Deloitte: Most Americans say shale development rewards outweigh the risks

A majority of Americans polled believe developing natural gas by tapping shale formations offers greater rewards than it does risks, including risks possibly associated with hydraulic fracturing, said a survey conducted by the Deloitte Center for Energy Solutions.

Eight out of 10 respondents linked gas with job creation and economic revival, according to results released Dec. 15 at the annual Deloitte LLP oil and gas conference in Houston.

Specifically, 83% of respondents agree that gas development can stimulate US job growth, and 79% believe the gas development can help revitalize the economies of the states and communities.

“This is an enormous gift that has been bestowed on the American people and the American economy,” said Peter J. Robertson, Deloitte independent senior advisor. “The challenge [for industry] is to do it right every day, every well.”

Robertson said job creation and economic revival will grow as production of shale gas ramps up.

“Shale gas made up a small share of domestic natural gas production in 2005, but has surged since then, and in 2010 made up 20% of what is produced domestically. By 2030, the portion could be close to 50%,” Robertson said.”

Benefits of shale

The Deloitte survey results produced results similar to what has come out of separate studies conducted by IHS Global Insight and others.

IHS researchers have said shale gas production supported more than 600,000 jobs in 2010, a number that is projected to grow to nearly 870,000 by 2015.

The IHS study, entitled “The Economic and Employment Contributions of Shale Gas in the United States,” examined the economics of shale gas in terms of jobs and government revenues through 2035. That study was commissioned by America’s Natural Gas Alliance.

Separately, PwC US released a study entitled “Shale Gas: A Renaissance in US Manufacturing” that was released during a Dec. 14 news conference hosted by the National Association of Manufacturers (NAM).

The PwC study said US manufacturing companies could employ 1 million more workers by 2025 due to benefits from affordable energy and demand for gas services.

“More and more Americans are beginning to recognize the enormous potential of shale gas,” said Jay Timmons, NAM president and chief executive officer. “The impact of increased shale gas development will ripple through our economy, with manufacturers in particular, seeing great benefits.”

Benefits outweigh risks

The Deloitte survey consisted of 1,694 online interviews conducted during November 2011 with adults age 21 to 74.

It examined three types of respondents: residents of areas where shale gas development is established such as Texas, Louisiana, and Arkansas (537 respondents); residents of areas where shale is development is newer such as New York (89 respondents in New York City and 162 in western New York state), and Pennsylvania (243 respondents); and an additional 663 respondents across the US.

The survey indicated 56% of respondents in areas where shale gas development is planned or under way believe that jobs producing gas from shale formations command a “much” or “somewhat” higher pay grade than the average in their communities.

The number jumps to 62% when looking at established shale regions like Texas.

Only 19% believe the risks of developing shale gas “somewhat” or “far” outweigh the benefits; 58% believe the benefits outweigh the risks, and almost 25 percent were uncertain, the survey showed.

Meanwhile, 58% of respondents where shale development is under way or planned would recommend that their family and friends lease land to a shale gas developer. In established shale areas, 7 in 10 survey respondents (71%) would advise family or friends to lease land to a gas developer.

The survey also indicated shale gas could play an increasingly important role in making America more energy independent with 47% of national respondents saying shale is “extremely” or “very” impactful on energy independence.

Adam Sieminski, chief energy economist for Deutsche Bank Global Market Commodities Research, told Deloitte conference participants that he agrees shale could mean energy independence for the US and Canada by 2025.

The survey showed 54% of respondents nationally believe shale development currently is being regulated appropriately. About 20% said there is too much regulation, and 16% believe there is too little regulation. The remaining 10% were unsure.

Contact Paula Dittrick at paulad@ogjonline.com.

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