In the remote expanses of Mesquite, Nevada, the gas meter started spinning at the massive new Crown Holdings plant on Aug. 2, 2023.
It was a moment for celebration.
“It was about a multiyear vision. Watching it come true, you’re happy for the city, the residents and the communities who are benefiting from this opportunity,” said Justin Brown, president, Southwest Gas Corporation. “To see this economic development underway that they wanted to see happen and to be a part of that was a very exciting night.”
From aluminum cans to pet food, the advent of natural gas is helping propel today’s manufacturing resurgence, convincing manufacturers to site new plants and create jobs in once-overlooked remote areas. Call it a moment for both the chicken and the egg. Some utilities are building pipelines dedicated to anchor tenants. Others are boldly going where no gas utility has gone before, invited by local officials eager to attract manufacturers that have, in the past, bypassed their gasless corners of the world.
It all shows that where affordable, reliable natural gas goes, manufacturing follows.
“When you look at commercial industrial developments, certainly they have to ask the question, ‘Do you have enough gas capacity to be able to meet my load requirement?’” said Chad Shaffer, government and community relations manager, Duke Energy.
Nevada and Arizona are two of the fastest-growing states in the country. People moving to the region for manufacturing jobs then attract more manufacturers and businesses, said Brown. Recent entries to the Arizona manufacturing landscape include semiconductor producers Intel and Taiwan Semiconductor Manufacturing Company. Amid all this growth, Southwest Gas has long identified the Nevada city of Mesquite, hugging the Arizona border, as a place where natural gas availability could propel economic growth.
However, state regulations required anchor tenants to justify pipeline extensions, and businesses were unwilling to make those massive investments. But in 2015, talks among Southwest Gas and Mesquite city officials, economic development authorities, policymakers and regulators evolved into Senate Bill 151.
The legislation framed Mesquite’s dilemma within a broader lens, with language calling for the Public Utilities Commission of Nevada to adopt regulations authorizing natural gas utilities to expand their infrastructure for economic development purposes. The carefully sculpted wording was designed “not to allow expansion anywhere and everywhere but to be a targeted tool to provide expansion of natural gas infrastructure in the right situation,” whether for industrial or residential service, said Brown.
The Legislature approved the bill unanimously, and then-Gov. Brian Sandoval gave his enthusiastic approval.
With its new tool in place, Southwest Gas filed a plan with the PUCN focusing on the Mesquite business loop and areas suitable for new construction. Funding came from Southwest Gas capital and a ratemaking structure accounting for the plan’s socioeconomic benefits.
The assurance of natural gas convinced Pennsylvania-based Crown Holdings to look more closely at Mesquite for siting a two-line, state-of-the-art aluminum beverage can manufacturing facility. The recently opened 355,000-square-foot facility is creating 126 jobs.
Another manufacturing-related project is the pending Bethel- Batavia Pipeline in Ohio, which creates a “new trunk of the tree” that enhances Duke Energy Ohio’s natural gas system, says Shaffer. The project is intended, in part, to spark economic development for an underserved segment of the growing Cincinnati metro area. It has already played a role in Nestlé Purina PetCare’s decision to build its first new factory in nearly 50 years. That advanced manufacturing facility in Clermont County is expected to create 300 jobs.
The advent of the Bethel-Batavia line demonstrated Duke Energy’s ability to enhance capacity and serve the pet-food maker’s gas load request. Construction on the pipeline began in June 2023, and gas is expected to be moving by late fall. But the story began in spring 2020, when Duke Energy conducted route studies and began design work. The application was filed with the Public Utilities Commission of Ohio in January 2021 and was approved in July 2021. “The project team has moved very steadily and made great progress,” said Shaffer.
He added, “The fact that we have this project in the works—and it syncs up with [Nestlé Purina PetCare’s] timeline—was absolutely critical for that project. This line was for the entire region, but it just so happened that while planning for that future growth, we were able to help land one of the large future employers for the county.”
Although the western part of Clermont County, closer to Cincinnati, was already attracting larger companies interested in capitalizing on Cincinnati’s growth, eastern areas that lacked natural gas have been at a disadvantage. In that climate, the pipeline project has generated “tremendous support from elected officials,” said Shaffer. Clermont County Commissioner David L. Painter called it “a game changer” that not only brings long-awaited residential gas but “will also ensure that gas supplies are sufficient in these areas to support future business expansion decisions here in our county.”
Meanwhile, in northwest Michigan, the moderate- to lowincome Mesick-Buckley region has long gone without natural gas, dependent instead on costly, less reliable propane. In recent years, the DTE Energy governmental affairs team, partnering with other Michigan natural gas utilities, launched discussions with local and state officials on funding natural gas lines to unserved and underserved areas.
As a result, the state Legislature approved $25 million infrastructure allocations in two 2022 budget bills, totaling $50 million dispersed to businesses, nonprofits and local governments for low-carbon energy facilities that can include natural gas, combined heat and power, or renewable natural gas facilities, plus electrification programs.
In June of this year, DTE received $7.3 million for the Mesick- Buckley pipeline. The allocation finally solved the puzzle of how to gasify a distant region in a state where the tariff structure doesn’t allow socializing costs across the entire customer base, said Henry J. Decker, vice president, gas sales and supply.
Under that structure, utilities could provide revenue credits to customers, but anything exceeding the credits would be borne by customers—“and that was a bridge too far for these communities,” said Decker. “With this state funding, we were able to bridge that gap. Costs are shared between us, the customers and the state.”
For years, Mesquite officials heard the same refrain from potential manufacturers: “No gas? We’ll look elsewhere.”
Southwest Gas and Mesquite leaders turned that refrain into a talking point that helped advance SB151. “We spent a lot of time working with the mayor and the city council on that SB151 initiative that we brought to the table,” said Brown. “Having their involvement was critical.”
When the legislation passed and Southwest Gas won approval for its pipeline, Crown Holdings paid attention. Announced in September 2021 and now operating, the energy-intensive plant expanded Crown Holding’s North American footprint and supplies cans for a growing beverage market. “Had we not had gas there, I suspect that Crown wouldn’t have been in Mesquite,” said Brown. “Like other businesses, they would have migrated somewhere where there was natural gas infrastructure available, especially to serve the type of facility that they have and the processes they go through.”
In their testimony accompanying the regulatory filing, PUCN witnesses noted that Mesquite was the only city along the Interstate 15 corridor from Salt Lake City to Los Angeles lacking natural gas. “It was a very powerful statement,” Brown said. “That’s where this legislation really came into play.”
For the Mesick-Buckley pipeline, DTE reached out to stakeholders “long before the approval process,” said Decker. Letters of support came in from municipalities, residential customers and even a school district noting its potential savings of $70,000 a year—“which in this area of our state is not inconsequential.”
Chambers of commerce supporting the Mesick-Buckley project gave natural gas a thumbs up for its savings and reliability, especially compared to propane.
The project is expected to reach about 1,000 potential residential customers and 100 small businesses. While economics restrict the Mesick-Buckley pipeline from being big enough to accommodate any future large manufacturer, “the pipe will be developed to accommodate future growth,” including commercial businesses larger than those currently in the area, Decker said.
Challenges to expansion have been minimal, say gas utility officials. All agree that previous and new investments in relationship-building, topped with strong communications and peerless safety cultures, helped clear the way. “We’re used to building to meet our customers’ energy needs,” Brown said, adding that the enthusiasm of Mesquite city officials for the project helped with acquiring the various regulatory and permitting approvals.
Southwest Gas also conducted a campaign educating contractors about their new requirement to call 811 and get dig tickets—an unfamiliar demand in areas unserved by natural gas.
In Ohio, Duke Energy’s communications and transparency strategies were advised by lessons learned from the Central Corridor Project, which faced stiff opposition from communities and went into service in 2022. The emphasis helped sustain the Bethel- Batavia Pipeline’s smooth sailing. Outreach included a project website with interactive map, a newspaper advertorial and a 16-page color brochure answering questions about routing, safety, construction and restoration.
Even after approval, Duke Energy continued regular briefings, updating municipal managers and local fire chiefs on next steps. The connections to fire departments led to the development of emergency evacuation plans in the case of worker injury.
“Those meetings gave them a direct liaison within Duke Energy,” said Shaffer. “A lot of great things spawn out of those engagements that can really help in events where seconds can be life or death. It’s one of those things that builds a lot of goodwill by being a good community partner.”
The role of a natural gas utility in building a new manufacturing plant is “an ongoing process,” said Brown. Typically, businesses reach out first to economic development partners, which then connect them with utilities. Together, they determine short- and long-term needs and objectives. The utility’s system capacity and costs get incorporated into the manufacturer’s construction and business plan.
“Once they pull the trigger on it, we’re working side by side with them on making sure that we’re extending our facilities,” Brown said.
Ripple effects become readily apparent. Southwest Gas has seen interest within the business loop circled by the new pipeline. Casinos, a hospital and some residents have converted from propane to natural gas. Because the Crown Holdings plant came to town, new home construction is rising. “We’ve been really pleased with the conversion rate and the growth in that area as it continues to ramp up, and it continues to grow each year,” said Brown.
Utility site preparation programs also get to work assessing and marketing sites for businesses rethinking the viability of regions gasified by new pipeline infrastructure. For example, Duke Energy’s Site Readiness program is queueing up potential industrial customers for the Bethel-Batavia Pipeline. Site Readiness, now in all six of Duke Energy’s states, originated in Ohio-Kentucky in 2010 and has resulted in investments totaling $2.5 billion and 5,010 jobs in that territory alone.
Prospects are also approaching Duke Energy with requests for information on different kinds of projects needing different levels of service. “Our engineers are very quick to turn around those RFIs,” said Shaffer. “It’s a very competitive world, and when there are multiple other states that are competing for the project, it’s critical to have the answers as soon as you can.”
In those circumstances, Duke Energy works with local and regional economic development authorities and entities as “a collaborative team to land these large projects. It only helps the narrative once you have ample utility infrastructure that is able to plan for future growth.”
The effort demands an eye on responsible growth that doesn’t overbuild or overtax the system, Shaffer adds. “You want to have enough that you can get a significant commercial industrial end user that ultimately helps the community in many ways, whether that be expanding the tax base, or hiring or bringing additional people to the region,” he said.
“Once the tone is set in terms of your infrastructure on all ends, the rising tide is going to lift all boats.”