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Natural gas from shale is no fluke, but a trend, IHS report shows

An IHS report on unconventional natural gas supplies has produced a gusher of good news for the chemical industry and U.S. manufacturers.

ACC President and CEO Cal Dooley said the study shows “abundant and affordable supplies of natural gas are revitalizing the chemical industry and a providing a competitive edge for manufacturers in the global marketplace.”

IHS Vice President John Larson spoke enthusiastically about the benefits of domestically produced supplies of abundant and affordable natural gas:

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.

This isn’t hyperbole. Data in the IHS report justifies Larson’s enthusiasm.

On the job front, the study reported unconventional natural gas production supported 1.7 million jobs this year, projecting that number will double to three million high-paying jobs, many in manufacturing, by 2020.In a Wall Street Journal article, IHS Vice Chairman Daniel Yergin called low-cost natural gas “the real stimulus.”

Consider a trio of highlights in the IHS study:

  • On the production side, natural gas production has risen from 52 billion cubic feet per day to 65 BCF per day over the last five years, with almost all of the growth coming from unconventional sources like shale gas. Natural gas from shale was two percent of total U.S. gas production in 2000. In 2012, it is 37 percent. By 2020, unconventional supplies will account for 75 percent of natural gas production.
  • On the demand side, IHS projected growth in natural gas usage to rise from almost 70 BCF per day in 2012 to 96 BCF in 2035, with utilities leading the charge, followed by the petrochemical industry and energy-intensive manufacturers. Demand growth in the U.S. can be met almost entirely from North American supplies of natural gas.
  • On the manufacturing side, production of natural gas liquids (NGLS), the critical feedstock helping spur a revival of the chemical industry and manufacturers, has increased 30 percent from 2008 to 2012 and will double again to 3.8 million barrels of oil equivalent a day by 2020. That’s good news for the petrochemical industry, which the study said “represents the single most important end-use sector for NGLS in North America, accounting for more than one-half of total demand for NGLS.”

Best of all, the IHS numbers suggest the natural gas will provide long-term advantages for industrial America. This report, Dooley emphasized, “confirms these benefits from natural gas liquids are not a short-term phenomenon but an ongoing trend expected to last for decades.

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