Commentary: Texas LNG industry supports local communities, growth

Ed Longanecker

The U.S. LNG industry is dedicated to providing national and economic security for Americans and allies around the globe. The industry’s record production and exports in recent years underscore the commitment of the people and communities who develop these critical resources.

Driven by massive production increases in the Permian Basin, the United States has transitioned from a net importer of natural gas to the world’s leading exporter of this crucial energy source. In the process, coastal communities in Texas have emerged as a hub for a thriving LNG industry, delivering substantial economic and economic benefits exceeding $60 billion in gross regional product in 2023.

Yet, in the Department of Energy’s recent LNG study, Energy Secretary Jennifer Granholm questioned the benefits of LNG exports for Gulf Coast and Southwestern communities, noting that price volatility and environmental and economic factors may discount the benefits the LNG industry delivers. However, evidence clearly shows that LNG exports are good for Americans, and great for Texans.

Texas has positioned itself as the epicenter of the U.S. LNG export industry, becoming a vital engine of economic growth and infrastructural development for the state. Each year, the LNG industry supports thousands of local jobs and contributes billions in state tax revenue.

In this region last year, direct oil and natural gas employment exceeded 55,000 with a total diversity index of 50%, meaning our industry provides quality employment opportunities across a broad range of demographics. Once direct, indirect and induced multipliers are incorporated, more than 178,000 jobs were supported by our industry last year.

Strong employment numbers in the sector can be attributed to the record-breaking oil and gas production Texas has seen recently. Contrary to what the LNG study outlines, the price of natural gas will remain affordable even as LNG exports increase, if production also remains high, according to an analysis by the Center for Strategic and International Studies. Research showed that in 2023, when the U.S. was the top exporter of LNG, Henry Hub prices averaged $2.57 per MMBtu, well below the $3.64 per MMBtu average seen between 2010-2015, when the U.S. was exporting 99% less.

The CSIS analysis recognizes that circumstances since 2010-2015 have changed but emphasizes that low domestic natural gas prices will remain if domestic natural gas supply does as well.

Development projects for the LNG industry that were meant to spur widespread infrastructure growth in Texas are now at a standstill due to permitting issues and economic uncertainty surrounding the LNG pause. The Port of Brownsville and Corpus Christi — regions of the state needing economic revitalization — have seen significant expansion in the last decade, but their progress has been stalled in recent months due to ongoing ambiguity in the industry.

Projects like Rio Grande LNG would deliver vast economic and employment benefits to nearby communities, while also safeguarding nearby wildlife reserves. Infrastructure growth, like the one the sector delivers, creates ripple effects in industries ranging from transportation to engineering and manufacturing, cementing Texas’ position as a leading global energy supplier and steward of the land.

In 2023 nearly $100 billion of U.S. goods and services were purchased by the oil and natural gas sector in Texas coastal counties, 30% of which occurred within the region. Out of 926 business sectors in these Texas counties, 880 sold goods and services to the local oil and natural gas industry. The industry also supported local businesses and organizations in the communities where it operates including:

Corporate, subsidiary and regional managing offices ($343,245,558).

Plumbing, heating and air-conditioning contractors ($133,378,391).

Full-service restaurants ($20,136,027).

Hotels and motels ($11,091,850).

Supermarkets and other grocery stores ($4,254,928).

Clothing and clothing accessories retailers ($2,845,362).

General medical and surgical hospitals ($1,986,339).

Convenience retailers ($909,520).

Elementary and secondary schools ($474,893).

Colleges, universities and professional schools ($365,957), and more.

The benefits of the LNG industry extend far outside of Texas too; the United States has generated substantial economic benefits on both a micro and macro scale. According to a recent National Association of Manufacturers study based on data from 2023, U.S. LNG exports support 222,450 jobs and pay U.S. workers a combined $23.2 billion in annual income.

More broadly, the LNG industry contributes a whopping $43.8 billion toward the U.S. GDP, and generates $11 billion in tax and royalty revenues for local, state and federal governments.

Texas alone accounts for a significant portion of these figures. The NAM study also finds that, under the right circumstances, the number of jobs, annual income, GDP contributions and tax revenues generated by U.S. LNG exports could quadruple by 2044.

Critics of LNG exports argued at a December hearing that totalitarian regimes like Iran and Russia have not benefited from the pause on export permits because U.S. dominance remains. However, we must remind them that leaving the LNG industry’s future in limbo due to a permit pause gravely jeopardizes national security for us and our allies. Our natural gas exports remain a critical geopolitical tool, serving our allies in Europe and Asia as they make efforts to replace Russian natural gas supplies.

Our energy independence paid off not only for our allies, but for Americans. In a few short months, between January and April 2022, the U.S. increased LNG exports by nearly 20%, and more than doubled the percentage of LNG exports bound for Europe compared to the year prior. As a result, European imports of Russian natural gas decreased by 40% between January and July 2022.

The United States is witnessing the benefits of a strong LNG export industry unfold in real-time. Texas is at the heart of this burgeoning industry, and will continue to experience tremendous benefits, serving as the bedrock of U.S. economic growth while securing an advantageous position on the global stage for decades to come.

For these benefits to continue to materialize, we must end the permit pause immediately and support a stable legal and regulatory framework for the industry, allowing for continued investment and reliability from our trade partners.

Ed Longanecker is president of the Texas Independent Producers and Royalty Owners Association.

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