API study: Investment in infrastructure could add a million jobs

By Staff | May 09, 2017

The American Petroleum Institute (API) last week released a new study conducted by ICF to investigate the scope of the economic opportunity and the amount of oil and natural gas infrastructure development likely in the U.S. over the next two decades.

“By 2035, if the right regulatory policies are in place, private investment could exceed $1.3 trillion for oil and natural gas infrastructure, and create more than 1 million jobs,” said,” said Kyle Isakower, API vice president of regulatory and economic policy.

According to the study, new oil and gas infrastructure could also add up to $1.89 trillion to the U.S. GDP. Individual states such as Ohio could support an average of 48,000 jobs per year and generate more than $95 billion to the state’s GDP. New York could support an average of more than 40,000 jobs per year and add more than $85 billion in GDP growth.

What differences are there between the base case and high case for future market conditions examined in the study?

While the base case represents a most likely scenario, the high case is put forward to assess infrastructure development in a more robust environment that is fostered by a larger hydrocarbon resource base and more rapid advancements in E&P technology. The study assesses capital expenditures associated with and the resulting economic consequences of oil and gas infrastructure development.

Which areas of the U.S. will see the greatest investments in infrastructure?

Geographically, oil and gas infrastructure investment will be greatest in the Southwest, which includes Texas, with a total CAPEX of $381 to $501 billion, accounting for 36 to 37 percent of the total infrastructure investment across the U.S. It should come as little surprise that this area leads the way on infrastructure development because it is relatively friendly to oil and gas development and is already home to a significant amount of infrastructure. However, the Northeast/Midwest U.S. will also see a significant investment in oil and gas infrastructure, with total investment for the area ranging from $283 to $381 billion, accounting for roughly 27 to 28 percent of the total oil and gas infrastructure investment across the U.S.

What oil and gas production trends are used in the API study?

The scenarios in this study project significant growth in oil and gas production and markets that evolve to accommodate such growth. While the base case shows fairly constant U.S. oil production in aggregate, tight oil supplies will continue to grow to offset declines in conventional production. In the high case, oil production growth is robust with U.S. production rising to upwards of 12 million barrels per day by 2035. Natural gas production growth is even more pronounced, increasing from roughly 72 billion cubic feet per day at present to between 110 and 131 billion cubic feet per day by 2035. Natural gas liquids (NGL) will track along with gas production over time.