Shale oil and gas development will help the equipment rental industry generate about $26.7 billion in additional revenues between 2012 and 2015, according to a new study conducted by IHS Global Insight. The study, commissioned by the Energy Equipment Infrastructure Alliance, provides a detailed analysis of the unconventional oil-and-gas supply chain over 56 North American Industrial Classification System sectors representing more than 40 percent of the employment across the entire unconventional energy sector.
“The numbers are positive for every NAICS sector analyzed and there are tens-of-thousands of jobs created along with billions of dollars in economic activity over the 2012-2015 period analyzed by this study,” said John McClelland, American Rental Association vice president, government affairs, and chief economist. “The details of this report are impressive and the benefits widespread.”
The report, entitled Supplying the Unconventional Revolution: Sizing the Unconventional Oil and Gas Supply Chain, shows that the states producing unconventional energy from shale formations benefit substantially from the economic activity generated by developing these resources. However, non-producing states also benefit because of the manufacturing, mining, transportation and services their businesses provide as inputs into the energy sector.
The development of infrastructure to support energy exploration is a major part of the benefit. North Dakota is a clear example.
“In recent years, North Dakota has had a strong economy while much of the U.S. has struggled,” said Mark Gilbertson, owner of Fargo Rentall, Fargo, N.D. “Part of this is due to the strong performance of established industries in the state like ranching, grain farming and coal. However, the development of the Bakken Shale formation has been the fundamental driving force in the rapid and sustained growth of the state’s capital stock and specifically in the amount of rental equipment working in North Dakota. We have experienced multiple years of double digit growth in our rental fleet that is only constrained by our access to capital. Simply put, the sky is the limit.”
“ARA became a founding organization member of EEIA and supported the study with our long-term research partner IHS Global Insight because we want to understand the impact of the unconventional oil and gas supply chain on the equipment rental industry,” said Christine Wehrman, CEO of ARA.
A copy of the report, the executive summary and supporting tables is available at