#1: U.S. Positioned to be World’s Top Oil, Natural Gas Producer

In what is being described by experts as a “remarkable turn of events,” the Wall Street Journal reports today that “the U.S. is overtaking Russia as the world’s largest producer of oil and natural gas.” This is great news for American consumers, our economy, environment and our nation’s security. What’s more, America’s safe and surging shale development is still in its “early innings” of growth and potential. Here’s what they’re saying about this generational shift:

U.S. SHALE CREATING “DRAMATIC CHANGES” TO GLOBAL MARKET

  • “U.S. is Overtaking Russia as Largest Oil and Gas Producer”: The U.S. is overtaking Russia as the world’s largest producer of oil and natural gas, a startling shift that is reshaping markets and eroding the clout of traditional energy-rich nations. U.S. energy output has been surging in recent years, a comeback fueled by shale-rock formations of oil and natural gas that was unimaginable a decade ago. A Wall Street Journal analysis of global data shows that the U.S. is on track to pass Russia as the world’s largest producer of oil and gas combined this year—if it hasn’t already. … “This is a remarkable turn of events,” said Adam Sieminski, head of the U.S. Energy Information Administration. “This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn’t in a million years have dreamed about.” … The U.S. last year tapped more natural gas than Russia for the first time since 1982, according to data from the International Energy Agency. … Ken Hersh, chief executive of NGP Energy Capital Management LLC, said the immense amounts of oil and gas uncovered in recent years indicate that the U.S. energy boom could last a long time. (Wall Street Journal, 10/2/13)
  • America’s Energy Sector is “Open for Business”: America’s government may be closed, but its energy sector is open for business. We are overtaking Russia as the world’s largest oil and gas producer. … Pennsylvania, home to the Marcellus Shale, has allowed companies to extract its natural gas. Pennsylvania counties with hydrofractured gas wells have performed better in terms of income growth and employment than those which have no wells. The more wells a county contains, the better it performed. … Between 2007 and 2011, per capita income rose by 19% in Pennsylvania counties with more than 200 wells, by 14% in counties with between 20 and 200 wells, and by 12% in counties with fewer than 20 wells. … Cheap energy is attracting more manufacturing back to America. Shell is considering building a multibillion dollar petrochemical plant in Pennsylvania. … Our private energy sector is unparalleled, and is the key to future economic growth. (MarketWatch op-ed, 10/4/13)
  • Domestic Natural Gas Provides U.S. With a “Huge Advantage” Over China: Conventional wisdom says that by many economic measurements, China isn’t far behind the U.S.—and is catching up fast. But in one vital sector—energy—the U.S. leads and is pulling away. … No industry is more important than energy, however, and here, the United States is unquestionably stronger. … American energy production is now growing four to five times faster than Chinese output. At this rate, the U.S. will produce four times as much energy as China by the end of the decade. … The American energy boom is due to small, innovative businesses seeing an opportunity to expand, but neither such businesses nor the opportunity to expand exist in China. … Ultimately, the huge gap between the U.S. and China will continue to widen unless Beijing can manage sweeping market-driven reform in energy. … Home-produced energy gives the U.S. a huge and growing advantage in a core economic sector. (The Atlantic, 10/1/13)
  • Safe Shale Development Bolstering U.S. Security, Global Influence: America’s natural gas boom threatens Russia’s economic strategy, an expert says, leaving it with few alternatives to rescue its economy while threatening to shatter its energy stranglehold on Europe. … An American shale gas boom has been unleashed by the use of hydraulic fracturing, or fracking, to unlock the energy treasures in the vast porous rock formations that blanket our nation. This, according to Thane Gustafson, a political science at Georgetown University and one of the world’s foremost experts on Russian energy, undermines Moscow’s economic and foreign policy goals. Gustafson said that fracking, which he described as a “remarkable story of entrepreneurship” inspired by “the freedom to fail,” has placed the U.S. on the path to becoming a net exporter of natural gas by 2020. Fracking should also make us energy-independent by 2035, according to the World Energy Outlook’s 2012 report. That would shatter Moscow’s ambitions. … At least America’s energy producers follow President Reagan’s famous strategy: “We win. They lose.” (Investor’s Business Daily editorial, 10/3/13)
  • U.S. Natural Gas Revolution Threatens Russia’s Economy: The burgeoning natural gas revolution in the United States threatens the central economic strategy of Russia and leaves its autocratic leaders with few alternatives to combat anemic economic growth, one expert said Wednesday. Dr. Thane Gustafson, a political science professor at Georgetown University and one of the world’s foremost experts on Russian energy, said the surge in U.S. natural gas production has undercut Russian gas exports to Europe and prompted executives to scuttle their plan for shipping liquefied natural gas (LNG) to America. (Washington Free Beacon, 10/3/13)

NATURAL GAS MAKING AMERICA “THE MOST ATTRACTIVE PLACE IN THE WORLD TO INVEST”

  • U.S. Natural Gas Production Driving Global Investment: The U.S. boom in natural-gas production is luring investment from foreign manufacturers eager to tap a cheap, abundant supply of fuel and feedstocks. Companies from the U.S. and abroad have invested or are planning to invest billions of dollars through the rest of the decade in plants that would churn out chemicals, fertilizers, plastics, metals and fuel from gas. … Boston Consulting Group estimates that international companies will invest at least $50 billion through the end of the decade on projects that take advantage of low-price natural gas. … The U.S. gas bonanza…has already given a boost to domestic manufacturers. … Now inexpensive gas also is turning the U.S. into a magnet for investment by foreign companies. Energy consulting firm IHS Cera said in a report last month that cheaper gas would kick-start the nation’s chemicals sector over the next dozen years, creating more than 300,000 jobs and driving half a trillion dollars in production through 2025. … “If you think about the competitive advantages of an economy, having low-priced energy is about the most important,” Incitec Chief Executive James Fazzino said. Combined with a stable regulatory framework and a trained labor pool, the U.S. “is really the most attractive place in the world to invest,” he said. (Wall Street Journal, 10/1/13)
  • Natural Gas “Boosting U.S. Construction Market”: The size of construction group Skanska’s business in the Americas could overtake that of its Nordic home markets, as it sees a surge in work on industrial plants as a result of the U.S. shale gas boom, its chief executive said on Tuesday. … But the key factor in its growth prospects now is a surge in U.S. demand for new plants in energy-intensive industries such as steel, glass and fertilizer production to take advantage of the cheap gas flowing from shale. … Skanska was keen on making acquisitions in the United States that stood to benefit from the shale gas boom as well as in public infrastructure where years of underspend had left a growing need for new investment. (Reuters, 10/1/13)
  • Shale “a Major Factor Behind…the U.S. Manufacturing Renaissance”: For nearly two decades, direct jobs tied to oil and gas extraction stayed relatively flat, noted Andrew Lyon, a principal in PwC’s National Economics and Statistics group. But fast forward to 2005, and, suddenly, the trend line spiked up. Direct oil and gas extraction jobs nearly doubled between 2005 and 2011, according to Lyon, speaking at the U.S. Energy Association’s 6th annual Energy Supply Forum. There were about 800,000 jobs directly tied to extraction in 2011 nationwide. … Lyon stressed that the industry is still an outlier in an otherwise bumpy U.S. economy. “Given the sluggish employment growth in the United States overall, this has been a very significant support for the economy,” he said. And the positive benefits are bound to continue, Lyon added, noting that “clearly this industry is a major factor behind…the U.S. manufacturing renaissance.” (Houston Chronicle, 10/3/13)
  • “U.S. Still In Early Phases of One of Today’s Most Powerful Investment Opportunities”: After a decade or more of shale development in the US, the country remains “in the early innings” of that growth with tens of billions more dollars expected for infrastructure and development, according to an analysis by investment bank Credit Suisse. … Credit Suisse analyst Arun Jayaram, head of US E&P research, said during a conference call that the US is still in the early phases of one of today’s “most powerful investment opportunities,” the shale revolution. “Using our model, we anticipate US oil production to grow from 6.5 million b/d in 2012 to 11.3 million b/d by 2020,” Jayaram said. … In the core of nearly every play exists a “positive story” that should propel continued volume growth, the report said. … Industry has shown it can meet bullish demand projections for gas, power, transportation and LNG exports, Credit Suisse said. Despite a relatively low price environment of $5/MMBtu or below, and against the views of many commentators, Credit Suisse’s Commodities Research team believes US gas supplies will keep on rising. (Platts, 10/1/13)
  • “U.S. Gears Up to Be a Prime Gas Exporter”: Cove Point has had a sporadic history and has not been visited by a tanker for delivery since 2011 thanks to reduced U.S. demand for natural gas. …Dominion Transmission wants to reverse the flow. … The company has already signed 20-year contracts with utilities in Japan and India. Thomas F. Farrell, chief executive of Dominion Resources, which owns the facility, said Cove Point, which has easy access to the Marcellus shale fields in Pennsylvania, was “cost-effective and environmentally compatible.” Dominion is just one of many companies now seeking approval to export L.N.G. from about 20 upgraded or new facilities in the United States. The companies want to take advantage of the recent flood of cheap shale gas brought on by advanced drilling techniques and helped by the extensive American domestic pipeline network. … Companies including Chevron, Exxon Mobil, Royal Dutch Shell and Total are planning up to $400 billion in L.N.G. investments around the world. (New York Times, 9/29/13)
  • Natural Gas Provides U.S. Economy with a “Bright Future”: When President Barack Obama made an offhand remark two months ago regarding the economic export opportunities provided by America’s unprecedented natural gas production, it signaled a green light for full speed ahead in the construction of liquid natural gas terminals. Even though a previous energy development approval had been granted for an export terminal conversion in Freeport, Texas, the just-announced OK by the U.S. Department of Energy for LNG-export clearance for the Dominion Cove Point LNG shipping dock, in Calvert County, Md., to countries that do not have a free trade agreement, is a major breakthrough. … With the U.S. price of less than $4 per million British thermal units, major natural gas users in Japan, the United Kingdom, and central and western Europe will provide multibillion dollars of export potential, plus thousands of additional employees as early as mid-2014. … Once underway, it’s a sure bet that U.S. liquid natural gas, along with coal, and oil derivatives could eventually vault U.S. energy exports into an excess of low 100 billion annual export dollars. The beneficial effects on national revenues, employment, and component products needed in all aspects of this development will obviously be immense. (My Desert op-ed, 9/28/13)

SAFE DEVELOPMENT BOOSTS LOCAL ECONOMIES

  • Responsible Natural Gas Production “Alive and Well” in Pennsylvania: The gas industry naysayers have been spreading a lot of misinformation lately that the gas drilling industry is on the decline in Pennsylvania. … The fact is that the average gas well in the state is producing about three times the amount of a well in the Barnett Shale play in Texas, according to Terry Engelder, a Penn State University geoscientist. … The cumulative production for gas wells in Pennsylvania in June totaled 4.8 trillion cubic feet and most of the wells have already paid for themselves, according to Engelder. … The naysayers can pour all the cold water on this important economic development that they want. It won’t change reality. (Williamsport Sun-Gazette editorial, 10/3/13)
  • W.Va. has a “Positive Economic Outlook” Thanks to Clean-Burning Natural Gas: Growth in the natural gas industry is contributing to a positive economic outlook and potentially more jobs in West Virginia in 2014, according to the latest information from the West Virginia University College of Business and Economics. The signs of this growth are abundant in Harrison and surrounding counties, officials said Tuesday. … According to the report, West Virginia is expected to see steady job growth during the next few years. Mike Romano is president of the Harrison County Economic Development Authority and a Harrison County commissioner. Romano said the area has been lucky and is a definite contributor to job growth as a result of the natural gas boom experienced during the last few years. (Exponent-Telegram, 10/1/13)
  • Locally-Sourced Shale Gas Heats Pa. School, Hospital and Homes: Local natural gas is now flowing through a pipeline that’s bringing natural gas service to homes and businesses in part of Susquehanna County. Leatherstocking Gas Company turned on the new line Monday night. It’s now bringing gas to Montrose Area High School and a new hospital. Homes will be next and it’s all making history in the northern tier. … Inside the school, boilers are being converted from oil to much cheaper natural gas. The district is looking forward to big savings using the gas coming from Marcellus shale all around it. “We estimated in the first year alone in the high school, we’ll save about 40 percent of what our fuel costs. We allocate around $160,000 to heat the high school now. We’re estimating under $100,000 so we’re thrilled.” Natural gas service is also running now to the new Endless Mountains Health System hospital near Montrose. … “I think it’s amazing. I never would have dreamed it.” (WNEP, 10/1/13)
  • Pa.’s Natural Gas Regulations are “Well-Managed Overall”: Pennsylvania’s oil and gas drilling regulations are well-managed overall…according to a review released Monday by a group financed by the federal government and industry organizations. A six-person team from the State Review of Oil and Natural Gas Environmental Regulations, Inc., found that state regulations generally meet or exceed a basic set of national guidelines.… “This review demonstrates that the oil and gas industry in Pennsylvania is matched by world-class oil and gas management and regulations,” said Department of Environmental Protection Acting Secretary Chris Abruzzo, adding that the agency will work to implement the recommendations of the report. … “The DEP should be quite pleased with the result,” said Andrew Paterson, a technical and regulatory vice president with the Marcellus Shale Coalition. (Associated Press, 9/30/13)

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