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IHS: Unconventional Natural Gas Creating Jobs Across Lower 48

June 18, 2012
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Unconventional natural gas activity supported more than one million jobs in 2010, a number that is likely to grow to nearly 1.5 million by 2015. The industry is expected to generate significant job creation, economic growth and tax revenues nationwide -- in producing and nonproducing states alike -- according to a report from IHS Global Insight.

"When it comes to unconventional natural gas, a state does not need to have a gas play to benefit economically," said IHS Vice President John Larson, the lead author of the study, which was commissioned by the industry-funded America's Natural Gas Alliance.

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 U.S. sources, the coast-to-coast structure of the supply chain and the quality of jobs created by the industry, IHS said in its report.

"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," Larson said. "As this report makes clear, these benefits spread beyond producing states to deliver positive impacts across the country."

The top 10 producing states between 2010 and 2015 (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%, with Pennsylvania and Colorado leading with expected compound annual growth rates of 14% and 10%, respectively, IHS said. Total U.S. employment is expected to grow at 1.6% during the same period.

Nearly one-fifth of the unconventional gas activity jobs expected by 2015 will be in nonproducing states, IHS said. The top 10 nonproducing states in 2015 are expected to be California, Florida, Georgia, Missouri, North Carolina, Indiana, Wisconsin, Minnesota, Tennessee and Maryland, according to the report. Jobs created in nonproducing states would include service jobs necessary to support development and jobs supporting the industry through its extensive supply chain.

The report also concluded that unconventional gas activity will account for 79% of total U.S. gas production by 2035. Nearly $3.2 trillion in cumulative investments in the development of unconventional gas between 2010 and 2035 are expected to fuel that increase.

IHS said it expects the annual contribution of unconventional gas activity to U.S. gross domestic product to reach nearly $197 billion by 2015, with more than $22 billion of that amount coming from non-producing states. In total, the annual contribution is expected to be almost $332 billion by 2035. And government revenue from unconventional gas activity is projected to reach more than $49 billion annually by 2015 and more than $85 billion annually by 2035.

The report is based on an IHS analysis of each play that calculated the investment of capital, labor and other inputs required to produce the hydrocarbons. The economic effects of the investments was calculated using a proprietary IHS economic impact assessment and macroeconomic models to generate the contributions to employment, GDP growth, labor income and tax revenues that will result from unconventional gas development.

The study is the second in a series by IHS. It follows a report last year that concluded that shale gas has dramatically transformed the outlook for U.S. energy supplies and is having "profound" economic impacts on creating jobs and stimulating growth, as well as bolstering tax revenue and reducing consumer energy costs (see NGI, Dec. 12, 2011). In that report, IHS said it expected that shale gas will account for 60% of U.S. gas output by 2035.

©Copyright 2012 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

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