IHS: Unconventional Gas to Create Nearly 1.5 Million US Jobs by 2015

IHS: Unconventional Gas to Create Nearly 1,5 Million US Jobs By 2015

Natural gas production from shale, coal bed methane and tight sands is expected to generate significant job creation, economic growth, and revenue for federal, state and local treasuries throughout the U.S. in gas “producing” and “non-producing” states alike, according to a new IHS Global Insight study.

The economic contributions are realized throughout the lower 48 states and the District of Columbia in both the twenty producing states and the twenty-eight non-producing states. Unconventional gas activity supported more than one million jobs in 2010, and it will grow to support nearly 1.5 million by 2015, says the study, which is the second in a series.

The new report, The Economic and Employment Contributions of Unconventional Gas Development in State Economies, examines unconventional gas activity – a growing subset of the total natural gas industry. The report found substantial growth in jobs and economic activity in unconventional plays over the past decade. The report is a companion to an IHS Global Insight study on shale gas economic and employment contribution released in December.

“At a time when the U.S. economy is slowly recovering from the Great Recession and struggling to create enough jobs to sharply reduce the unemployment rate, the growth in shale and other unconventional natural gas production is a major contributor to employment prospects and the U.S. economy,” said IHS Vice President John Larson, the lead author of the study. “As this report makes clear, these benefits spread beyond producing states to deliver positive impacts across the country.”

The dramatic impact on employment and the economy from unconventional gas activity reflects its significant capital intensity requirements, the ability to source capital equipment and services from US sources, the coast-to-coast structure of the supply chain and the quality of jobs created by the industry.

Between 2010 and 2015, the Top 10 producing states (as ranked by unconventional gas-related employment) – Texas, Louisiana, Colorado, Pennsylvania, Arkansas, Wyoming, Ohio, Utah, Oklahoma and Michigan – will experience a compound annual job growth rate of nearly 8 percent, with Pennsylvania and Colorado leading with expected compound annual growth rates of 14 percent and 10 percent, respectively. Meanwhile, total US employment is expected to grow at a significantly lower average rate of 1.6 percent during the same period.

Of the nearly 1.5 million unconventional gas activity jobs contributing to the economy by 2015, nearly one-fifth are projected for non-producing states. The Top 10 non-producing states (as ranked by jobs growth due to unconventional gas development) in 2015 are projected to be California, Florida, Georgia, Missouri, North Carolina, Indiana, Wisconsin, Minnesota, Tennessee and Maryland, supporting the industry through the extensive supply chain and service jobs necessary to support development.

“When it comes to unconventional natural gas, a state does not need to have a gas play to benefit economically,” Larson added.

Among the study’s other key findings:

  • Unconventional gas activity accounted for 53 percent of total U.S. natural gas production in 2010 and is projected to rise to 79 percent of total U.S. natural gas production by 2035.
  • Nearly $3.2 trillion in cumulative investments in the development of unconventional gas are expected to fuel the increase in production between 2010 and 2035.
  • By 2015, the annual contribution of unconventional gas activity to U.S. gross domestic product is projected to reach nearly $197 billion, more than $22 billion of which will be from non-producing states. In total, the annual contribution is expected to more than double by 2035 to almost $332 billion.
  • Government revenue from unconventional gas activity is projected to reach more than $49 billion annually by 2015 and will continue to rise, to just over $85 billion by 2035. Over the study’s entire 25-year horizon, unconventional gas is expected to generate nearly $1.5 trillion in total government revenue.

The earlier IHS shale gas study, The Economic and Employment Contributions of Shale Gas in the United States, presented the economic contributions of shale gas specifically in terms of jobs, economic value and government revenues through 2035, as well as the broader macroeconomic impacts on households and businesses. Whereas the original report examined the contributions at a national level, this report builds upon the original work by adding analysis of the other unconventional natural gas activities (coal bed methane and tight sands) and further distributes the results to the state level.

The studies were commissioned by America’s Natural Gas Alliance (ANGA). IHS Global Insight offers an independent assessment and is exclusively responsible for all of the analysis, content, and conclusions contained in the studies.

The Economic and Employment Contributions of Unconventional Gas Development in State Economies report is based on the IHS CERA analyses of each play which calculate the investment of capital, labor, and other inputs required to produce these hydrocarbons. The economic effects of these investments are then calculated using the proprietary IHS Global Insight economic impact assessment and macroeconomic models to generate the contributions to employment, GDP growth, labor income, and tax revenues that will result from the higher level of unconventional gas development.

LNG World News Staff, June 13, 2012; Image: ihs