In an environment characterized by 2 percent gross domestic product expansion seemingly year after year, America’s energy renaissance has stood out.

According to the U.S. Energy Information Administration (EIA), the U.S. produced 5.7 million barrels of oil per day in 2011. Last year, that total reached 6.8 million barrels of oil per day. By 2019, U.S. oil output will surge to 13.1 million barrels a day, due in large part to soaring oil extraction at shale formations in Texas and North Dakota.

Trends characterizing natural gas supply are even more awe-inspiring. The EIA forecasts U.S. gas production will surge from 21.6 trillion cubic feet (Tcf) in 2010 to more than 37 Tcf by 2040. The United States already produces more natural gas than any other nation.

Implications of America’s energy production boom include:
  • greater medium-wage and high-wage job creation;
  • relative price stability;
  • bolstered domestic industrial production;
  • enhanced government tax collections;
  • shrinking trade deficits;
  • less dependence on foreign energy;
  • greater diplomatic influence; and
  • rapid economic growth in energy-rich communities.
Construction Gets a Turbocharger
America’s energy renaissance stands to impact virtually every industry—from manufacturing and financial services to environmental technology, retail and especially construction. America’s productive capacity eventually will translate into large energy exports, including in the form of liquefied natural gas (LNG) being distributed from many export-oriented LNG terminals now under development.

American companies endeavor to construct more than 200 million tons per year of LNG export capacity over the next several years, according to Hydrocarbon Processing’s Construction Boxscore. Roughly two dozen LNG export facilities are awaiting approval from the U.S. Department of Energy to export LNG to non-Free Trade Agreement (FTA) nations. Thus far, only a few have received non-FTA export approval: Cheniere Energy’s Sabine Pass project (in Cameron Parish, La.) and Dominion’s Cove Point LNG project in Calvert County, Md.

Among prospective LNG exporters, Cheniere Energy has taken the early lead. It was one of the first prospective exporters to file for federal approval (2010). According to Forbes, the company intends to reconfigure its Sabine Pass terminal, the largest receiving terminal in the world. It will reorient its five existing storage tanks, two berths and 94-mile pipeline to become bi-directional. According to Fuelfix.com, Cheniere is building four LNG trains, which are facilities designed to cool natural gas into a liquid state. These facilities will have the capacity to process more than 2.5 billion cubic feet of natural gas per day.

Despite the advantage of existing infrastructure, Forbes reports Cheniere’s additional project investments are estimated to cost roughly $5.6 billion, with $2 billion in equity and $3.6 billion in debt. Private equity firm Blackstone Group is a major financial supporter. The project is expected to create 3,000 construction jobs, with the expansion slated for completion next year.

In less than two years, Cheniere will be among the first energy companies to send LNG tankers through a widened Panama Canal—a 7,000-mile shortcut to buyers in China, Japan and other large Asian markets.

For its part, Dominion’s Calvert County, Md., project represents construction in the range of $3.4 billion to $3.8 billion. Most other proposed LNG projects face lengthy and expensive regulatory hurdles and will not begin construction for several years.

A shortage of craft professionals also threatens various timetables. Several key North American gas-based projects could be delayed or cancelled due to a lack of skilled labor. According to Bechtel’s Thomas M. Jones, as reported in Gas Processing News, “If you add all the planned projects together, you could have 100,000 craft workers needed just in Texas and Louisiana. The sustainable number that can be put into the field is probably between 40,000 and 60,000.”

Economists already have begun to measure the positive economic implications of the pending LNG export boom. According to ICF, the net effect on U.S. gross domestic product is expected to be positive at about $15.6 billion to $73.6 billion per year on average between 2016 and 2035. Despite concerns, ICF and many other analytical groups expect LNG exports will have only “moderate impacts” on domestic natural gas prices. LNG exports also are expected to generate a net positive impact on U.S. employment, with projected growth of 73,100 to 452,300 jobs on average between 2016 and 2035.

Looking Ahead
Many people will live during a time of U.S. energy independence—something that hasn’t occurred since the 1950s. However, the capacity to become energy independent does not presently exist. More facilities will be needed, and more workers will be needed to construct those facilities. Still, the outlook for U.S. energy self-sufficiency has seldom been more positive than it is today.

Construction industry stakeholders should expect the power segment to dominate nonresidential construction growth during the next few years. However, the projects to come are concentrated in a handful of states. Of the 14 LNG export terminals already proposed to the Federal Energy Regulatory Commission, three are in Texas and five are in Louisiana.


Anirban Basu is chief economist of Associated Builders and Contractors. For more information, visit www.abc.org.