Study: Natural Gas Pipeline Infrastructure Benefits Farmers

“Natural Gas Pipeline Infrastructure and Its Impact on Michigan and Ohio Agriculture,” written by Hillsdale College professors Gary Wolfram and Charles Steele, addresses key agricultural direct needs for affordable natural gas, from fuel for grain drying to indirect uses in fertilizers and pesticides noting, “there is no safer method of transportation for natural gas” other than by pipeline. “Agriculture is the traditional industry of America’s Midwest and the livelihood of millions of Americans,” said Lisa Tharp, legislative director of Ohio State Grange. “It’s important to recognize the positive impact that natural gas pipeline infrastructure will have on farming in the 21st century. Increasing access to
affordable natural gas will serve as a great benefit to our region’s farmers that face increasing costs.”

The Grange noted that in recent years Ohio has become a new epicenter of energy development, with natural gas production rising from less than 7 Bcfd five years ago to more than 87 Bcfd today. The increase in production has in turn led to proposals such as the Rover pipeline project, which would construct new pipeline infrastructure in Ohio and Michigan in order to move the fuel to market. “Farmers across our region and country are projected to face falling agricultural commodity prices,” said study author Wolfram. “Natural gas is a major component of farming operations and expenses. Building new natural gas infrastructure can reduce costs for farmers by increasing access to affordable natural gas.”

Further observed was that, where available, natural gas is typically much less expensive per Btu than propane, which is widely used for crop drying because it is more easily transported by truck and rail and can be used where natural gas sources are unavailable. Better natural gas transportation infrastructure—pipelines—would permit wider use of a less expensive fuel for drying. In addition, since propane is a byproduct of natural gas production, increased natural gas production would also boost propane supplies, putting downward pressure on propane prices.

Ohio State Grange comments that agricultural demand for propane is substantial. In 2008 more than 1.1 Bgal. were sold for agricultural purposes, including crop drying. Although natural gas tends to be cheaper, lack of access means propane is more commonly used. “Unfortunately, propane supplies themselves suffer from inadequate distribution networks, and consequently farmers have suffered recent propane shortfalls,” the study observes. “For example, in 2013 a bumper corn crop and wet harvest combined to drive up propane demand and prices for Midwest farmers. Compounding the problem, propane supply constraints are tightening because an important propane pipeline for the Midwest, the Cochin pipeline, [was] reversed to ship light condensate to Canada. Continued pipeline constraints would be expected to drive up the prices of both natural gas and propane unless new infrastructure is constructed
in the years ahead.”