Natural gas prices boon to La.

12 16, 2011 by The Advocate

Low natural gas prices will generate billions of dollars of industrial investment in Louisiana for years to come, the state’s top economic development official says.

“I think it’s likely that we’re going to see tens of billions of dollars cumulatively of new capital investment — heavy industrial investment — in south Louisiana over the next few years, largely in the chemical industry and some of the energy-related fields like gas-to-liquids projects,” said Stephen Moret, secretary of Louisiana Economic Development, on Thursday in a conference call with reporters to release LED’s 2011 economic development highlights.

“That one thing is going to have a profoundly positive impact on the Louisiana economy,” Moret said of the low natural gas prices, aided in part by new and at-times controversial technology known as hydraulic fracturing. In recent years, large natural gas deposits have been discovered in northwest Louisiana, Texas and other states.

Dan Borné, president of the Louisiana Chemical Association, called today’s favorable natural gas prices a “renaissance for chemical manufacturing in Louisiana.”

“Five years ago it was problematical whether our plants would continue to grow in the wake of high natural gas prices and dwindling supplies,” Borné reflected. “That economic model has been turned upside down with huge supplies of natural gas at competitive prices.”

For the dozens of chemical plants in Louisiana, Borné compares their use of natural gas to a bakery’s use of flour. It’s an essential ingredient in nearly all of their processes.

“Just as a baker makes a variety of products from flour, we use natural gas as a feedstock from which we derive beaucoup primary chemical building blocks,” Borné said. “The new natural gas reality translates into billions of dollars in new investments and re-investments in the Louisiana chemical industry, creating a lot of jobs along the way.”

“I fully anticipate a very robust, sustained industrial construction boom in south Louisiana in the chemical industry and also the energy industry as well,” Moret said.

In the past year, the state has had a record year of economic development gains, the LED report pointed out. Projects announced in 2011 will eventually create some 20,500 new jobs and $18 billion in new capital investment, according to the report.

The state will also benefit from an overall improving image when thinking about business climate, Moret noted. In addition, Louisiana could benefit from what’s expected to be a growing trend of moving heavy industrial manufacturing from China to the U.S.

Maritime International, a maker of docking equipment and bollards used to moor large ships, recently announced it is moving a manufacturing facility from China to Broussard, where Maritime International is headquartered.

“There could be hundreds of thousands, perhaps millions of jobs created in the U.S., largely in the South, in the next 10 to 15 years,” Moret said of the domestic manufacturing shift.

The report cited numerous business publication and other rankings, pointing out Louisiana’s nearly meteoric improvement when it comes to the state’s perception as a business-friendly state, in workforce development and other areas.

However, the secretary was careful to balance all of these rosy findings with cautionary warnings regarding the federal regulatory environment.

“It’s not just what they actually do. It’s the fear of what could happen,” Moret said, referring to concerns around environmental regulations and “Obamacare,” borrowing from politically charged language when referring to the nation’s health-care overhaul law.

“A big challenge we’re facing in the country right now is a crisis of confidence among business leaders,” Moret said. “And part of that is they don’t know what the outlook is going to be for some critical regulatory issues that impact their businesses and that’s causing some a lot of investment to sort of stay on the sidelines.”