Wednesday, March 27, 2013

Shale Oil, Hydraulic Fracturing Set Tone For Booming Energy Growth

In his recent State of the Union address, President Obama touted the role of natural gas as a bridge fuel and went on to recognize the shale oil and gas industry boom as the leading reason for optimism for U.S. economic growth in energy and many parallel industries.

Obama’s message was clear: Energy will once again be something the U.S. can create domestically and minimize its reliance on foreign sources of oil and petroleum. Saying that 2014 would be a breakthrough year for the U.S., Obama said the nation was better prepared for the demands of the 21st Century than any other nation in the world.

Industries that support the U.S. energy boom, such as heavy-duty equipment manufacturers, well-site managers, maintenance staffs who keep the equipment running and support staff who manage housing barracks and food lines for workers, will all benefit from the increased domestic energy production.

Optimism has not been synonymous with in the energy sector for a long time, especially with the downgrading of coal mining operations in an environmentally friendly nation prepared to halt global warming. When Y2K was on everyone’s mind as a potential nightmare scenario for technology and its darker side, the real dark side concerning economic stability and the trade deficit was only just becoming apparent.

The cost of importing energy was one of the largest burdens on the U.S. trade balance at the beginning of the 21st Century. There was no bright side and certainly little hope for balanced trade when it came to energy.

With a growing focus on cleaner burning fuels and emissions standards getting tighter, natural gas use was becoming more prevalent and concerns for an import imbalance for natural gas began to grow. Crude oil and petroleum products were one thing, but now natural gas would make three components to the U.S. energy trade imbalance.

In 2008, the U.S. ran an energy imbalance amounting to $411 billion, 2.8% of GDP, and with a strong Energy Independence Security Act taking hold there was nothing holding back investment in a new energy recovery technology called fracking.

Evolving hydraulic fracturing technology, known as fracking, put U.S. natural gas and oil production into hyper-drive and resurrected a once-stifled energy sector. Companies providing shipping and trucking support found demand growing each month, refineries required more employees and parts to run the facilities 24/7.

The U.S. has itself a real-life energy boom.

Obama specifically mentioned Sustainable Shale Gas Growth Zones to encourage cooperation in shale growth and development. This would be a significant change in policy allowing further shale gains, rather than fighting legislation meant to block drilling and well placements.

It is estimated that natural gas is responsible for $385 to $400 billion in new economic development. For companies already involved in the boom, this is a great area of revenue growth. For companies still to enter the arena, there is plenty of room to find a seat at the table and enjoy a helping of U.S. energy boom.

posted by Layne Gobrogge

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