While UK politicians disposed towards the idea of a shale gas industry nurse hopes of economic riches and the Great British Public gets bombarded with horror stories about large-scale drilling and fracturing onshore, the Americans are simply getting on with it.
The impacts of the shale gas (and oil) revolution Stateside are dramatic and the US appears confident that energy self-sufficiency is within reach.
But how dramatic and how within reach?
This is why, on June 24, legendary American energy analyst and author of the remarkable book, The Prize, testified before the Joint Economic Committee of the United States.
Daniel Yergin is vice-chair of leading analysts IHS, which has conducted a number of studies designed to “better understand and quantify the dramatic economic contributions associated with unconventional oil and gas development”.
Here are some highlights of Yergin’s testimony, which is presumed to leave the American political machine in no doubt that this is a revolution that has delivered enormous economic benefit to what is a sprawling land.
o Natural gas production increased 27% between 2007 and 2013. Estimates of recoverable natural gas reserves have more than doubled since 2005. US oil production has increased 3.3million barrels per day since 2008 – a 66% increase, which is larger than the output of 11 of 12 Opec countries.
o By 2012, the unconventional natural gas and oil activity was already supporting more than 2.1million jobs across a vast supply chain. About 60% of these jobs – 1.3million – were from shale gas activity; the rest from tight oil.
o The total number of jobs supported is expected to rise to 3.3million by 2020 – with 1.8million of those jobs from shale gas.
o In 2012, this
revolution added $74billion to federal and state government revenues. IHS projects the number to rise to about $125billion by 2020. Between 2012 and 2035, unconventional activity is expected to generate nearly $1.6trillion in cumulative government revenues.
o Today, unconventional natural gas activity accounts for nearly 67% of total US Lower-48 natural gas productive capacity and is projected to rise to nearly 75% by the end of the decade. US Lower 48 resources are sufficient to supply current consumption rates for over 100 years.
o Owing to the long supply chains, the job impacts are being experienced across the US, including in states without significant shale gas or tight oil activity. More than a quarter of all jobs associated with the unconventional energy revolution are found in states with no appreciable unconventional activity.
o The unconventional gas revolution increased average household disposable income in 2012 by $1,200 – a number that will grow to $2,700 by 2020 – as a result of savings on utilities and lower costs for goods and services as producers and retailers enjoy lower energy costs.
Yergin said: “What is now becoming clear is that the lower costs of energy brought about by this abundant growth in natural gas supply is helping to stimulate a manufacturing renaissance and improving the competitive position of the US in the global economy and further stimulating job creation in the United States.
“Overall, the unconventional revolution – shale gas and tight oil – has helped to strengthen the US economy and has proved to be an important contributor to the US economic recovery.
“A few months ago, former Federal Reserve chairman Ben Bernanke described the unconventional revolution as ‘one of the most beneficial developments if not the most beneficial development since 2008’ in the economy.
“The unconventional revolution came along at the right time. One might well wonder how our economy would look today without it – much higher energy bills, higher unemployment, lower growth.”
Yergin pointed out that it took about two decades for the development of the technological base that is fuelling today’s success story. It is since only 2008 that the unconventional revolution has unfolded rapidly.
“As recently as just six years ago it was widely assumed that a permanent era of energy shortage was at hand,” he stated.
“The country, it seemed, was on a path to spending several hundreds of billions of dollars more every year on imports to meet oil and natural gas demand.
“How different things look today.”
However, Yergin warned the Committee that, while US crude oil production has increased dramatically since 2008, the 3.3million barrels per day increase has almost exactly balanced the amount of oil currently missing from the world market owing to disruptions in countries like Libya and Iraq and sanctions on Iran.
“In other words, the increase in US oil production has compensated for loss of oil elsewhere. Without that increase, we would be looking at much higher oil prices than today,” Yergin added.
