Column: Rover Pipeline will benefit Michigan
In recent weeks, construction of the Rover Pipeline has commenced in Ohio. Once complete, the $4.2 billion project will be capable of transporting more than 2 billion cubic feet per day of domestically produced natural gas from processing plants in West Virginia, Ohio and Pennsylvania for delivery to markets throughout the Midwest, providing reliable access to affordable natural gas for consumers across the region.
The construction phase of Rover promises to create a number of economic benefits for the states through which the pipeline will pass. As recent reports in Ohio have indicated, these positive impacts are being realized — with the project having already spent more than $110 million in development. Further, local business owners are seeing a noticeable upswing in commerce as construction workers spend their paychecks at restaurants, hotels, campgrounds and grocery stores.
The Rover Pipeline will travel across Lenawee, Washtenaw and Livingston counties, and these communities in Michigan can soon expect to see many of the same benefits as construction progresses northwest. The project is expected to create as many as 10,000 construction positions for trades workers, for which $620 million will be paid to contractors hired, including 1,000-1,500 in Michigan alone. And, as in Ohio, these workers will stay in local hotels and eat at local restaurants, providing our communities’ small business owners with a windfall of trade.
Additionally, Rover’s construction is estimated to generate millions of dollars — as much as $8.7 million in sales tax revenue and $6 million in approximate ad valorem taxes — in Michigan. These funds can then be allocated by state and local governments to rebuild our roads and bridges, support school systems and bolster the many public services that Michigan residents rely upon.
Yet another layer of economic activity stemming from Rover’s construction lies in the acquisition of components for the project. Rover will spend nearly $1 billion in purchasing components — over 70 percent of the pipe will be manufactured right here in the U.S., as will other necessary materials. In this manner, the project will provide an enormous stimulus for American companies.
Ultimately, once in operation, the Rover Pipeline will alleviate energy constraints in Michigan and throughout the Midwest through providing safe, reliable access to natural gas. The region has historically suffered from an inability to reach energy resources — a fact that has been underscored in recent years as the nearby Marcellus and Utica shale formations have been developed. The Rover Pipeline, however, will facilitate that access, easing bottleneck constraints on natural gas producers in Ohio, West Virginia, and Pennsylvania.
And this supply of natural gas will be a boon for industries throughout Michigan — from businesses and manufacturers to domestic consumers. In fact, we conducted a study in 2015 to illustrate some of these many impacts. In the white paper, titled “Natural Gas Pipeline Infrastructure and Its Impact on Michigan and Ohio Agriculture,” we illustrated that a more reliable supply of natural gas would help agricultural operations in the region reduce their overhead budget by lowering the costs of electricity, fuel, and agricultural chemicals. These same effects extend beyond the agriculture industry — industrial manufacturers, chemical manufacturers, and businesses of virtually every kind will profit from affordable, clean-burning natural gas supplied by the Rover Pipeline.
Rover officials expect the project to be in service to Defiance, Ohio, by the middle of this year, with the pipeline fully operational through Michigan by November. With construction already underway in Ohio, Michigan residents should look forward to a safe, efficient and successful completion of the Rover Pipeline — and all the benefits that accompany development of natural gas infrastructure in the Midwest.
Gary Wolfram is a professor of economics at Hillsdale College.