North America’s shale gas boom is creating a surge of related jobs in rust-belt states that have been hit hard by the recent recession, as the industry battles to overcome environmental concerns by touting the economic benefits of development.
While Pennsylvania and West Virginia have benefited from the boom in the Marcellus gas fields, Ohio is the latest state to see oil companies boost investment on unconventional shale plays, bringing thousands of new jobs to its depressed southeastern region.
Indeed, the rapid growth in natural gas development in the United States and Canada is have significant impact on the overall economy by stimulating investment and high-paying jobs, keeping energy costs down and creating revenue for cash-strapped governments, IHS Global Insight says in a new report.
The shale gas sector accounted for more than 600,000 direct and indirect jobs in the United States last year, a figure that is forecast to grow to 870,000 by 2015. IHS economists say the industry creates more spinoff activity for every dollar invested than most sectors because its supply chain is largely based in North America.
At the same time, lower natural gas prices have had a stimulative effect on the North American economy, even as they encourage investment in industries that rely on the fuel as feedstock, such as the chemical industry.
“This is really without a doubt one of the bright spots in what is otherwise a very, very laborious recovery period,” IHS vice-president John Larson said. “And you just don’t see a lot of industries creating the value that this industry is currently creating for the overall economy.”
If shale gas production is constrained – whether owing to environmental concerns or other factors – those economic benefits would disappear and gas prices would climb, providing a brake rather than stimulus to economic growth, he said.
The IHS report concludes that shale gas has risen to 34 per cent of U.S. production today from just 1 per cent in 2000, and that it will grow to 60 per cent by 2035.
The shale boom has revolutionized the continent’s energy sector, but the industry is under growing pressure over concerns that that its aggressive extraction techniques pose a danger to local water resources.
Several states and provinces – including New York and Quebec – have imposed moratoriums on shale gas drilling. The industry insists the environmental effects can be minimized, and that the economic benefits far outweigh the threats.
In Ohio, energy giants such as Exxon Mobil Corp., Royal Dutch Shell PLC, Chevron Corp. and Devon Energy Corp. have acquired land positions and are expecting to pursue winter drilling programs this year.
The companies are exploring the Utica formation in hopes of finding commercial quantities of liquids-rich natural gas and even light crude. An industry-sponsored report concluded oil and gas drilling in the state could create 204,000 direct and indirect jobs by 2015 and generate $240-million (U.S.) in revenue for local municipalities.
“Ohio’s been through the wringer,” said Tom Stewart, executive vice-president of the Ohio Oil and Gas Association. “This is a state that is looking for economic opportunity, and we hope this will be it.”
Mr. Stewart noted the spinoffs are already evident in long-depressed Youngstown, Ohio, where the French firm Vallourec Group SA is spending $650-million to build a steel mill to provide pipe to the unconventional gas industry for the Marcellus and Utica plays.
Editor's note: The New Brunswick government has not imposed a moratorium on shale development, though several municipalies in the province have opposed drilling in their jurisdictions. Incorrect information in this article has been changed online.