In a letter to Pennsylvania Gov. Tom Wolf and 11 other governors of states on the East Coast, the Industrial Energy Consumers of America (IECA) warned that natural gas scarcity along the eastern seaboard was growing due to a lack of interstate natural gas pipeline capacity.
The letter urged the governors to ask President Joe Biden to use the Defense Production Act to build natural gas pipeline infrastructure from Alabama to New York to ensure the reliability of natural gas and electricity for the manufacturing sector.
“Today, there is either none or very limited firm natural gas pipeline capacity available for the manufacturing sector along the entire Eastern Seaboard,” IECA President and CEO Paul Cicio said. “The entire Eastern Seaboard is supplied by one major pipeline, the Transcontinental Gas Pipeline Corporation (Transco),” Cicio wrote. “Transco has plans to expand pipeline capacity, but the expansions are insufficient, and the earliest expansion will start operating in 2025. The expansions are limited and will not resolve capacity shortfalls for everyone. For example, the expansions will not benefit Zone 5 consumers in Virginia, North Carolina, or South Carolina that have severe capacity shortages during peak demand.”
When capacity is limited, he said, manufacturers pay higher prices for their natural gas or cut back production.
“During winter and summer peak natural gas demand, manufacturers are the first to be curtailed. When this happens, manufacturers must reduce or stop operating their facilities with a significant economic impact which could cost millions of dollars per day.” he wrote. “Last winter, for areas like Transco Zone 5, manufacturers paid over $20 per MMBtu for their natural gas. For perspective, the average 2021 Henry Hub natural gas price was $3.84 per MMBtu.”
The letter asked Wolf, and the governors of Alabama, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, South Carolina, Virginia, and West Virginia to temporarily delay any voluntary actions by electric utility companies to shut down coal-fired electricity generation. The IECA said this would free up pipeline capacity for manufacturing. Without that natural gas pipeline capacity, the organization said, the country lacks natural gas and electricity reliability. Additionally, Cicio said, without that reliability, manufacturers would not expand in East Coast states, preferring to take their business to states with reliable pipeline infrastructure.
Without the pipeline capacity, states face major economic and job losses, he said. Manufacturing contributes more than 3.4 million jobs to the region with 30,000 facilities, creating more than $638 billion in GDP.