*UPDATE* The President’s Big Shout Out to Shale
According to most geologists, shale has been a natural geological feature of the earth’s outermost crust for about two billion years now, give or take a couple hundred million. But would you believe it? In all that time, the word "shale" had never been mentioned in a State of the Union address...
UPDATE (Jan. 26, 10:26am ET): A document on the White House website (found here) entitled “Blueprint for an America Built to Last” reiterates the President’s support for natural gas development and the hundreds of thousands of jobs it will create. It is indeed telling (and little wonder) that developing natural gas from shale plays so prominently in a plan to create jobs while also reducing environmental impacts.
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According to most geologists, shale has been a natural geological feature of the earth’s outermost crust for about two billion years now, give or take a couple hundred million. But would you believe it? In all that time, the word “shale” had never been mentioned in a State of the Union address delivered by an American president (in fairness, the office of U.S. president hasn’t been around quite that long).
Well, it had to happen eventually. And last night, that two-billion-year-long-no-mention streak finally came to an end, with President Obama devoting a significant segment of his nationally (and internationally) televised address to touting the promise and potential of developing America’s enormous natural gas resources — particularly those in “shale rock” — as the foundation for an energy policy that’s “cleaner, cheaper, and full of new jobs.” From the speech:
“We have a supply of natural gas that can last America nearly 100 years,” the President stated, “And my administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade.” The President went on to say that expanded natural gas development will “create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy.”
But unlike the numerous throwaway lines in all too many political speeches and presidential statements, the president’s words about natural gas were clearly a major component of his address, and news outlets from across the country took notice. Below is a snapshot of what major media had to say about the speech, specifically the president’s endorsement of the responsible development of natural gas from shale:
- Reuters, “Obama backs shale gas drilling”
President Barack Obama on Tuesday pledged support for the U.S. shale gas boom, but said government must focus on safe development of the energy resource.
In his State of the Union address, Obama called for government to develop a roadmap for responsible shale gas production and said his administration would move forward with “common-sense” new rules to make sure drillers protect the public.
“America will develop this resource without putting the health and safety of our citizens at risk,” Obama said.
- UPI, “Obama heralds domestic natural gas”
Obama, in his State of the Union address Tuesday, said natural gas was one of the foundations for U.S. energy security. He said there’s enough natural gas in the country to meet domestic demand for 100 years but companies working to exploit those reserves must do so responsibly.
- Washington Post,”In State of the Union Address, Obama says he will push forward with fracking”
In his State of the Union address Tuesday night, Obama spoke optimistically about the bounty of unconventional natural gas under the eastern United States. “We have a supply of natural gas that can last America nearly 100 years,” Obama said, “and my administration will take every possible action to safely develop this energy.” This is good news, pretty much no matter where you land on the political spectrum.
- Bloomberg, “Obama Pushes Natural-Gas Fracking to Create 600,000 Jobs”
President Barack Obama pushed drilling for gas in shale rock and support for cleaner energy sources to boost the economy in his final State of the Union address before facing U.S. voters in November.
Hydraulic fracturing, the process of injecting water, sand and chemicals underground to free gas trapped in rock, could create more than 600,000 jobs by the end of the decade, Obama said yesterday. The process, called fracking, is among a list of energy policies Obama said would fuel economic growth.
“We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy,” Obama said.
- POLITICO, “Obama steals GOP’s ‘all of the above’ energy slogan”
Obama also highlighted the economic potential from tapping into the nation’s natural gas supplies, citing independent reports showing the industry could support about 600,000 jobs over the next decade…”This country needs an all-out, all-of-the-above strategy that develops every available source of American energy — a strategy that’s cleaner, cheaper and full of new jobs,” Obama said to rousing applause from Republicans in the House chamber.
Cleaner. Cheaper. More affordable. And insanely abundant. At a time when most folks on Capitol Hill today can’t even agree on what they disagree on, responsible development of American energy resources represents that rarest of ideas in Washington that appear to make sense to just about everyone across the political continuum. Heck, even Sen. Bob Casey (D-Pa.), previously (and currently?) a critic of Marcellus development in his state, told reporters after the speech that he “was glad for the focus on natural gas. It’s a big benefit to Pennsylvania. We’ve got a great natural resource with lots of jobs.”
And he wasn’t the only one talking shale last night. Click around below to see what other folks had to say:
Virginia “Gigi” Lazenby, Chairman, Independent Petroleum Association of America (IPAA):
“Our industry, made up of mostly very small- and medium-sized businesses, applauds the president for his stated commitment to expanding the responsible development of job-creating American oil and natural gas. As the president made clear this evening, job creation and the restoration of the American dream is a shared goal that exceeds political boundaries. As the president underscored, our nation continues to increase its domestic oil and gas production, creating thousands of well-paying, private sector jobs, providing much-needed relief and savings for struggling consumers and stimulating an otherwise anemic economy.”
Jack Gerard, President and CEO, American Petroleum Institute:
“The administration has an opportunity to turn energy policy in a direction that could provide huge benefits to our economy. And if the President is sincere in this, our industry will work very hard with him to make it happen.” (NOTE: Gerard also added, “If the President is serious about creating more jobs and more energy, allow America’s oil and natural gas companies to produce more of our energy at home, and we’ll put people to work and deliver more revenue to the government. That’s what the American people want.”)
Statement from America’s Natural Gas Alliance (ANGA):
“Tonight’s speech builds on the White House report earlier this month documenting the broad impact that natural gas production can have on investment and job creation across leading sectors of our economy. A range of U.S. industries and their workers are more competitive today thanks to our nation’s vast, affordable natural gas supplies. Along with these opportunities come lower energy costs for consumers and cleaner air.”
Kathryn Klaber, President, Marcellus Shale Coalition:
“We are encouraged that President Obama recognizes the tremendous energy security, environmental, and economic benefits associated with job-creating American shale gas development fueled overwhelmingly through private investment on privately-owned lands. And while presidents of both parties have made a clarion call for more American energy over the past four decades, it is our genuine hope that President Obama’s remarks tonight are reflected in his Administration’s policies that are rooted in sound science and move forward with an aim of leveraging our nation’s abundant natural gas resources on behalf of consumers, families, and small businesses. American natural gas will continue to make our nation stronger and more secure.”
Dave McCurdy, President and CEO, American Gas Association:
“If there was ever a fuel in the right place at the right time, it is natural gas in 2012 and beyond. We’re glad to see the President acknowledge the many benefits natural gas provides for our energy future, not just in the State of the Union Address but also in his latest jobs report…By continuing to increase the use of natural gas, we can make progress on our national priorities of helping to improve our economy, reduce environmental impacts and secure our nation’s energy future.”
Brad Gill, Executive Director, Independent Oil and Gas Association of New York (IOGA of NY):
“In his State of the Union Address Tuesday, President Obama spoke of the important role domestic oil and natural gas will have in securing the nation’s energy future and economic recovery. Using newer technologies to harvest homegrown energy is a vital component in job creation and commerce by powering businesses and ‘factories that are cleaner and cheaper’… The President’s energy policy acknowledges the 600,000 jobs that natural gas production will help create over the next decade. His messages must be heard and considered in New York as the state moves toward allowing safe natural gas development in the Southern Tier.”
Dan Fitzsimmons, President, Joint Landowners Coalition of New York (JLCNY):
“In tonight’s SOTU address, President Obama affirmed that we don’t have to choose between our economy and the environment in developing shale gas. The president committed the Administration to taking ‘every possible action to safely develop this energy.’ The landowners of NY state stand ready to support this call to action.”
Shale Continues to Drive U.S. Manufacturing Renaissance
By now we all know that the development of American energy resources from shale remains a major economic engine for our country, responsible for hundreds of thousands of jobs across the nation. But another important (and under-told) benefit of the "shale revolution" is its role in resuscitating America's previously declining manufacturing base...
By now we all know that the development of American energy resources from shale remains a major economic engine for our country, responsible for hundreds of thousands of jobs across the nation. But another important (and under-told) benefit of the “shale revolution” is its role in resuscitating America’s previously declining manufacturing base.
Last month, a report from PricewaterhouseCoopers highlighted how affordable, domestic supplies of natural gas will save U.S. manufacturers more than $11 billion per year over the next decade, in addition to creating a million new jobs during that same period. This affordable energy supply is also projected to increase disposable income for each household in the United States by as much as $2,000 per year.
So it should be no surprise, although still worth highlighting, that a new report from the White House shows how domestic manufacturing, after years of stagnation and decline, is finally on the rebound. From that report:
The manufacturing sector has recovered faster than the rest of the economy, supporting growth and job creation. Over the past two years, the economy has added 334,000 manufacturing jobs — the strongest two-year period of manufacturing job growth since the late 1990s. Manufacturing production has surged 5.7% on an annualized basis since its low in June of 2009, the fastest pace of growth of production in a decade.
And what, according to the White House, is driving that recovery?
A boom in natural gas production has supported manufacturing: The surge in domestic natural gas production can lower energy costs, reduce pollution and drive investment in the industries that supply equipment the natural gas sector and those that use natural gas as an input to production, like the chemical industry. Recent data from the Energy Information Administration indicate that by the end of 2011 natural gas extraction increased by over 24% since 2006.
Later in the report, under the heading “America’s Natural Resource Boom,” the White House report describes how expanded natural gas production, particularly from shale, has “led to rapidly growing domestic production and relatively low domestic prices for households and downstream industrial users.”
The Washington Post echoed the good news about America’s energy-led manufacturing rebirth in an editorial that ran yesterday:
The White House briefing paper that accompanied the “insourcing” event attributes much of the rebound in manufacturing to the boom in domestic natural gas production, made possible by new “fracking” technologies. The federal government didn’t do much specifically to promote fracking. Yet the process has dramatically cut the price of gas, a key industrial input, and led to spinoff employment in related industries. The White House notes that more of such development, appropriately regulated, could have “substantial” benefits to the U.S. economy. Even in a polarized Washington, everyone should be able to agree on that.
Candidly, we’re not all that interested in the specific politics of the matter, but it’s worth noting the Post’s observation that the federal government “didn’t do much” to promote developing natural gas from shale — and yet, voila!, here we are. Opponents of shale have for years labored under the delusion that the EPA should be in charge of directly regulating the process of hydraulic fracturing, calling for heavy-handed federal control on the misguided assumption that only such a system will guarantee the broadest possible benefits.
But as this White House report makes clear, shale development and hydraulic fracturing (which has been tightly regulated by the states for decades) is creating jobs and revitalizing one of America’s proudest and most critical industries. And as ANGA points out, the natural gas production at the center of this manufacturing renaissance is being done in a “safe and responsible manner,” thereby removing any need to choose between a strong economy and a clean environment.
With these facts clearly established, the question for critics is: Why should we jeopardize this bright spot in an otherwise troubled economy — facilitated by responsible, state-based rules and regulations — with a one-size-fits-all, Washington-centered regulatory regime?
States Continue Effective Regulation of Shale
It's a tired refrain (and demonstrable fiction) used incessantly by opponents of responsible shale development in their press releases and fundraising pleas: The industry, they claim, is unregulated. But for those of us interested in facts, we know better. And news this week from Colorado and Texas provides yet another example of how states are doing a more than adequate job in regulating the industry: both states' primary regulatory bodies overseeing oil and gas development moved forward with rules requiring disclosure of fluids used during hydraulic fracturing.
It’s a tired refrain (and demonstrable fiction) used incessantly by opponents of responsible shale development in their press releases and fundraising pleas: The industry, they claim, is unregulated. But for those of us interested in facts, we know better. And news this week from Colorado and Texas provides yet another example of how states are doing a more than adequate job in regulating the industry: both states’ primary regulatory bodies overseeing oil and gas development moved forward with rules requiring disclosure of fluids used during hydraulic fracturing.
In Texas, the Railroad Commission (RRC) adopted its rule on December 13th to comply with a law passed earlier this year by the state’s legislature. That rule will require companies to use the FracFocus.org website to disclose chemicals used during hydraulic fracturing. The requirement will apply to all wells permitted by RRC on or after February 1, 2012, the date the rule goes into effect.
Companies across the country have been voluntarily utilizing Frac Focus for chemical disclosure for months, and anyone who visits the site can look up well-specific data. Of course, FracFocus.org has been available since this past spring to anyone with Internet access, a fact lost on professional opponents of development who still choose to believe that hydraulic fracturing fluids are a mystery.
It’s also worth noting that the new RRC rule was praised by a range of interests, from America’s Natural Gas Alliance (ANGA) to the League of Conservation Voters.
A similar story unfolded in Colorado, where the Colorado Oil and Gas Conservation Commission (COGCC) approved its own disclosure requirement for operators in the Centennial State. As in Texas, companies must use FracFocus.org, and both states have provisions to protect proprietary information. The new rule in Colorado was similarly embraced by diverse group of stakeholders, ranging from the Colorado Oil and Gas Association (COGA) to the Environmental Defense Fund.
Texas and Colorado are two of the largest oil and gas producing states in the country (Texas being the largest), and the new rules approved by their respective regulatory bodies demonstrate yet again that state governments — not bureaucrats inside the Environmental Protection Agency — are more than capable of tightly and effectively regulating shale development.
How Are You Going to Spend Your Extra $926?
Maybe it’s a mortgage payment. Or monthly tuition for your kids. For some (no, not me), maybe it’s a new pair of shoes. But whatever you decide to spend it on, thanks to a new study released this week, at least you’ll know now where it came from: natural gas from shale.
That’s right, Christmas shoppers. According to a new paper issued today by IHS CERA — and commissioned by our colleagues at America’s Natural Gas Alliance (ANGA) — that $926 represents the average amount of extra disposable income delivered to every American household each year through 2015 as a result of low natural gas prices, which themselves are made possible by shale. What happens after 2015? The story gets even better, with the average American family finding an extra $2,000 in their pocket each and every year through 2035.
A little extra money around the holidays is certainly a welcome development, but what does this study have to say about the most important issue facing our country today — jobs? Quite a lot, it turns out. According to IHS CERA, the development of energy from shale is singularly responsible for the creation of more than 600,000 jobs across the United States – jobs that happen to pay an eye-popping $23.16 per hour, on average (I wish blog-writing was similarly lucrative). By 2015, this figure is expected to grow to nearly 870,000, surpassing 1.6 million new jobs by 2035. And that’s just associated with the development of resources from shale – no limestone, no sandstone, no marble rye (also known by us geologists as the tastiest of the formations).
As mentioned, a copy of the full report can be found here. With so many facts and figures that themselves are headline-worthy, it’s hard to whittle them all down. But for folks on the go, here’s a quick round-up of the highlights:
- “In 2010, the shale gas industry supported over 600,000 jobs, which included 148,000 direct jobs in the US, nearly 194,000 indirect jobs in supplying industries, and more than 259,000 induced jobs. By 2035, the shale gas industry will support a total of over 1.6 million jobs across the US economy, comprised of more than 360,000 direct jobs, over 547,000 indirect jobs, and over 752,000 induced jobs.” p.1
- “Workers in the oil and natural gas sector are currently paid an average of $28.30 per hour—more than the wages paid in manufacturing, wholesale trade, education and many other industries.” p.21
- Given the relatively high wages paid directly to employees in the shale gas sector and in the various supplier industries that support shale gas, employees have higher-than-average spending, resulting in relatively larger induced income contributions.” p.21
- The relatively higher average “value added” nature of the jobs attributable to the shale gas sector indicates this sector is a potential growth engine of the US economy over the forecast period.” pp.22
- “In 2010, the average direct employee in the shale gas industry contributed $197 thousand in “value added” contributions to the US economy. By 2015, these contributions will increase 20% to $238 thousand per employee – significantly outpacing economy wide growth.”p.22
With jobs and investment comes greater GDP, and increased tax revenues at the local, state, and federal level:
- “{IHS CERA’s} assessment shows that shale gas production makes a significant contribution to the US economy, and will continue to do so for the duration of the 25-year forecast horizon.” p.18
- In 2010, shale gas industry activity contributed $76.9 billion to US GDP. This will increase by 53% to $118.2 billion by 2015 and to $231.1 billion by 2035. These economic contributions are even more significant when viewed against the current backdrop of the current state of the US economy.” p.4
- “ In 2010 shale gas production contributed $18.6 billion in federal, state and local government tax and federal royalty revenues. By 2035, these receipts will more than triple to just over $57 billion. On a cumulative basis, the shale industry will generate more than $933 billion in federal, state, and local tax and royalty revenues over the next 25 years…annual government revenues will increase from nearly $19 billion in 2010 to $37 billion in 2020 and to more than $57 billion by 2035.” p.22
- “Royalty payments to the federal government are estimated at $161 million in 2010, growing to $293 million in 2020 and escalating to $583 million by 2035. Total 2010 tax and royalty revenues of $18.6 billion are roughly the size of federal Pell Grants or the total budget outlays for NASA in 2010. The sum is also about 42% of the size of US Department of Homeland Security’s budget outlays in 2010 and exceeds the annual budget outlays for the EPA and National Science Foundation combined.”p.23
Development is spurring lower gas prices, providing savings for household and industrial consumers across the nation:
- “ The lower natural gas prices achieved with shale gas production will result in an average reduction of 10% in electricity costs nationwide over the forecast period.
- If shale gas had not radically changed the picture beginning in 2007, the US would have to rely on large quantities of LNG imports, and US consumers would be paying over two times more for natural gas. Savings from lower gas prices amount to $926 per year in disposable household income between 2012 and 2015. In 2035, these savings would increase to nearly $2,000 per household.”p.37
- “These lower prices are currently providing a short-term boost to disposable income, profits (except for gas producers), GDP and employment—a positive force during this period of economic stagnation and uncertainty.”p.24
- The opportunity to take advantage of these potential benefits would never have existed without the exploitation of shale gas plays. The chemical industry is looking forward to increased investment and employment in the United States, the aluminum industry has a new source of support for domestic production, and the general competiveness and profitability of domestic cement and steel production is higher.”p.35
- “Over the short term, the impact of lower gas prices results in peaks for various economic benchmarks: a 1.1% increase in GDP in 2013; 1 million more employed Americans in 2014; and 3.0% higher industrial production in 2017. In 2015, 809,000 more Americans will be employed because of low gas prices.”p.26
- “The short-term impact (over two to five years) is lower inflation, higher disposable incomes (for all consumers), higher GDP, higher employment and lower unemployment than in the constrained shale gas scenario. The economic recovery will be stronger and come sooner than if gas prices were at the higher levels associated with the constrained shale gas scenario.”p.26
- “Over the short term, the impact of lower gas prices results in peaks for various economic benchmarks: a 1.1% increase in GDP in 2013; 1 million more employed Americans in 2014; and 3.0% higher industrial production in 2017. In 2015, 809,000 more Americans will be employed because of low gas prices.”p.26
- “The short-term impact (over two to five years) is lower inflation, higher disposable incomes (for all consumers), higher GDP, higher employment and lower unemployment than in the constrained shale gas scenario. The economic recovery will be stronger and come sooner than if gas prices were at the higher levelsassociated with the constrained shale gas scenario.”p.26
- UPDATE (12/7/11): Lots of great pieces in the press today highlighting key findings of this week’s IHS/ANGA report on shale – including a great write-up by Andy Maykuth in the Philadelphia Inquirer. Click here to give it a look.
