On the energy front, one of the biggest stories of 2011 was the development of shale gas.  And, if the current trends continue, it will likely be the story of 2012 as well.

The Wall Street Journal reports,

The boom in low-cost natural gas obtained from shale is driving investment in plants that use gas for fuel or as a raw material, setting off a race by states to attract such factories and the jobs they create.

Recently, natural gas prices have plummeted.  “Because electric utilities often burn gas,” the Journal notes, “that price drop has helped bring down average electricity costs.

That’s a big deal for manufacturers, which consume one-third of the energy produced in this country. Lower energy prices make manufacturers more competitive and help offset other areas where manufacturers in the country are at a disadvantage compared to our competitors.

The shale boom’s impact on manufacturing was highlighted in a recent report completed by PricewaterhouseCoopers and released jointly with the National Association of Manufacturers.

The report shows that shale development means more investment in our economy, lower energy prices and one million more jobs by 2025.

In a roundtable discussion at the NAM headquarters today NAM President and CEO Jay Timmons and PwC U.S. industrial products leader Bob McCutcheon released a report that looks at the tremendous economic benefit and the jobs that will be created by shale gas exploration and production.

The report titled Shale Gas: A renaissance in US manufacturing? estimates that shale gas could result in one million manufacturing jobs by 2025 and more than $11 billion in cost savings:

“Lower feedstock and energy costs could help US manufacturers reduce natural gas expenses by as much as $11.6 billion annually through 2025… US manufacturing companies could employ approximately one million more workers by 2025 due to benefits from affordable energy and demand for products used to extract the gas.” (continue reading…)

Earlier this week the U.S. Forest Service delayed the lease sale of approximately 3,300 acres in the Wayne National Forest for shale oil and gas drilling. The Forest Service states that conditions have changed since the 2006 Forest plan was developed.

The exploration and development of shale oil and gas is creating thousands of jobs across Ohio and neighboring states, and providing a significant economic boost to the local communities. The impacts of shale exploration and development are felt throughout the economy, from the companies that do the fracturing all the way to the local restaurants and hotels.

Just recently the Ohio Oil and Gas Energy Education Program estimated that drilling in the Utica shale in Ohio would produce up to 204,500 jobs by 2015. These much-needed jobs are put at risk with the delay of the lease sale. 

Manufactures remain concerned with how this delay and potential future delays will directly impact their energy costs and ability to compete. Access to affordable sources of energy is directly linked to the competitiveness of manufacturers as they use one-third of our nation’s energy supply. 

We are hopeful that this lease sale delay in the Wayne National Forest does not trigger a chain reaction for similar delays throughout the country, potentially locking up an important resource and driver of job creation.  Our nation needs jobs and shale development provides a tremendous opportunity for job creation as well as access to an important and valuable new source of energy.

Chip Yost is vice president for energy and resources policy, National Association of Manufacturers.

Today the National Association of Manufacturers joined 118 other business groups in sending a letter to President Obama on the importance of shale gas and hydraulic fracturing. It’s essential that manufacturers have access to affordable energy as they use nearly one third of all the energy consumed here in the Unites States.

Excerpt from the letter:

Natural gas is an enormously versatile fuel that helps power our nation and enhances its energy security. There is huge potential to expand development, which can strengthen our nation’s economic recovery and put people back to work. Without hydraulic fracturing, that potential will not be realized, and we will not enjoy the tremendous economic and job creation benefits our nation’s abundant supplies of natural gas can provide. Government policies must encourage the continued investment in new energy development and allow it to proceed efficiently. Hydraulic fracturing is of critical importance to the success of both oil and natural gas production here at home, and the industry is committed to ensuring that it will continue to be employed in a safe and responsible manner.

The discovery of shale gas has been creating jobs and boosting our economic growth while also contributing to our energy security. Any additional regulations on the industry will hurt job growth in this important industry. Manufacturers hope that Congress and the Obama Administration will continue to support the development of shale and hydraulic fracturing technology.

Late last week the U.S. Energy Information Administration published their “Today in Energy” and featured coal reserves. According to the report, “The United States leads the world with over 260 billion short tons of proven recoverable coal reserves—28% of global reserves. Recoverable domestic coal reserves, at current mining levels, would last 222 years.”

I find it ironic that we have one government agency touting our coal reserves while another agency does everything it can to limit the use of coal. Affordable energy is key to manufacturers’ ability to compete. We can ill afford to lock away any sources of energy that can help manufacturers better compete. We have an energy policy in this country being set by the Environmental Protection Agency (EPA) instead of Congress.

President Obama’s decision to shelve the unachievable and unaffordable ozone standards proposed by the EPA was appropriate but long overdue. There are a whole slew of other EPA regulations that we need to deal with from Boiler MACT, to Utility MACT to coal ash as well as permitting delays for OCS drilling and threats of regulation on shale exploration and fracking. We need the White House to lead and make decisions that provide an environment where job creation is possible and not stifled by poorly thought out regulations. 

Chip Yost is vice president for energy and resources policy, National Association of Manufacturers.

The Department of Energy’s (DOE) Natural Gas Subcommittee released a draft report on August 11 that makes recommendations regarding the safety and environmental performance of hydraulic fracturing from shale formations. Manufacturers, users of one-third of the energy consumed in the United States, agree with the Subcommittee’s characterization of natural gas as “a cornerstone of the U.S. economy.”  Unfortunately, the call for increased regulation of hydraulic fracturing is a reason for concern.

The Subcommitee’s recommendations include:

•  Required disclosure of all chemicals in hydraulic fracturing fluid – Many companies that manufacture this fluid voluntarily disclose the chemicals they use through the Frac Focus registry. Additional mandatory disclosure requirements may discourage manufacturers from developing new fluids if they know that competitors can easily find their exact “recipe.”
• New air emission standards – Comprehensive Environmental Protection Agency (EPA) rules are already in place or are in the process of being revised. Additional regulation would be redundant, confusing, expensive and unnecessary.
• Reduction in the usage of diesel engines at fracturing sites – This sweeping recommendation does not take into consideration that there may be no economically viable alternative to using a diesel engine at some wells.

Hydraulic fracturing is a critical process that has allowed the U.S. to take advantage of its rich shale gas resources. The majority of natural gas wells have used hydraulic fracturing, and there have been 4.3 million wells drilled in North America over 150 years. Current state regulations have been effective in protecting the environment. Manufacturers urge caution as the DOE moves forward with its final recommendations – additional federal regulations could put the brakes on a technology that is creating jobs and providing more affordable energy for all Americans.