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Shale energy creating supply chain jobs

Robert Francis

Logistics operations drive by the shale energy boom employed 32,000 workers in 2012, a figure which is expected to grow by over 26,000 jobs, or 82 percent, to more than 58,000 jobs in 2025.
America’s shale energy revolution is creating and sustaining hundreds of thousands of jobs in diverse sectors of the economy that supply construction, equipment, supplies and services to shale energy operations, and it is making the U.S. manufacturing sector more competitive by reducing energy costs, the president and CEO of Energy Equipment and Infrastructure Alliance (EEIA), Toby Mack, told Congress May 20.


Testifying at a House Energy and Mineral Resources Subcommittee hearing, Mack said the shale supply chain is booming and has created more than 450,000 jobs since the energy revolution began less than a decade ago. New research conducted by IHS Global for EEIA indicates that this boom will generate consistently rapid growth over the next decade. By 2025, nearly 300,000 new jobs will be created, for a 64 percent increase over 2012 employment in the diverse shale supply chain industries.
EEIA represents the shale energy supply chain, which includes manufacturing and distribution companies, construction companies, material suppliers, service providers and organized labor, which provide equipment, construction, materials, services and workers for shale oil and gas exploration, production, transportation and processing.


The economic and job benefits of shale oil and gas development extend well beyond those states with major shale plays. The preliminary IHS Global findings indicate that by 2025 better than one out of every seven jobs in the supply chain industries, more than 126,000 in all, will be in non-energy producing states, according to Mack.

From Mack’s testimony:
New research
My purpose is to share some important preliminary findings from new research conducted by IHS Global for EEIA. Its objective is to discover and report the extent of supply chain jobs, labor income, and economic output attributable to shale energy operations. The study looks at over 50 different supply chain industries in manufacturing, construction, services and logistics, from 2012 and throughout the forecast period to 2025. The values are reported by year for each industry, and within each of the lower 48 states.
One important facet of this research is its measurement of jobs and output not only in the energy-producing areas, but also in states where little or no energy is produced, but where there is significant manufacturing of equipment and products used in regions where energy operations occur. Thus it documents the extent to which all Americans are stakeholders, not only in the new abundance and affordability of energy, but also in the economics of its production, processing and delivery.
The research I am sharing today is preliminary. Some of the numbers reported may be higher, but not lower, when the final report is released this summer. Thus what I am reporting should be considered as depicting the minimum case. While the final report will detail economic output, jobs and labor income, the following analysis focuses only on jobs, which serve also as a proxy for output and worker income.
Manufacturing jobs
The study measures and reports on 20 different categories of manufactured products.
In these manufacturing industries, jobs grow from 125,000 in 2012 to over 185,000 in 2025, nearly 50 percent growth. Importantly, at least one of every three manufacturing jobs is created outside of energy-producing areas. In fact, job growth is greater in non-producing states, with jobs growing by over 100 percent compared to 30 percent in energy-producing states.

Construction jobs
Construction jobs include not only construction company workers, but also related architectural and engineering workers, construction equipment distribution, maintenance and leasing workers, and constructions materials production and distribution workers.
Construction accounts for roughly 50 percent of all jobs in the shale energy supply chain. Jobs in construction of shale energy infrastructure grow from about 220,000 in 2012 to 345,000 in 2025, for an increase of over 125,000 jobs and growth of about 60 percent. Construction jobs are primarily but not exclusively located in energy-producing areas, with about 85 percent based near energy operations.

Logistics jobs
Logistics jobs include those related to freight trucking, railroad operation, pipeline operation and water transportation.
Shale energy-driven logistics operations employed 32,000 workers in 2012, to grow by over 26,000 jobs, or 82 percent, to over 58,000 jobs in 2025. Again about 85 percent of these jobs occur in and around energy operations. Much of the demand for logistics workers is driven by hauling and delivery of materials and supplies to and from energy operations.

Service jobs
Service employment categories are a diverse range of types of services, including environmental, waste management, technical, professional and scientific services, financial services, and well drilling and completion services. These categories employed 80,000 workers in 2012 and will double to just under 160,000 workers by 2025. Nearly all service jobs are located in or near energy-producing areas.

Conclusions
The shale energy supply chain sectors are flourishing and the outlook is strong for continued growth in employment and production output. The supply chain is a major contributor to the U.S. economy and its outlook for the foreseeable future is strong. The benefits are distributed widely throughout the United States and not confined to the energy-producing areas. However, government action restricting shale energy production could undermine the viability of this sector. Policymakers must protect public health, safety and the environment, while ensuring policies that allow the shale energy sector to continue to grow and prosper.
 

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