American Oil and Gas Reporter - January 2012 - 254

* Over the next 25 years, the shale
gas industry will generate more than $933
billion in tax revenues for local, state
and the federal governments.
* Savings from lower natural gas
prices, as well as the associated lower
prices for other consumer purchases,
equate to an annual average addition of
$926 in disposable income per household
between 2012 and 2015, and will increase
to more than $2,000 per household
annually in 2035.
Jobs Multiplier
IHS notes that as recently as 2007, it
was believed the country would soon
need to import large volumes of liquefied
natural gas to meet domestic demand.
Instead, the study notes, shale gas
production has more than doubled the
size of the discovered natural gas resource
in North America-enough to satisfy more
than 100 years of consumption at current
rates.
A key reason for the shale gas industry's
profound economic impact is its high
"employment multiplier"-the indirect and
induced jobs created to support an industry,
IHS observes. For every direct job created
in the shale gas sector, more than three
indirect and induced jobs are created, a
rate higher than the financial and
construction industries, the report finds.
"Shale gas combines a capital-intensive
industry with a broad domestic supply
chain," Larson comments. "The United
States is a leader in all parts of the shale
gas industry, which means most of its
suppliers are based domestically, and that
means a larger portion of the dollars
spent are supporting domestic jobs in
trucking, steel fabrication, aggregates,
heavy equipment manufacturing, hotels
and restaurants, among others."
The study also finds that shale gas and
related jobs pay higher wages on average-
$23.16 an hour as of December-than
those paid to workers in manufacturing,
transportation and education, IHS says.
IHS says its study measured the broader
impact of lower natural gas prices, finding
that from 2010 to 2035, prices would
average at least two times more, absent
shale gas production. This impact is even
greater now and over the next few years,
when prices would have been two-and-ahalf to three times higher, IHS emphasizes.
It says lower natural gas prices have
resulted in a 10 percent reduction in
electricity costs nationally, and that flows
through the economy and leads to lower
prices for many other consumer purchases.
Lower gas prices also boost the
international competitiveness of domestic
manufacturers, IHS mentions, resulting

in 2.9 percent higher industrial production
by 2017 and 4.7 percent higher production
by 2035.
"Absent the added supply from shale
gas production, large volumes of LNG
imports would be required and U.S.
consumers would be paying European or
even Asian prices, which are two to three
times what they are in the United States,"
Larson says. "The benefits of that savings
reverberate through the wider economy."
Study Methodology
The Economic and Employment
Contributions of Shale Gas in the United
States was commissioned by America's
Natural Gas Alliance. IHS Global Insight
offers an independent assessment and
says it is exclusively responsible for all
of the analysis, content and conclusions
contained in the study.
In measuring the economic contribution
of shale gas, IHS says the study fully
"sized" the economic influence of the
industry by capturing all the supply chain
and income effects associated with shale
gas activity in the United States. The
results of the production and capital
expenditure profile analysis were integrated
into a customized modeling approach
developed by IHS Global Insight.
This approach links input/output
modeling techniques similar to those used

by the U.S. Department of Commerce
and the Congressional Budget Office with
the dynamic modeling capabilities of
proprietary IHS models to capture the
industry's comprehensive contribution
and impact on the economy, IHS says. It
says the results represent a conservative
estimate because the study:
* Constrained future production and
capital expenditures by realistic market
demand as well as technical and economic
feasibility of developing shale gas plays;
* Did not consider production or investment activities from additional gas
plays that have yet to be discovered;
* Evaluated each play independently
to reflect regulatory environments in each
region, and adjusted production profiles
to reflect little or no development if there
was uncertainty as to regulation and
access;
* Did not consider the economic benefits accruing to U.S. suppliers that serve
the Canadian shale gas industry; and
* Did not quantify job creation in industries that would refocus investment
in the United States (for instance,
petrochemicals).
To download The Economic and
Employment Contributions of Shale Gas
in the United States complete report and
methodology, visit www.ihs.com/EconomicContributionofShaleGasintheUS.
❒

Benefits Of Shale Development
Outweigh Risks, Survey Says
HOUSTON-A majority of Americans
think developing natural gas resources
held in shale formations offers more rewards than risks, including those associated
with hydraulic fracturing, a survey conducted by the Deloitte Center for Energy
Solutions indicates. Moreover, it says
eight in 10 respondents link natural gas
with job creation and economic revival.
According to the survey, 83 percent of
respondents agree that natural gas development can stimulate job growth in the
United States, while 79 percent believe
developing gas resources can help revitalize
the economies of the states and communities where shale gas is produced.
Only 19 percent of those surveyed
feel the risks of developing shale gas
somewhat or far outweigh the benefits,
while 58 percent see benefits outweighing
the risks, and the remainder are unsure.
The survey consisted of 1,694 online
interviews with adults aged 21-74, and
examined three audiences: residents of
areas where shale gas development is an
established industry; residents of an area

254 THE AMERICAN OIL & GAS REPORTER

where shale is a newer phenomenon,
specifically New York; and respondents
across the United States, Deloitte reports.
In areas where shale development is
under way or planned, 58 percent of those
polled say they would recommend that
family or friends lease their lands. In established shale-producing areas in Texas,
Louisiana and Arkansas, 71 percent report
they would make such a suggestion.
The public also associates jobs in the
natural gas industry with good pay, Deloitte
reports, with 56 percent of respondents
in areas where shale gas development is
planned or under way believing jobs in
gas production command higher pay than
the average in their communities. That
number jumps to 62 percent when looking
at relatively mature shale regions, such
as Texas, the survey points out.
Peter Robinson, an independent senior
adviser for oil and gas at Deloitte, points
out that the role of natural gas in job creation and economic revival is only going
to increase as shale gas production ramps
up. Citing a separate Deloitte research
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