Appalachian Basin

The Things We Make, Make Us

**Cross posted on all EID platforms**

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:

  • Dow Chemical plans to build a new ethylene unit on the Gulf Coast by 2017; will restart another dormant unit in 2012 and will construct a new propykene unit in Texas by 2015. Feedstock for all will include supply contracts from the Marcellus and Eagle Ford Shales.
  • Formosa Plastics intends to spend $1.5 billion on an 800,000 mt per year ethylene plant and downstream assets in Texas by 2015 partly due to the availability of shale gas feedstock.
  • Bayer Corporation is in discussions to build an ethane cracker plant in the Marcellus Shale basin.
  • Westlake Chemical will expand ethylene capacity in Loisiana by the end of 20q12 and again in 2014 and may also expand in Kentucky to use expected lower cost American feedstock.
  • Nucor is building a $750 million direct-reduced iron facility in Louisiana after securing a natural gas supply agreement that is expected to include nearby shale resources.
  • Vallourec is spending $650 million on a new plant in Ohio to supply steel pip for companies extracting shale gas.
  • U.S. Steel invested $95 million in an Ohio plant to help meet demand from shale gas extraction activities.

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.

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