On October 19, the U.S. Energy Information Administration published a summary of some new data on U.S. manufacturers’ ability to switch fuels The data began back in 1994, and at that time 28% of the natural gas used in manufacturing could easily switch to another fuel. That means that manufacturing plants could change the fuel being burned in their furnace in less than 30 days. Most commonly, this meant switching between coal, oil, or natural gas depending on whatever was cheaper to obtain at the moment.
By 2014, surveys showed that only 11% of the natural gas consumption could be easily switched. The EIA found the main reason for the lack of switchability is that manufacturers did not have the equipment onsite to support it. Long-term contracts and environmental restrictions are also common concerns. Natural gas steadily increased its market share in manufacturing during that time as well, up to 39% in 2014. The EIA notes that manufacturers have dropped coal and oil because gas is more available, cheaper, and environmentally friendly. That made manufacturers “discount the value that fuel-switching capability had provided in earlier years.” In other words, a growing number of manufacturers do not really care about being able to switch to coal or oil anymore because gas is much better.
The type of manufacturing going on in Ohio, Pennsylvania, and West Virginia is also changing. The Ohio Valley has long been known for producing coal and making steel, but petrochemical manufacturing might be its future. A recent study suggests that up to five ethane “crackers” could be built in the region (one is under construction in Beaver County and another may soon begin construction in Belmont County). These massive plants break down natural gas into the components that make plastics, and it is probably not surprising that such plants are typically powered by natural gas as well.
Manufacturing in Appalachia is boosting demand for natural gas in the region, and if you are interested in producing in the area you should call some of the best landmen in the business at Cimmaron Land at (412) 212-7517.