* Unconventional oil and gas to support 3 mln jobs by 2020
* Close to two-thirds U.S. domestic oil to come from sector
* Sector faces major tax, environmental, trade policy issues
By Roberta Rampton
WASHINGTON, Oct 23 The U.S. oil and gas rush is
cutting into jobless numbers, supporting a total of 1.7 million
jobs this year, a number that will swell to almost 3 million by
2020, a leading consultant said in a study released on Tuesday.
The report by forecaster IHS Global Insight is part
of a series attempting to quantify the impact that booming
production of so-called "unconventional" oil and gas has had on
the American economy.
Using new technology to blast fossil fuels trapped in shale
rock has transformed the U.S. energy sector.
After five years of rapid growth, unconventional oil
accounts for about 2 million barrels per day of U.S. production
in 2012, IHS said. Total U.S. crude oil production is expected
to average 6.3 million barrels per day, according to the Energy
Unconventional oil will outpace conventionally drilled oil
by 2015 and reach close to 4.5 million bpd by 2020, representing
close to two-thirds of total U.S. crude and condensate
production, IHS said.
"At which point do you stop calling this unconventional?"
said John Larson, a vice-president at the firm and lead author
of the study, in an interview.
"This is going to become the convention."
Oil, gas and chemical lobby groups helped pay for the study
but did not influence its independent, data-driven results,
OBAMA CITED EARLIER REPORT
President Barack Obama cited an earlier report in the IHS
series on the campaign trail and in a State of the Union address
that documented 600,000 jobs created by the natural gas sector.
That natural gas employment estimate has since swelled to
900,000 jobs, Larson said, noting more data is now available
about new "plays" where companies are drilling.
By 2020, IHS forecasts about 1.3 million additional jobs in
unconventional oil and gas, with the sector contributing more
than $416 billion to the economy.
Of the 3 million total jobs, IHS said about 20 percent would
come directly from the upstream oil and gas industry, with more
than 900,000 people employed by suppliers and about 1.5 million
"induced" jobs from spending by workers in the sector.
With 12 million Americans unemployed and about 23 million
underemployed, the growth in unconventional oil and gas jobs is
helping take some slack out of the jobs market, Larson said.
"This is really overwhelmingly net new jobs being added to
the economy," he said.
BIG POLICY DECISIONS AHEAD
The report comes as the Environmental Protection Agency
considers what role it should play in regulating hydraulic
fracturing or "fracking," the technology used by drillers to
blast sand, water and chemicals into shale rock to unleash the
oil and gas.
Environmental groups have raised concerns that fracking can
pollute groundwater and air, but the industry says the practice
is safe so long as wells are properly built.
The projections in the report assume the industry remains
regulated mainly at the state level, and also assumes that most
growth in drilling continues to happen on privately owned land,
The sector currently contributes more than $61 billion in
revenues to government, rising to more than $111 billion by
2020, assuming no changes to the industry's tax incentives.
However, both Obama and Republican presidential candidate
Mitt Romney have talked about rolling back those tax breaks as
U.S. policy makers look for ways to boost revenues to help avert
massive spending cuts and personal income tax increases that are
part of the "fiscal cliff" looming at the end of the year.
In February, IHS is planning another report in the series
looking at how the energy boom has led to a "renaissance" in the
U.S. manufacturing sector.
Part of that report will forecast jobs created by proposed
exports of liquefied natural gas, Larson said.
IHS currently assumes exports of 4 billion to 6 billion
cubic feet per day by 2035, Larson said -- far less than what
companies have proposed to build.
Even if the Energy Department gives a green light for
exports, IHS does not believe the global market is strong enough
to support all the proposals, Larson said.
"It's really hard for us to see how all those (terminals),
even if they were approved, end up being built," he said.