American Gas Association Issues White Paper Entitled 'Value of Natural Gas to U.S. Agriculture and Agrochemicals'

WASHINGTON, May 22 (TNSrep) -- The American Gas Association issued a 59-page report in March 2023 entitled "Advancing America's Agriculture: The Value of Natural Gas to U.S. Agriculture and Agrochemicals."

Here are excerpts:

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Table of Contents

Disclaimer ... 2

Letter from the President and CEO ... 3

Executive Summary ... 5

Introduction and Context ... 8

Natural Gas Consumption and the U.S. Agriculture Sector ... 9

* Methodology and Approach ... 9

* Natural Gas Consumption ... 10

Natural Gas Consumption and the U.S. Agrochemical Sector ... 14

Overview of the U.S. Agriculture Sector ... 20

* Physical Footprint of the U.S. Agriculture Sector ... 20

- Land-Use and Acreage... 20

- Croplands ... 22

- Livestock ... 22

- Food Processing ... 23

Economic Footprint of the U.S. Agriculture Sector ... 25

Appendix ... 31

* U.S. Agriculture Sector ... 31

* U.S. Agrochemical Sector ... 45

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Letter from the President and CEO

Our nation's natural gas industry delivers affordable and reliable energy to millions of Americans and businesses every day, driving down emissions and helping to achieve our nation's energy and environmental goals. As the preferred source of home heating, a fundamental component for manufacturing, and the largest source of electric power generation in the United States, natural gas is an essential part of our energy sector and economy. Still, far too few people realize just how critical this clean and affordable fuel is to our daily lives.

This report, the first in AGA's Advancing America series, examines how natural gas is essential for a thriving agriculture sector, based on data sourced from the U.S. Energy Information Administration and the IMPLAN economic model. Simply put, food fuels our lives and natural gas is vital to our farming communities. The American farmer relies on domestic natural gas for the fertilizer in their fields, the fuel to run their equipment, and energy to process, store and transport our nation's food supply to feed 330 million Americans and countless individuals abroad, who depend on U.S. agricultural exports (valued at $177 billion in 2021 according to the USDA)./1

America's farms and ranches are key beneficiaries of the growth in U.S. natural gas production, which means all of us who rely on a strong domestic agriculture sector are benefiting. We may not think about everything that goes into the price we pay for a loaf of bread or a gallon of milk, but you can directly connect the availability of low-cost natural gas to the cost of food on grocery store shelves globally.

Global agricultural production is becoming more energy intensive,/2 thus the need for secure and affordable natural gas supplies is greater than ever. Natural gas is a critical domestic feedstock for the agriculture industry, allowing the United States to produce critical fertilizers and other agricultural needs at competitive prices, shielding our farmers from supply-chain bottlenecks, ensuring bountiful crop yields, and buttressing global food security.

The U.S. agricultural chemicals sector is a major economic engine, supporting 344,000 jobs and $50.8 billion in U.S. GDP,/3 and benefits our highest-producing agricultural states in the Midwest like Iowa, Missouri, and Nebraska.

As of 2021, China and Russia were the world's largest producers of ammonia (the main ingredient in fertilizer) - with the United States ranked third. Agrichemical security means global food security, underscoring why domestic ammonia production is so vital and why U.S. natural gas is critical to national security. Recent events in Europe demonstrate that the absence of domestic energy supplies contributes to economic uncertainty and insecurity. For example, natural gas prices in Europe have soared compared to those in the United States the past year.

Our advantage extends to America's reputation of driving environmental progress, ensuring that local crops and livestock have a lower emissions intensity with cleaner fertilizer. The United States is also innovating by turning farm waste into renewable natural gas ("RNG") to produce low-carbon energy. Capturing methane emitted by our farming community and blending it into our pipeline system will enable lower emissions in our food supply ecosystem. RNG exemplifies how natural gas utilities provide innovative solutions that will help lead our nation and world to a cleaner energy future.

Despite the benefits natural gas provides our farmers, as well as our nation's economic and environmental progress, certain policymakers and activist groups are pushing for ideologically driven bans on this affordable and reliable energy. Restricting the development and use of natural gas would mean higher costs for farmers, driving up food prices and costs for families and businesses across the country. We must ensure that farmers and American manufacturers have competitive and secure supplies of fertilizers and affordable energy to produce the food our nation depends on.

State and federal policymakers must recognize the critical role of natural gas infrastructure in keeping costs low for both the American farmer and the American families who are already struggling to put food on their tables. The world's population will increase by two billion people by 2050, which means our farmers and our natural gas industry will be vital to meeting the growing demand for food and avoiding destabilizing food insecurity.

Karen Harbert

President and CEO, American Gas Association

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Executive Summary

The American Gas Association ("AGA") engaged FTI Consulting, Inc. ("FTI") to analyze the natural gas consumption and economic impact of U.S. crops, livestock, food processors, and agrochemical sectors on the U.S. economy. The findings in this analysis are based on data from the U.S. Energy Information Administration and federal economic data (such as from the U.S. Bureau of Economic Analysis) imbedded in the IMPLAN economic model.

* The U.S. agriculture sector (defined to include crops, livestock, and food processors) is connected to many other sectors across the economy. The U.S. agriculture sector is a major consumer of natural gas, and the availability of abundant natural gas resources - an important feedstock for many key agricultural inputs, most critically ammonia to produce nitrogenous fertilizers - has directly benefitted the sector. Those benefits extend beyond farms, ranches, and industry to every state through jobs, output, and tax revenues. America's extensive natural gas infrastructure plays an essential role in delivering these benefits across the country.

* Natural gas helps the U.S. economy produce agrochemicals, the most important of which is the fertilizer used to increase crop yields. The security value of a strong U.S. agrochemical industry is hard to overstate, especially considering that the two largest producers of ammonia - a key component of fertilizer - outside the U.S. are China and Russia./4 The expansion of domestic gas production over the past 15 years has allowed the U.S. to increase its ammonia production capacity and, with it, the capability of producing agrochemicals domestically. Put differently, the benefits of natural gas to U.S. agriculture include reduced reliance on autocratic regimes.

Here are some of the most important figures from the analysis:

* The U.S. agriculture sector is a major part of the economy. It provides 5 million direct jobs and directly contributes $437 billion to U.S. gross domestic product ("GDP").

* Accounting for indirect suppliers and induced expenditures, the U.S. agriculture sector supports 17.2 million jobs and approximately $1.75 trillion in U.S. GDP. This is roughly equivalent to the GDP of Texas, the second-largest state economy after California.

- States with the largest shares of their economies supported by the U.S. agricultural sector include Nebraska, Iowa, South Dakota, North Dakota, Idaho, Kansas, Arkansas, Kentucky, Wisconsin, Montana, and Missouri.

* U.S. agriculture is one of the largest consumers of natural gas. When including direct use and use throughout the industrial supply chain, the U.S. agriculture sector consumes roughly 1.7 trillion cubic feet ("Tcf") of natural gas - equivalent to almost 15% of all U.S. commercial and industrial consumption of natural gas based on 2021 data.

* In six states - Nebraska, Iowa, South Dakota, North Dakota, Idaho, and Kansas - agricultural consumption represents over 30% of commercial and industrial gas demand. States known for their agriculture and food processing sectors - such as those in the Midwest, California, Texas, and Louisiana - have comparatively high use of gas in agriculture.

* Just five of the many agricultural subsectors consumed 2.06 Tcf of natural gas in 2021, nearly equivalent to the total consumption of California, which is the second largest natural gas consuming state.

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[Figure omitted]

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* The U.S. agrochemical sector produces fertilizers and other agricultural chemicals, such as critical herbicides and pesticides, for use on farms. The U.S. agrochemical sector would be at risk if it were to lose its access to gas for direct use, as feedstock for its production, or for intermediate production of its suppliers through the chemical supply chain.

- In 2021, U.S. production of nitrogenous fertilizers and other agrochemicals required the consumption of approximately 95 billion cubic feet (Bcf) of natural gas throughout the supply chain.

- States with the largest consumption of natural gas related to the production or the supply chain of agrochemicals include Texas, Louisiana, Iowa, California, Ohio, Indiana, Alabama, Illinois, Oklahoma, Wisconsin, and Mississippi.

* Losing secure access to ample gas supplies would put the U.S. agrochemical sector in a precarious position relative to competitors. If the industry were to become suddenly uncompetitive relative to foreign producers, then the U.S. would need to import more of its ammonia feedstock and finished fertilizer products.

* The U.S. agrochemical sector also has a significant impact on the U.S. economy:

- It supports 344,000 U.S. jobs and $51 billion in U.S. GDP

- California, Florida, New York, and Texas have the largest number of jobs supported by the agrochemical manufacturing sector. In California, this natural gas-dependent sector supports 38,000 jobs. Other notable state job impacts include 13,800 in Illinois; 12,400 in Pennsylvania; 7,200 in Wisconsin; and 5,900 in Colorado.

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The report, figure and footnotes are posted at: https://www.aga.org/wp-content/uploads/2023/03/Advancing-Americas-Agriculture-The-Value-of-Natural-Gas-to-U.S.-Agriculture-and-Agrochemicals.pdf

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