This State’s Business Boom is Fueled by a Controversial Source

Photo credit: Flickr/Stuart Seeger 

Jim Cramer, the host of CNBC's "Mad Money", recently took his show on the road to a state that's seeing business boom thanks to the natural gas boom. That state is Louisiana. On his show Cramer spent some time talking about the business boom with the state's Governor Bobby Jindal (R), as well as the CEO of Nucor (NYSE: NUE  ) , which is investing heavily in the state thanks to its natural gas. The show was filled with insights on how the natural gas boom is fueling a boom in manufacturing.

A buildup in the bayou
Governor Jindal noted that his state's economy is growing 50% faster than the national economy. He attributes that outperformance to his pro-business stance as well as the abundance of natural gas. Jindal pointed out on Mad Money that thanks to natural gas the state has had over $50 billion in manufacturing projects that have been announced, which will create over 80,000 new jobs.

He noted that he was able to convince Nucor to invest in Louisiana over Brazil because of the state's predictable regulatory environment as well as a plethora of trained workers. Because of that Nucor invested in Louisiana to build its new DRI facility, which brought hundreds of construction jobs as well as 140 high paying permanent jobs.

Nucor is far from the only company investing to build manufacturing capacity in the state. Jindal pointed out that companies are coming from all across the world to invest in his state. He noted that South Africa's Sasol (NYSE: SSL  ) is spending $20 billion on a petrochemical facility in southwest Louisiana. In addition to that, a European fertilizer company is investing a billion dollars in his state, while a European steelmaker is also investing in the state because of the structural advantage it has in low natural gas prices.

Nucor's story
Nucor broke ground on the first phase of its $750 million DRI facility in 2011, and it's now up and running at about 95% of capacity. The company has already been permitted to build a second plant, and it has more than enough land to build a third facility if business keeps booming.

Photo credit: Copyright © Encana Corporation. All rights reserved.  

This facility wouldn't have been possible if it weren't for the shale gas revolution. The reason for this is simple: This facility consumes as much natural gas per year as the residents of Manhattan. In fact, to control its costs Nucor signed a gas drilling agreement with Encana (NYSE: ECA  ) to provide even more security on its energy costs. While the drilling in the joint venture with Encana has been temporarily suspended due to ultra-low gas prices, the venture gives Nucor the ability to better manage the volatile nature of natural gas. The bottom line though is that without our abundant shale gas resources Nucor wouldn't be investing in Louisiana. 

Investor takeaway
The natural gas boom isn't just a boom for drillers. Manufacturers like Nucor and Sasol are now able to take advantage of the structural competitive advantage that low natural gas prices in America are providing. That gives investors many options to profit off of our energy boom.

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Matt DiLallo

Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:

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