Report: Gulf Coast Infrastructure ‘Ill-Equipped’ to Handle Expected Boom in U.S. Energy Exports

By October 24, 2018Shopfloor Main

Thanks to innovative technological changes and a surging economy, U.S. energy production has accelerated to record levels. In fact, according to one recent report, the United States is expected to become the world’s largest energy producer—surpassing Russia—by 2023. The bulk of that expansion is expected to come from the Permian Basin, an energy pool that lies under Texas and New Mexico. Companies like ExxonMobil are already investing billions of dollars to increase production capacity in the region.

Thanks to this incredible boom, the Gulf Coast region exported more energy than it imported earlier this year for the first time in history, creating new growth in the industry and new opportunities for manufacturing workers. Yet, a new report from The Wall Street Journal presents a sobering reminder that additional investment in existing infrastructure may be necessary to meet growing demand.

According to The Wall Street Journal, the existing shipping infrastructure in the Gulf Coast region is “ill-equipped” to handle an increase in U.S. energy exports and is prompting fears that ports could become congested:

Existing U.S. shipping terminals are already ill-equipped to handle the growing load, because only one can fully accommodate the giant tankers used to ship oil to Asia and Europe. That has at least four companies, including commodities trader Trafigura Group Pte. Ltd. and pipeline builder Enterprise Products Partners L.P., planning new or expanded terminals to load up the big ships…

However, some exporters worry ports could become congested as companies try to push more oil across a limited number of docks while navigating narrow, shallow channels. Most U.S. facilities also aren’t deep enough to fully load Very Large Crude Carriers, or VLCCs, which can hold up to 2 million barrels of oil. The Louisiana Offshore Oil Port, south of New Orleans, is the sole exception, but it is primarily used for imports.

This report is just the latest reminder that modernizing and investing in America’s infrastructure is a top priority for manufacturers in the United States, who rely on critical infrastructure projects to connect with employees, work with suppliers, transport goods to market and increase productivity. When infrastructure fails to meet those needs, it negatively impacts growth.

But manufacturers aren’t staying on the sidelines. We’re supporting solutions like the Driftwood project, development of a liquefied natural gas (LNG) production and export terminal in the Gulf Coast region. Tellurian President and CEO Meg Gentle explained, “The U.S. requires at least $170 million in new infrastructure to leverage our amazing opportunity to export clean air. Once we receive the necessary permits, our Driftwood project is poised to invest $30 billion in South Louisiana and Texas, creating nearly 50,000 direct and indirect jobs in at least 18 states.”

The National Association of Manufacturers (NAM) continues to rally support for broad-based, jobs-creating investment in expansion and modernization, including advocating increased public and private infrastructure funding, developing an interstate system focused on moving goods to market, investing in ports and inland waterways, supporting efforts to reduce traffic congestion and modernizing drinking water and wastewater systems as well as modernizing information and telecommunications infrastructure. Learn more about the NAM’s plan at NAM.org/BuildingToWin.

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