Oil and Gas Manufacturing: Current Shale Boom to Enhance Manufacturing, Economy, and Incomes

oil and gas manufacturing

Earlier this year, Alexander Frei of Cushman & Wakefield’s Business Incentives Practice said in an article in Area Development mgazine that the . According to Frei, the technological advancements in oil and gas manufacturing that have taken place over the last 20 years, which ultimately resulted in the establishment of fracking as an economically feasible method of accessing fossil fuels, is arguably the biggest single reason for this projection of U.S. energy independence. In fact, not only will the U.S. no longer need to import energy, but also fracking for shale gas could result in the United States becoming a net exporter of natural gas in the next decade, Frei noted.

As noted in a previous post, oil and gas suppliers are also seeing major growth from this trend, as more and more oil and gas manufacturing companies are needing those supplies to keep up with this current boom.

Oil and Gas Manufacturing Creates Energy Independence and Costs Savings for U.S. Manufacturers

A report from IHS indicates that Frei’s thinking was on the right track. According to the study, the shale oil and gas boom is already cutting the U.S. trade deficit by reducing the need for imported energy, while also enhancing America’s global manufacturing competitiveness, especially for U.S. manufacturing companies that operate in energy-intensive sectors. In fact, the study projects that the shale boom from oil and gas manufacturing companies will result in a reduction in the U.S. trade deficit of more than $164 billion by 2020 — thereby eliminating one third of the nation’s current trade deficit.

“The shale boom “is leading to unprecedented investment and capacity expansion in the U.S., in stark contrast with other areas, ” said American Chemistry Council President Cal Dooley in referenced to the IHS report. He further noted that North American basic chemical and plastics production is projected to double by 2020, while Western Europe’s production is expected to fall by a third. Dooley highlighted IHS’s finding that by 2025 unconventional energy is projected to spur $100 billion in investment in U.S. chemical and plastics plants and boost industry capacity by 89 million tons.

“The unconventional oil and gas manufacturing revolution is not only an energy story; it’s also a very big economic story that flows throughout the U.S. economy in a way that is only now becoming apparent,” IHS Vice Chairman Daniel Yergin said. “In addition to significant job and economic impacts from the energy production and its extensive supply chains, the growth of long-term, low-cost energy supplies is benefiting households and helping to revitalize U.S. manufacturing, creating a competitive advantage for U.S. industry and for the United States itself.”

The study by IHS — “” — expands on research released by IHS last October. According to these reports, the unconventional oil and gas manufacturing sector currently supports more than 2.1 million jobs, and that total is projected to rise to 3.3 million jobs in 2020 and 3.9 million jobs by 2025. Further, more than 460,000 combined oil and gas manufacturing jobs (3.7 percent of all manufacturing jobs) will be supported in 2020, rising to nearly 515,000 (4.2 percent of total manufacturing jobs) in 2025. The U.S. manufacturing sectors that are reaping the greatest benefits from secure supplies of low-cost energy include energy-related chemicals and other energy-intensive sectors such as petroleum refining, aluminum, glass, cement, and the food industry, according to the study. The chemical manufacturing sector accounted for $198 billion in exports in 2012, or 13 percent of total U.S. merchandise exports — up from $152 billion in 2007. The IHS study forecasts that this growth in the U.S. chemical sector will continue as energy-intensive industries benefit from lower energy prices as well as increased demand for their products.

Additionally, U.S. households are benefiting from lower electricity and heating bills because of the boom created by shale oil and gas, adding more than $1,200 last year to the discretionary income of the average U.S. family. That number will reach $2,000 by 2015, according to the IHS study.

The Shale Boom Driving Oil and Gas Manufacturing Hot Spots

US shale gas production has grown rapidly in recent years after a long-term effort by as the natural gas industry in partnership with the Department of Energy to improve drilling and extraction methods while increasing exploration efforts and is the driving force behind the boom in oil and gas manufacturing. US shale production was 2.02 trillion cubic feet (57 billion cubic meters) in 2008, a jump of 71% over the previous year. In 2009, US shale gas production grew 54% to 3.11 trillion cubic feet (88 billion cubic meters), while remaining proven US shale reserves at year-end 2009 increased 76% to 60.6 trillion cubic feet (1.72 trillion cubic meters). In its Annual Energy Outlook for 2011, the US Energy Information Administration (EIA) more than doubled its estimate of technically recoverable shale gas reserves in the US, to 827 trillion cubic feet (23.4 trillion cubic meters) from 353 trillion cubic feet (10.0 trillion cubic meters), by including data from drilling results in new shale fields, such as the Marcellus, Haynesville, and Eagle Ford shales. In 2012 the EIA lowered its estimates again to 482 tcf. Shale production is projected to increase from 23% of total US gas production in 2010 to 49% by 2035.

“The development of shale gas is expected to significantly increase U.S. energy security and help reduce greenhouse gas pollution.” — White House, Office of the Press Secretary. The availability of large shale gas reserves in the US has led some to propose natural gas-fired power plants as lower-carbon emission replacements for coal plants, and as backup power sources for wind energy.

Eagle Ford Shale Formation

The Eagle Ford Formation (also called the Eagle Ford Shale) is a sedimentary rock formation from the Late Cretaceous age underlying much of South Texas in United States, consisting of organic matter-rich fossiliferous marine shale. It derives its name from the old community of Eagle Ford, now a neighborhood in West Dallas, where outcrops of the Eagle Ford Shale were first observed. Such outcrops can be seen in the geology of the Dallas–Fort Worth Metroplex, and are labeled on images with the label “Kef”. The Eagle Ford Shale is one of the most actively drilled targets for oil and gas in the United States in 2010.

Petrohawk drilled the first well to produce oil and gas from the Eagle Ford in 2008, in LaSalle County, Texas. Oil companies quickly extended the productive area, which stretches from the Texas-Mexico border in Webb and Maverick counties and extends 400 miles toward East Texas. As of 2013, Eagle Ford produces oil and gas in 15 counties. The play is 50 miles wide and an average of 250 feet thick at a depth between 4000 and 12,000 feet. The shale contains a high amount of carbonate which makes it brittle and easier to use hydraulic fracturing to produce the oil or gas.

Marcellus Shale Formation

The Marcellus Shale Formation is a unit of marine sedimentary rock found in eastern North America. Named for a distinctive outcrop near the village of Marcellus, New York in the United States, it extends throughout much of the Appalachian Basin. The shale contains largely untapped natural gas reserves, and its proximity to the high-demand markets along the East Coast of the United States makes it an attractive target for energy development by oil and gas manufacturing companies.

The Marcellus natural gas trend, which encompasses 104,000 square miles and stretches across Pennsylvania and West Virginia, and into southeast Ohio and upstate New York, is the largest source of natural gas in the United States, and production was still growing rapidly in 2013. The Marcellus is an example of shale gas, natural gas trapped in low-permeability shale, and requires the well completion method of hydraulic fracturing to allow the gas to flow to the well bore. The surge in drilling activity in the Marcellus Shale since 2008 has generated both economic benefits and considerable controversy.

Haynesville Shale Formation

The Haynesville Shale is an informal, popular name for a rock formation that underlies large parts of southwestern Arkansas, northwest Louisiana, and East Texas. It lies depths of 10,500 to 13,000 feet below the land’s surface. It is part of a large rock formation, which is known by geologists as the Haynesville Formation. The Haynesville Shale underlies an area of about 9,000 square miles and averages about 200 to 300 feet thick. The Haynesville Shale is overlain by sandstone of the Cotton Valley Group and underlain by limestone of the Smackover Formation.

The Haynesville Shale came into prominence in 2008 as a major producer of shale gas for oil and gas manufacturing in East Texas and Louisiana. Producing natural gas from the Haynesville Shale involves drilling wells from 10,000 feet (3,000 m) and to 13,000 feet (4,000 m) deep; the formation becomes deeper to the south.

In 2008, the Haynesville Shale was thought to be the largest natural gas field in the contiguous 48 states with an estimated 250 trillion cubic feet (7.1×1012 m3) of recoverable gas. More recently, as of 2009, the Haynesville was estimated to have 75 trillion cubic feet of recoverable gas, second only to the Marcellus Formation in the US.Some scientists estimated recoverable reserves average of 6.5 billion cubic feet per well. The US Energy Information Administration estimated that the average well would produce 2.67 billion cubic feet of gas. Production has boomed since 2008, creating a number of new millionaires in the Shreveport, Louisiana region. Haynesville gas production peaked at 7.2 billion cubic feet per day in November 2011. In January 2013 the formation produced 6.2 billion cubic feet per day, 9.3% of all the gas produced in the US.

Oil and gas manufacturing solves a lot of current economical issues for the United States. We are hopeful that politics can stay out of the issue or at least guide the issue further to truly allow the United States to become more energy dependent. How do you think this current boom will affect the United States economy long term?

Adam Robinson

Adam Robinson oversees the overall marketing strategy for Thomasholmes including website development, social media and content marketing, trade show marketing, email campaigns, and webinar marketing. Mr. Robinson works with the business development department to create messaging that attracts the right decision makers, gaining inbound leads and increasing brand awareness all while shortening sales cycles, the time it takes to gain sales appointments and set proper sales and execution expectations.

Adam Robinson

Adam Robinson

Adam Robinson


Adam Robinson

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