#392. Manufacturing Revolution with Shale Gas

Posted on July 31, 2012May 6, 2014 | The Agurban

Manufacturing Revolution with Shale Gas

After visiting the Shell Oil exploratory rig in western PA, we toured a glass plant owned by Pittsburgh Glass Works (PGW) in Meadville, PA. The plant was originally built in 1968 and doubled in size in the 70s to its present size of 630,000 sf.

Thirty years ago the plant employed 650, but with automation and process improvement, today they produce twice as much, but with only 260 employees. It is an example of the power of productivity that has allowed the USA to achieve a record level of manufacturing production in this country in 2008, but with millions of fewer workers. And, it is that productivity that results in those employed in the manufacturing sector to be some of the highest paid jobs in the country.

Today, the PGW plant produces 1 million sf of glass each day of the year, mostly for the auto industry. That glass fits into 60 semis. If it was used for buildings, the glass from two of the three daily shifts would have been enough to cover ALL of the six buildings in the World Trade Center in New York.The plant uses 6,000 mcf of natural gas per day. At the current price of $2.83/mcf that is $17,000/day or over $6 million/year. Labor cost is estimated at around $10 million. In China, natural gas cost to make that same product would be about $30 million, almost double the cost of gas AND labor combined.And, it is why we learned that the PGW plant is not only making glass for autos made in the USA but is exporting that glass to dozens of countries around the world.

There is a burgeoning revolution taking place in this country. Our new natural gas resource is making it very economical to bring energy-using plants back to this country. We are in the second inning of a nine inning game on this trend.

Shale Gas Trip Take Homes:

My trip to PA to see what is happening with shale gas production was a real eye-opener. Here are the key takeaways from that trip for me.

– We will NEVER run out of oil and gas. Prices might rise and rise greatly but there is much more petroleum down in the earth than we will ever retrieve.

– Cheap gas will bring a number of industries and manufacturing businesses back to the USA.

-Shale gas is a game changer. The USA has gone from becoming an importer of natural gas to becoming an exporter. The energy equilibrium has been radically altered for the better.

-American ingenuity and inventiveness is alive and well. Our best days lie in the future.

SPECIAL NOTE: About the same time I was visiting western PA, we received a story about a manufacturer in Tuscola, IL, just up the road from Effingham, that recently completed an addition that tripled the size of their manufacturing space. J.L. Allen Co., which began operations in 954, does fabrication work for natural gas and oil pipeline projects across the nation. Most of the company’s projects last year were in Pennsylvania, New Jersey, and West Virginia. This year, their work is concentrated in New York and New Jersey.

For the full story, visit here.