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Released July 11, 2023 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Available labor may be something of an issue in the energy sector, with President Joe Biden touting the prospects in the energy transition while the Fed frets over the resilience of hiring.
Data from the U.S. Labor Department showed the world's largest economy created 209,000 jobs in June, the smallest gain in more than two and a half years. The number of people working part time, meanwhile, increased because of "slack work or business conditions."
That would be welcome news for policymakers at the Federal Reserve working to cool consumer-level inflation and slow the overall economy through aggressive rate hikes. Lorie Logan, the president of the Federal Reserve Bank of Dallas, said last week that recent data suggest another round of rate hikes may be necessary even as inflation starts to move closer to the 2% target rate.
"Job openings remain far above the 2019 level. Layoffs remain low," she said. "There is no indication of an abrupt deterioration in labor market conditions."
Labor, however, remains at a premium in some parts of the energy sector. While some segments, such as exploration and production, may be learning to do more with less, other parts of the energy sector are starving for labor.
"Labor availability is a big issue in blue-collar areas," a representative from the oilfield services sector told the Dallas Fed. "It is hard to find employees, and wage rate requirements continue to increase."
That does little to support the wave of developments expected for U.S. liquefied natural gas (LNG) facilities. Cheniere Energy Incorporated (NYSE:LNG) (Houston, Texas) has six trains running now at its Sabine Pass terminal with a combined capacity of 4.56 billion cubic feet per day (Bcf/d) in peak nameplate capacity. Plans for another train would boost that capacity to 5.32 Bcf/d.
Counting expansions to Sabine Pass, IIR finds there are $27.5 billion worth of final investment decisions (FID) that are either upcoming or awaiting approval between now and 2024. Labor is necessary to turn those planned financial commitments to reality. For related information, see June 27, 2023, article - Nearly $30 Billion in FIDs Expected in U.S. LNG.
Bechtel Corporation (Reston, Virginia) is behind much of the rollout in new LNG facilities, including expansions for Cheniere and the planned terminal in Port Arthur. The company could be looking to expand payrolls by 500% in order to keep up with the planned additions.
Bechtel is behind at least 30% of the global LNG footprint. Paul Marsden, the head of Bechtel global business unit, told the Reuters news agency that managing labor has proven to be a difficult endeavor.
"Labor has grown as an inflationary concern for everyone in the industry," Marsden said. "We need to actively forecast and manage labor availability and supply chain like never before."
The U.S. Energy Information Administration (EIA) expects total U.S. LNG export capacity to increase by 20% next year, relative to 2022 levels.
Elsewhere, Industrial Info sees nearly $200 billion in combined investments for hydrogen and carbon capture and storage facilities across North America.
Speaking in South Carolina recently, Biden said thousands of jobs and billions of dollars in investments are coming to the U.S. economy amid a reshoring of the manufacturing base needed to support the energy transition.
"Jobs that used to go to Mexico, India, Romania, and China are now coming home to South Carolina," he said.
Those jobs come with a catch. Too hot and it encourages the Fed to do more to slow the economy. Too cool, and some of the key parts of the economy struggle enough to usher in a recession. Much like the debate over the energy transition and fossil fuels, it may be a Goldilocks climate that may work best.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Data from the U.S. Labor Department showed the world's largest economy created 209,000 jobs in June, the smallest gain in more than two and a half years. The number of people working part time, meanwhile, increased because of "slack work or business conditions."
That would be welcome news for policymakers at the Federal Reserve working to cool consumer-level inflation and slow the overall economy through aggressive rate hikes. Lorie Logan, the president of the Federal Reserve Bank of Dallas, said last week that recent data suggest another round of rate hikes may be necessary even as inflation starts to move closer to the 2% target rate.
"Job openings remain far above the 2019 level. Layoffs remain low," she said. "There is no indication of an abrupt deterioration in labor market conditions."
Labor, however, remains at a premium in some parts of the energy sector. While some segments, such as exploration and production, may be learning to do more with less, other parts of the energy sector are starving for labor.
"Labor availability is a big issue in blue-collar areas," a representative from the oilfield services sector told the Dallas Fed. "It is hard to find employees, and wage rate requirements continue to increase."
That does little to support the wave of developments expected for U.S. liquefied natural gas (LNG) facilities. Cheniere Energy Incorporated (NYSE:LNG) (Houston, Texas) has six trains running now at its Sabine Pass terminal with a combined capacity of 4.56 billion cubic feet per day (Bcf/d) in peak nameplate capacity. Plans for another train would boost that capacity to 5.32 Bcf/d.
Counting expansions to Sabine Pass, IIR finds there are $27.5 billion worth of final investment decisions (FID) that are either upcoming or awaiting approval between now and 2024. Labor is necessary to turn those planned financial commitments to reality. For related information, see June 27, 2023, article - Nearly $30 Billion in FIDs Expected in U.S. LNG.
Bechtel Corporation (Reston, Virginia) is behind much of the rollout in new LNG facilities, including expansions for Cheniere and the planned terminal in Port Arthur. The company could be looking to expand payrolls by 500% in order to keep up with the planned additions.
Bechtel is behind at least 30% of the global LNG footprint. Paul Marsden, the head of Bechtel global business unit, told the Reuters news agency that managing labor has proven to be a difficult endeavor.
"Labor has grown as an inflationary concern for everyone in the industry," Marsden said. "We need to actively forecast and manage labor availability and supply chain like never before."
The U.S. Energy Information Administration (EIA) expects total U.S. LNG export capacity to increase by 20% next year, relative to 2022 levels.
Elsewhere, Industrial Info sees nearly $200 billion in combined investments for hydrogen and carbon capture and storage facilities across North America.
Speaking in South Carolina recently, Biden said thousands of jobs and billions of dollars in investments are coming to the U.S. economy amid a reshoring of the manufacturing base needed to support the energy transition.
"Jobs that used to go to Mexico, India, Romania, and China are now coming home to South Carolina," he said.
Those jobs come with a catch. Too hot and it encourages the Fed to do more to slow the economy. Too cool, and some of the key parts of the economy struggle enough to usher in a recession. Much like the debate over the energy transition and fossil fuels, it may be a Goldilocks climate that may work best.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
