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Full potential of shale gas untapped

CHARLESTON, W.Va. -- Although hundreds of millions of dollars already have been invested to extract natural gas from the Marcellus Shale, development is still in its infancy, said Christopher Guith, vice president for policy at the U.S. Chamber of Commerce's Institute for 21st Century Energy.

"I don't think a lot of people understand how far-reaching it is," Guith said of the impacts of the Marcellus and other oil- and gas-rich shales.

The institute commissioned a three-part study of shale energy by IHS, an independent global energy research firm. The first part of the study, released in October, found that shale energy development has created 1.75 million jobs nationwide in recent years. By 2015, shale and the development of other unconventional energy sources are projected to be responsible for 2.5 million jobs and, by 2035, 3.5 million jobs.

The second part of the study, released in December, detailed the impact shale energy is having on the states. It said that through 2012, shale energy supported nearly 12,000 West Virginia jobs in industries related to extraction and generated more than $280 million in state and local government revenue.

Guith pointed out that those jobs were created during one of the worst economic periods in recent history.

"But for those jobs being created, we would be looking at unemployment north of 10 percent in some of those time frames," he said.

By 2020 shale energy extraction is expected to support 29,656 jobs in West Virginia and generate $884 million in tax revenue, the study said.

The third part of the study, to be released soon, will look at all of the economic impacts shale energy is expected to have from the time it is extracted to the time it is used to make final products.

"Adding the 'midstream' and 'downstream' will give us the full picture," Guith said. "Those numbers are going to be mind blowing."

A lot of shale energy's potential is still locked up, he said.

"Pennsylvania is sitting squarely on top of the Marcellus Shale but as recently as last year, Pennsylvania was still importing 75 percent of its natural gas. Why? Because the infrastructure hasn't been built yet" to get the gas to market and transform it into final products.

In March 2012 Shell announced it wants to build a multi-billion-dollar cracker plant near Monaca, in western Pennsylvania. A cracker converts natural gas into more profitable chemicals like ethylene, which is used to make plastics, tires and other products.

Guith said a cracker is important because of the trickle-down effect it has. Manufacturers cluster nearby to take advantage of the feedstock a cracker produces.

"The vast majority of this business is on the Gulf Coast so a cracker is important for all three states," Guith said, referring to Pennsylvania, Ohio and West Virginia. "Many would argue that, at the end of the day, Ohio and West Virginia may have got the better deal because of all of the tax deals Pennsylvania had to give Shell.

"Ohio and West Virginia are in line to get revenues. I think the cracker was sort of a loss leader. You're talking a $5 billion to $8 billion investment. It'll create a tremendous amount of jobs in the construction phase and a moderate number of jobs in the afterward phase. But there will be many more follow-on jobs."

Guith pointed out that Shell is not yet completely committed to building a cracker in Pennsylvania. He said that is understandable, given the history of ups and downs in the natural gas industry.

So far, "we have seen companies like Dow open shuttered facilities," he said. "The next step is investing in new facilities. We're seeing that in steel in Akron and Canton already. The steel industry was moribund for 20 years. Now five mills are being retrofitted and a brand new one is being built by a French company, all in one small area, and that's 100 percent because of the 'shale gale.'"

A Shell cracker will be great for West Virginia, even if it is in Pennsylvania, Guith said. "There could be room for two or three more.

"The fact we have this resource gives us an enormous competitive advantage with the rest of the world," he said. "The rest of the world uses oil as a feedstock (in the chemical industry). We have the cheapest natural gas in the world. Being able to use that gives the manufacturing sector, the petrochemical industry, a tremendous advantage.

"We're on the verge of a manufacturing renaissance."

Guith said the U.S. Chamber of Commerce established the Institute for 21st Century Energy in 2007 when Chamber President and Chief Executive Officer Tom Donohue identified energy as an issue that affects all chamber members.

The institute's goal is to be a thought leader and provide research and policy analysis and be an advocacy organization with 2,300 state and local affiliates, Guith said.

"While there continues to be a debate or discussion about fracking and whether it's a hazard to health or the environment, that's pretty well covered by other organizations," he said. "That's not really what people look to the chamber for. At the end of the day, they look to us for what it means for business.

"We've identified a couple of key things we want to focus on in the short term," he said. "One is the Keystone XL pipeline and the other is shale energy. We've launched the 'Shale Works for Us' campaign in a couple of states including Ohio, Pennsylvania and West Virginia; we're getting active in Colorado and we're watching New York."

More information about the campaign is posted on the Internet at www.shale

worksforus.com.

Contact writer George Hohmann at business@dailymail.com or 304-348-4836.


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