US shale boom to create half-million jobs

Posted on June 13, 2012

The boom in gas production from “unconventional” reserves such as shale is creating hundreds of thousands of jobs across the US, but the gains are concentrated principally in a few resource-rich states, according to an industry-backed analysis.

The unconventional gas revolution, driven by advances in production techniques that have unlocked previously uncommercial resources, has led to a surge in output and a plunge in natural gas prices, creating jobs directly in the industry and indirectly in areas that have benefited from the flow of income and spending.

    About 455,000 jobs will be created this way during 2010-15, according to IHS, the energy research group, which produced the study for America’s Natural Gas Alliance, the industry group. More than half of those will be concentrated in just four states: Texas – the leader with 97,000 new jobs – Pennsylvania, Colorado and Louisiana, the analysis showed.

    The industry is expanding outside its heartland in the Gulf of Mexico region – the fastest growth is expected to be in Colorado and Pennsylvania.

    Pennsylvania had little gas production before the development of its Marcellus Shale, which is expected by IHS to double gas-related employment to 111,000 over the five years to 2015.

    Colorado’s production has been growing since the 1990s, but had been relatively low compared to Texas and Louisiana.

    John Larson of IHS said the spread of gas production across the country was helping to make supplies more resilient.

    “We are creating geographic diversity, which should, for example, help guard against the effect of hurricanes in the Gulf of Mexico,” he said.

    However, the jobs are still expected to be concentrated in the gas-rich states. Out of total unconventional gas-related employment in 2015 of 1.46m, IHS expects that 1m will be in the top 10 gas-producing states.

    In a sign of the uneven distribution of the economic benefits, five chemicals companies have announced plans for crackers, plants for turning ethane, a natural gas liquid in abundant supply from US wells, into ethylene used to make plastics. Four of those projects are in Texas, and one in Pennsylvania.

    Susan Christopherson of Cornell University said that although the jobs from the shale boom would in part follow the location of the resources, the concentration of the industry’s expertise and supply chain in Texas would inevitable make that state the principal beneficiary.

    “If other states do well, Texas will do even better,” she said.

    The IHS forecasts were based on assumptions about rising production and the investment and jobs that will be needed to support those increases.

    Mr Larson said the forecast growth was based on a rise in the price of gas from about $2.20 per million British thermal units today to about $4.77 in 2015 and an expected regulatory regime that would be broadly the same as today.

    The US energy secretary’s advisory group on shale gas, which finished its work last November, had recommended tighter regulations and the collection of more data.

    However, Mr Larson said, “the committee’s recommendations were things that could be done to improve the regulatory framework around this activity to enable it to continue”.

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