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A variety of N.J. industries hitting the gas to power growth

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Linde supplies chemical and manufacturing companies with natural gases and other services.
Linde supplies chemical and manufacturing companies with natural gases and other services. - ()

From its state-of-the-art operations center in Stewartsville, a team of Linde Group staffers coordinates natural gas deliveries throughout North America, and monitors Linde plants from thousands of miles away.

The 24/7 center opened in 2009 after relocating from Bethlehem, Pa., and though it's no longer in the Keystone State, much of its work is very much tied to the natural gas drilling operations there.

“One of the biggest fundamental shifts that Linde sees is the lower cost of natural gas as a raw material across the chemical and manufacturing sectors,” said Earl Lawson, vice president of energy solutions at Linde North America, in the Murray Hill section of New Providence, part of the Munich-based Linde Group.

Those companies turn to Linde to supply gases and other services. As its clients become more bullish on natural gas, Linde sees opportunity for major growth in the region and the continent.

Linde is one example of the economic spillover effect caused by natural gas drilling in Pennsylvania's Marcellus Shale.

Hal Bozarth, executive director of the Chemistry Council of New Jersey, said one of the most basic, and most important, benefits his members see is the falling electricity prices that come as generators switch to cheaper natural gas.

The other benefit, Bozarth said, is that cheaper natural gas means cheaper ethane, a byproduct of natural gas that's used in a variety of manufacturing processes. Ethane is used to make Ethylene, which is used for everything from flooring to car components.

“For years, New Jersey and America have been losing out on new investment in chemical manufacturing because the price of natural gas — meaning ethane — has been too high,” he said.

Bozarth said natural gas can be an equalizer in the global economy.

“From our standpoint, it really is the cost of raw materials and the cost of electricity that makes or breaks whether or not we can be successful,” he said, adding that the regulatory environment is the third major factor.

Jeff Scheininger, president of Flexline U.S., in Linden, said lower electrical bills have made a big difference for him. But he's also seeing direct benefits as the drilling in Pennsylvania has sparked new demand for his company's specialty hose assemblies.

“For us, the economic impact is that is has made up for some of the manufacturing firms that in the last few years had closed in New Jersey,” he said.

Flexline supplies its products to vendors that specialize in oil and gas drilling hoses. Prior to 2009, he had “zero” oil and gas business, he said. Now, it makes up 5 percent to 8 percent of the firm's sales, and he's certain his proximity to Pennsylvania is contributing to his success.

“If I were closer to the drilling, I'd have more business,” he said. “I'm just about as far away as they'll go.”

The gas boom also is creating jobs due to the need for a more robust pipeline infrastructure.

Spectra Corp. last year began construction on a 16-mile expansion of its pipeline connecting Linden and Manhattan. The company said construction of the pipeline, which is expected to be complete by November, will create 700 direct and 5,200 indirect jobs.

Marylee Hanley, a Spectra spokeswoman, said the pipeline is being built to connect New Jersey, New York and the Northeast to regions like Pennsylvania that are producing natural gas.

However, one possible barrier to that growth is the controversy that has erupted over the practice of hydraulic fracturing, a method using water and chemicals to extract shale gas. Some environmentalists say the practice — known as “fracking” — is contaminating the water supply in drilling regions. That's led New York to pass a moratorium on the practice. Gov. Chris Christie last year imposed a one-year fracking moratorium in the Garden State, though he allowed the ban to expire.

Jim Benton, executive director of the New Jersey Petroleum Council, said he doesn't expect public concern to derail the natural gas boom.

“That's an issue we've looked at, and the American public is with us,” he said.

Meanwhile, at Linde, Lawson said most of the shale-gas-fueled growth is occurring outside of the state. But with 900 employees and its North American headquarters here, he said the economic ripples will benefit New Jersey.

“As few as four years ago, North America would have been seen as a mature market” for Linde, he said. “With what's going on with shale gas now, it's considered a growth market.”

E-mail to: jaredk@njbiz.com
On Twitter: @jaredkaltwasser

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