Bloomberg News

Fracking Will Support 1.7 Million Jobs, Study Shows

October 23, 2012

Drilling for oil and natural gas in shale rock is supporting 1.7 million U.S. jobs this year, including workers outside the energy industry such as waiters and shop clerks, according to researcher IHS Global Insight.

Job tied to unconventional oil and gas production will reach 3.5 million by 2035, according to the report backed by the industry and released today. Because U.S. unemployment is high, many finding jobs related to drilling otherwise would be unemployed, said John Larson, a vice president at IHS and the study’s lead author.

The IHS report was funded by groups such as the American Petroleum Institute and the Natural Gas Supply Association. In January, President Barack Obama cited an earlier IHS study that predicted drilling for shale gas alone would create more than 600,000 jobs by the end of the decade.

“We look at this in the near term, and we believe that many of these jobs really are net new jobs because these individuals would not be able to find employment elsewhere,” Larson said on a conference call. “These jobs tend to be higher paying.”

Shale oil and gas is freed by hydraulic fracturing, or fracking, in which millions of gallons of chemically treated water and sand are forced underground to shatter rock and allow the fuel to flow. Critics have cited potential risks to ground water and air quality. The U.S. Environmental Protection Agency is conducting a study of the impacts of fracking on water.

Rigs, Pipes

About 80 percent of jobs will be on rigs or at companies supplying drillers, such as pipe manufacturers. The rest will be “induced” jobs in other businesses, such as restaurants, hotels and shops. This year, the drilling industry will support about 360,000 direct jobs, 537,000 jobs in supplying industries and more than 850,000 jobs outside the industry, according to the report.

The forecasts assume current regulations on fracking will remain unchanged, according to the report.

Job growth among oil producers reflects capital costs to tap into shale rock. From this year until 2035, more than $5.1 trillion will be invested to produce unconventional oil and gas, according to the report.

Federal, state and local taxes will increase more than $111 billion in 2020 from $62 billion this year.

“We’re talking about what we perceive as a game changer in energy production for the United States,” Larson said. “It’s a really rapid rise and a dramatic shift.”

Doubling Demand

Forecasts in the report are based on IHS projections of oil and gas production. The report assumes demand for natural gas to generate electricity will more than double from now through 2035, and that U.S. exports of natural gas will reach about 4.3 billion cubic feet a day by 2020.

“We have a very, very detailed, bottom-up, build on a play-by-play basis around all this activity,” Larson said. “What you’re seeing here does not represent all resources. It only represents those resources brought to market as a commercially viable productive frontier given the market prices that we see.”

In his January State of the Union address, Obama said fracking could support more than 600,000 jobs by the end of the decade. Larson said he was “comfortable with the accuracy” of that forecast based on state and national employment data.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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