The impact of the growth in unconventional resources production in the US is clear—a reversal of hydrocarbon output decline, an increase in energy security because of lessened dependence on foreign sources, and an overall remarkable shift in the US energy outlook. Now supporters are touting the great economic benefits of the shale boom.
The success in unconventionals development first had an impact on the landlocked gas market, and is now leading to great growth in oil and other liquids. Production is outstripping expectations, particularly in high-profile plays such as Eagle Ford in Texas and Bakken in North Dakota. Over the past 5 years, US gas production has risen 25% to 65 Bcf/D, largely driven by shale. A decade ago, shale accounted for 2% of US gas output; now it accounts for 37%. On the liquids side, the US is now the global growth leader in production capacity growth, according to the US Department of Energy. Crude output rose 658,000 BOPD from 2008 to 5.66 million BOPD in 2011, and has increased another 700,000 BOPD this year to 6.3 million BOPD. The US Energy Information Administration forecasts a rise of another 500,000 BOPD next year.
Private forecasters are also bullish. Consultancies and investment houses such as Raymond James, Simmons & Co., and Citigroup peg US crude production from 7.5 million BOPD to 9 million BOPD by 2015. The International Energy Agency predicts the US will pass leading global oil producers Russia and Saudi Arabia by 2020.
Attention has turned from just raw production and reserves figures to assessing the shale revolution’s effect on the economy. Most of the studies see an obvious, and perhaps even dramatic, impact on the US economy, from jobs growth to manufacturing benefits.
IHS CERA predicts that unconventional oil and gas development is supporting 1.7 million jobs this year, growing to 2.5 million jobs in 2015, 3 million jobs by 2020, and 3.5 million jobs in 2035. Similarly, Citigroup predicts up to 3.6 million new jobs from the increased oil, gas, and manufacturing work. There is also a knock-on economic benefit. Because gas is not an easily tradable commodity, the gas glut in the US has led to cheaper consumer costs for electricity and lower feedstock costs for industries.
All of this has geopolitical and geoeconomic implications as well. Moves are already underfoot for the US to begin exporting gas in the form of LNG to Europe and perhaps Asia, which could affect Russia’s traditional markets in Europe in particular. And the US will likely be importing less oil from places such as the Middle East, west Africa, and Venezuela.
Despite the positive economic news, attempts to put hydraulic fracturing under additional scrutiny show no signs of slowing. Studies in both the US and UK continue to question shale development’s effect on drinking water supplies and emissions. And the industry is braced for a new anti-hydraulic fracturing movie titled Promised Land that debuts this month. As Stephen Holditch, director of the Texas A&M Energy Institute, said during the 2012 SPE Annual Technical Conference and Exhibition, the public is still weighing whether fracturing’s economic benefits and energy supply growth outweigh the potential downsides they constantly hear about.