‘Shale Gale’ Reshaping America’s Energy and Economic Landscape
America’s ongoing shale revolution “has transformed the overall U.S. energy industry, shifted company strategies, and dramatically changed global energy markets” while delivering unprecedented economic and environmental benefits, according to a major new report from global business analyst IHS Markit.
The opportunity for greater positive impacts will only grow, according to the study, which predicts a 60-percent increase in American natural gas production over the next 20 years, with much of that increase coming from the Appalachian Basin. The report predicts $120 billion in new capital investments in manufacturing between 2012 and 2020, with 4 million jobs supported by shale by 2025.
In The Shale Gale Turns 10: A Powerful Wind at America’s Back, noted energy expert Daniel Yergin chronicles shale’s meteoric rise over the past decade and its bright future. As Yergin notes:
“To say that the ‘Shale Gale’—as IHS Markit originally coined it in 2010—has been anything but a veritable revolution would be an understatement. It represents a dramatic and largely unanticipated turnaround that dramatically changed both markets and long-term thinking about energy. The profound and ongoing impacts on the industry, energy markets, the wider economy and the U.S. position in the world continue to unfold.”
Instead of America becoming an LNG importer reliant on foreign, often hostile, nations – which IHS notes was the assumption a decade ago – huge increases in production of clean, domestic natural gas have made the U.S. a major LNG exporter while boosting job creation, manufacturing investments and our national security, the report finds. Co-author Sam Andrus says the trends will accelerate:
“The new outlook for natural gas cost and availability has created new possibilities for progress toward national goals of energy efficiency, cost efficiency, environmental protection and energy security.”
The key to that progress is ensuring the right policies and critical infrastructure are in place to support future investments and growth.
Here’s what you need to know from IHS Markit’s report:
Electricity Generation:
Gas has become a backbone of electric generation in the United States… in terms of actual generation, we expect natural gas’s share to grow from almost one-third currently to almost half of all electricity generated by 2040.
Economic Opportunity:
The development of the Marcellus play provided major economic stimulus in Pennsylvania, including such support industries as real estate, lodging, food, vehicle sales, construction, and local commerce. The supply chains are even creating jobs in New York State, despite that state’s ban on shale gas development.
For years, energy-intensive manufacturing had been leaving the United States owing to high energy costs. But, as the reality of abundant and inexpensive natural gas came to be accepted, the direction of investment changed. The advantages in terms of thermal energy, feedstock, and electricity costs have driven a surge of new investment in US petrochemical and other industrial facilities.
It has been estimated that, by 2025, as many as 4 million jobs—direct, indirect, and induced—could be supported by unconventional activity.
Cleaner Air:
The shift from coal to natural gas has, because of falling natural gas prices and confidence in long-term gas supply, along with the addition of renewables, contributed to the reduction in US carbon dioxide (CO2) emissions from power generation. We estimate that in 2017, CO2 emissions from power generation were down 30% from 2005.
Time to Build:
Appalachia’s vast economic resource base comprises the massive and prolific Marcellus and Utica plays, each of which is now estimated to be able to supply the United States with two decades of natural gas. Production from these plays, currently at more than 25 Bcf/d, is expected to grow to almost 50 Bcf/d by 2050—rivaling the entire US production level prior to the Shale Gale. But this monumental growth will require more infrastructure to move gas production from supply basins to consuming markets within North America and to liquefaction facilities for export.
Pipeline projects in general, and specifically those of Appalachia, have faced growing challenges, such as more organized opposition, longer review times, and rising costs, resulting in the delay or even cancellation of many large-scale projects.
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