and only 3 percent of the entire national gas distribution system is composed of cast iron mains – a figure that is continuously being reduced as pipeline operators implement accelerated pipeline replacement programs. And serious incidents involving cast iron mains have also declined – dropping by a difference of 86 percent between 1985 and 2012.

“Safety is the top priority for the American Gas Association and its more than 200 member companies,” said AGA CEO and President Dave McCurdy. “Our nation’s natural gas infrastructure makes up the safest energy delivery system in the country and is the envy of other nations. This report shows the industry is successfully working to enhance system integrity though upgrades and modernization. As a result, Americans can continue to enjoy the benefits of our abundant supply of clean affordable natural gas for decades to come.”

By managing pipeline risk and replacing pipe no longer fit for service, as well as conducting other improvements, the industry is also reducing emissions from the natural gas distribution system. Improved data from the Environmental Protection Agency and others shows a declining trend for natural gas emissions. Less than 1.5 percent of natural gas is emitted as it travels from where it is produced to homes and businesses. Of that, only 0.3 percent is emitted from systems operated by local natural gas utilities. Distribution system emissions have dropped 16 percent since 1990, even as the industry added nearly 300,000 miles of distribution mains to serve 17 million more customers – an increase of 30 percent in both cases. Continued efforts to upgrade and modernize the natural gas pipeline network to enhance safety are lowering emissions even further. Pipeline replacement is resource-intensive, making it vital for natural gas utilities to have strategic “smart modernization” plans for managing replacement costs through careful planning and operational efficiency. Additionally, natural gas utilities must overcome significant challenges associated with this type of work, such as maintaining gas delivery to customers and working to minimize the impact to the public right of way and customer yards.

With natural gas prices at historic lows, America’s natural gas utilities are using this opportunity to advance upgrades to their energy delivery system, and they are working with local regulators to develop innovative rate models that further encourage the significant capital investment needed without increasing the burden on ratepayers. The natural gas industry spends over $7 billion each year in infrastructure investments. Currently, 32 states have infrastructure cost recovery mechanisms including 4 states which have adopted programs in the last 6 months.