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Natural Gas. The Affordable Energy Option. Abundance Driving Affordability Throughout the last decade, domestic development of natural gas increased by 36 percent, enabling the U.S. to become the world’s leading producer. But how did the nation increase its production so drastically in only 10 years? It is a revolution fueled entirely by two factors – innovation and shale. Breakthroughs in hydraulic fracturing (fracking), horizontal drilling and other well stimulation technologies are unlocking natural gas that was trapped in shale and other tight rock formations for millions of years. The U.S. can now access more energy resources efficiently, safely, and ultimately cost effectively. This newfound energy abundance at home translates into real benefits for the American consumer and the entire economy. The surge in natural gas caused prices to drop dramatically. Since 2008 alone, the average national price of natural gas delivered to residential consumers decreased by almost three dollars per thousand cubic feet of natural gas. More Money in Your Pocket Natural gas is now the nation’s largest fuel source for electricity generation, providing more than 31 percent of U.S. electricity in 2017. And because innovations have made it a more affordable energy option, Americans across the country see the savings in their utility bill each month. In fact, today, energy accounts for only 6.6 percent of a family’s monthly spending. With less money spent keeping the lights on and the homes warm, families have more money for essential household expenses ranging from childcare to groceries to rent. According to the U.S. Energy Information Administration (EIA), falling natural gas and oil prices directly reduced Americans’ cost of living. Powering U.S. Industry Abundant natural gas not only saves consumers on home electricity, but it also has a positive ripple effect for American manufacturers. A strong supply is helping to cut prices in energy intensive industries across the value chain, from producers of raw materials to finished products. These energy intensive manufacturers include producers of steel, chemicals, refined fuels, plastics, fertilizers and numerous consumer products. Affordable energy, for the industries that rely on it the most, brings jobs back to our shores and attracts investment. Industrial electricity prices in 2015 were 30 to 50 percent lower than those of foreign competitors – and are likely to remain lower. And these lower energy costs translate into lower manufacturing costs. The total cost to manufacture goods in the U.S. was 10 to 20 percent lower than in Europe in 2015. In addition to strengthening the economy, reduced manufacturing costs for U.S. industries make goods more affordable for consumers, once again helping families save on their daily living expenses. Natural gas is revolutionizing energy supplies, and the tangible savings for the nation and consumers cannot be overstated. Energy is essential to modern living and when it’s affordable, we all reap the benefits.

What is liquid natural gas? Changing natural gas to its liquid state makes storage and transportation of the resource much easier, as it shrinks in volume about 600 times. Liquified natural gas, commonly referred to as LNG results when natural gas has been cooled to a low temperature of -260 degrees F. Impurities are removed and the nontoxic liquid is clear, odorless and noncorrosive. The condensed liquid is transported by ship and when it reaches its destination, it is off-loaded into insulated storage tanks. Regasification is the process that converts LNG to its gas form, which then enters a pipeline distribution center and can be delivered to the consumer. Exports LNG exports from the United States provide the global market with a safe, alternative and reliable source of energy. And exporting natural gas offers economic benefits to the United States, including the thousands of jobs created by domestic production. It is estimated that the export of LNG could provide $10 billion to $31 billion to natural gas producing states. Demand for supporting equipment and goods and other materials like steel and cement benefits even non-natural gas producing states. Safety Over several decades, LNG and its exportation have been handled safely; more than 135,000 carrier voyages have occurred without major accident or security issues. LNG ships are designed to prevent rupture or leakage and they are equipped with numerous technologies for safety and accident prevention. To ensure safe handling and transport, LNG is regulated by the following federal agencies, among others: Federal Energy Regulatory Commission Department of Transportation S. Coast Guard Department of Homeland Security Market-distorting energy subsidies vs. the market As energy consumers, Americans benefit most when all of the nation’s energy sources play a role in supplying the grid. Subsidies, like those recently pushed for nuclear plans in New Jersey, Ohio and Connecticut create a distorted market with an uneven playing field and do a disservice to energy consumers. While voters in key states like Pennsylvania, New Jersey, Ohio and Connecticut have made it clear in the polls that they don’t want to pay for nuclear plant bailouts, a recent IHS Markit study oddly suggests that the solution to market distorting subsidies to some energy sources is more subsidies. The study says that: Subsidies for specific generating technologies do not reduce, but rather shift, some of the cost of specific electric generation technologies. Federal subsidies shift some costs from consumer power bills to current or future consumer tax bills. In addition, some state subsidies shift costs from consumers with distributed generation resources to those without. Since subsidies shift costs, the result is the development of more subsidized resources than are cost-effective with a level playing field. As a result, an economic rationale exists for market interventions to offset the unintended consequences of the uneven playing field. Allowing the market itself to choose winners and losers in energy sourcing is the best approach to electricity generation for consumers. Factors like reliability, affordability and efficiency come into play, and unbiased markets allow for the innovation and competition that results in real solutions like lower prices and a better end-product. Natural gas was the leading energy source in the United States in 2016 with its growth attributed not to subsidies, but to the market. A recent study examined different energy sources to determine their reliability when supplying the future U.S. power grid. Study results show that “natural gas is uniquely positioned among energy sources to supply attributes – dispatchability, ramp rates, frequency response and others – that ensure the future reliability of the U.S. power grid.” These results demonstrate how natural gas provides a reliable source of energy, without subsidies that tip the market. While the idea is not to argue against other energy sources, the market and consumers alike can see the advantages offered by natural gas. And ultimately, the advantages offered to consumers by a market free of distorting-subsidies.

All energy sources have an environmental effect; from the space they take up to emissions produced throughout their life-cycle. As an example, there is some methane released during natural gas development. But despite a record-setting over the last three decades, the amount of methane emitted into the atmosphere during natural gas extraction continues to drop. Why? Because leading companies are working hard to continuously improve their environmental performance by developing new technologies, collaborating with other companies and colleagues, and implementing best practices that will bring these emissions down to nearly zero. What is methane? Methane is the primary component of natural gas. With a chemical formula of CH4, methane is made up of four hydrogen atoms and only one carbon atom. The result? For the same amount of energy produced, burning natural gas emits significantly less CO2 into the air than other fossil fuels. Methane is the clean-burning energy source that fuels our nation more efficiently and cost effectively than ever before. However, methane in the atmosphere is a greenhouse gas. That’s why the industry’s proactive stance on reducing methane emissions that occur during the development of natural gas is so important. Moving even faster in the right direction. According to the Environmental Protection Agency, methane emissions from the energy sector decreased 14 percent from 1990 to 2016, while natural gas output increased by more than 50 percent during the same period. And now, new industry programs are bringing companies together to share information and take actions that reduce methane emissions further and faster than ever before. The Oil and Gas Climate Initiative has committed $20 million to support technologies and businesses that detect, measure and mitigate methane emissions. And The Environmental Partnership, comprised of dozens of the country’s largest natural gas companies responsible for 30 percent of U.S. production, has made a collective commitment to reach specific goals within the next five years that will drastically reduce operational methane emissions. One of these goals is to create a more airtight infrastructure through the widespread replacement of pneumatic control valves. Pneumatic control valves manage liquid levels, temperature and pressure during the production, transmission and storage of natural gas. Replacing existing pneumatic controllers with low- or zero-bleed alternatives will nearly eliminate a major source of emissions. Methane leak detection, monitoring, and repair is another area of increased focus. Over the next eighteen months, companies will rapidly increase the use of technologies like optical gas imaging (OGI) infrared cameras to detect and measure methane leaks from a variety of gas industry equipment and will complete necessary repairs more quickly. Companies are also ramping up internal training programs to ensure employees understand and follow all best practice protocols and procedures to reduce or eliminate methane emissions. In addition to industry-led initiatives like these, natural gas companies are voluntarily participating in programs administered by the U.S. Environmental Protection Agency, including Natural Gas STAR, and Methane Challenge, both of which promote the use of technologies and practices that reduce methane emissions. One successful practice is a protocol for completing new natural gas wells known as reduced emissions completions, or “green completions.” The process captures gas that would otherwise be released into the atmosphere during the final stage of bringing a new gas well online. Since the start of these EPA programs, U.S. energy partners have implemented approximately 150 new technologies and practices and eliminated nearly 1.39 trillion cubic feet (Tcf) of methane emissions. One goal, many benefits. Controlling methane emissions is not only about environmental health and safety – it’s also good economics. Methane is a valuable commodity; eliminating methane leakage means more natural gas is captured and retained, which can be sold and used as energy. The increased use of natural gas has reduced carbon emissions, lowered costs to American consumers, and increased our nation’s manufacturing competitiveness. U.S. industrial electricity costs are lower than those of our foreign competitors, giving manufacturers – including producers of steel, chemicals, refined fuels, plastics, fertilizers and numerous other products – a major competitive advantage. Industry standards and existing regulations on air emissions from EPA and other agencies are empowering the private sector to continue to innovate and deliver more natural gas and oil to customers while improving air quality and protecting public health and the environment without unnecessarily hampering manufacturing and business expansion. What’s more, the methane mitigation industry has taken off over the past six years, leading not only to cleaner air, but also to high quality jobs in a growing field. Methane mitigation equipment manufacturers and service providers are providing an array of good-paying jobs across nearly all 50 states. The industry’s numbers are trending in all the right directions. Natural gas production is up while carbon emissions are down, and the industry’s big steps forward in reducing methane emissions are having a broad and positive impact. It all adds up to a win-win situation – for the industry, the environment, the American workforce, and energy consumers everywhere.

Natural gas makes U.S. manufacturing more competitive. The price of energy – from the electricity needed to run a factory to the gas powering the delivery truck – impacts the final cost of every item you purchase. Some things require more energy than others. In the steel industry, energy can account for 20 to 40 percent of the cost to make materials for things like stainless steel appliances or railroad tracks. So when manufacturers have access to less expensive energy, their overall production costs decrease as well. For decades, Americans saw their jobs move overseas where the labor, and thus cost of doing business, was cheaper. But a shift since 2010, according to the Bureau of Labor Statistics, shows that the number of manufacturing employees continues grow. Why? Innovative technologies like hydraulic fracturing and horizontal drilling now provide access to abundant supplies of natural gas. This energy source’s increased availability caused its prices to drop and companies have utilized the savings in many ways, which includes hiring more workers. This is especially true for U.S. energy-intensive manufacturers, who now have an advantage over many foreign competitors, and that means more investment and jobs. For example, access and proximity to this plentiful energy resource has made the U.S. the place to be for petrochemical and plastics manufacturers. According to the American Chemistry Council, our abundant supply of natural gas has attracted nearly $200 billion in new manufacturing investment which will create 468,000 new jobs by 2025. The need for this plentiful, affordable energy source is not slowing down. According to the National Association of Manufacturers, total natural gas demand is expected to increase by 40 percent over the next decade, with the manufacturing and power generation sectors driving that need. Natural gas is in manufactured products. From parts in the cars we drive to the toys we buy our children, natural gas products serve as a building block for thousands of consumer goods. It’s one of the primary feedstocks for chemical compounds know as petrochemicals. Scientists classify these compounds into one of three categories – olefins, aromatics and synthesis gas. Natural gas liquids produce around 90% of U.S. olefins, which is a class of chemicals that includes ethylene, propylene, and butadiene. These three petrochemicals are required to manufacture a wide range of items that support the leisure and fundamental comforts of modern life. Vehicles, no matter the power source or size, are lighter, sleeker and faster because of the natural-gas based plastics, fibers, compounds and adhesives used to make and maintain them. They’re also safer thanks to the seat belts and air bags made from polyester, a strong, durable and flexible fiber. Products made with natural gas also save lives – acrylic lenses sharpen the vision of those suffering from cataracts; sterile products, like intravenous lines and bags, gloves, masks and catheters, prevent the spread of disease; and medications are able to last longer with refrigeration. The Renaissance of petrochemical manufacturing. Just a decade ago, the U.S. petrochemical industry was in decline. However, greater access to low-cost natural gas feedstocks, and an increased need for goods manufactured with them, has shifted the tide. According to the International Energy Agency, global economic growth is lifting people in developing countries into the middle class. Higher incomes give these individuals more money to buy items made with petrochemicals like kitchen appliances, toys, credit cards and furniture. This demand has resulted in multimillion-dollar investments to expand or build new petrochemical manufacturing facilities. In fact, jobs at energy-related chemicals companies are projected to rise from 53,000 in 2012 to nearly 319,000 by the end of 2025. Not only will job growth increase, but so will wages. Labor income in the energy-related chemicals industry will likely increase nearly $3.8 billion in 2012 to just over $26 billion in 2025. And though the industry has a long history along the Gulf Coast, this boon has the potential to create a secondary hub in Appalachia. Two advantages of this area are its proximity to abundant natural gas liquids in the Marcellus and Utica shale formations and to major manufacturing markets in the Midwest and East Coast. According to the American Chemistry Council, this growth could result in over 100,000 new jobs for residents throughout the mountain region, thanks in part to natural gas. The shale revolution has meant so much more than just lower electricity prices for end consumers. Increased natural gas production has resurrected manufacturing, and brought along with it more jobs, higher wages and the potential for new business in new regions.

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