November 22, 2013

Maine Voices: Strategic natural gas investments critical to the state’s competitiveness

The historic increase in U.S. natural gas production is triggering a manufacturing revival that can help Maine.

By Mark Gardner, Dave Paterson and Keith Van Scotter

The historic increase in U.S. natural gas production is triggering a manufacturing revival that can help Maine.

ABOUT THE AUTHORS

Mark Gardner is CEO of Sappi North America; Dave Paterson is CEO of Verso Paper; and Keith Van Scotter is CEO of Lincoln Paper and Tissue.

The Portland Press Herald’s Oct. 22 editorial, “Our View: LePage administration chased off ocean wind investment,” questioned whether the best method to improve Maine’s manufacturing competitiveness was through natural gas, stating “there is no guarantee that the (gas) infrastructure . . . will be built in time to take advantage of historic low prices.”

As CEOs of some of Maine’s largest manufacturing facilities we recognize that there is rarely ever a guarantee. At the same time the real question is what policy has the best chance to improve the competitiveness of Maine manufacturing and the answer is unequivocal – strategic natural gas investments.

Collectively, over the past two years and continuing our three companies have invested millions to convert to natural gas. We have hardly been alone. The reason has been a historic increase of natural gas production in North America, particularly in the Marcellus Shale region centered in Pennsylvania, which has grown in production by six-fold since 2009.

To put this figure in perspective, it was announced recently by the Energy Information Administration that the natural gas production in this region of the United States alone is now greater than Saudi Arabia. This has rapidly reduced natural gas prices in North America to the point where they are now roughly half the price of European gas and less than a quarter of the price in Japan.

The ramifications of this natural gas boom have been broad and significant, leading to lower electrical prices, lower heating costs and, most critically, a revival of manufacturing in the United States.

Specifically, North American manufacturing has seized a competitive advantage, lowering the cost of products, and bringing job growth back to the United States in energy-intensive industries.

This development has been the envy of nearly every country on earth and last month Central European countries pleaded for expeditious natural gas exports from the United States to allies across the world to expand the prosperity of this natural gas revolution.

Maine needs to participate in the renaissance of American manufacturing. But in Maine we face two challenges – one local and the other regional.

First, our natural gas distribution service has been limited and we are aggressively working with local natural gas companies to bring this fuel to our factories.

Second, our region does not have the necessary pipeline infrastructure to transport the gas at the volumes necessary to fully take advantage of this new supply especially during the coldest days of the year when demand is at its peak.

Without investment in additional pipeline capacity, prices will spike to expensively priced world prices. This is hardly rocket science – we simply need the political leadership for a regional commitment to finance basic natural gas infrastructure. Compared to the rest of the world we are in an enviable position.

We join the governor in the support of expanding natural gas infrastructure both locally and regionally and believe it is an imperative to remaining competitive both nationally and globally. Not only will this investment improve Maine’s business climate, but coupled with our industry’s leadership in using renewable biomass, we will continue to make progress on reducing greenhouse gas emissions.

The governor, the chairman of the Public Utilities Commission and key members of the Legislature understand this huge opportunity for Maine’s manufacturing sector as well as the environment. And they are pushing New England to take advantage of the natural gas production just to our south.

Every day we are required to make the strategic decisions that have the best opportunity to keep Maine people employed while continuing to export pulp, paper and tissue. Natural gas production growth in North America can be a cornerstone to improving the the state’s economic climate.

We must continue to make the strategic investments that will improve our region’s competitiveness, and work together to realize the governor’s vision of affordable domestic natural gas powering Maine’s manufacturing sector.

— Special to the Press Herald

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