Energizing America: Facts for Addressing Energy Policy. Rayola Dougher API Senior Economic Advisor,

Size: px
Start display at page:

Download "Energizing America: Facts for Addressing Energy Policy. Rayola Dougher API Senior Economic Advisor,"

Transcription

1 Energizing America: Facts for Addressing Energy Policy Rayola Dougher API Senior Economic Advisor,

2 U.S. oil and natural gas production is increasing as a result of technological innovations U.S. Crude Oil Production (millions of barrels per day) U.S. Natural Gas Marketed Production (billions of cubic feet per day) Note: Bars in red show EIA s Short-term Energy Outlook forecast. Source: Energy Information Administration.

3 Shale resources are widely dispersed across the U.S.

4 Trillion cubic feet U.S. shale gas proved reserves increased more than five fold in as many years Source: EIA

5 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Billions cubic feet per day (dry) U.S. shale gas production has increased rapidly in recent years Marcellus (PA & WV) Haynesville (LA & TX) Eagle Ford (TX) Fayetteville (AR) Barnett (TX) Woodford (OK) Bakken (ND) Antrim (MI, IN, & OH) Rest of US Source: EIA

6 The Potential of the Utica Shale Play in Ohio Estimates range from 3.8 tcf to 15.7 tcf gas and1.31 to 5.5 billion barrels of oil according to Ohio Department of Natural Resources. Source: Ohio Department of Natural Resources

7 Trillion Btu Ohio uses three and a half times more energy than it produces Consumption Production Electricity imports Renewables Nuclear Coal Natural Gas Oil Source: EIA, State Energy Profiles, 2012

8 Ohio s production has fallen sharply in recent years Ohio Crude Oil Production (thousands of barrels per day) Ohio Natural Gas Marketed Production (millions of cubic feet per day) Source: Energy Information Administration.

9 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Ohio Natural Gas Gross Withdrawals fromshale Gas Million cubic feet Source: EIA

10 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Ohio and Pennsylvania: Natural Gas Gross Withdrawals from Shale Gas Million cubic feet Pennsylvania Ohio Source: EIA

11 Shale production is offsetting declining production from other U.S. oil and natural gas resources

12 Price Index: January 2007 = 1.0 The price of natural gas has fallen relative to crude oil Changes in the price of crude oil and natural gas Crude Oil (WTI) Natural Gas (Henry Hub) Source: EIA

13 Henry Hub $/MMBTU EIA forecasts relatively low natural gas prices for decades Forecast Source: EIA

14 Expenditures on natural gas have fallen sharply (billions $) Residential Commercial Industrial $68.0 $64.4 $51.0 $38.6 $26.8 $ Source: EIA

15 Industrial production expands in response to competitive advantage of low natural gas prices Industrial production benefits from strong growth in shale gas production Lower natural gas prices lower costs of both raw material and energy Chemical and fertilizer facilities are seeing increased utilization with lower natural gas prices Energy-intensive industry can be more competitive in the global market

16 More energy can lead to American prosperity American consumers annual savings due to lower gas prices resulting from shale energy development (IHS Global Insight)

17 Shale development equals more jobs Construction Industry Drilling Industry Chemical Industry Trucking Industry Hospitality Industry Steel Industry

18 Employment contribution of unconventional oil and gas development in Ohio (number of workers) Industry Administrative & Support Services 2,616 7,591 13,412 Professional, Scientific, & Technical Services 2,578 10,130 19,553 Food Services & Drinking Places 2,016 7,100 13,581 Fabricated Metal Product Manufacturing 1,976 3,863 6,361 Machinery Manufacturing 1,846 4,126 8,476 Primary Metal Manufacturing 1,596 2,916 4,380 Wholesalers 1,546 4,327 8,032 Management of Companies & Enterprises 1,190 3,419 5,724 Real Estate 1,132 3,630 6,663 Oil and Gas Extraction 1,064 20,789 39,049 Construction 1,009 8,387 17,670 Insurance Carriers & Related Activities 703 2,396 4,505 All Other Industries 19,560 64, ,218 State Total 38, , ,624 Source: IHS Global, America s New Energy Future: The Unconventional Oil and Gas Revolution and the US Economy, December 2012

19 Ohio Jobs Supported by Shale Development Direct Jobs Indirect Jobs 120 New Jobs Ken Miller Supply Wooster, Ohio CHK correspondence with company 160 New Jobs 508 Jobs Saved US Steel Lorain, Ohio ml 449 New Jobs 489 Jobs Saved Republic Steel Lorain, Ohio ml 100 New Jobs BP Warren, Ohio CHK correspondence with company 120 New Jobs TMK IPSCO Brookfield, Ohio Jobs/LEcE8PoD3UeQAJABgGhFKQ.cspx 700 New Jobs Baker Hughes Massillon, Ohio New Jobs 100 Jobs Saved V&M Star Youngstown, Ohio New Jobs Ariel Corp Mt. Vernon, Ohio s/2013/02/10/well-positioned.html 150 New Jobs Weatherford Youngstown, Ohio 70 New jobs State of Ohio: Ohio Dept. of Natural Resources (ODNR) Columbus, Ohio Field/Pv3k_rZXskm-N2tnJw9VMA.cspx 500+ New Jobs Chesapeake Energy Louisville, Ohio 100 New Jobs Kelchner Dayton, Ohio CHK correspondence with company 45 New Jobs CESO Dayton, Ohio CHK correspondence with company 300 New Jobs Halliburton Zanesville, Ohio =1&nclick_check=1 145 New Jobs 55 Jobs Saved Tremcar Dover, Ohio New Jobs Schlumberger New Philadelphia, Ohio

20 Oil and natural gas jobs pay well (average annual wages) Oil and natural gas extraction $155,062 Pipeline transportation $129,549 Drilling oil and gas wells Support activities for oil and gas Oil and gas pipeline construction $80,222 $69,193 $92,266 Ohio $43,601 Source: U.S. Quarterly Census of Employment and Wages, 2012.

21 Shale development equals more government revenue Contributed $74 billion in 2012 and expected to grow to $126 billion by On cumulative basis, estimated to generate $1.6 trillion in tax revenue between

22 Economic impact of unconventional oil and gas development on Ohio Employment 38, , ,624 Value Added (millions $) Federal Taxes State & Local Taxes (millions $) $4,103 $17,960 $35,292 $537 $911 $2,150 $4,594 $4,218 $8,453 Source: IHS Global Insight, America s New Energy Future: The Unconventional Oil and Gas Revolution and the US Economy, December 2012.

23 Power and Politics

24 Million barrels per day World crude oil and liquid fuels production growth OPEC North America Russia and Caspaian Sea Latin America North Sea Other Non-OPEC Source: EIA, Short-term Energy Outlook, April 2014

25 United States Canada Brazil Kazakhstan Russia Sudan China Oman Colombia Malaysia Other North Sea Vietnam India Gabon Australia Egypt Norway Mexico Azerbaijan Syria United Kingdom (million barrels per day) Non-OPEC crude oil and liquid fuels production growth Source: EIA, Short-term Energy Outlook, April 2014

26 May-2007 Oct-2007 Mar-2008 Aug-2008 Jan-2009 Jun-2009 Nov-2009 Apr-2010 Sep-2010 Feb-2011 Jul-2011 Dec-2011 May-2012 Oct-2012 Mar-2013 Aug-2013 Jan-2014 Crude oil and petroleum product imports have declined as a share of consumption 70% 60% 50% 40% 30% 20% 10% 0% Source: EIA

27 EIA projects U.S. will be net exporter of natural gas by 2017 Natural gas (quadrillion Btu) Production Consumption Source: EIA, AEO 2014

28 Seven US facilities have been approved to export LNG, over 20 are awaiting approval and there are more than 60 competing sites planned or under construction in foreign nations Source: API LNG Export Facility Map

29 LNG exports result in employment and GDP gains Impact ( averages)* Key Economic Impacts (relative to zero LNG exports case ICF Base Exports Case (up to ~4 Bcfd) Middle Exports Case (up to ~8 Bcfd) High Exports Case (up to ~16 Bcfd) Employment Change (No.) 73, , , , , ,300 GDP Change (2010$ Billion) $ $22.8 $ $37.2 $ $73.6 Henry Hub Price (2010$/Mmbtu) $5.03 $5.30 $5.73 Henry Hub Price Change ($2010$/Mmbtu) $0.32 $0.59 $1.02 *Includes direct, indirect, and induced impacts Source: ICF International, U.S. LNG Exports, November 13, 2013.

30 87% of federal offshore acreage is off-limits to development

31 Development of Canadian oil sands would benefit the U.S. economy

32 Filling America s tank Within 10 years Canada and U.S. can provide all our liquid fuel needs Sources of liquid fuel supply in % 10% 13% 53% Oil from Rest of World Biofuels Oil from Canada U.S. Oil Production 10% 18% 72% EIA Forecast Sources: EIA; Wood Mackenzie Potential

33 U.S. oil and natural gas companies pay their fair share of taxes and are a great source of public revenue Income Tax Expenses as a Share of Net Income Before Income Taxes (2013) 40.2% 25.2% Oil and Natural Gas Companies S&P Industrials Excluding Oil and Natural Gas Companies Source: Compustat North America Database (March 2014 update).

34 Source: Wood Mackenzie, U.S. Supply Forecasts and Potential Jobs and Economic Impacts, September 7, 2011.

35 Voters voice strong support for increased domestic oil and natural gas development Harris Poll Results on Increased U.S. Oil and Natural Gas Development 94% 91% 86% 75% 73% 69% 68% Importance of energy security Lead to more jobs Help lower energy costs Support building Keystone XL pipeline Support O&NG development Support offshore development Increasing energy taxes may hurt consumers Source: Harris Interactive telephone poll, November 6, 2012

36 For more information visit: