Additional insight on the new IHS Global unconventional oil and natural gas study that projects more than $5.1 trillion in industry cumulative capital spending by 2035, supporting 3.5 million jobs. Here’s John Larson, IHS vice president for public sector consulting, during a conference call with reporters:
“This really is … a game changer in energy production for the United States. It’s a really rapid rise and a dramatic shift. You don’t often get to see the words ‘game-changer,’ or ‘sea change’ used around these types of events, but this is one of them. We think it’s one of the most significant energy events in the last 100 years.”
Here’s what an energy “sea change” looks like:
- U.S. domestic oil production, which had been in decline between 1970 and 2008, is increasing – thanks in large part to unconventional production. Tight oil developed through hydraulic fracturing will total 2 million barrels per day (mbd) this year and is expected to reach 4.4 mbd by the end of the decade, Larson says.
- Natural gas from shale was about 2 percent of total U.S. gas production in 2000. This year it will be 37 percent, Larson says. By 2020 unconventional natural gas will account for 75 percent of overall U.S. gas production, and by 2035 that figure will be 80 to 85 percent, he says.
- Natural gas liquids (NGLs) from unconventional development, an important feedstock that is helping revive the U.S. manufacturing sector, have increased 30 percent from 2008 to 2012. Larson says unconventional NGLs will double again by 2020 to about 3.8 mbd.
This growth in developing unconventional resources will necessitate major capital spending by energy companies and will be accompanied by dynamic job creation and increased tax revenues for all levels of government over roughly the next two decades, IHS projects. Larson:
“(Unconventional production) is going to be fueled by capital expenditures. You’ll see massive outlays to help drive that growth. … You can see this continued expansion. This is not just a near-term boom. This is a long-term boom. That capital expenditure is going to be taking place through the full forecast horizon in 2035. That’s key to driving the job growth.”
IHS estimates unconventional oil and natural gas activity 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. The totals include direct jobs (people working for energy companies), indirect jobs (people working for industry’s supply chain) and induced jobs – jobs supported by the economic activity of industry workers. Larson:
“These jobs are very high-value jobs. They reach a broad base of employees, and the income earned by these jobs is significantly greater than the average income opportunity out there.”
Certainly, the IHS study depicts a vigorous industry that can play a major role in leading economic renewal. IHS Vice Chairman Daniel Yergin:
“The growth of unconventional oil and gas production is creating a new energy reality for the United States. That growth has not only contributed to U.S. energy security but is a significant source of new jobs and economic activity at a time when the economy is a top priority.”
API President and CEO Jack Gerard:
"The study highlights the extraordinary opportunities we have right here at home to develop our unconventional oil and gas resources and return our economy to a pro-growth engine. Polls show Americans’ top priority is job creation, and the oil and natural gas industry will be a driver for those new jobs, with nearly three quarters of a million new jobs added over just the next three years.”