Staruch: Putting Natural Gas To Work For Your Business

By: Scott Staruch

This October 14th and 15th, the annual Penn State Natural Gas Utilization Conference will take place in Canonsburg, Pa., just south of Pittsburgh (www.2014Utilization.org). Since many readers in the southeast will likely be unable to make the trek, this month’s column offers a glimpse of what will be discussed, and how natural gas can go to work for your business.

Price + Supply = Confidence

No matter who you ask (the Energy Information Administration, the Potential Gas Committee, MIT), for the last few years they all have been predicting increasing amounts of recoverable U.S. natural gas. Recent natural gas supply projections range from 2,000 trillion cubic feet (TCF) to well over 3,000 TCF. And for perspective, in 2013 total U.S. natural gas consumption was 26 TCF.

Here in Pennsylvania, we’re constantly reminded of that supply as we continue to hit new production milestones. In early August, the Department of Energy’s Energy Information Administration (EIA) announced, “natural gas production in the Marcellus Region exceeded 15 billion cubic feet per day (Bcf/d) through July, the first time ever recorded…increasing from 2 Bcf/d in 2010 to its current level.” Then in late August, Wood Mackenzie provided an analysis of the Marcellus Shale play calling it “the largest shale gas play in the world” and predicting it holds over $90 billion in remaining value.

That supply and increasing production provides price stability for businesses.  In 2009, EIA’s Annual Energy Outlook forecasted gas prices around $13 per MMBtu (1,000,000 British thermal units). However, their most recent Annual Energy Outlook suggests prices will be just over $6 per MMBtu in 2035, and still less than $8 per MMBtu in 2040.

Natural Gas & Your Facility

No matter your business’ size, if you use a lot of energy, natural gas is sure to reduce your overhead costs and environmental impact. UGI Utilities, the state’s largest natural gas distribution company, finds that “many small to medium-sized businesses are saving $12,000 a year or more on their overall energy costs by switching to natural gas for heating and more.” An example of the types of savings from natural gas: since 2008 UGI converted over 31,500 households to natural gas, and in 2014 those 31,500 households will save roughly $47 million.

With the supply and price forecast mentioned earlier, affordable natural gas is not limited to just one utility. Early this month, Philadelphia Gas Works announced it was cutting prices by nearly 7 percent per month, and other utilities like PECO and Columbia Gas have programs to help commercial customers make the switch to natural gas.

Natural Gas & Your Fleet

There’s been growing awareness and interest in the role of natural gas as an alternative fuel in our transportation sector. If you have a child in the Lower Merion School District or if you use Bucks County Transport, this is no surprise to you.

“Natural gas vehicles outperform conventional fuels with a significantly higher octane rating, better fuel efficiency and lower operating costs - all while offering dramatic reductions in emissions. Natural gas is the only fuel alternative that can power heavy-duty trucks and buses, among the busiest vehicles on the road today,” explains America’s Natural Gas Alliance.

What surprises many southeastern PA residents is that this pocket of the commonwealth has more public compressed natural gas (CNG) fueling stations than any other region of the state. So whether you’re in Bucks, Delaware, Montgomery or Philadelphia County, you have access to at least one CNG fueling station.

While the upfront costs of natural gas vehicles are greater than traditionally fueled vehicles, for businesses that have medium/heavy-duty, delivery, service or transport vehicles, the fuel savings will likely pay you back in just a couple of years. The latest Clean Cities Alternative Fuel Price Report pegs the nationwide average fuel price for CNG at $2.15 versus $3.65 for gasoline. Additionally, to help make the shift to natural gas, you may be eligible for grants, rebates or other incentives.

Infrastructure

As mentioned in last month’s Region’s Business, pipeline infrastructure to bring the local supply of natural gas to businesses will be a major factor in enabling the increased use of natural gas.  New infrastructure ensures system reliability, resiliency and supply diversification.

Proposed projects like the Atlantic Coast, Atlantic Sunrise, Constitution, PennEast Pipeline, and others are critical to bring natural gas to not only Pennsylvanians, but to our neighboring states. Pennsylvania sits above arguably the largest natural gas field in the world, and other communities are looking to their “friends in Pennsylvania” to help them with their energy needs.

Natural Gas: The Competitive Edge

While Pennsylvania businesses still face numerous hurdles to rebound from the economic downturn, the competitive edge under their feet is natural gas. The natural gas revolution is here and businesses that convert today will stay competitive for years to come.

Scott Staruch serves on the Penn State Natural Gas Utilization Conference Planning Committee. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

Staruch: 4 Keys To Securing A Bright Manufacturing Future in SEPA

A recent resurgence in manufacturing can only be sustained if state and federal legislators address these important barriers.                     

By Scott Staruch

Today, the old notion that the U.S. was heading towards a service-based economy has been replaced with a resurgent manufacturing sector, one that supports one in six private sector jobs. In July, U.S. manufacturing expanded for the 14th consecutive month with a Purchasing Managers Index (PMI) of 57 percent – an increase of nearly 2 percent over June.

Locally, the Federal Reserve Bank of Philadelphia’s July Business Outlook Survey found that manufacturers in the Philadelphia region expanded at the fastest pace since March 2011, and firms remain optimistic about continued growth for the rest of 2014. Four measures will secure and enhance the area’s position as a manufacturing leader.

Energy advantage

Pennsylvania’s diverse and abundant energy portfolio provides local manufacturers a significant advantage over competing states and countries. Affordable and price-predictable energy will further serve as an economic development tool to attract new manufacturers and jobs.

The state’s rich natural gas supplies are well known and production continues to hit new benchmarks. The recent July Drilling Productivity Report from the Energy Information Administration found natural gas production in the Marcellus Region exceeded 15 billion cubic feet per day through July – compared with 2 Bcf/d in 2010.

To nurture this, it’s crucial not to overburden the industry with excessive taxes. Additionally, allowing manufacturers to leverage local natural gas for their facilities, operations and natural gas liquids for chemical feedstocks, expanding pipeline capacity is  critical.

“Natural gas production in the Appalachian Region continues to set new milestones and strengthen energy security,” says Dan Whitten of America’s Natural Gas Alliance. “Recent data from the Energy Information now shows that the Marcellus Shale is the most productive shale region in the nation, accounting for about a quarter of all the natural gas we use in the United States.”

“For Pennsylvania manufacturers to fully take advantage of this local supply, new infrastructure is essential,” adds Whitten.

Infrastructure investment

Just as pipelines are necessary arteries to bring energy to manufacturers, equally important is transportation infrastructure.

Earlier this year, National Association of Manufacturers (NAM) President & CEO Jay Timmons told the Senate Committee on Environment and Public Works, “While many of our members predominantly depend on motor carriers to deliver finished products to their customers, manufacturers rely on air freight to deliver time-sensitive and high-value cargoes, railroads for raw materials and finished products, inland waterways for bulk-sized movements and seaports for access to overseas markets.”

Bob Latham, executive vice president of Associated Pennsylvania Constructors, explains, “Pennsylvania took a great step forward last year with the passage of Act 89 … Congress has propped up the Highway Trust Fund through May 2015, but it’s imperative a long-term comprehensive program with growth be adopted at the national level.”

Regulatory reform

For manufacturers, reversing the tide of burdensome regulations will enable continued innovation and entrepreneurship. In 2013, the cost of federal regulatory compliance was estimated at $112 billion, resulting in over 67 million hours of paperwork. There are over 3,000 federal regulations in the pipeline, and it’s essential these regulations be fully vetted for their impact on our manufacturers. Consider an effort to change how the Internet is regulated: wired/wireless net-works and Internet speeds are vital for manufacturers and consumers. Hampering innovation by over regulating one of the most dynamic industries with an 80-plus-year-old law is an example of misguided regulation threatening manufacturers, especially for  the tech industry that employs over 205,000.

Tax reform

U.S. manufacturers face the highest combined corporate tax rate in the developed world at 39 percent — compare this with the Organization for Economic Co-operation and Development (OECD) average of 25 percent. In addition, Pennsylvania has the distinction of having the highest state corporate tax rate — at 9 percent. Even with tax relief measures, over-bearing federal and state corporate taxes put state manufacturers at a devastating pricing disadvantage across industries and the globe. Without serious corporate tax reform, manufacturers and businesses are faced with increasing prices, losing customers and cutting jobs. Unlocking success Pennsylvania energy, infrastructure investments, sensible regulations and tax reform are the keys that will unlock many doors to sustained manufacturing growth. Of course, it’s ultimately the human element and ensuring the region’s workforce has the necessary skill sets that will carry manufacturers over the threshold.

Scott Staruch can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

See more at: http://philadelphia.regionsbusiness.com/four-keys-securing-bright-manufacturing-future/#sthash.oLYwDICR.dpuf