A new Manhattan Institute for Policy Research report released this week, “Step on the Gas! How to Extend America’s Energy Advantage,” underscores the clear economic, geopolitical, and environmental benefits tied to job-creating shale development.
According the independent, nonpartisan public policy research organization, America’s outdated energy policy is “ill equipped” to manage the new abundance of responsibly developed shale. We need to focus on smart and commonsense policies, according to the paper, which “ensure that the necessary pieces are in place to sustain U.S. energy leadership for decades to come” to “amplify the current boom and extend it far into the future.”
Key study takeaways:
- New drilling technologies that release massive reserves from shale have increased production during 2005–14 by 69% (oil) and 42% (gas). The U.S. is now the world’s largest producer of both resources.
- New gas production has come primarily from the Marcellus Shale formation. Output there leaped from 500 billion cubic feet (bcf) in 2008 to more than 5,600 bcf in the 12 months ending April 2015.
- Soaring production helped lift America’s economy out of the Great Recession—boosting annual GDP by hundreds of billions of dollars and creating hundreds of thousands of shale-related jobs.
- Lower-cost energy and petrochemical feedstock are enabling a resurgence of domestic manufacturing.
- Continued shale development could add an incremental $380 billion–$690 billion to annual GDP by 2020 and create 1.7 million permanent jobs, according to McKinsey—larger than any other U.S. growth opportunity.
- America’s new status as an energy superpower confers considerable geopolitical benefits. U.S. drillers are now the swing producers in global markets.
- The $1,500 that the average U.S. household now saves annually from plunging energy prices—$1,000 at the pump and $500 from lower costs for electricity, heating, and finished goods that use natural gas as an input—is larger than the total increase in median household income during 1986–2013.
- The spread of natural gas to generate electricity reduces air pollution and has lowered carbon dioxide emissions by more than 200 million metric tons annually (much larger than the reduction delivered by renewables) during 2005–13, helping the U.S. cut emissions by more than any other country.
- If the rest of the world rapidly develops its oil and gas resources and the U.S. does not, America’s economy will suffer mightily, for little environmental gain.
And another study released this week demonstrates our rich regional resource base. Specifically, the Utica Shale’s resource potential – which is below the Marcellus – is 20 times larger than previously estimated, according to West Virginia University experts.
Here’s what they’re saying about the Utica Shale’s “gigantic” resource base:
- Utica Gas Reserves Estimate Skyrockets: The Utica Shale formation holds 782 trillion cubic feet of natural gas, more than 20 times the amount officials believed it to contain just three years ago, according to the Appalachian Oil and Natural Gas Research Consortium at WVU. … “It’s a lot bigger than we thought,” consortium Director Douglas Patchen said. … For perspective, 1 trillion cubic feet is enough fuel to provide power to 243,150 homes for 100 years. … “This is a landmark study that demonstrates the vast potential of the Utica as a resource to complement – and go beyond – what the Marcellus has already proven to be,” said Brian Anderson, director of WVU’s Energy Institute. (Wheeling Intelligencer, 7/15/15)
- “Utica may be next big natural gas producer”: Results of the study provide evidence that the Utica is much larger than original estimates, and its size and potential recoverable resources are comparable to the Marcellus, the largest shale oil and gas play in the U.S. and the second largest in the world. … “The revised resource numbers are impressive, comparable to the numbers for the more established Marcellus Shale. (West Virginia University, 7/14/15)
- “New study shows greater potential for Utica Shale”: The Utica Shale and associated hydrocarbon-rich rock zones hold significantly more potentially recoverable natural gas than early estimates predicted. It turns out, according to the new study’s estimates, the total Utica Shale play could hold technically recoverable volumes of 782 trillion cubic feet of natural gas and nearly 2 billion barrels of oil. … The new assessment is also higher than estimates the researchers had calculated a year ago, when they determined that 188.6 trillion cubic feet of natural gas and 830 million barrels of oil could be extracted from the Utica play using existing technology. … The figures “might make the Utica gas play second only to the Marcellus in the USA.” (Pittsburgh Post-Gazette, 7/14/15)
- WVU Study: Utica Shale Holds 20 Times More Recoverable Gas Than Previously Thought: A study released Tuesday shows there may be 20 times more recoverable natural gas in the Utica Shale and surrounding hydrocarbon-rich formations than previously thought. … The consortium’s director and study co-author Doug Patchen said the revised estimate puts the Utica Shale play on par with the more explored and well-known Marcellus Shale formation. “The technically recoverable resource could be very comparable. (WV Public Broadcasting, 7/14/15)
- “Study estimates Utica shale holds gigantic amount of recoverable gas”: The amount of natural gas trapped in the Utica shale might rival what drillers hope to extract from its more famous neighbor the Marcellus, a group of geologists said Tuesday. “It’s comparable to the highest number I’ve seen for the Marcellus,” said Doug Patchen. … “It’s going to take many years to drill it up. It will take decades,” Patchen said. “It’s not a flash-in-the-pan thing.” … During a gas conference last month, several executives said they hope to reach the Marcellus, Utica and other layers with multiple wells from single pads. “There are very few fields of that size, but here’s at least two right under our feet.” (Pittsburgh Tribune-Review, 7/14/15)
And here’s what they’re saying about natural gas, which is now responsible for more than 30 percent of America’s electric power generation:
- Marcellus “Megagiant” Put Pa. on Energy Map: The Marcellus Shale put Pa. on the map as a gas-producing state, but other rock layers have the potential to keep it there far into the future. Drillers have sought unconventional well permits for 12 geological formations other than the Marcellus … Most of those are in the western part of the state; about 520 of those have been drilled. … “They are all classic formations that have new life due to horizontals with classic hydraulic fracturing,” Lackawanna College School of Petroleum and Natural Gas dean Richard Marquardt said. … The industry considers the threshold for a “supergiant” gas field to be 30 trillion cubic feet. The Marcellus holds more like 800 trillion cubic feet. “We should really coin a new term for the Marcellus … “We should probably call it something like a megagiant.” (Scranton Times-Tribune, 6/11/15)
- MSC Member Williams “Contributes to Economic Development, Energy Independence”: Over the next three years, approximately 4,600 miles of new interstate pipelines will be built in Pa. to transport the abundant supply of Marcellus Shale. … Over the next 10 years, $10 billion worth of pipeline will be constructed each year in the shale gas plays across the country. More than half of the interstate natural gas pipeline projects proposed to FERC since 2010 have been in Pa., and they carry an estimated cost of over $2 billion. … The pipeline buildout will help fill the economic development gap … by creating new midstream jobs and new work for a number of industries that support pipeline development such as engineering firms, construction companies and environmental consultants. “ will see significant short-term economic impacts during the construction phase of our pipeline projects, as restaurants, hotels, motels, and retailers experience increased activity from construction crews … In addition, the pipelines will create a backbone for future economic growth in the region as new wells are drilled to meet the growing demand.” (Pa. Business Central, 7/10/15)
- Shale Creates American Manufacturing Opportunities: Just a decade ago, the domestic chemical industry was in decline as natural gas prices were high and estimated reserves low. … Due primarily to the shale gas revolution, the fortunes of the domestic chemical industry have changed radically. The abundance of cheap natural gas and associated liquids resulting from the widespread use of fracking has made the U.S. the place to build new chemical manufacturing facilities. ACC reports, the $800-billion U.S. chemicals industry will experience 3.2% growth in 2015 and is expected to expand by more than 3% in 2016. … Consumers have benefitted immensely from the decline in natural gas prices over the past decade. In 2015 alone, those homeowners using natural gas for heating and cooking could expect to see a 5% decline in their heating/cooking bill for the year. … ACC reports 238 U.S. chemicals companies have announced investment projects worth a total of $145 billion … This represents a huge reversal in the flow of chemical plant investment in less than a decade. (Heartland, 7/14/15)
- Energy Sparks “Profound Shift” In American Manufacturing Competitiveness: When you look at the total cost of production for many goods, the S. appears increasingly attractive. … Efforts by hydraulic fracking companies drove down natural gas prices … U.S. industrial electricity costs are now between 30% and 50% lower than those in foreign countries. … Dow Chemical recently announced its decision to invest $6 billion in expanding its manufacturing facilities in the United States by 40%. … GE and Caterpillar each has re-shored 1,900 jobs to Kentucky, Ohio, Georgia, and Texas. Flextronics, NCR, and Boeing are also moving jobs back to the United States, thanks largely to the competitive advantage of lower energy prices. … The advantage that fracking is giving the U.S. economy is likely to have very long legs, according to Harvard’s Michael Porter. (The New American, 7/9/15)
- Shale “Offers Huge Opportunity to Send U.S. Economy on Upward Trajectory”: The American Chemistry Council … noted that “the surge of natural gas production from shale has reversed the fortunes of the U.S. plastics industry” and “has changed the competitive landscape for U.S. plastics.” Companies are capitalizing on this boon, as the ACC is tracking $130 billion of new investment in chemical manufacturing capacity announced since 2010 to be put in place over the next decade. This includes nearly $25 billion of investments in new plastic resin capacity; investments of $2.5 billion to increase capacity in plastics compounding, additives and colorants; and investments totaling $19.6 billion in new plastic products capacity to consume that resin. “The combined output from the new investments,” said the ACC, “in compounding and ancillary chemistries and products will be $46.98 billion.” That translates into jobs … a total of 127,500, with the affected supply chain adding 172,900 indirect jobs to support the industries that supply materials, utilities, parts and services. Payroll is estimated to be $19.1 billion. … A combined 461,800 direct, indirect and payroll-induced new jobs will be created because of shale-advantaged production. (Plastics Today, 7/11/15)
- “Have Faith in the Shale Gale”: Neither federal energy policy nor the global majors drove the U.S. shale revolution. The shale gale is a victory for entrepreneurs and free markets. An unrestricted U.S. market may have led to the current glut, but the American ascendancy may be sustained and enlarged in a second stage of the shale gale: a smarter, lower-cost chapter of the boom. … Market dynamics triumphed in the first stage of the shale revolution by creating a formidable supply. U.S. producers now need access to the demand side. … The U.S. shale industry remains poised to take advantage of the economic opportunities at hand. Our national leadership’s embrace of this energy opportunity would extend its benefits across the country. Lifting the export ban on our crude oil should be an overarching national priority. (The Hill op-ed, 7/14/15)
- “Natural Gas Key to Winning War on Terror”: Right now, we’re a nation adrift without an energy plan. … As long as we keep buying oil from the Middle East, our enemies can continue to fund terrorism. … More than ever, we need to move our heavy-duty trucks … to natural gas. … That will introduce the first real competition into our fuel supply. It will improve our balance of trade, it will improve our environment, and it will remove the last marked card from OPEC’s poker hand over our national security. … Because of the tremendous advances in recovery techniques, we have vast crude oil and natural gas reserves yet to develop and produce. It’s a perfect time to decouple our energy-focused military presence in the Middle East. For too long we have spent the lives and limbs of thousands of young men and women fighting in the Middle East, and we still bear most of the cost of protecting the about 17 million barrels that flow through the Strait of Hormuz every day even though only about 10% of that oil comes to us. … As I’ve said since the beginning: Natural gas is cheaper, it’s cleaner, and it’s ours. Let’s make it a key part of our energy future, and a key weapon in the war on terror. (TIME, 7/8/15)