Shale gas bright spot in troubled U.S. economy: report

Reuters News
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Posted: Dec 06, 2011 4:03 PM
Shale gas bright spot in troubled U.S. economy: report

By Roberta Rampton

WASHINGTON (Reuters) - The U.S. shale gas boom has created more than 600,000 U.S. jobs so far, a leading consultant said in a study released on Tuesday about gains made in the labor market from controversial "fracking" technology.

The study by forecaster IHS Global Insight, which was commissioned by a natural gas industry group, found that each new job directly involved in drilling supported the creation of more than three additional jobs in supplies and services.

The jobs have a multiplier effect more powerful than in finance or construction, the study said, forecasting the number of jobs could rise by another 45 percent by 2015.

In Washington, where President Barack Obama and lawmakers are fixated on job creation, the report could fuel arguments from Republicans that federal regulators should stay out of hydraulic fracturing or "fracking" that has upended the industry and uncovered decades' worth of reserves.

The report focuses on the economic impacts of an industry already touted by Republicans as holding great promise, finding more than 600,000 U.S. jobs supported by shale gas since 2002. The U.S. government's establishment survey shows that the economy actually lost 2.2 million jobs since 2000, when the shale gas industry was in its infancy.

Of the 600,000 net new jobs, 148,000 are directly related to drilling, said John Larson, a vice-president at the firm, and lead author of the study.

By 2015, total shale jobs are forecast to grow to 870,000, he said. "There are not a lot of industries right now in this economy adding net new jobs," Larson said in an interview.

"It clearly does stand in stark contrast to the broader economy and this long and painful recovery," he said.

REGULATORY STATUS QUO

In shale "fracking," drillers blast gas from shale rock using sand, water and chemicals. Environmental groups worry fracking pollutes water, a charge that industry refutes.

"New extraction technologies represent exactly the kind of American ingenuity we need to revive the economy," said Fred Upton, Republican chairman of the House Energy and Commerce Committee.

"We need to make sure we are developing our resources safely and without burdensome red tape that would slow the job creation and energy potential of this vast American resource."

The shale gas industry is projected to contribute $118.2 billion to the economy by 2015, up 53 percent from last year's level, the consulting firm said in the report, which was commissioned by industry group America's Natural Gas Alliance.

The results were based on independent data and analysis, Larson said.

The report comes ahead of the 2012 presidential election, where persistent unemployment is the top issue and as federal environmental regulators weigh a larger role in the industry, currently monitored mainly at the state level.

The U.S. Environmental Protection Agency is looking at new standards for wastewater discharged from gas wells, and is finalizing rules for air pollution from the wells.

It is also studying the impact of fracking on drinking water, and wants to propose a new rule to gather data about chemicals used in fracking.

Some states have also constrained drilling. The report assumed the status quo remains in place for regulations. For example, it did not forecast any new development in New York state, which is considering whether to lift a ban on fracking.

Lower electricity prices created by the bounty of natural gas has also helped the economy, leading to another 809,000 jobs by 2015, Larson said. Eventually, the new supplies could spur growth in the U.S. chemical industry, creating even more jobs, he said.

The industry also provided $18.6 billion in tax and royalty revenues in 2010 to cash-strapped government at all levels - equivalent to what the federal government spent on the Environmental Protection Agency and National Science Foundation combined, the report said.

Early in 2012, the firm plans to release a report on the economic impact from unconventional oil, such as that coming from North Dakota's Bakken development, and another on how growth in Canadian natural gas production has benefited U.S. suppliers.

(Editing by Bob Burgdorfer and Andrea Evans)