This month, market intelligence firm, IHS released a report entitled “America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy.” Our blog post will focus on a few of the numbers in the report, especially this one: Between now and 2035, unconventional energy will generate millions of jobs.
Upstream unconventional oil and natural gas activity will support over 1.7 million jobs in 2012, growing to 2.5 million in 2020 and 3.5 million by 2035. These numbers include direct employment, indirect employment (jobs created for producers of materials and services used on these projects), and induced employment (jobs created when employees working on energy projects spend money on consumer goods). This surge in activity is a sharp contrast to the energy industry of just 5 years ago, and is due mostly to new technologies, such as horizontal drilling, that provide additional methods for extracting resources.
Over $2.1 trillion in capital expenditures during this time period will take place in unconventional oil projects, with an additional $3 trillion in unconventional natural gas. Between 2012 and 2035, total government revenues from federal, state, and local tax receipts will be $2.5 trillion.
Increasing Unconventional Resource Production is Decreasing Imports
Unconventional energy sources have enhanced U.S. energy security – we are importing far less oil and gas than just 5 years ago. As we’ve discussed in previous blog posts, the United States is getting closer to energy independence and may soon begin exporting LNG. Natural gas production has increased 25% in the past 5 years, and shale gas now accounts for 37% of natural gas production, as opposed to 2% in 2000. Unconventional natural gas now accounts for 65% of natural gas production.
As shown in the chart below, unconventional gas production is expected to continue increasing.
Additionally, unconventional oil is expected to average over 2 million barrels per day in 2012 – up 1.2 million barrels since 2008. Natural gas liquids grew by over 500,000 barrels from 2008 to 2012. Strong growth in both areas is expected to continue.
As you can see in the chart above, the increased unconventional energy production has created a sharp decrease in U.S. imports. If this trend continues, then the United States will be on its way to energy independence.
Economic Contributions from Unconventional Resources
In 2012, unconventional resource projects received $87 billion in capital expenditures, expected to grow to $172.5 billion per year by 2020. The spending will take place in upstream unconventional oil and natural gas activities including drilling, completion, facilities, gathering systems and auxiliary support services.
Conclusion: Reshaping the Future of Energy
Unconventional resources are reshaping our energy future and bringing significant economic benefits. By 2035, it is expected that capital expenditures on unconventional oil and gas development will total $5.1 trillion. These projects will help create up to 3 million jobs by the end of the decade. In addition to providing jobs and pumping capital into our economic system, unconventional resources will contribute to future U.S. energy independence.
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