From steel pipe manufacturers to companies that produce sand and gravel, the U.S. shale boom is buoying businesses far removed from the oil and gas fields, a new study finds.
These companies are benefiting from the huge investments needed to explore, produce, process and transport oil and gas unlocked from previously inaccessible dense rock formations through advances in hydraulic fracturing and horizontal drilling, according to the findings by Houston-based energy analyst firm IHS.
The boom has been most generous to companies working in states with the most oil and gas activity, but the economic boost has also trickled down to steel-makers and machine tool manufacturers based in regions with no production, the report said.
And companies with no experience in the energy industry are thriving, with businesses being created to meet the industry’s demand for new services, such as supplies for water and sand which are injected underground during hydraulic fracturing to crack and prop open rock formations to extract oil and gas.
In 2012, unconventional production supported 524,000 jobs in industries that support the the energy industry, either directly or indirectly, the report found. These supply chain industries are expected to continue to add jobs in the coming decade, with IHS predicting that the shale boom will sustain 757,000 jobs in 2025.
Beyond job creation, a surge of new drilling activity is pumping money back into the economy, IHS said, estimating that supply chain companies will contribute more than $16 billion in government revenues next year, up from $13 billion in 2012.
“The growth in unconventional production has become an important source of economic activity for these industries at a time when many of their other primary markets were experiencing decline as a result of the Great Recession,” Brendan O’Neil, managing director of consulting for IHS Economics and Country Risk, said in a statement.
The study is the latest by IHS as it seeks to quantify the economic contributions sparked by the U.S. energy renaissance. Unconventional oil and gas activity has bolstered the nation’s oil production by 50 percent since 2008 and helped thrust the U.S. into its position as the world’s leading natural gas producer. The industry has been trying to convince lawmakers that the shale boom has created far-reaching economic benefits that can be felt across the nation.
Two weeks ago, the American Petroleum Institute, an industry trade group, unveiled a survey showing that oil and gas companies hired nearly 30,000 supply vendors, including accountants, information technology assistants, uniform manufacturers, portable restroom providers and restoration firms. Texas led the survey with 11,033 vendors.