PMA Releases Economic Impact Study Related to House Bill 1100

The Pennsylvania Manufacturers’ Association released an economic impact study, analyzing the prospect of two natural gas synthesis plants located in northeast Pennsylvania.

“Based on the results, it’s clear that these projects would be transformative to northeast Pennsylvania, and the commonwealth as a whole,” said David N. Taylor, President & CEO of the Pennsylvania Manufacturers’ Association. “Entire economies are centered around this type of economic activity and will sustain regions for generations to come. Attracting and retaining natural gas synthesis manufacturing ought to be a priority of policymakers at the state and federal level to ensure this prosperity occurs in our commonwealth as opposed to a competitor state.”

Pennsylvania’s energy opportunity continues to drive innovation and revitalize economies in the areas of the commonwealth that often need it the most. In Beaver County, Pennsylvania, the largest construction site in North America is underway, supporting 6,500 construction jobs and the manufacturing plant being built will sustain more than 600 manufacturing jobs. The “Pennsylvania Resource Manufacturing Tax Credit,” passed by the Corbett Administration in 2012 was the catalyst for this project to locate in Pennsylvania rather than one of our competitor states.

This same opportunity exists in a slightly different form in northeast Pennsylvania. The possibility of one natural gas synthesis plant locating in Pennsylvania would be a major economic driver, but the fact that there are two projects being explored in different counties would be transformative to the commonwealth’s economy. In this part of the Marcellus formation, the gas is “dry,” meaning it’s almost exclusively methane. Methane is used in natural gas synthesis manufacturing plants to create hydrogen and nitrogen in the form of ammonia and urea, and methanol. These products are themselves manufactured goods, but they are also the feedstock for many other manufacturing processes and products, sustaining agriculture, transportation, and chemical manufacturing industry clusters.

House Bill 1100 establishes a tax credit for methane manufacturing similar to that of the “Pennsylvania Resource Manufacturing Tax Credit.” The credit is production based, meaning not a cent of tax liability is offset until the project is complete, employees are hired, and product begins to flow from the plant. The legislation as passed with vast bipartisan support in both the Pennsylvania House and Senate includes provisions that: require a capital investment of at least $450 million to construct the facility and place it into service; the creation of at least 800 full-time jobs construction and/or permanent jobs; the payment of prevailing wage on any construction, reconstruction, demolition, alteration or maintenance of the facility; that a company must make a good faith effort to employ local construction workers; and that a company must purchase and use Pennsylvania natural gas to produce a Pennsylvania manufactured petrochemical product.

Based on the results of the economic analysis, the construction of two natural gas synthesis plants requires an upfront investment of $954 billion. The construction of two plants would be responsible for 2,229 direct, indirect, and induced jobs worth $301.7 million in labor income over the life of the project. The total economic output, not including the upfront capital investment, totals $812.2 million over 30 months.

The jobs at the manufacturing facility once construction is complete totals 300 direct jobs, but those 300 direct jobs will spur 717 indirect and induced jobs. The total labor wages of these jobs combined is $119.1 per year. The total economic impact related to these jobs’ totals $524.5 million, per year.

House Bill 1100 is currently on Governor Wolf’s desk and action is required by March 28.

Full study available at: www.pamanufacturers.org/NEPAnatgas

 

Categories: