The shale gas boom will account for nearly 1.5 million new jobs by 2015, employing hundreds of thousands of workers across 48 states even as some companies are currently cutting back on production, according to a study released today by research and analysis firm IHS Global Insight.
Soaring investment in unconventional gas production accounted for 1 million jobs in 2010 and will continue to have an effect on the national economy, contributing $192 billion to U.S. gross domestic product by 2015, according to IHS Global Insight. That total will increase to $332 billion by 2035, according to the report.
Job growth related to unconventional gas production, in both producing and non-producing states, will increase to 2.4 million by 2035, according to the research.
The independent study was commissioned by the industry-backed America’s Natural Gas Alliance and is part of a series on unconventional gas — developed from shale, coal-bed methane and tight sands — by IHS Global Insight, which is based in Englewood, Colo.
Although there is currently an oversupply of natural gas in the United States, which has forced major producers to cut back on their operations, there is a strong outlook for continued investment and job growth, said Roger Ihne, principal energy portfolio leader for research firm Deloitte, which was not affiliated with the study.
“I think clearly there’s been a fundamental shift as a result of natural gas and specifically shale gas in the United States and it has really helped to fuel a boom,” said Ihne, who said the study’s finding seemed on track with other analyses.
Nearly $3.2 trillion in cumulative investments in unconventional gas development are expected to fuel the economic growth from the industry between 2010 and 2035, according to the study.
“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,” IHS vice president John Larson, the lead author of the study, said in a statement. “As this report makes clear, these benefits spread beyond producing states to deliver positive impacts across the country.”
Larson said the study took into account cutbacks on natural gas production spending because of prohibitively low prices for the commodity. Major producers of domestic natural gas have had to substantially shift away from the capital-intensive process of producing the resource from unconventional sources like shale because of low returns resulting from the current gas surplus.
According to the most recent data available from the U.S. Energy Information Administration, there was 57 percent more gas in storage in March than the same month a year ago.
“We’ve already embedded that sort of oversupply and that activity that’s going to go on as companies think about investment opportunity potentially slowing,” Larson said during a conference call on the study.
Major investments in industrial projects, like several multibillion-dollar petrochemical plants already in the works in Texas, will likely be a part of the growth in American gas demand that will draw continued spending on gas production, Ihne said.
Texas will see the by far the most job growth because of the boom, with 288,222 new jobs already attributable to unconventional gas production as of 2010, the study said. That number will grow to 385,318 in 2015 and 682,740 by 2035, according to the study’s projections.
Annual government revenues from unconventional gas production are expected to exceed $49 billion by 2015, rising to $85 billion by 2035, the study said. By 2035, total government revenues from unconventional gas development will reach nearly $1.5 trillion, according to the report.
The economic benefits of the shale boom are broad, according to the study, with 18 percent of the projected 1.46 million new jobs to come from non-producing states by 2015.
California will lead the way for job growth in non-producing states, followed by Florida, Georgia, Missouri, North Carolina, Indiana, Wisconsin, Minnesota, Tennessee and Maryland, the study said. Job growth will come from industry-supporting roles, including “extensive supply chain and service jobs necessary to support development,” according to the report.
Louisiana ranked second in job growth in producing states, followed by Colorado, Pennsylvania, Arkansas, Wyoming, Ohio, Utah, Oklahoma and Michigan.
Unconventional natural gas job totals in producing states had a compound annual growth rate of nearly 8 percent compared with an average annual U.S. employment growth of 1.6 percent by 2015, according to IHS.