"That growth has not only contributed to U.S. energy security but is a significant source of new jobs and economic activity at a time when the economy is a top priority."
WASHINGTON--(BUSINESS WIRE)--The revolution in unconventional oil and gas production is fundamentally
changing the United States energy outlook, generating significant job
creation, economic growth and government revenues, according to a new
The entire upstream unconventional oil and gas sector will support more
than 1.7 million jobs in 2012 at average wage levels dramatically higher
than the general economy. The number of jobs is expected to increase to
2.5 million over the next three years. The number of jobs supported will
continue to rise to nearly 3.5 million in 2035, according to the study.
The new study, America’s New Energy Future: The Unconventional Oil
and Gas Revolution and the Economy builds on previous IHS research
on the economic impacts of unconventional gas to provide the most
complete assessment to date of the economic contributions—in terms of
jobs, economic value and government revenue—for both unconventional oil
and unconventional gas in the United States.
“The growth of unconventional oil and gas production is creating a new
energy reality for the United States,” said Daniel Yergin, IHS vice
chairman and author of The Quest. “That growth has not only
contributed to U.S. energy security but is a significant source of new
jobs and economic activity at a time when the economy is a top priority.
“The United States currently has the highest rate of growth in crude oil
production capacity in the world and is virtually self-sufficient in
natural gas, except for some gas from Canada. This is a stark contrast
from when, prior to the unconventional revolution, it was expected that
the U.S. would soon become heavily dependent on gas imports,” Yergin
Future growth in unconventional oil and gas production will drive
continued economic expansion in both the near- and long-term, the study
says. Annual unconventional tight oil production—projected at 2 mbd for
2012—is expected to increase by nearly 70 percent by 2015 to more than
3.5 million barrels of oil per day (mbd) and rise to 4.4 mbd in 2020.
Unconventional gas production—shale, plus “tight gas”—is expected to
increase 22 percent to nearly 42 billion cubic feet per day (Bcf/d) in
2015 (65 percent of total U.S. gas production) and reach more than 76
Bcf/d in 2035 (75 percent of total U.S. gas production).
Among the study’s key findings:
Nearly $5.1 trillion in capital expenditures ($2.1 trillion in the oil
sector, $3 trillion in the gas sector) will take place between 2012
and 2035 across the entire upstream unconventional oil and gas
Employment in the entire upstream unconventional oil and gas sector on
a direct, indirect, and induced basis will support nearly 1.8 million
jobs in 2012, 2.5 million jobs in 2015, 3 million jobs in 2020, and
nearly 3.5 million jobs in 2035.
The jobs created tend to be high quality and high paying, given the
technologically innovative nature of unconventional oil and gas
activity. Workers associated with unconventional oil and gas are
currently paid an average of $35.15 per hour—higher than the wages in
the general economy ($23.07 per hour) and more than wages paid in
manufacturing, wholesale trade and education, among others.
Unconventional energy activity will contribute $237 billion in value
added contributions to GDP in 2012, a figure that will increase to
$475 billion annually in 2035.
Unconventional oil and gas activity will generate more than $61
billion in federal and state government revenues in 2012 and increase
to $91 billion in 2015 and $111 billion in 2020. By the last year of
the forecast period, in 2035, government revenues will increase to
more than $124 billion.
A key reason for the profound economic impacts associated with
unconventional oil and gas production are the lengthy, complex,
domestically-sourced supply chains which support American jobs. The
total employment contribution for overall upstream unconventional
activity relative to total U.S. employment will average 1.5 percent over
the short-term (2012-2015), 1.9 percent over the intermediate term
(2015-2020) and 2 percent over the long-term (2020-2035), the report
The industry, highly capital-intensive by nature, relies on suppliers in
construction, fabricated materials and heavy equipment but it also
requires a broad range of material and services such as legal and
financial services and information technology, said John Larson, IHS
vice president, public sector consulting.
“Unconventional oil and gas production is unique in that it combines a
highly capital-intensive industry with a broad domestic supply chain,”
Larson said. “The United States is a world leader in all parts of
unconventional oil and gas activity which means that most of the dollars
spent here stay and support American jobs.”
The report, America’s New Energy Future: The Unconventional Oil and
Gas Revolution and the Economy is the first in a series of major
studies measuring the economic impacts of unconventional oil and gas
activity in the United States. Subsequent reports will focus on the
economic impacts on a state-by-state level and the potential for a U.S.
manufacturing renaissance fueled by abundant energy supply.
America’s New Energy Future: The Unconventional Revolution and the
Economy 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. The
research was supported by the American Petroleum Institute, Institute
for 21st Century Energy, the American Chemistry Council and the Natural
Gas Supply Association IHS is exclusively responsible for all of the
analysis and content.
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