Economic Impact of Natural Gas Pipeline Projects on Local Communities

Natural gas pipeline projects are varied in nature and involve the construction and operation of infrastructure that transports natural gas from production sites, between market hubs, and to end-users of the natural gas (such as homes, businesses, industrial facilities, LNG plants, and power plants). New natural gas infrastructure projects are crucial for meeting the growing energy demands of the United States, with natural gas supplying nearly 40% of the country’s electricity generation today. The extensive network of natural gas pipelines in the US, spanning over 3,000,000 miles, highlights the importance of this energy source in powering the nation.

Natural gas pipeline projects not only support end users, natural gas markets, and the energy sector, but also have far-reaching economic impacts on the communities they pass through. From job creation during construction and operation phases to local economic development and taxes paid during the lifespan of the assets, these projects can bring significant financial benefits, as well as increased natural gas supply benefits, to the regions they serve.

As the demand for natural gas continues to grow, the development of pipeline projects remains essential for ensuring a stable and reliable supply of this critical energy source. However, these projects also raise important questions about their impact on local communities, the environment, and the economy, which will be explored further in this article.

Positive Economic Impacts

Job Creation and Employment Opportunities

Natural gas pipeline projects have a significant impact on direct job creation and employment opportunities in local communities in the United States. The construction and operation of these pipelines require a diverse workforce of skillsets, including skilled laborers, engineers, technicians, and support staff.

The building of new natural gas pipelines creates numerous jobs in the construction sector. These positions involve tasks such as surveying, site preparation, pipe installation, welding, and inspection. The construction phase of pipeline projects often employs local workers, providing a boost to the local economy.

Once a pipeline is operational, it requires ongoing maintenance, monitoring, and management. These activities create long-term employment opportunities in the form of pipeline operators, maintenance technicians, safety inspectors, and administrative staff.

The natural gas industry, as a whole, supports over 4 million jobs across the United States. Moreover, it is estimated that there are 58 jobs created for every mile of new transmission pipeline built. With the United States projected to require an additional estimated 26,000 miles of natural gas transmission infrastructure over the next two decades, the potential for job growth in this sector is substantial.

Local Economic Development and Support Industries and Services Growth

Beyond direct jobs, pipeline construction brings secondary economic benefits to host regions. Out-of-state construction workers temporarily reside in local hotels, frequent restaurants and shops, and utilize local services–generating business for communities along the route.

Once built, pipelines generate lasting tax revenues for local counties and municipalities while supplying affordable energy for community growth. The steel and related materials and equipment required for pipeline facilities also benefit manufacturing, mills, and resource industries.

Landowner Compensation

Private landowners are also compensated for easements, allowing pipelines to cross their properties. Compensation to landowners includes one-time payments when easements are signed and temporary land rentals during construction. Landowners grant easements in return for fair compensation negotiated between pipeline companies and landowners.

Ad Valorem Tax

Natural gas pipelines generate ad valorem taxes, which are essentially property taxes based on the assessed value of the pipeline infrastructure. These taxes provide a reliable and important revenue stream for counties, supporting local government services, schools, and public infrastructure projects.

Pipeline Owner Income Tax

Pipeline owners pay income taxes on their profits at both the federal and state levels. These tax revenues contribute to the overall economic well-being of the country and the states where the pipelines operate, supporting various government programs and services.

The positive economic impacts of natural gas pipeline projects are far-reaching, from job creation and local economic development to landowner compensation and tax revenues. These benefits highlight the significant role that natural gas pipelines play in supporting the economic vitality of communities across the United States.

Economic Concerns

While natural gas pipelines unlock substantial economic opportunities, questions and concerns from communities can also emerge regarding environmental impacts, property rights, and community interests. Responsible development integrates mitigation strategies and fair compensation for affected stakeholders.

Environmental Concerns and Mitigation

Pipeline construction may disturb landscapes and ecosystems along the route. The clearing of vegetation, trenching, heavy equipment operation, and other activities that occur during construction could temporarily impact local wildlife and habitat. The permitting process, including environmental assessments, environmental surveys, and other critical permitting tasks, makes sure that the pipeline companies work with regulators to ensure any potential impacts are mitigated.

In order to ensure that external corrosion does not occur, modern pipelines are engineered to rigorous safety standards using advanced materials and protective coatings.

Additionally, the use of advanced technologies such as leak detection systems and regular maintenance helps to mitigate risks of releases from the pipeline.

Land Acquisition and Eminent Domain

Constructing pipelines requires securing easements through both public and private lands. Most easements are voluntarily negotiated between landowners and pipeline companies. But if some landowners resist, pipeline companies may exercise eminent domain as a last resort–a legal process for compulsory purchase of private property for public infrastructure projects.

Eminent domain recognizes pipelines as vital energy infrastructure benefiting society overall. Fair compensation is still provided to affected landowners. And while it may be unpopular with some landowners, eminent domain has enabled beneficial infrastructure like highways, railroads, and power lines that would otherwise be impossible if each landowner could refuse access.

Community and Social Impact

Enhanced Access to Energy–Improving Quality of Life

Beyond jobs and tax revenues, communities are enhanced by this vital energy source. Natural gas fuels cleaner electricity generation, heats homes and businesses affordably, enables manufacturing and commerce, and supports public services through reliable, affordable, and clean burning energy.

Pipelines are the vital link bringing natural gas from distant gas fields to local communities that increasingly depend on it. As more towns, factories, and power plants shift from coal to natural gas, expanded pipeline capacity unlocks access to this cleaner, domestic fuel.

Impact on International Energy Markets

The development of natural gas pipeline projects in the United States can have a significant impact on international energy markets. As the US increases its production and export of natural gas, it can help to diversify global energy supplies and reduce the influence of traditional energy-exporting countries.

The export of US natural gas, particularly in the form of liquefied natural gas (LNG), can provide a reliable and affordable energy source for countries looking to reduce their dependence on coal or oil. This can help to lower global greenhouse gas emissions and support the transition to a cleaner energy future.

Additionally, the increased availability of US natural gas on the international market can help to stabilize energy prices and reduce the risk of supply disruptions. This can have positive economic impacts for both the US and its trading partners, fostering greater energy security and cooperation.

As the nation continues to navigate the transition towards a cleaner energy future, natural gas pipelines will play a crucial role by providing a reliable fuel for power generation and other industrial uses during the increasing penetration of intermittent renewable energy.

Frequently Asked Questions (FAQs)

1. What are the primary economic benefits of natural gas pipelines for local communities, counties, states, and the US?

Natural gas pipelines provide several economic benefits, including job creation, tax revenues, and stimulating local economic development. Pipeline projects create jobs in construction, operation, and maintenance, while also compensating local landowners through easement payments. Additionally, pipeline companies pay ad valorem taxes to local counties and income taxes to states and the federal government, contributing to public services and infrastructure.

2. How do natural gas pipelines impact local job markets?

Natural gas pipeline projects have a significant impact on local job markets, particularly in the construction and operation phases. The construction of new pipelines creates jobs for skilled laborers, engineers, and support staff, often drawing from the local workforce. Once operational, pipelines require ongoing maintenance and management, creating long-term employment opportunities in various fields.

3. How are local communities compensated for land used by pipelines?

Local communities and landowners are typically compensated for the use of their land through easement payments or outright purchase by the pipeline company. Easement payments provide landowners with financial compensation for granting the right to construct and operate a pipeline on their property. In some cases, companies may also offer additional benefits or compensation to affected communities to mitigate any negative impacts.

4. What measures are in place to ensure the safety of natural gas pipelines?

Pipeline safety is a top priority for the natural gas industry and is regulated by federal and state agencies, including the Pipeline and Hazardous Materials Safety Administration (PHMSA) at the federal level. Pipeline companies are required to adhere to strict safety standards, including regular inspections, maintenance, and emergency response planning. Advanced technologies, such as remote monitoring systems and automatic shut-off valves, are used to detect and respond to potential safety issues, well in advance. Additionally, pipeline companies invest in ongoing safety training for their employees and work closely with local emergency responders to ensure a coordinated response in the event of an incident.