How shale is sparking an American industrial revival

You want some good economic news?  Technology to extract natural gas from shale formations has created an abundance of cheap energy that is bringing back manufacturing, attracting overseas investment, and solving our energy problems.  From Washington Post journalist Steven Mufson

The shale gas revolution is firing up an old-fashioned American industrial revival, breathing life into businesses such as petrochemicals and glass, steel and toys.

Methanex Corp., which closed its last U.S. chemical plant in 1999, is spending more than half a billion dollars to dismantle a methanol plant in Chile and move it to the parish.

Nearby, a petrochemical company, Williams, is spending $400 million to expand an ethylene plant. And on Nov. 1, CF Industries unveiled a $2.1 billion expansion of its nitrogen fertilizer manufacturing complex, aiming to displace imports that now make up half of U.S. nitrogen fertilizer sales.

These companies all rely heavily on natural gas. And across the country, companies like them are crediting the sudden abundance of cheap natural gas for revving up their U.S. operations. Thanks to new applications of drilling technology to unlock natural gas trapped in shale rock, the nation’s output has surged and energy experts almost unanimously forecast that prices will remain low or moderate for a generation. The International Energy Agency says that by 2015, the United States will overtake Russia as the world’s biggest gas producer.

via The new boom: Shale gas fueling an American industrial revival – The Washington Post.

The rest of the article gives more details of what the natural gas boom is doing for the economy.  Of course, some people want to stop it.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • http://theoldadam.com/ Steve Martin

    “Of course, some people want to stop it.”

    That’s an understatement. For many on the left, who know better and who are more caring, there will be no rest until we are all living in the dark, riding bicycles, and eating grasses.

  • http://theoldadam.com/ Steve Martin

    “Of course, some people want to stop it.”

    That’s an understatement. For many on the left, who know better and who are more caring, there will be no rest until we are all living in the dark, riding bicycles, and eating grasses.

  • http://enterthevein.wordpress.com J. Dean

    Steve @1,
    You couldn’t be more right. Anything that sniffs of real progress but does not allow for government overregulation is a threat to them.

  • http://enterthevein.wordpress.com J. Dean

    Steve @1,
    You couldn’t be more right. Anything that sniffs of real progress but does not allow for government overregulation is a threat to them.

  • Tom Hering

    Of course, some people want to stop it.

    You mean some people don’t want polluted air and water, health effects, and ruined communities? Funny how all the conservative concern for the well-being of future generations goes right out the window, and how conservatives, not liberals, turn out to be unswervable believers in the ideal of progress. All it takes is a promise of riches.

  • Tom Hering

    Of course, some people want to stop it.

    You mean some people don’t want polluted air and water, health effects, and ruined communities? Funny how all the conservative concern for the well-being of future generations goes right out the window, and how conservatives, not liberals, turn out to be unswervable believers in the ideal of progress. All it takes is a promise of riches.

  • Josh

    I’m not convinced about the viability of shale oil, but I do tend to be more skeptical about the sustainability of our modern way of life than some other people I know. I will readily admit that I am by no means a master of geology… if I’m honest, I probably couldn’t even qualify as a novice… but I question the feasibility of finding a suitable replacement for oil. The efficiency of oil (energy expended to harvest a fuel divided by the energy produced by the fuel), its ease of transport and storage, the nearly unfathomable infastructure tailored to oil, its versatility (toys, fuel, fertilizers, etc.), and, finally, the present crisis in the financial markets (companies are readily investing at the moment, but there is far less wiggle room for such things than there used to be and without capital there will be no production) all make me less than optomistic about the future of an oil-based culture. It all seems to point towards a shift back towards a less energy-intensive way of life.

  • Josh

    I’m not convinced about the viability of shale oil, but I do tend to be more skeptical about the sustainability of our modern way of life than some other people I know. I will readily admit that I am by no means a master of geology… if I’m honest, I probably couldn’t even qualify as a novice… but I question the feasibility of finding a suitable replacement for oil. The efficiency of oil (energy expended to harvest a fuel divided by the energy produced by the fuel), its ease of transport and storage, the nearly unfathomable infastructure tailored to oil, its versatility (toys, fuel, fertilizers, etc.), and, finally, the present crisis in the financial markets (companies are readily investing at the moment, but there is far less wiggle room for such things than there used to be and without capital there will be no production) all make me less than optomistic about the future of an oil-based culture. It all seems to point towards a shift back towards a less energy-intensive way of life.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    It all seems to point towards a shift back towards a less energy-intensive way of life.

    What kind of “energy-intensive”? Seriously, the average person expended quite a bit of energy just getting basics back before the industrial revolution.

    Actually cheap energy leads to waste and pollution. We import stuff from across oceans that we could make ourselves and waste less energy on transportation. That would be more expensive, but then hey, maybe we would use less and pollute less. Cheap energy is not really so great. Sorry to be the wet blanket.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    It all seems to point towards a shift back towards a less energy-intensive way of life.

    What kind of “energy-intensive”? Seriously, the average person expended quite a bit of energy just getting basics back before the industrial revolution.

    Actually cheap energy leads to waste and pollution. We import stuff from across oceans that we could make ourselves and waste less energy on transportation. That would be more expensive, but then hey, maybe we would use less and pollute less. Cheap energy is not really so great. Sorry to be the wet blanket.

  • http://chriskrycho.com/ Chris Krycho

    It’s an interesting thing to watch play out economically at the moment. It’s boomed so much in the last five years that, with every company imaginable trying to get in on it, the market is flooded. I actually expect to see a lot of failure in the area before things settle back down a bit—too many companies can’t make any profit at the moment, because the supply is too high for the demand. It’ll settle out, but the market is going to take a while to stabilize.

  • http://chriskrycho.com/ Chris Krycho

    It’s an interesting thing to watch play out economically at the moment. It’s boomed so much in the last five years that, with every company imaginable trying to get in on it, the market is flooded. I actually expect to see a lot of failure in the area before things settle back down a bit—too many companies can’t make any profit at the moment, because the supply is too high for the demand. It’ll settle out, but the market is going to take a while to stabilize.

  • Steve Billingsley

    Tom @ 3
    It’s also ironic how liberals who champion the working-class are quick to object to an industry that provides a lot of well-paying jobs to non-college educated men (the group that has been hit the hardest in the economic downturn of the last few years) and could lower energy costs that are a big part of life for those who live paycheck to paycheck.

    This (in fact no economic development) is not a panacea and their are trade-offs in every part of economics. But there is plenty of hypocrisy to go around.

  • Steve Billingsley

    Tom @ 3
    It’s also ironic how liberals who champion the working-class are quick to object to an industry that provides a lot of well-paying jobs to non-college educated men (the group that has been hit the hardest in the economic downturn of the last few years) and could lower energy costs that are a big part of life for those who live paycheck to paycheck.

    This (in fact no economic development) is not a panacea and their are trade-offs in every part of economics. But there is plenty of hypocrisy to go around.

  • Cincinnatus

    I have mixed feelings about hydraulic fracturing, but Tom–and progressives more generally–do seem to be a bit more than disingenuous when they oppose it. If I may borrow their language, either you’re for the middle class or you’re not, and you have to recognize that opposing the extraction of shale oil is, yes, tantamount to foreclosing one of the few productive economic activities to come along for the American working/middle class in decades.

    Fortunately for their consistency, their President is all in favor.

    This is another example of what I call the “Appalachian conundrum.” Where I’m from, coal extraction is basically the only productive industry and source of employment around. Appalachians would have virtually nothing if the coal industry shuts down–it is their economy. On the other hand, the coal industry has been immensely destructive of the environment and tremendously exploitative of the locals, as absentee landowners are wont to be. And just as the coal industry is, indeed, folding–threatening to leave Appalachia more broke and desperate than it already is–along comes shale oil to save the day.

    Is the price of salvation worth it?

  • Cincinnatus

    I have mixed feelings about hydraulic fracturing, but Tom–and progressives more generally–do seem to be a bit more than disingenuous when they oppose it. If I may borrow their language, either you’re for the middle class or you’re not, and you have to recognize that opposing the extraction of shale oil is, yes, tantamount to foreclosing one of the few productive economic activities to come along for the American working/middle class in decades.

    Fortunately for their consistency, their President is all in favor.

    This is another example of what I call the “Appalachian conundrum.” Where I’m from, coal extraction is basically the only productive industry and source of employment around. Appalachians would have virtually nothing if the coal industry shuts down–it is their economy. On the other hand, the coal industry has been immensely destructive of the environment and tremendously exploitative of the locals, as absentee landowners are wont to be. And just as the coal industry is, indeed, folding–threatening to leave Appalachia more broke and desperate than it already is–along comes shale oil to save the day.

    Is the price of salvation worth it?

  • Jon H.

    Modern US conservatives ‘conserve’ nothing but wealth; they exploit everything else. But by so doing, I think they understand best America’s hustler character.

  • Jon H.

    Modern US conservatives ‘conserve’ nothing but wealth; they exploit everything else. But by so doing, I think they understand best America’s hustler character.

  • Steve Billingsley

    Cincinnatus @ 8
    It’s also an example of what I think is essentially a Manichean view of energy. That is to say, a view that there are “good” or “clean” sources of energy (i.e. wind, solar) and “bad” or “dirty” sources of energy (anything related to fossil fuels). Every energy source has it’s upside and downside. The large scale wind-farms in West Texas do their share of environmental damage (noise pollution, disruption to migratory patterns of birds, killing thousands of birds each year) and for solar to scale to any degree it would have to have a geographic footprint (say in the desert somewhere) that could disrupt the habitats of a variety of species. The question, like all economic questions, is a matter of trade-offs. Do the upsides outweigh the downsides?

    Energy is going to be a part of economic activity. Always. It is just a matter of how that energy is produced and used. Before oil and coal, it was whale oil, kerosene and wood. There are large portions of the East Coast that are more heavily forested today than they were in the mid-19th centuries due to dependence upon wood for fuel. Do we need to ramp up the whaling ships again? There isn’t an energy source that is pure, absent of downsides. I wish there was, but there isn’t.

  • Steve Billingsley

    Cincinnatus @ 8
    It’s also an example of what I think is essentially a Manichean view of energy. That is to say, a view that there are “good” or “clean” sources of energy (i.e. wind, solar) and “bad” or “dirty” sources of energy (anything related to fossil fuels). Every energy source has it’s upside and downside. The large scale wind-farms in West Texas do their share of environmental damage (noise pollution, disruption to migratory patterns of birds, killing thousands of birds each year) and for solar to scale to any degree it would have to have a geographic footprint (say in the desert somewhere) that could disrupt the habitats of a variety of species. The question, like all economic questions, is a matter of trade-offs. Do the upsides outweigh the downsides?

    Energy is going to be a part of economic activity. Always. It is just a matter of how that energy is produced and used. Before oil and coal, it was whale oil, kerosene and wood. There are large portions of the East Coast that are more heavily forested today than they were in the mid-19th centuries due to dependence upon wood for fuel. Do we need to ramp up the whaling ships again? There isn’t an energy source that is pure, absent of downsides. I wish there was, but there isn’t.

  • rlewer

    Tom #3
    .
    “polluted air and water, health effects and ruined communities”

    Do you have proof of this? It has been in the courts and proven false.

    Pennsylvania has oil seeps and gas leaks into the air since before anyone ever thought of drilling anywhere.

  • rlewer

    Tom #3
    .
    “polluted air and water, health effects and ruined communities”

    Do you have proof of this? It has been in the courts and proven false.

    Pennsylvania has oil seeps and gas leaks into the air since before anyone ever thought of drilling anywhere.

  • http://steadfastlutherans.org/ SAL

    Steve Billingsley “There isn’t an energy source that is pure, absent of downsides. I wish there was, but there isn’t.”

    When such energy sources are fictionalized they’re called Unobtainium. I’d call a tradeoff free fuel Utopium.

    LENR or to be even more far-fetched Vacuum energy are probably the only potential tradeoff free fuels.

  • http://steadfastlutherans.org/ SAL

    Steve Billingsley “There isn’t an energy source that is pure, absent of downsides. I wish there was, but there isn’t.”

    When such energy sources are fictionalized they’re called Unobtainium. I’d call a tradeoff free fuel Utopium.

    LENR or to be even more far-fetched Vacuum energy are probably the only potential tradeoff free fuels.

  • nativetxn

    How about the large amounts of fresh water that are used in the shale process, which is then unusable for drinking? Water is essential for life, and here in Texas at least, is in short supply. Yet water conservation is consistently ignored to pursue more energy, industry, etc.

  • nativetxn

    How about the large amounts of fresh water that are used in the shale process, which is then unusable for drinking? Water is essential for life, and here in Texas at least, is in short supply. Yet water conservation is consistently ignored to pursue more energy, industry, etc.

  • Klasie Kraalogies

    Funny how people immediately resort to extreme views – of the other side. From vegan luddites to moonscape millionaires .. Tsk tsk.

    Although I’m a geologist, I’m not a hydrocarbon specialist. But in general terms, it is prudent to put any mineral development through a thorough environmental impact study. It is important to understand what the likely effects are. There are no zero-impact projects (hey, even vegetable farming has quite an environmental impact). So, the question is just – how high is the environmental price, and can it be afforded. The economic context should be taken into account as well. But we cannot ignore the one in favour of the other. Which can lead to a conundrum, as Cincinnatus noted.

    The cleanest form of energy, if properly managed, is still nuclear. But in terms of safety, newer designs are imperative – pebble bed and/or CANDU reactors.

    And as a last comment – resources aren’t for ever. Careful management, and constant research is called for.

  • Klasie Kraalogies

    Funny how people immediately resort to extreme views – of the other side. From vegan luddites to moonscape millionaires .. Tsk tsk.

    Although I’m a geologist, I’m not a hydrocarbon specialist. But in general terms, it is prudent to put any mineral development through a thorough environmental impact study. It is important to understand what the likely effects are. There are no zero-impact projects (hey, even vegetable farming has quite an environmental impact). So, the question is just – how high is the environmental price, and can it be afforded. The economic context should be taken into account as well. But we cannot ignore the one in favour of the other. Which can lead to a conundrum, as Cincinnatus noted.

    The cleanest form of energy, if properly managed, is still nuclear. But in terms of safety, newer designs are imperative – pebble bed and/or CANDU reactors.

    And as a last comment – resources aren’t for ever. Careful management, and constant research is called for.

  • DonS

    We are a society that has become accustomed to knee-jerk reactions. That is definitely the case, on both sides, when it comes to the development of our still, and apparently greatly increasing, energy supplies. Some things to keep in mind:

    1) Increasing U.S. domestic energy supply reduces our dependence on energy imported from unstable and/or dictatorial foreign regimes. This is good for liberty and for peace.

    2) The era of cheap energy is still over. These new oil supplies are only coming on line because oil is $80+ per barrel. Should the price of oil fall substantially, shale and tar sand oil becomes uneconomical. The lower natural gas prices are probably here to stay for a little while, but as industry shifts over from coal and oil to gas, prices will increase to re-establish energy price equilibrium.

    3) However, though energy will never be as cheap as it was, a stable domestic supply provide a lot of high paying middle class skilled jobs, both in the energy industry directly, and in manufacturing that requires a stable and plentiful energy supply. This energy coming on line will be a key to our economic recovery and to the revitalization of a strong middle class.

    4) There are some legitimate environmental concerns with hydraulic fracturing, though they seem remediable with sound practices. It will behoove the industry to work to ensure that they develop and implement those sound practices in order to ensure the long-term viability of the industry and safety well-being of the populace.

    5) We need good transmission systems to move the energy from source to customer. Hopefully, environmentalists will recognize our compelling interest in re-establishing strong industry in this country, and work with industry to build this infrastructure safely and effectively.

  • DonS

    We are a society that has become accustomed to knee-jerk reactions. That is definitely the case, on both sides, when it comes to the development of our still, and apparently greatly increasing, energy supplies. Some things to keep in mind:

    1) Increasing U.S. domestic energy supply reduces our dependence on energy imported from unstable and/or dictatorial foreign regimes. This is good for liberty and for peace.

    2) The era of cheap energy is still over. These new oil supplies are only coming on line because oil is $80+ per barrel. Should the price of oil fall substantially, shale and tar sand oil becomes uneconomical. The lower natural gas prices are probably here to stay for a little while, but as industry shifts over from coal and oil to gas, prices will increase to re-establish energy price equilibrium.

    3) However, though energy will never be as cheap as it was, a stable domestic supply provide a lot of high paying middle class skilled jobs, both in the energy industry directly, and in manufacturing that requires a stable and plentiful energy supply. This energy coming on line will be a key to our economic recovery and to the revitalization of a strong middle class.

    4) There are some legitimate environmental concerns with hydraulic fracturing, though they seem remediable with sound practices. It will behoove the industry to work to ensure that they develop and implement those sound practices in order to ensure the long-term viability of the industry and safety well-being of the populace.

    5) We need good transmission systems to move the energy from source to customer. Hopefully, environmentalists will recognize our compelling interest in re-establishing strong industry in this country, and work with industry to build this infrastructure safely and effectively.

  • Klasie Kraalogies

    DonS – good observations there!

  • Klasie Kraalogies

    DonS – good observations there!

  • John L

    Don got it right. Cheap NG won’t last, and another part of the reason is that we’re building massive LNG ports to export our new-found bounty. This will push up the price of gas to global parity ($11-13 not $4). Cheap NG and temporary rising U.S. oil supply is good news for N. American energy independence, but the world still needs a growing amount of oil for another 40 years (some estimates put oil demand peaking around 120M b/d by 2040 – I’m not convinced the world can affordably supply 120M b/d). After 2050 or so, the transition to fossil alternatives will be well underway. The question is: can we survive until 2050 w/o major economic-environmental disruptions?

    I would disagree with KK about “The cleanest form of energy, if properly managed, is still nuclear.” I believe the cleanest form of electricity generation is renewable: PV, wind, hydro, etc.. In 2012, nearly half of all new U.S. installed electricity generation was renewable.

    http://www.renewableenergyworld.com/rea/news/article/2012/12/renewables-account-for-46-new-us-electrical-generating-capacity-since-january

    California is at 13% renewable, with a goal of 33% by 2020. Germany is 20% renewable with a 100% target by 2050, and there’s no reason they can’t do it.

    A conservative forecast puts PV solar at $0.035/kwh by 2040 (median 95% global installed cost) – which is far less than the cost to profitably produce coal-gas-nuke electricity. It’s my hope that PV achieves “80% global grid parity” far sooner – say 2025 – and that the accelerating move to PV electricity will be a strong market signal towards rapidly prioritized electric mobility and storage research. Given the power of economics to change historical momenta, I would not be surprised to see pure electric vehicles by 2040 that outperform IC vehicles in every metric, including life-cost and range, with short charge times. For those requiring “fast fill” I would not be surprised to see the average 2040 “plug-in hybrid sedan” approaching 100 MPG, nor would I be surprised to see pure EVs with a small “emergency” fossil engine.

    The next 30-40 years are going to define much of what humanity becomes moving forward. A CO2-triggered environmental melt-down is certainly not out of the realm of possibilities.

  • John L

    Don got it right. Cheap NG won’t last, and another part of the reason is that we’re building massive LNG ports to export our new-found bounty. This will push up the price of gas to global parity ($11-13 not $4). Cheap NG and temporary rising U.S. oil supply is good news for N. American energy independence, but the world still needs a growing amount of oil for another 40 years (some estimates put oil demand peaking around 120M b/d by 2040 – I’m not convinced the world can affordably supply 120M b/d). After 2050 or so, the transition to fossil alternatives will be well underway. The question is: can we survive until 2050 w/o major economic-environmental disruptions?

    I would disagree with KK about “The cleanest form of energy, if properly managed, is still nuclear.” I believe the cleanest form of electricity generation is renewable: PV, wind, hydro, etc.. In 2012, nearly half of all new U.S. installed electricity generation was renewable.

    http://www.renewableenergyworld.com/rea/news/article/2012/12/renewables-account-for-46-new-us-electrical-generating-capacity-since-january

    California is at 13% renewable, with a goal of 33% by 2020. Germany is 20% renewable with a 100% target by 2050, and there’s no reason they can’t do it.

    A conservative forecast puts PV solar at $0.035/kwh by 2040 (median 95% global installed cost) – which is far less than the cost to profitably produce coal-gas-nuke electricity. It’s my hope that PV achieves “80% global grid parity” far sooner – say 2025 – and that the accelerating move to PV electricity will be a strong market signal towards rapidly prioritized electric mobility and storage research. Given the power of economics to change historical momenta, I would not be surprised to see pure electric vehicles by 2040 that outperform IC vehicles in every metric, including life-cost and range, with short charge times. For those requiring “fast fill” I would not be surprised to see the average 2040 “plug-in hybrid sedan” approaching 100 MPG, nor would I be surprised to see pure EVs with a small “emergency” fossil engine.

    The next 30-40 years are going to define much of what humanity becomes moving forward. A CO2-triggered environmental melt-down is certainly not out of the realm of possibilities.


CLOSE | X

HIDE | X