Daniel Yergin: Unconventional Oil and Gas Revolution in US “Goes Beyond Energy Itself”

Testimony before US House Energy and Commerce Subcommittee on Energy and Power

Tuesday, February 5, 2013 10:30 am EST


"The United States is in the midst of the"

(February 5, 2013) – IHS Vice Chairman and author of The Quest: Energy, Security and the Remaking of the Modern World, Daniel Yergin discussed the broad impacts—from economic activity and jobs, to energy security and geopolitics—of the revolution in U.S. unconventional oil and gas production during testimony today before the U.S. House Energy and Commerce Subcommittee on Energy and Power.

Yergin cited recent IHS research finding that unconventional oil and gas (tight oil, shale gas and tight gas) production supports more than 1.7 million U.S. jobs and is expected to grow to 3 million by the end of the decade.

In addition to the economic impacts, Yergin discussed the impact on energy security and geopolitics, the importance of addressing environmental concerns associated with production and the outlook for U.S. energy exports.

Excerpts from Yergin’s testimony follow below. The complete testimony is available at: http://energycommerce.house.gov/hearing/AESI-assessment-north-americas-energy-resources

Editors Note:The future of unconventional oil and gas production will be one of the major topics examined at IHS CERAWeek, the world’s preeminent energy conference, in Houston March 4-8. Complete information, including registration for journalists, is available at www.ceraweek.com.


Daniel Yergin testimony before the U.S. House Energy and Commerce Subcommittee on Energy and Power, Tuesday February 5, 2013

“The United States is in the midst of the “unconventional revolution in oil and gas” that, it becomes increasingly apparent, goes beyond energy itself. Today, the industry supports 1.7 million jobs – a considerable accomplishment given the relative newness of the technology. That number could rise to 3 million by 2020. In 2012, this revolution added $62 billion to federal and state government revenues, a number that we project could rise to about $113 billion by 2020.”

“It is notable that, owing to the long supply chains, the job impacts are being felt across the United States, including in states with no shale gas or tight oil activity. For instance, New York State, with a ban presently in effect on shale gas development, nevertheless has benefitted with 44,000 jobs. Illinois, debating how to go forward, already registers 39,000 jobs.”

“People talk about the potential geopolitical impact of the shale gas and tight oil. That impact is already here. It is sobering to consider that, without this increase in oil output based on the same technologies as shale gas, the sanctions on Iranian oil exports might well have failed.”

“U.S. carbon dioxide emissions from energy consumption are down 13 percent since 2007. The economic downturn is part of the story. But the most significant part is the result of natural gas supplanting coal in electric generation at a rapid rate.”

“We will see the Western Hemisphere, and North America in particular, moving towards greater self sufficiency. At the same time, the very large, technically-advanced refining complex on the Gulf Coast—along with the shifting domestic product demand—will put the United States in the position to continue to expand exports of refined products.”

“What, of course, gets most attention now is the potential for liquefied natural gas (LNG ) exports. This needs to be looked at in terms of overall U.S. supply and global competition. Our view is that, owing to the very large resource base, the market in the U.S. is demand-constrained, rather than supply-constrained. Larger markets—whether they be in electric power, industrial consumption, transportation, or exports— are required to maintain the investment flow into the development of the resources. Many LNG projects for the United States have been announced. These would be expensive facilities to build—$10 billion or more. Only a handful, in our view, are likely to end up being financed and built. The reason is both cost and the scale of global competition.”

“Current net U.S. imports from the Persian Gulf are equivalent to eight percent of total consumption, as it is. Even if that number goes down, the nature of U.S. interests in the region go well beyond direct oil imports to the importance of the region for the global economy and global security.”

"Hydraulic fracturing has been used since the late 1940s, as already indicated. However, it has only been recently applied at this scale and with this degree of intensity in regions that are more densely populated and that are not accustomed to oil and gas development. Understandably, the environmental impacts need to be carefully assessed and monitored, and the public needs to be confident about these impacts…. As a consequence, a subcommittee to the Secretary of Energy’s Advisory Board was established to examine the environmental questions. I served on that committee under Chairman John Deutch of MIT. Our work identified three major environmental issues – water, local air pollution, and community impact. Each, the subcommittee concluded, needs to be managed with great attention and can be managed through best practices in operations and regulation, continuing technological innovation, and community engagement.”


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