There are some eye-popping numbers in a new study of America’s unconventional oil and natural gas potential by IHS Global Insight, out today. There’s news coverage from Fuel Fix.com here, and Reuters has it here. IHS Global’s Daniel Yergin has an op-ed on the report in the Wall Street Journal (subscription publication). Key IHS projections:
Spending: $5.1 trillion – Company expenditures between 2012 and 2035 on capital projects to develop unconventional oil and gas – which is to say energy that is developed with horizontal drilling and hydraulic fracturing. Actually, IHS projects the figure will be in excess of $5.1 trillion, including more than $2.1 trillion in unconventional oil activity and more than $3 trillion in unconventional natural gas activity.
Jobs: 1.7 million, growing to 3.5 million – Employment in the exploration and development of unconventional oil and gas will support 1.7 million jobs this year, growing to 2.5 million in 2015, 3 million in 2020 and 3.5 million in 2035. On average, direct employment will represent about 20 percent of all jobs resulting from unconventional oil and natural gas activity, with the rest contributed by indirect and induced employment.
Revenues to governments: $2.5 trillion – IHS projects that unconventional oil and gas activity will generate more than $2.5 trillion in cumulative federal, state and local tax receipts between 2012 and 2035. This oil and gas will contribute $62 billion in 2012, growing to more than $111 billion in 2020.
"… remarkable is the transformation in the natural gas market emanating from the rapid expansion of unconventional natural gas production. A dozen years ago, shale gas production was only 2% of total US natural gas production. Today, it represents 37%. This burgeoning supply, and its impact on market prices, is a significant factor supporting a manufacturing renaissance. It is also prompting a national discourse about wider markets for natural gas."
More from IHS:
"Unconventional oil and natural gas activity is already revolutionizing America’s energy future and bringing enormous benefits to its economy. Unlocking unconventional energy will generate millions of jobs and billions in government receipts. It will make significant contributions to the US economy through direct employment, its many and diverse connections with supplier industries, the amount of spending this direct and indirect activity supports throughout the economy, and the revenues that flow to federal and state and local governments."
“Unlocking” is the key word. The United States has tremendous shale-energy reserves. Indeed, another new report indicates the Marcellus formation is far larger than the most recent government estimate. Will we develop the resources there and in other shale formations, or will we hinder it or even stop it cold with new layers of red tape and regulation? Will the states will continue to take the oversight lead with sensible, effective regulatory regimes, or will multiple federal agencies get into the act, making this energy development harder and chilling investment?
The IHS Global report highlights breathtaking potential for jobs, economic growth and revenue that’s badly needed by all levels of government. What’s required is clear leadership on policies that will foster safe and responsible development of this remarkable American resource.