Loretta PrencipeFriday, February 16, 2018
Plans for infrastructure reform are top-of-mind in Washington these days, particularly considering the broad significance of job creation, rural broadband deployment, pipeline infrastructure, hydropower and energy storage reforms for many industries nationwide. It should be no surprise that the oil and natural gas industries are keeping a close eye on these developments.
At the beginning of 2018, I predicted to colleagues that natural gas’s share of generation in the United States would begin to surpass coal on an annual basis. Given the details of President Trump’s new infrastructure plan, the Legislative Outline for Rebuilding Infrastructure in America, natural gas certainly has rosy prospects going into the new year.
As it stands, the plan would provide substantial funds—totaling approximately $1.5T— including $200 billion in federal funding towards infrastructure, and an approximation from stimulated supplementary investment from the private sector, as well as local and state governments.
The natural gas industry has made it clear that they are invested in renovating pipeline infrastructure. In the past, the industry has identified many barriers against the renovation process, including an antiquated permitting process at the federal level—a process that could be strategically streamlined to maximize competition and efficiency.
A primary tenet of the current infrastructure plan is to hasten the permitting process for pipeline construction, first and foremost by eradicating regulatory constraints, and by providing a strict timeline for review processes under the National Environmental Policy Act (NEPA).
In keeping with eliminating regulatory roadblocks under the proposed plan, Congress would be cornered out of the decision-making process for many energy infrastructure considerations, with responsibilities deferred to federal agency officials, including Interior Secretary Ryan Zinke.
Now, what do these changes mean for natural gas’s share of generation over coal in the United States? It’s worth mentioning that the word “coal” doesn’t appear once in the proposed infrastructure plan.
According to U.S. Energy Information Administration, natural gas currently provides 29 percent of our nation’s energy, whereas coal provides 15 percent. The Department of Energy projects that five years from now, those percentages will both drop 1 percent—having assumed that wind energy would make up the 2 percent difference.
Given the newly friendly environment in Washington for pipeline development, we should expect to see that need met by natural gas—and for natural gas to be embraced in other parts of the world, as well. China, for example, is the fastest growing market for natural gas.
American industry will jump at the opportunity to expand into international markets, and some companies are taking those steps already. In marking a major advancement for the US gas industry, Cheniere Energy recently signed the first long-term deal between an American natural gas exporter and a state-owned energy company in China.
I stand by my prediction, and I would wager that that natural gas will find great success under the Trump administration. Washington—and global markets—should expect to see a reinvigorated natural gas industry in the coming months, formulating future plans for expansion and infrastructure investment on the horizon.
The natural gas industry has a lot to gain under this proposed plan, but those gains could be quickly lost without comprehensive and cohesive messaging on the benefits of energy infrastructure reforms, both in the United States and internationally. Makovsky’s Energy, Manufacturing and Sustainability practice has deep experience in energy policy communications, and we look forward to continuing to craft honest, meaningful messaging to best convey these industry stories.
Andy Beck is Executive Vice President of Makovsky’s energy, manufacturing and sustainability practice, and general manager of Makovsky’s Washington, D.C. office. Previously, Andy served as the Director of Public Affairs for the U.S. Department of Energy.