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Study: ‘One of the Most Significant Energy Events in the Last 100 Years’


Additional insight on the new IHS Global unconventional oil and natural gas study that projects more than $5.1 trillion in industry cumulative capital spending by 2035, supporting 3.5 million jobs. Here’s John Larson, IHS vice president for public sector consulting, during a conference call with reporters:

“This really is … a game changer in energy production for the United States. It’s a really rapid rise and a dramatic shift. You don’t often get to see the words ‘game-changer,’ or ‘sea change’ used around these types of events, but this is one of them. We think it’s one of the most significant energy events in the last 100 years.”

Here’s what an energy “sea change” looks like:

  • U.S. domestic oil production, which had been in decline between 1970 and 2008, is increasing – thanks in large part to unconventional production. Tight oil developed through hydraulic fracturing will total 2 million barrels per day (mbd) this year and is expected to reach 4.4 mbd by the end of the decade, Larson says.
  • Natural gas from shale was about 2 percent of total U.S. gas production in 2000. This year it will be 37 percent, Larson says. By 2020 unconventional natural gas will account for 75 percent of overall U.S. gas production, and by 2035 that figure will be 80 to 85 percent, he says.
  • Natural gas liquids (NGLs) from unconventional development, an important feedstock that is helping revive the U.S. manufacturing sector, have increased 30 percent from 2008 to 2012. Larson says unconventional NGLs will double again by 2020 to about 3.8 mbd.

This growth in developing unconventional resources will necessitate major capital spending by energy companies and will be accompanied by dynamic job creation and increased tax revenues for all levels of government over roughly the next two decades, IHS projects. Larson:

“(Unconventional production) is going to be fueled by capital expenditures. You’ll see massive outlays to help drive that growth. … You can see this continued expansion. This is not just a near-term boom. This is a long-term boom. That capital expenditure is going to be taking place through the full forecast horizon in 2035. That’s key to driving the job growth.”

IHS estimates unconventional oil and natural gas activity will support 1.7 million jobs this year, growing to 2.5 million in 2015, 3 million in 2020 and 3.5 million in 2035. The totals include direct jobs (people working for energy companies), indirect jobs (people working for industry’s supply chain) and induced jobs – jobs supported by the economic activity of industry workers. Larson:

“These jobs are very high-value jobs. They reach a broad base of employees, and the income earned by these jobs is significantly greater than the average income opportunity out there.”

Certainly, the IHS study depicts a vigorous industry that can play a major role in leading economic renewal. IHS Vice Chairman Daniel Yergin:

“The growth of unconventional oil and gas production is creating a new energy reality for the United States. That growth has not only contributed to U.S. energy security but is a significant source of new jobs and economic activity at a time when the economy is a top priority.”

API President and CEO Jack Gerard:

“The study highlights the extraordinary opportunities we have right here at home to develop our unconventional oil and gas resources and return our economy to a pro-growth engine. Polls show Americans’ top priority is job creation, and the oil and natural gas industry will be a driver for those new jobs, with nearly three quarters of a million new jobs added over just the next three years.”

Image: Investment via Shutterstock

Mark Green's picture

Thank Mark for the Post!

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Bob Meinetz's picture
Bob Meinetz on October 24, 2012

The Energy Collective's tagline is "The World's Best Thinkers on Energy & Climate". Mark, by ignoring climate your article represents the epitome of poor energy thinking.

As one of its representatives I understand your job is to market the oil industry. Whether that role is a valuable one on The Energy Collective is questionable, and as a citizen I have no qualms whatsoever about attacking your obsession with jobs at the expense of the environment as highly irresponsible and regressive.

It's not 1920, and the public knows better than to believe a profit-trumps-all outlook belongs in our energy future.

Bob Meinetz's picture
Bob Meinetz on October 24, 2012

Thanks for your reply Henry.

I understand some disagree with my point of view, and I welcome legitimate criticism and discussion. As dear old Dad used to say: "Please - correct me. I love to learn."

However, Mark's article references only a report created by a consulting company, IHS Global. Who funded the study? Why is the study not publicly available without creating an account at the company's website?

These ambiguities typically don't accompany rigorous academic research. And when that company uses superlatives like "game-changer" and "dramatic" the whole affair smacks of little more than a sponsored puff piece.

I'm challenging that, and I think The Energy Collective should too.

Jesse Parent's picture
Jesse Parent on October 24, 2012

Bob, I hear where you're coming from. To that end, I can only encourage you to continue your 'calling out' of Energy Tomorrow / Vote4Energy / Mark Green / etc. They are all advocacy-based sentiments endorsed by the API, and ones that never advocate for less oil or gas develpoment.

I don't think TEC will  be inclined to not publish them, as they have, as Henry said, allowed pretty much every type of zealotry possible in favor of one energy perspective over another. 

While I'm personally 'put off' by the amount of clout that the API & manifestations have in shaping energy discussion in the US, the only thing I can think of is either ignoring them entirely or challenging them vigorously when it comes up - or pointing out to people who may not know that the creations of such group are, by design, going to be promoting oil and gas development.

At the very least, TEC allows us another avenue to express that. 

"These ambiguities typically don't accompany rigorous academic research."
No, they certainly do not.
See my other remarks about 'reports' and 'polls' used by the API.

Rick Engebretson's picture
Rick Engebretson on October 24, 2012

The large increase in oil investment and oil jobs Mark brags about also means consumers will pay more to oil companies and oil companies must work harder to get the oil. ie: oil companies grow. But does it really fix anything or just dig us deeper, faster, in a dead end?

Bob Meinetz's picture
Bob Meinetz on October 25, 2012

Jesse, thanks for your message of support.

I'd like to backtrack just a hair and give TEC some recognition. It really is a rare portal that can present many different views on a subject which often generates contentious debate. In general it does so with great success, and that's valuable.

Having been employed by blogs and publishing a few of my own, I have a fair idea of the amount of work involved and the scant resources which are typically available. Though I wouldn't expect TEC to vet articles, I believe they'd elevate discussion if there was a simple requirement that quoted sources are available to the public, and are published under some kind of editorial or peer review elsewhere.

The products API represents are indispensable as is their input. But commercials masquerading as research only make it harder for themselves to be taken seriously, and for TEC to attract "the world's best thinkers on energy & climate".

Ron Wagner's picture
Ron Wagner on November 2, 2012

You are totally ignoring the impact of cheap natural gas. 

Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, vans, buses, locomotives, aircraft, ships, tractors, engines of all kinds. It costs far less.  It will help keep us out of more useless wars, where we shed our blood and money. It lowers CO2 emissions. Over 2,400 natural gas story links on my blog. An annotated bibliography of live links, updated daily. The big picture of natural gas.

Ron Wagner's picture
Ron Wagner on November 2, 2012

So really, you believe in controlling free speech in the name of your "scientific" wisdom.


Bob Meinetz's picture
Bob Meinetz on November 2, 2012

I believe people who make claims should be able to properly source them, especially on a website which hopes to attract "the world's best thinkers". That is scientific wisdom and it's not mine, it goes back to the Greeks and more recently Descartes and Francis Bacon.

As for controlling speech, I wouldn't dream of it. Feel free to occupy a street corner and lecture all who will listen.

Rick Engebretson's picture
Rick Engebretson on November 2, 2012

Actually, ronwagn, I'm a big fan of natural gas, too. But I work toward agricultural development of fuels, and energy in general. A cow eats a lot of grass to filter out nutrients, leaving behind a lot of natural gas producing waste.

I don't intend to mass market energy, or spend $trillions to do it. I think rebuilding small farm agriculture infrastructure will do more for energy, food, environment, employment than anything else we could do. I represent 1 percent of 1 percent of public opinion. Howling at the moon in the dark is what I do best. In my lonely labors, questioning my sanity, it helps to watch the good people of NYC try make their lives whole.

Thanks for the link, and shared thoughts.

Ron Wagner's picture
Ron Wagner on November 2, 2012

We have a lot in common. I am a big fan of biomass and biomethane. I started out burning corn in a corn stove when it was $1.89 a bushel and I lived in a big old house with no insulation. It was a lot cheaper than natural gas. That was only seven years ago!. Then as ethanol came along, corn shot up in price. Natural gas was cheap, and  I now heat a smaller and new home with natural gas. I live on an acre of Giant Burr Oaks, White Pine, and Silver Maples. I heat with a small gas space heater, and rarely use the whole house heat. 

Maybe you can help me. I am trying to inform farmers about the possibilities of using CNG and LNG. There are modules that could be delivered to the farm. Steyr makes a CNG tractor: 

Caterpillar has an ag division and Cat is "all in" on converting to CNG and LNG equipment. 

I think farmers could save a bundle on fuel, and that would help them keep the world  fed. 

I am a fan of Mother Earth News. They once had an article on building a methane digester from a barrel.

All the best, 

Ron Wagner

Ron Wagner's picture
Ron Wagner on November 2, 2012

Mark, Thanks for the article. It hits a lot of very important points. Natural gas will help people all over the world. I predict that natural gas will be fairly cheap worldwide in twenty years. Biomethane will be a small part of that. 

Rick Engebretson's picture
Rick Engebretson on November 3, 2012

Ron Wagner, I urge you to try post articles on TEC. I've been howling at the moon too long and don't take myself seriously anymore.

In about 1987 people blamed post consumer plasic for filling landfills. So I put some effort into "recycled plastic livestock septic tanks." The idea was to mass produce an 8 foot diameter section of plastic pipe that could be trucked to farms and bolted together to needed volume with the ends capped. A simple, cheap horizontal structure, with good thermal and chemical properties, that could be maintained (unlike concrete or steel). I learned the hard way that self promoting environmentalists don't really want recycling, methane and nutrient capture, clean water, healthy farming. And our rural county now is home to a new mountain aka landfill.

Yes, my 1951 Allis Chalmers WD45 tractor included a propane fuel option.

There is a lot we could do. But the self promoting environmentalists really just want new taxes. And we'll see what hunger in America (and the world) really looks like next year. They'll want a tax for hunger, too. This drought is not over. Real fear in the farm belt now.

Perhaps the current US political crisis can be seen as a breakdown of consumers vs. producers. The large, less populated producing areas of the country are leaning Republican while the consumer states lean Democrat. Oil and food production is not as lovely as opera production, or banking. But producers are hitting limits consumers need to better understand. And without the hype, perhaps that is the real message of this article.

Please post on TEC.

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