7 Jaw-Dropping Facts From America's Shale Revolution

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The facts are clear: Shale is a game-changer for America's energy industry. 

For decades, geologists have known that vast quantities of oil and gas laid locked inside the fine grained sedimentary rock. However, it has only been recently that new technologies have allowed energy producers to exploit this bounty. 

Since operators began developing these shale fields in earnest, the industry has produced some incredible statistics. Here are the seven incredible facts from America's shale revolution. 

1) America could become energy independent by 2020
According to estimates by the U.S. Energy Information Administration, the United Stares is sitting on 58 billion barrels and 665 trillion cubic feet of technically recoverable shale oil and gas. To put those numbers into perspective, that's enough oil to fuel 113 million consumer vehicles for nearly two decades and enough gas to heat 61 million homes for 160 years.

Thanks almost entirely to shale drilling, U.S. oil production is expected to hit 11 million barrels per day by 2020, more than double the country's output in 2005. So much oil is flowing that the U.S. may not need to import any crude at all, or at least only rely on friendly nations such as Mexico and Canada by the end of the decade. 

2) Horizontal drilling can pull forward three decades of oil production.
Advances in horizontal drilling and hydraulic fracturing have only recently allowed producers to economically exploit energy from shale rock. To highlight the improvements in drilling technology, Pioneer Natural Resources  (NYSE: PXD  )  CEO Scott Sheffield pointed out in a recent conference call that a vertical well in the Texas Spraberry/Wolfcamp shale would take between 30 to 35 years to produce 140,000 barrels of oil equivalent. However, a single horizontal well in the same area accomplished the same feat within its first six months of operation. While this is an usually strong result, we're seeing comparable improvements in other shale fields across the country.  

3) The U.S. is on track to export 6.3 billion cubic feet of gas per day.
Thanks to shale drilling, gas production has soared 20% in five years and the U.S. should have enough gas to last generations.Soon the nation will begin exporting gas, an unthinkable possibility just a few years ago.

In total, the Obama Administration has given the green light to export 6.3 billion cubic feet of LNG per day on four contracts. Cheniere Energy  (NYSEMKT: LNG  )  was the first company to receive government approval to build a liquefied natural gas export terminal in a generation. Its Sabine Pass export facility is under construction right now in Louisiana and CEO Charif Souki expects the terminal to be operational by 2015.

4) Midstream companies will spend $100 billion on new infrastructure.
Companies like Kinder Morgan Inc  (NYSE: KMI  )  that store, ship, and process all of these new hydrocarbons are poised to make a fortune. However, the industry will need massive new investments in order to accommodate surging production. According to a report from ITG and Tortoise Capital Advisers, midstream MLP's have set aside $100 billion for new pipelines and other facilities over the next three years.

5) Shale drilling has created 1.7 million jobs.
According to a report by IHS CERA, shale drilling has boosted America's average annual household income by $1,200. Based on the same study, unconventional energy production has also created 1.7 million direct and indirect jobs. 

Through 2020, shale drilling could generate more than two million jobs in the United States. Hiring is on the rise in traditional energy centers like Texas, Louisiana, and Oklahoma. However, the boom extends to other states as well like Pennsylvania, Ohio, Wyoming, and West Virginia, a big boost for many struggling regions. 

6) Shale drilling has shaved $165 billion off of the nation's trade deficit.
All of this new found oil and gas could boost the value of the U.S. dollar and reduce the nation's trade deficit. According to a study by IHS, shale drilling reduction could reduce the U.S. trade deficit by $164 billion by 2020. That statistic represents almost third of the nation's current trade deficit.

7) Shale drilling could create five million manufacturing jobs by 2020.
In order to take advantage of low natural gas prices, Dow Chemical (NYSE: DOW  )  is building a multibillion-dollar chemical plant in Freeport, Texas. The company estimates that the new facility will create 2,000 jobs at peak construction and is scheduled to be completed in 2017. However, the new plant is only the largest part of a $4 billion expansion in the region. 

Dow is only one of many companies capitalizing on America's abundant gas supplies. A reshoring trend is already underway in other industries like steel, fertilizers, and tires. According to a study by the Boston Consulting Group, the shift could bring back up to five million manufacturing jobs by 2020, positions once believed to be lost forever to China and other low cost countries.

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Read/Post Comments (10) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 17, 2014, at 5:16 PM, 092326 wrote:

    Much of this has been accomplished in spite of the energy policies of the present Administration.

  • Report this Comment On May 17, 2014, at 7:20 PM, mgbishop4450 wrote:

    These published reports on increased oil and gas are a little over blown----I say this because of my 35+ years experience in gas/oil supply with 3 major pipeline companies----during those years I witnessed periods of short supply and over supply, both temporarily.---almost all new wells ability to produce are vastly over stated, the test are generally calculated, but when tied into a pipeline, against competing wells, pressures, etc, the deliverability drops about 25-30%, this on top of normal decline of10-15% per year-----infill drilling helps to boost the numbers, albeit for a short while, and a result is faster depletion.

    Milton G. Bishop

    Richardson, Texas

  • Report this Comment On May 17, 2014, at 11:09 PM, speculawyer wrote:

    Additional facts:

    1) The price of oil has not dropped despite this "revolution". Why? Because it was the rise in oil prices that made it possible, not any new technology. Both fracking and horizontal drilling have been known for decades.

    2) The decline rates on fracked wells are huge. After a couple years, the flow slows down to a trickle. So you either have to re-frack or drill another one. This causes what is known as the "Red Queen" syndrome where you need to run faster and faster just to stay in the same place. (the same production rate)

    3) People are talking about exporting oil but we still import nearly half the oil that runs through our refineries! Seems a bit odd to me. Why import and export the same commodity at the same time? (It does make sense in some situations due to geography.)

    4) When (or should I say "if") we start exporting LNG, our natural gas prices are going to shoot up. Why sell the gas cheap in the USA if they can ship it to Asia. (And Asia is where it will go, they have high prices . . . they are not going to sell it to Ukraine for a low price out of the good of their hearts! LOL!)

    5) Your #3 and #7 contradict each other. . . if we export gas, the price will go up and then we won't be creating lots of domestic manufacturing jobs.

    6) Pulling ahead 3 decades of production is a good thing? Oh, our children are going to love it when they realize that we quickly burned through all our oil as fast as we could such that they become heavily dependent on imported oil. Well, screw them, eh?

  • Report this Comment On May 17, 2014, at 11:57 PM, stockingshorts wrote:

    .............gee?.....but why are the gasoline prices STILL SO HIGH???.....OH YEAH....EXCUSES. Like The Ukrainian situation, King Saud's hemorrhoid; The perennial favorite, "We're switching from winter blend to summer blend," Putin says we can't lower the prices because....; The Tea Party wants them high, the American people are using too much gas so we'll sell the extra overseas (figure THAT one out.)

    There's always an excuse and the American Consumers can be damned again......time for a revolution.

  • Report this Comment On May 18, 2014, at 7:06 AM, engbulldog3 wrote:

    Why are gasoline prices so high? That's Wall Street's making a great profit on average joe!

  • Report this Comment On May 18, 2014, at 7:58 AM, geoman4919 wrote:

    The Energy Return On Investment (EROI)for shale oil is certainly less than 10 and is likely about 4. The EROI for conventional oil and gas located in more normal oil reservoirs such as sandstone run 100 EROI or more. So a conventional oil well returns about 100 times the energy needed to drill and produce it while shale oil produces about 4 times the energy used to drill and produce it. The society which runs on the surplus energy derived from shale oil has much less available energy. Since prosperity is directly tied to energy consumption the prospect for society is grim. I am a oil geologist working in texas.

  • Report this Comment On May 18, 2014, at 10:46 AM, Everett wrote:

    Well, it really doesn't matter if we have billions of tons of oil ready to drill out of the ground or not. Even if it was easy to get out of the ground. The fact is, it is not whether or not it is available or a lot of it, the price will not come down because the whole world is not drowning in it. Which as we all know, will never be the case. Somewhere in the world, there will be someone who won't have something, oil or food and that will impact the cost of oil or food, here in the US, according to some egg-head, who does not want to see the price come down because he heads up some company who wants to gouge the heck out of you. Can you say, oil company? You got it.

  • Report this Comment On May 18, 2014, at 11:30 AM, kennyhobo wrote:

    Yes, the US could become energy self sufficient with a vibrant economy due to inexpensive energy costs. Manufacturing could return in big numbers and bolster the middle class. The only threat is the Democrat Party and Environmental Terrorism from ignorant activists. Obama is a threat! His EPA is destroying the chance for an improving middle class. The scientific ignorance and incompetence of Obama, his cabinet, his EPA, ... his ADMINISTRATION is a serious problem to American prosperity. The Chicago Way is more than a Stereotype. The Chicago Way destroys ....

  • Report this Comment On May 18, 2014, at 2:54 PM, dunce1239 wrote:

    Unconventional energy may have produced the same number of jobs, but not even near the same amount of energy as measured in BTUs or BOE and the cost of every unit however measured is much higher mentioning the jobs figures without the other comparables is biased reporting. The article is ostensibly about energy, not jobs.

  • Report this Comment On May 18, 2014, at 6:56 PM, Liberatarian54 wrote:

    If any other business besides fracking, without this much money and power were creating the same amount of tremors, and earthquakes, you can bet it would have been closed down the first year. The studies are overwhelming. Take Oklahoma where fracking is prevalent. From 1975 to 2008 avg 2 earthquakes per year, but in the last 5 years since fracking there have 100 per year. In some areas closer to fracking sites over 1000 per year. As high as a 5.7 magnitude earthquake in Prague, OK. As more collateral damage is witnessed, the insurance costs for fracking are going to become astronomical.The lawyers lie in wait for the class action lawsuits, and are now just chomping at the bit!

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Covering the intersection between the oil patch and Wall Street. Twitter @RobertBaillieul.

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