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NGLs Key to America’s Energy Resurgence
A recent report from the Brookings Institution describes natural gas liquids (NGLs) as a “critical component of the industrial sector’s ability to take advantage of the U.S. hydrocarbon resurgence.” After all, these NGLs – such as ethane, butane, and propane – are important feedstocks used by America’s manufacturing industry, used to make everything from shampoo to textiles.

juliabell

Julia
Researcher

 

A recent report from the Brookings Institution describes natural gas liquids (NGLs) as a “critical component of the industrial sector’s ability to take advantage of the U.S. hydrocarbon resurgence.” After all, these NGLs – such as ethane, butane, and propane – are important feedstocks used by America’s manufacturing industry, used to make everything from shampoo to textiles.

According to the report:

“If the United States is to realize the full potential in its resurgence as a major hydrocarbon producer, NGLs will play a major role. NGLs production will have a direct impact on the competitiveness of U.S. manufacturers and petrochemical producers and play a significant role in any scenario of domestic self-sufficiency in hydrocarbon liquids.” (p.  12)

The good news is that the U.S. supply of NGLs is both abundant and widespread. Held in shale plays across the United States, NGLs make up a significant portion of U.S. energy production, and are increasingly being sourced from anywhere shale development is occurring. According to the Energy Information Administration (EIA), total domestic NGL production has increased by nearly a million barrels per day (mmbd) in less than a decade — from 1.7 mmbd in 2005 to nearly 2.5 mmbd in October 2012. In fact, America’s NGL supply now accounts for around 20 percent of the entire global NGL market (p.4). The following chart appears in the Brookings report:

The benefits of this affordable and American supply are already being realized, too. A 2012 report from Pricewaterhouse Coopers highlighted the significant advantages that increased domestic NGLs provides for America’s manufacturing base, most notably chemicals, which are used in an estimated 90 percent of all manufactured products.

As the supply continues to expand, companies around the world are increasingly choosing to relocate their facilities in the United States, where this abundant NGL supply is matched with affordable natural gas power generation. German chemical company BASF has invested more than $5.7 billion in North America over the last four years, and Phillips 66 — a newly formed spin off of ConocoPhillips — just announced plans to build a new fractionator south of Houston to take advantage of this newfound liquid production. According to E&E News (sub req’d):

“Petroleum output from the Eagle Ford, the Permian Basin, and other shale and tight oil and gas formations located near the Gulf Coast is expected to continue at high levels for decades, prompting companies to locate new petrochemical manufacturing capabilities to the region to take advantage of cheap and abundant feedstock…

“‘We see excellent market-facing opportunities to grow the natural gas liquids business, and the chance to supply purity NGLs and liquefied petroleum gas to the petrochemical industry and heating markets,’ said [Phillips 66] CEO Greg Garland in an email.”

Certainly exciting news for American manufacturers and consumers alike.

Yet, as Brookings warns, the need to keep up demand will be critical to this continued excitement. Just as infrastructure has been delayed for dry natural gas in the Northeast, pipeline and infrastructure delays (due in no small part to government bureaucracy and NIMBY activism) are limiting access to NGLs in the market. Increased pipeline capacity in the Marcellus and Utica regions, according to the study, will be key to continued development.

Of course, Brookings explains another key factor for continued growth:

“Exporting NGLs provide producers an incentive to maintain production of both NGLs and, in turn, dry natural gas. Further, many investors see exports as a critical component to smoothing the price volatility that characterizes the NGL market. more important than the current surge in investments in U.S. manufacturing is the assurance of a predictable supply of NGLs something provided by increase NGL export.” (p.14)

By providing infrastructure for both domestic projects and international exports, the United States will ensure the continued development of this important resource, while also continuing to grow the American economy.

Shale Drives Manufacturing Back to the U.S.
The Washington Post recently highlighted a growing trend that holds great economic promise for the United States. Specifically, the Post noted that European industry is moving to the United States to take advantage of lower energy costs, specifically clean-burning natural gas. Of course, this is just the latest in a series of economic good news attributable to the nation’s growth in oil and natural gas development from shale resources. Little wonder, then, why major U.S. investment banks are declaring that “energy is beginning to carry America.”

johnkrohn

JD
Communications Director

The Washington Post recently highlighted a growing trend that holds great economic promise for the United States.  Specifically, the Post noted that European industry is moving to the United States to take advantage of lower energy costs, specifically clean-burning natural gas. Of course, this is just the latest in a series of economic good news attributable to the nation’s growth in oil and natural gas development from shale resources. Little wonder, then, why major U.S. investment banks are declaring that “energy is beginning to carry America.”

To exemplify the exodus by European manufacturers, the Post highlighted German chemical company BASF, which has invested more than $5.7 billion in North America over the last four years.  According to company representatives, the reason behind this significant investment is pretty straight-forward:

“It’s become clear, with the drop in gas and electricity prices in the United States, that we are, at the moment, at a significant disadvantage with our competitors,”

“It’s a very slow process, but it’s a continuous one,” said Harald Schwager, the head of BASF’s European operations, referring to the manufacturing outflow. “Once a customer of ours decides to build a new factory in the U.S., then this customer will request from us to be close by with our production. And so, over time, you see a self-accelerating process, which will move production into the U.S.”

The reason more companies are placing manufacturing facilities in the United States – after a decade’s worth of decline for the industry – is also fairly simple. Affordable natural gas supplies, made possible through the responsible development of shale. This not only translates into lower feedstock costs for manufacturers like BASF, but it’s also caused wholesale electricity prices in the United States to drop by more than 50 percent since 2008.

For these reasons, BASF’s investments are noteworthy — but they are by no means unique. In fact, Austrian steelmaker Voestalpine recently came to a similar decision when its senior leadership decided to locate a new steel plant in Texas, a decision the company reached after examining 17 sites in eight different countries.  In explaining his company’s decision, Dr. Wolfgang Eder noted:

 ”In the USA, re-industrialization is being promoted very consistently, ambitiously and with great conviction,” Eder told Reuters. “Low energy prices gave us the final – and not insignificant – push.”

Of course, these are just a few examples of a much larger trend that’s being witnessed in communities across the United States. The French oil and gas pipeline company Vallourec has opened multiple steel plants in Youngstown, Ohio, providing over $700 million in economic activity for this once struggling Rust Belt city.  At the same time, in Louisiana, the South African based company Sasol is building the nation’s first commercial plant to convert natural gas to liquid fuels, thanks to the United States’ newfound abundance of affordable natural gas. This project, which has been billed as the largest manufacturing investment in Louisiana’s history, is expected to provide nearly $14 billion in economic activity and 7,000 well-paying construction jobs.

All of this activity, and more, has led outlets like NPR to run headlines like: “Cheap Natural Gas Pumping New Life into U.S. Factories.”  While it would be easy to dismiss such a headline as anecdotal, recent experience and statements by U.S. executives and federal officials show it is indeed true – and perhaps even an understatement.

Drew Greenbelt, owner of Baltimore based Marlin Steel Wire Products, recently noted his company’s orders are rising because his customers are receiving a widening discount in the price of natural gas and electricity. Specifically, he noted the savings are “making U.S. companies that used to be at a price disadvantage now uniquely positioned to win contracts they never won in the past — or haven’t for a while.” He added: “Everyone talks about what’s going on in North Dakota, but it’s filtering down now to conventional factories throughout America.”

Last year John Surma, chairman of U.S. Steel, observed the following: “It has become clear to me that the responsible development of our nation’s extensive recoverable oil and natural gas resources has the potential to be the once-in-a-lifetime economic engine that coal was nearly 200 years ago.”

The aggregate benefits of these investments to the overall U.S. economy were recognized last year by former Treasury Secretary Timothy Geithner, who told NBC News: “The economy now is actually looking quite resilient,” before adding that two of the biggest reasons for that development are gains in domestic oil and gas production and domestic manufacturing. “If you look at what’s happening in energy, enormous boom,” Geithner said. “In manufacturing, [the country is having] one of the strongest periods in manufacturing revival that we’ve seen in almost a generation.”

All of this supports a report issued more than a year ago by the global consulting firm PricewaterhouseCoopers. That study, titled “Shale Gas: a Renaissance in U.S. Manufacturing?” predicted that shale development would save U.S. manufacturers nearly 12 billion dollars per year in energy costs. When combined with increased demand for manufacturing products due to oil and gas development, the result of the U.S. energy boom would be an additional one million U.S. manufacturing jobs by 2025.  It’s worth noting this activity is all in addition to the $545 billion in economic activity supported by America’s oil and natural gas industry just last year.

As the discussion about U.S. energy policy and shale development continues, we should remember: Just four years after the onset of one of the deepest recessions in U.S. history, shale development is providing millions of jobs, billions of dollars in new investment, and is breathing new life into a vital sector of our economy. Oh, and did we mention it’s giving us cleaner air, too?

*UPDATE III* Shale Fueling America’s Chemical Industry
Back in December 2011, PricewaterhouseCoopers (PwC) released a report on the major impact shale development was having on American manufacturing. The report, “Shale Gas: A Renaissance in US Manufacturing?” highlighted how affordable, domestic supplies of natural gas will save U.S. manufacturers more than $11 billion per year over the next decade, create one million new jobs during that same period, and increase disposable income for each household in the United States by as much as $2,000 per year. Now, nearly a year later, PwC has released a new report, “Shale gas: Reshaping the US chemicals industry,” focused on the direct impact of shale development on North America’s chemical industry.

Dana
Staff Geologist

 

UPDATE III (11:25 am ET, 2/1/13):  This week, Methanex Corp. announced it would be moving a methanol plant from Chile to Louisiana to take advantage of America’s abundant supply of affordable natural gas.  As the Globe and Mail reports:

“Methanex, which has plants in six countries, is one of a growing number of petrochemical companies locating manufacturing facilities in North America to take advantage of the booming supplies and low cost of natural gas.”

The company’s CEO, John Floren, also stated he expects to move a second Chilean plant to Louisiana in the coming years, which would of course mean even more U.S. jobs.

As forecasts by PricewaterhouseCoopers (PWC) find North America transforming into a “major, global, low-cost provider of energy and feedstocks,” today’s news from Methanex reconfirms the facts: Natural gas development from shale in the United States is a globally competitive force, and it’s putting American manufacturing back on top.

UPDATE II (5:07 pm ET, 12/13/2012): This week, the American Chemistry Council (ACC) released its “Year End 2012 Situation and Outlook,” highlighting a bright union in America’s economy: the chemical industry and natural gas. American Chemistry Council’s (ACC) chief economist Kevin Swift sums it up: “Following a decade of high and volatile natural gas prices that destroyed industrial demand and led to the closure of many gas-intensive manufacturers, shale gas offers a new era of American competitiveness that will lead to greater investment, industry growth, and employment.” And the evidence is already right in front of our eyes.   Dow Chemical Co.—a leader in America’s chemical industry—applied for a federal permit this week to build its largest ethylene plant in Freeport, Texas. (And as you can see here, ethylene is used in everything from shampoo to the tires on your car.) And according to Plastics and Rubber Weekly,  “chemical and related industries have announced $45bn in projects over the next few years.” Not bad for American business—and all thanks to inexpensive, job-creating, domestic natural gas.

UPDATE (5:39 pm ET, 11/15/2012): More good news for American manufacturing, thanks to shale.  From chemical plants relocating back to the United States, bringing jobs and opportunities along with them, to new major plant openings and expansions, natural gas development is revamping and expanding the American supply chain.  As a recent story by Steven Mufson at the Washington Post highlights, domestic shale development is “firing up an old-fashioned American industrial revival, breathing life into businesses such as petrochemicals and glass, steel and toys.”  The Post notes that manufacturers are planning “to invest as much as $80 billion” in new U.S. facilities and operations, which is due to the “massive competitive advantage the United States has with natural gas today,” according to Dow Chemical’s George Blitz. U.S. Steel – long a source of pride among hardworking men and women in the Rust Belt – added that affordable natural gas has allowed them “to realize important and significant cost savings.”

This one should really be read from start to finish, so be sure to check it out.

 —Original post, October 15, 2012—

This one should really be read from start to finish, so be sure to check it out.

Back in December 2011, PricewaterhouseCoopers (PwC) released a report on the major impact shale development was having on American manufacturing. The report, “Shale Gas: A Renaissance in US Manufacturing?” highlighted how affordable, domestic supplies of natural gas will save U.S. manufacturers more than $11 billion per year over the next decade, create one million new jobs during that same period, and increase disposable income for each household in the United States by as much as $2,000 per year. Now, nearly a year later, PwC has released a new report, “Shale gas: Reshaping the US chemicals industry,” focused on the direct impact of shale development on North America’s chemical industry.

In addition to the natural gas that heats our homes and generates electricity, development often also yields valuable liquids such as ethane, butane, and propane. These “NGLs” (natural gas liquids) are used to make things like shampoo, the bumper on your car, and the sole of your shoe. So as natural gas production expands – thanks in no small part to proven technologies like hydraulic fracturing and horizontal drilling – NGL production also increases, spurring new growth in American manufacturing.

As PwC U.S. Chemicals leader Anthony J. Scamuffa highlights:

“As the U.S. chemical industry expands NGL conversion into a higher volume of downstream products, the positive impacts could flow through the value chain into other manufacturing sectors, particularly given that chemicals are used in an estimated 90 percent of all manufactured products.

“…Not only could the abundance of NGLs help drive reduced pricing for derivative products, it could also potentially drive domestic re-shoring activity and possibly bring about a favorable shift in the U.S. balance of trade as ethylene capacity comes on line.”

And the impact of this increased supply is being felt across the United States. Hector Rivera, president and CEO of the Texas Chemical Council, noted recently in the Houston Chronicle, “Low natural gas prices related to the shale gas boom have spurred an estimated $15 billion in planned expansions at Texas chemical companies.”

In Pennsylvania, Shell announced in April that it would be constructing a mulit-million dollar ethane cracker near Monaca, PA, a project that is estimated to create more than 10,000 permanent jobs, according to the American Chemistry Council.  And according to PwC, these types of investments are just the beginning.

To date, the U.S. chemicals industry has invested $15 billion based on the shale industry’s production of ethylene, increasing capacity by 33 percent. The result: affordable feedstock for America’s robust chemical and manufacturing sector and fuel for America’s economy.  And while ethane production has been historically fueled by the Middle East, North American shale development is redefining the supply-demand dynamic, putting America back in the lead. As PwC further explains:

“The Middle East ethane production chain is predominantly centered in Saudi Arabia, which has leveraged its historically low-cost raw material sources to become a global petrochemicals powerhouse. However, its newer ethylene production facilities rely on an ethane-butane mix, which yields higher-priced ethylene and other feedstock chemicals. These factors are serving to reduce the country’s historic competitive advantage.”

It’s clear that the economic and even geopolitical benefits of shale are being realized every day. In fact, a new report released Friday by a team of Yale University economic graduates shows that lower natural gas prices — a result of expanded shale development — saved consumers an estimated $100 billion in 2011. Amazingly, the report also found the economic benefits of shale gas drilling exceed the costs by an astounding 400 to 1.

Pretty convincing odds, and yet another reminder that shale development truly is a game changer for the United States.

CRS Report: Shale Benefits the Economy and the Environment
A new report from the Congressional Research Service (CRS) examines the numerous avenues for economic growth resulting from American natural gas development, especially from shale. Thanks to a combination of factors – large resource base, affordability, environmental benefits, and manufacturing demand – natural gas is at the center of an economy built for the future.

Dana
Staff Geologist

 

A new report from the Congressional Research Service (CRS) examines the numerous avenues for economic growth resulting from American natural gas development, especially from shale. Thanks to a combination of factors – large resource base, affordability, environmental benefits, and manufacturing demand – natural gas is at the center of an economy built for the future. Strong yet fair regulation must also continue to play a role, but the CRS report makes clear that the economic benefits of shale are indeed very real.

For some quick background: the Congressional Research Service is a widely respected organization that provides policy analysis to the U.S. Congress. As a non-partisan entity that is housed within the Library of Congress, CRS is treated as an authoritative source by Democrats, Republicans, and independents, a reputation that the organization has enjoyed for nearly 100 years. You can learn more about CRS by clicking here.

Getting back to the CRS study, those who read the EID blog regularly won’t be surprised by its findings. We’ve cataloged the numerous studies and reports highlighting how responsible natural gas development from shale has helped revive America’s manufacturing base, created millions of jobs, and boosted local economies across the country.

So, what does the CRS have to say?

Benefit 1 – The United States has abundant supplies of natural gas, likely more than we think:

The term reserves has a specific industry definition that includes a technological component, an economic factor, and a probability of success among other criteria. To more fully understand the changes to the U.S. natural gas sector it is more appropriate to look at reserves and estimates for undiscovered, technically recoverable resources (UTRR) (see Figure 2). UTRR is an estimate of what can be extracted using current technology regardless of price. Using UTRR plus reserves, the United States has a natural gas resource base of 1,809 tcf or enough gas for approximately 79 years of production at 2011 levels. Compared with data from 2006, U.S. UTRR for natural gas has jumped almost 25%. Even this measure may not accurately reflect what will be extracted from the ground as technology is constantly changing. Just over the last few years, industry has been able to improve its shale gas extraction rate from about 5% to about 15%, thereby tripling what is recoverable. (p. 2-3, emphasis added)

In other words, when you hear people talk about how much energy we have in proven reserves – especially the misleading statistic that we only have “two percent of the world’s oil” – now you know that they’re actually understating U.S. energy capacity.

Benefit 2 – Consumers enjoying lower energy prices:

U.S. shale gas was beginning to come to market in 2007/2008 and by 2010/2011 it changed the trajectory of U.S. natural gas prices from those of the rest of the world. In 2011, the rest of world faced higher prices than in 2010 for natural gas, but the United States saw its natural gas price decline by 9%. U.S. natural gas prices have continued to trend lower ever since, and many analysts forecast U.S. natural gas prices to remain relatively low at least through the end of this decade and possibly for longer. (p. 6, emphasis added)

What does this mean, more specifically? CRS explains:

Expanded supply, coupled with low natural gas prices, has the potential to contribute to a transformation of important sectors of the U.S. economy. Increased output and employment, expanded investment, income growth, improved competitiveness, and a reduction in the foreign trade deficit are likely outcomes. These conditions in the natural gas markets are likely to benefit certain key industries directly, while many other industries could experience indirect benefits. (p. 13, emphasis added)

Benefit 3 – A cleaner environment:

An apparent consequence of the shift to more natural gas-fired electric power generation in the first quarter of 2012 has been a decrease of U.S. carbon dioxide emissions by almost 8% to their lowest levels since 1992. (p. 12, emphasis added)

Hear that, Sierra Club and Food & Water Watch? The United States is reducing CO2 emissions thanks to expanded and responsible development of our abundant natural gas supplies.

Benefit 4 – Increased U.S. competitiveness, including expanded domestic manufacturing:

In the international economy, those U.S. industries directly affected by expanded supply and low natural gas prices are likely to experience a competitive advantage over the producers of similar goods in other countries, resulting in increased exports from, and decreased imports to the United States. These effects would likely improve the U.S. trade deficit position. (p. 14, emphasis added)

In 2012, a number of chemical companies announced plans to invest in new plant capacity, expand existing facilities, or re-open plants near shale gas supplies. In April 2012, Dow Chemical announced $4 billion in expansions and new investment in Texas. Shell Chemical announced plans for an ethane cracking unit costing between $2 billion and $4 billion, to be constructed in Pennsylvania near Marcellus Shale natural gas supplies. Chevron announced plans for a $1 billion investment at its Baytown facility in Texas. In addition, Phillips Chemical, Westlake Chemical, and others announced investment plans related to low-cost shale gas availability. (p. 16, emphasis added)

For some additional context on the benefits to American manufacturers, here’s what the American Chemistry Council says about abundant natural gas supplies from shale:

Chemical manufacturers have already announced 50 new chemical projects to take advantage of new supplies of natural gas and expand their production. A recent ACC study found that the expected increase in natural gas production is not just revitalizing the chemical industry but could create 1.2 million new jobs across a broad sector of America’s manufacturing base.

Benefit 5 – Lower costs for America’s farmers:

Natural gas is the primary raw material in nitrogen-based fertilizer production. From 70% to 90% of the estimated cost of producing nitrogen-based fertilizers is related to the cost of natural gas. In the 2000s, when natural gas prices for industrial consumers more than doubled, closure of ammonia plants, which supply the raw material for fertilizers, followed suit, rising from 13 in 2002 to 26 in 2007. While some of this capacity moved overseas, some was permanently closed. It would take time and investment to reinstate U.S. capacity. If U.S. fertilizer production could recover and pass on lower costs to farmers, this could lower the cost of food and ethanol for use in transportation, and have employment benefits in the fertilizer industry as well as those industries whose costs had decreased. (p. 17, emphasis added)

CRS adds that “there are many other industries that stand to benefit that have not been addressed in this report.” Indeed, as we see in communities across the country, local businesses on Main Street have been given a boost through increased economic activity, from restaurants to hardware stores and everything in between.

A growing economy, more jobs, and a cleaner environment – all made possible by the responsible development of American energy. Opponents of oil and natural gas have done a masterful job pretending these benefits don’t exist, but at the end of the day, the facts speak for themselves.

Shale Putting America Back In Motion
At the end of 2011, IHS CERA released a report on the enormous benefits being created by natural gas development across the United States. This past summer, a second installment of the IHS CERA study found that, by 2015, responsible natural gas production from shale and other “tight” reservoirs will create an astounding 1.5 million jobs. Now, just months later, IHS has released its latest report – a comprehensive and exciting compilation of America’s energy awakening, undoubtedly thanks to shale.

Dana
Staff Geologist

 

At the end of 2011, IHS CERA released a report on the enormous benefits being created by natural gas development across the United States. This past summer, a second installment of the IHS CERA study found that, by 2015, responsible natural gas production from shale and other “tight” reservoirs will create an astounding 1.5 million jobs. Now, just months later, IHS has released its latest report – a comprehensive and exciting compilation of America’s energy awakening, undoubtedly thanks to shale.

As the report lays out, production of these reserves via hydraulic fracturing and horizontal drilling is generating significant economic growth – and will continue to do so well into the future. According to IHS, continued oil and gas development from shale will lead to:

That’s unquestionably good news for a nation looking to jumpstart its economy and free itself from foreign energy dependence. And with nearly 1 in 10 new U.S. jobs created by oil and natural gas development, it’s not surprising the outlook is shining bright.

In fact, the development of American shale is already providing a major boost to American manufacturing. As the Wall Street Journal reported today, America’s once abandoned rust belt is now coming back to life thanks to affordable, clean-burning natural gas. From the Journal:

“‘I never would have expected that as a region we’d have a second chance to be a real leader in American manufacturing,’ Bill Flanagan of the Allegheny Conference on Community Development, a regional business group, told a crowd of locals who came to hear about the chemical plant. ‘Suddenly we’re back in the game.’

“…’The U.S. is now going to be the low-cost industrialized country for energy,’ the energy economist Philip Verleger says. ‘This creates a base for stronger economic growth in the United States than the rest of the industrialized world.’

And as Daniel Yergin, IHS Vice Chairman and a leading global authority on energy, also described it in the Wall Street Journal, shale development holds a “tantalizing prospect that the U.S. could regain market share among the world’s manufacturing exporters”, a statement confirmed time and again across the nation and in recent reports by PricewaterhouseCoopers.

Yet atop these outstanding economic impacts (as described in local, regional, and national news), the broader socio- and geopolitical impacts of America’s ability to generate its own energy  cannot be overlooked.  Reducing our trade deficit and decreasing our reliance on foreign, often insecure sources of energy have wide reaching benefits for our national security and economy alike.

From Dr. Yergin:

“Shale gas alone is now 10% of the overall U.S. energy supply. And similar technologies to recover so-called tight oil trapped in rock formations are largely responsible for boosting U.S. oil production by 25% since 2008—the highest growth in oil output of any country in the world over that time period.

“…the energy revolution is having other effects that get less attention. The balance of payments is one. The increase in domestic oil production over the past five years will reduce our oil-import bill this year by about $75 billion. The growth of shale gas will save the U.S. from spending $100 billion a year on imported LNG, which was the likely prospect five years ago.

“There is also a geopolitical dimension. The increase in U.S. oil production since 2008 is equivalent to almost 80% of what was Iran’s export level before the imposition of sanctions on the Tehran regime. Without the additional oil coming from the surge in U.S. oil output, the Iranian oil sanctions could not have worked as well as they have.

“…The rapid growth of oil and natural gas production represents a major opportunity for the U.S. Without these energy resources, the disappointing economic picture would look worse, and so would the jobs numbers. Instead, the energy revolution is helping revitalize the economy and make the U.S. more competitive in the global marketplace.”

From the creation of millions of jobs to the strengthening of our national security, the development of America’s shale reserves is proof-perfect that American ingenuity and technology can truly put America back in drive.

 

Shale’s Latest Beneficiary? Hydrogen Fuel Cells
We've heard a lot about what the development of natural gas from shale is doing for the American economy: hundreds of thousands of jobs, lower prices for consumers, and a rebirth of domestic manufacturing. But now experts say shale will also facilitate the creation of a cutting edge technology: hydrogen fuel cells.

We’ve heard a lot about what the development of natural gas from shale is doing for the American economy: hundreds of thousands of jobs, lower prices for consumers, and a rebirth of domestic manufacturing.

But now experts believe that the abundant natural gas supplies in the United States will facilitate the creation of a technology that even Energy Secretary Steven Chu – winner of the Nobel Prize in Physics for 1997 – had once believed was “unlikely” to be developed: hydrogen fuel cells.

How is that, though? The U.S. Department of Energy estimates that 95 percent of hydrogen produced in the United States comes from natural gas. Just a few years ago – when the United States was considered to be on the cusp of a severe natural gas shortage – there was little reason to believe that hydrogen fuel cells would ever be economically viable. As late as 2009, Secretary Chu was arguing that the technology faced severe cost limitations, noting specifically the need to process hydrogen from natural gas.

But as they say: that was then, this is now.

Thanks to advances in (and the increased application of) proven technologies like hydraulic fracturing and horizontal drilling, natural gas development in the United States has grown substantially in recent years to record highs. This increased supply has lowered the price of natural gas, which naturally benefits consumers as well as manufacturers who use gas as a major source of energy or primary feedstock.

Which is why the U.S. Department of Energy now believes fuel cells are worth a second look. As Energy Department spokesman Bill Gibbons said:

“The development of America’s tremendous shale gas resources is also helping to reduce the costs of producing hydrogen and operating hydrogen fuel cells…The cost of hydrogen production alone can be cut in half based on earlier projections.”

A representative from Honda North America – which will begin commercial production of fuel cell cars in just a few years – has cited Secretary Chu’s “evolution” on the issue, adding that the Secretary now “appreciates to a greater extent” the possibilities of widespread fuel cell adoption.

Just one more example of how natural gas development – particularly from shale – is benefiting the American economy through increased innovation and technological advancement.

Shale Boosts U.S. Economy from Coast to Coast
We all know that responsible oil and natural gas production has been an economic boon to regions across the country, and as the Wall Street Journal highlights this week, the economic growth emanating from developing natural gas from shale is not limited solely to those areas lucky enough to have the formations underneath them.

We all know that responsible oil and natural gas production has been an economic boon to regions across the country, from communities throughout Pennsylvania benefiting from Marcellus Shale development to the rapidly expanding housing business in south Texas. And, of course, North Dakota boasts the lowest unemployment rate in the country, thanks in large part to the development of the Bakken Shale.

But the story doesn’t end there. Indeed, as the Wall Street Journal highlights this week, the economic growth emanating from developing natural gas from shale is not limited solely to those areas lucky enough to have the formations underneath them:

The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho. Truck drivers from pretty much anywhere can find work related to the surging energy business. Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin. Manufacturing plants are returning to the U.S. to take advantage of cheap natural gas, spurring major investments in petrochemical and steel production in the Gulf Coast and Midwest.

Landowners in huge swaths of the country where shale is found are raking in money for leasing their mineral rights. Consumers throughout the U.S. are paying lower bills for heating and electricity because of cheap natural gas. Even the U.S. balance of payments with other countries is improving because of the new energy economy.

“This is probably the biggest stimulus we have going,” says Michael Lynch, president of Strategic Energy & Economic Research, a consultant based in Amherst, Mass. Some $145 billion will be spent drilling and completing U.S. wells this year, up from $13 billion in 2000, estimates Spears & Associates Inc., an oil-field market research firm.

[...]

The growth in energy exploration and production is due to the widespread use of horizontal drilling and hydraulic fracturing, or fracking. Horizontal drilling allows energy companies to extract gas and oil up to a mile away from the actual well. Meanwhile, fracking—which involves pumping millions of gallons of water, sand and chemicals to break open dense rocks and release hydrocarbons—has enabled the industry to tap into energy-rich shale formations once overlooked by petroleum geologists.

In Nancy County, Nebraska — a largely agricultural county west of Omaha — demand has picked up so much for the area’s sand deposits that a local company has expanded its workforce by nearly ten-fold. As a member of the county board of supervisors described the situation, “This deal here is like winning the lottery.” Similarly, in western Wisconsin, the number of sand mines has increased substantially, creating over 1,000 jobs in just the past four months.

Of course, as the Journal also highlights, areas that have a long history of oil and natural gas development are also reaping significant benefits. (Houston became the first major metropolitan area to regain all of the jobs it lost during the recession, thanks to increased exploration for oil and natural gas in shale.) But these benefits extend beyond job creation and (enormous) economic growth:

Beyond simply adding jobs, communities from Pennsylvania and Ohio to Colorado and Texas that are home to this energy boom are experiencing a new emotion: optimism. Jeff Dahl, chief executive of MTR Gaming Group Inc., which operates a casino and resort in Wheeling, W.Va., says he is seeing consumer confidence rising as landowners get leasing bonuses of thousands of dollars and companies compete for workers.

“People are beginning to believe this is a game changer for the region,” says Mr. Dahl. The result is more spending on dining out and entertainment.

It’s little wonder, then, why investment in shale grew by 55 percent last year, not to mention why President Obama has taken notice of shale in a big way.

Of course, this economic revival is also paving the way to increased energy security, as domestic output of oil and natural gas reach new highs and reliance on OPEC becomes less necessary. Turns out we’re producing so much that energy prices are falling, which means consumers pay less for utility bills and manufacturers can invest more in the United States … all of which, in turn, means more capital to invest in U.S. businesses and the ability to create even more U.S. jobs.

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?

The Things We Make, Make Us

It is by now an impossible-to-deny fact that the responsible development of American energy resources from shale is an extraordinary generator of U.S. jobs, a reality confirmed once again last week in a report that pegged the current number of jobs tied to shale exploration at more than 600,000.

To their credit, even opponents of development are starting to acknowledge shale as a job creator, though they usually try to explain it away by suggesting that the only new jobs being created are ones in the hotel, restaurant and general services industries. Of course, they’re too polite (or craven) to put it in these terms, but the implication is clear: To them, those jobs aren’t “real.” And perhaps we’re even being a bit too polite in characterizing their views in that way.

Needless to say, we don’t happen to view the issue the same way they do. The way we see it, those jobs are real — and they’re making a difference in local communities at a time when it’s needed most. But the same way we reject the notion that hotel and restaurant jobs are second-class jobs, we also know that lots of other jobs, in lots of other industries, are being created as well. This week, a report authored by PricewaterhouseCoopers provides additional facts, figures and data in support of that contention — and if you haven’t seen it yet, it’s definitely worth a read.

The study, organized with input and assistance from the National Association of Manufacturers, took a long, hard look at how the development of the nation’s shale resources relates to American economic growth through 2025. What they found was impressive, and serves as a very important reminder of the very important opportunities that responsible development can make and is making possible.

The study found shale gas development has the potential to revive our economy by increasing energy affordability, resulting in significant cost savings for businesses while also stimulating  significant demand growth for manufacturing — potentially creating more than one million new jobs through 2025.  With the United States suffering from an 8.6 percent unemployment rate, the creation of a million new jobs would be welcome relief.

The study also highlights the fact that developing our nation’s shale resources will continue to provide an abundance of supply that keeps prices low for consumers. These low prices also help manufacturers, who rely heavily on a stable supply of affordable energy (and feedstock material) in order to compete with folks all around the world. According to the study, the lower feedstock and energy costs would save U.S. manufacturers a staggering $11.6 billion per year. This is money that can instead be invested in new facilities and, most importantly, new jobs.

Of course, these are only the long-term benefits.  The study also examined short-term impacts that are already being realized throughout the nation.  Specifically, the study mentions:

These are only a handful of examples. Other examples abound in communities where shale development is currently taking place. Ohio, as referenced above, is currently experiencing a resurgence in its steel industry, the likes of which has not been seen in decades, returning once idle plants and mills to bustling centers of commerce and employment.

The study comes in the wake of (and, in effect, confirms) a report from earlier this year by the American Chemistry Council (ACC), which examined the benefits accruing to the petrochemical industry as a result of shale development. ACC found that the development of natural gas could create 400,00 new jobs, generate $132.4 billion in new U.S. economic growth, and generate $43.9 billion in tax revenues for state, federal and local governments.

Reviewing recent experience and forward looking independent economic studies such as these reveals a clear trend:  The safe and responsible development of the nation’s shale resources is not only providing new life to the manufacturing sector, but is also providing hope and much-needed jobs to American workers, along with spurring significant economic growth in communities throughout the country. And for an economy that continues to struggle, the bright spot of oil and gas development is shining clearer than ever before.

NPR: Shale Development a Huge Boon to U.S. Manufacturing

Today, National Public Radio’s Morning Edition highlighted the remarkable impact that responsible shale development is having on American manufacturing, filing a short piece focusing on Marcellus development in Pennsylvania. The program highlighted how hydraulic fracturing is stimulating significant job growth for the manufacturing sector due to affordable and stable supplies of clean-burning natural gas — which is helping to create thousands of jobs during these challenging economic times. Here are several key excerpts from the story:

Energy production is stimulating growth along the supply chain. You can’t drill without steel; you can’t weld without workers. Whether an oil and gas producing state or not, domestic energy production is creating jobs in a wide array of manufacturing sectors.

And the American people are catching on! A poll released today by the American Consumer Institute Center for Citizen Research (ACI) noted that 80% of Americans support increased energy development to create jobs. Natural gas is no exception.

With the American economy currently on the ropes, natural gas development continues to be a light at the end of the tunnel (or well hole) for thousands of Americans trying to provide for themselves and their families. American innovation created hydraulic fracturing; American determination has enabled it to prosper and will continue to provide for our growing, energy-consuming nation.

Before increasing our reliance on foreign fuels and “our so-called friends in the Middle East” (CBS-21’s RJ Harris, 10/10/11), let’s look to the great domestic energy potential—right beneath our feet.