Potential economic impacts of the Bayou Bridge
pipeline.
Prepared on the behalf of Energy Transfer
David E. Dismukes, Ph.D.
Gregory B. Upton, Jr., Ph.D.
Center for Energy Studies
Louisiana State University
February 7, 2017
Table of Contents
1.0
Executive Summary
2.0
Project Background
3.0
Project Relationship to Louisiana Energy Economy
4.0
Estimated Statewide Economic Impact/Benefits
5.0
Conclusion and Summary of Benefits
© LSU Center for Energy Studies
2
EXECUTIVE SUMMARY – PROJECT OVERVIEW
The Bayou Bridge Pipeline is a critical energy infrastructure expansion
project that will connect an existing crude oil pipeline from Lake Charles,
Louisiana to a market hub in St. James, Louisiana. The pipeline will
deliver multiple grades of crude oil to existing terminalling facilities in
St. James for distribution to in-state refineries.
The Bayou Bridge Pipeline Expansion is comprised of 162 miles of 24Recent
Statecapital
Trends
inch pipe and will require
a $488 million
investment, $471 million
of which will be tied to Louisiana alone.
This report was prepared by the Center for Energy Studies (“CES”), at the
request of Energy Transfer, the project developer. The purpose of this
study is to educate stakeholders about the nature of the investment,
how the investment fits into Louisiana’s larger energy economy, and
to estimate the likely economic benefits that will accrue to the state,
region, and communities where the project will be sited.
© LSU Center for Energy Studies
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EXECUTIVE SUMMARY – STATE LEVEL IMPACTS
Construction of the Bayou Bridge pipeline expansion is estimated to
generate an economic benefit of over $829 million in economic
output for the state. Post construction, annual operations will result
in an increase of $2 million in state-wide economic output.
Direct Impacts - Construction
Economic output: $471 million
Jobs: 1,529
Wages: $311 million
Indirect Impacts Construction
Economic output: $99 million
Jobs: 552
Wages: $29 million
Direct Impacts - Operations
Economic output: $1.2 million/year
Job: 12/year
Wages from annual operations leads to Wages: $1.2 million/year
induced benefits only.
Induced Impacts Construction
Economic output: $259 million
Jobs: 2,000
Wages: $82 million
Induced Impacts Operations
Economic output: $0.9
million/year
Job: 7/year
Wages: $0.3 million/year
© LSU Center for Energy Studies
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EXECUTIVE SUMMARY – ADDITIONAL BENEFITS
• The project will help diversify Louisiana’s supply of crude oil.
• The project will lead to greater crude oil transportation alternatives, which
should help to make crude oil transportation rates more competitive,
thereby reducing refinery costs and increase Louisiana refinery
competitiveness.
• The project will increase Louisiana refinery access to growing, high-quality U.S.
domestic crude oil production that can displace foreign crude oil imports.
Recent State Trends
• The project will help leverage Louisiana’s growing role in global energy trade
and facilitate U.S. crude oil and refined product exports.
• Pipeline-based transportation is considered safer and usually involves
fewer spills than other forms of crude oil transportation. Bayou Bridge
represents an effective and safe alternative to truck, rail and waterborne
transportation of crude oil that should increase overall safety to the public and
environment.
• The project will help expand Louisiana’s critical energy infrastructure, its
energy economy, and leverage existing in-state energy infrastructure such as
refineries, processing and storage assets.
© LSU Center for Energy Studies
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Section 2: Project Background
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Section 2: Background
Project Geographic Scope
The new segment of the Bayou Bridge Pipeline will run from Lake Charles,
Louisiana to St. James, Louisiana. Crude from the St. James terminalling
facility will be redistributed to refineries located along the Gulf Coast.
© LSU Center for Energy Studies
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Section 2: Background
Project Geographic Scope
The Bayou Bridge Pipeline expansion
will run through 11 different parishes.
The immediate local benefits are likely
to be experienced in each parish.
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Section 3: Louisiana’s Energy Economy
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Section 3: Louisiana Energy
Domestic Shale Gas Basins and Plays
U.S.
unconventional
production from
shale plays has
unleashed a
considerable
level of
domestic
energy
production.
This
production,
however, is
arising in new
areas,
necessitating
new
infrastructure in
order to deliver
to the market.
Source: Energy Information Administration, U.S. Department of Energy
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Section 3: Louisiana Energy
Changes in Crude Oil Reserves and Production
45
4.0
40
3.5
35
3.0
30
2.5
25
2.0
20
1.5
15
1.0
10
0.5
5
-
0.0
1970
1975
1980
1985
1990
Crude Oil Reserves
Source: Energy Information Administration, U.S. Department of Energy.
1995
2000
2005
2010
U.S. Crude Oil Production (Billion Bbl)
U.S. Crude Oil Proved Reserves (Billion Bbl)
Crude oil production and reserves are climbing back to levels not seen since the
early 1980s (reserves). Creates new domestic resource opportunities for U.S.
refineries.
2015
Crude Oil Production
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Section 3: Louisiana Energy
Annual Energy Outlook, Crude Oil Reserves
U.S. crude oil reserves are expected to increase 20 percent by 2020 and
increase by another 20 percent by 2040.
50
Reserves, Billion Barrels
45
40
35
30
25
20
15
10
5
0
2014
2016
2018
2020
2022
2024
Source: Energy Information Administration, U.S. Department of Energy
2026
2028
2030
2032
2034
2036
2038
2040
© LSU Center for Energy Studies
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Section 3: Louisiana Energy
U.S. and Texas Crude Oil Production
4.0
0.3
3.5
0.2
3.0
2.5
0.2
2.0
0.1
1.5
1.0
0.1
0.5
0.0
Jan-12
0.0
Jul-12
Jan-13
Jul-13
Jan-14
Texas
Source: Energy Information Administration, U.S. Department of Energy.
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Louisiana Crude Oil Production (MMBbl per day)
Texas Crude Oil Production (MMBbl per day)
While crude oil production in Louisiana has been falling in recent years, crude
oil production in Texas has increased significantly, jumping 75 percent
between 2012 and 2015 due to unconventional development.
Louisiana
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Section 3: Louisiana Energy
Louisiana Crude Oil Pipelines
Louisiana has a large number of
crude oil pipelines that provide
important inputs for the state’s
refineries as well as transporting
crude oil to other mid-western
refineries.
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Section 3: Louisiana Energy
Louisiana Crude Oil Pipelines, Proposed Project and Refineries
Bayou Bridge
will link prolific,
lower-cost
unconventional
crude oil to
Louisiana
refineries.
© LSU Center for Energy Studies
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Section 3: Louisiana Energy
Petroleum Demand
30
105
Projection
Rest of World Petroleum Demand
(MMBbl per day)
U.S. Petroleum Demand (MMBbl per day)
U.S. demand for liquid fuels has been relatively flat, while demand in the rest
of the world has been increasing underscoring the opportunities for new
Louisiana-based energy exports.
25
100
20
95
15
90
10
85
5
80
0
2004
75
2005
2006
2007
2008
2009
2010
U.S.
Source: Energy Information Administration, U.S. Department of Energy.
2011
2012
2013
2014
2015
2016
2017
2018
Rest of World
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Section 3: Louisiana Energy
U.S. Petroleum Product Imports and Exports
Petroleum Product Imports and Exports
(MMBbl per day)
In 2011, the U.S. became a net exporter of petroleum products. Net exports
have increased 360 percent since then.
5
4
Net exports
3
2
Exports
1
0
-1
-2
-3
Imports
-4
1980
1984
1988
1992
Distillate
Source: Energy Information Administration, U.S. Department of Energy.
1996
2000
Motor gasoline
2004
2008
2012
2016
Other petroleum products
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Section 3: Louisiana Energy
Gulf Coast Petroleum Net Exports
Gulf Coast Petroleum Imports and Exports
(MMBbl per day)
The Gulf Coast region became a net exporter of petroleum products at the
end of 2008. Since then net exports have increased at an average annual rate
of 40 percent.
5
4
3
2
1
0
-1
-2
-3
Jan-2004
Jan-2006
Jan-2008
Imports
Source: Energy Information Administration, U.S. Department of Energy.
Jan-2010
Exports
Jan-2012
Jan-2014
Jan-2016
Net Exports
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Section 4: Potential Statewide Economic
Impact/Benefits
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Section 4: Economic Impact
Estimated Construction Capital Expenditures
The Bayou Bridge Pipeline Expansion will require a $487.6 million investment
in 2017. Approximately $470.7 million, or 97 percent of that investment will be
made in Louisiana.
$500
$450
$400
$350
Million $
$300
$250
$200
$150
$100
$50
$0
Louisiana
Total
© LSU Center for Energy Studies
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Section 4: Economic Impact
Estimated Economic Impact/Benefits
Construction Impacts
Output
($)
Impact
Employment
(jobs)
State/
Local Tax
($)
Wages
($)
Direct
$
470,696,224
1,529
$
311,110,312
$
37,190,434
Indirect
Induced
$
$
99,254,747
259,410,206
552
2,000
$
$
29,464,884
81,902,438
$
$
3,363,067
15,023,206
Total
$
829,361,176
4,081
$
422,477,634
$
55,576,707
The construction phase
of the Project is
estimated to lead to over
$800 million in direct
Louisiana economic
impacts, over 4,000 jobs,
more than $400 million
dollars of total wages and
over $50 million in taxes.
During the first 5 years of
operations, the Project is
estimated to lead to over
$9.5 million in direct
Louisiana economic
output, 19 jobs/year,
close to $7 million in total
wages and over $200,000
in taxes.
© LSU Center for Energy Studies
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Conclusion and Summary of Benefits
© LSU Center for Energy Studies
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Section 5: Conclusions
Conclusions
When developed the Bayou Bridge Pipeline will help diversify Louisiana’s crude
oil supply and expand the state’s energy economy.
Construction of the Bayou Bridge Pipeline project is likely to generate over $829
million in new economic activity in 2017, over 4,080 job-years, and over $420
million in new wages and employee compensation in 2017. Project construction
is estimated to generate almost $56 million in state and local tax revenues.
The annual operation of the Bayou Bridge Pipeline is likely to generate over $2
million in new economic activity, 19 permanent full time equivalent jobs, and
$9.5 million in new wages and employee compensation over its first five years of
operations. Annual operations of the Bayou Bridge Pipeline is estimated to
generate over $200,000 in state and local tax revenues over this same time
period.
Further, the Bayou Bridge Pipeline project will likely create additional benefits
not easily quantified that include diversifying Louisiana’s crude oil supply and
expanding Louisiana’s refining and petrochemical manufacturing base, and
expanding the opportunities created by Louisiana’s energy economy.
© LSU Center for Energy Studies
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