“The sure way to miss success is to miss the opportunity.”
That line was penned by Philarète Chasles, a writer and critic in 19th-century France, but it is no less relevant in the United States of the 21st century.
I was reminded of that line while reading a new study from the Harvard Business School and the Boston Consulting Group entitled America’s Unconventional Resource Opportunity.
In March, more than 80 representatives from industry, the environmental community, suppliers, think tanks, state and federal government, and academia convened at Harvard to discuss issues related to unconventional resource development. I was fortunate to be invited to participate on behalf of ExxonMobil. The result of that discussion is the report released yesterday.
The report’s findings are striking. The energy resources available from the country’s so-called unconventional resource basins – i.e. shale and tight rock – offer “perhaps the single largest opportunity to improve the trajectory of the U.S. economy, at a time when the prospects for the average American are weaker than we have experienced in generations.”
However, the authors warn, there is a real risk America will fail to capitalize on this historic opportunity, much less build on it.
The report lays out the extraordinary gains that shale energy has already provided:
- More than $430 billion contribution to annual U.S. GDP – or about $1,400 for every single American
- More than 2.7 million American jobs supported by unconventional energy development
- $800 in annual savings for the average residential household from lower energy costs attributable to unconventional natural gas
- $90 billion in natural gas and natural gas liquids (ethane, propane, butane) fuel cost savings for residential, commercial, and industrial users
- Local, state, and federal tax revenues in excess of $100 billion (the absence of the federal portion of these revenues in 2014 would have added approximately 13 percent to the federal deficit, the authors note)
The study concludes that those already-impressive numbers can grow – to as much as $590 billion in extra GDP, 3.8 million jobs, and $160 billion in tax revenues by 2030 – but only if policymakers, industry, and the public resolve to work together on ways that ensure continued safe and environmentally sensitive energy production.
That ambition is eminently achievable, and the report identifies several areas where action should be taken now to ensure we realize these benefits in the years ahead.
One is in the area of energy exports.
Lifting the ban on crude oil exports and removing the restrictions limiting liquefied natural gas (LNG) sales abroad would provide a tremendous stimulus to the U.S. economy while strengthening America’s hand geopolitically, the study concludes.
Another area is permitting for infrastructure projects, particularly pipelines.
The report notes that the number of infrastructure projects delayed more than 90 days is up 28 percent between 2005 and 2012, and the number of projects delayed more than 180 days is up 20 percent.
Why? “Long, inefficient, and highly political permitting processes are the major driver of infrastructure delays,” which ultimately can raise transportation costs and lower the value of the oil and natural gas extracted.
The report also includes suggestions to build on successful environmental-protection efforts – “Unmistakable Progress,” as the report labels one section. Read the entire report here.
A happy combination of geology, technology, human ingenuity, and sound political systems has afforded the United States with a tremendous opportunity that can benefit Americans for many generations.
We should not let this opportunity pass us by, especially considering the rewards we’ve enjoyed thus far. As the report makes clear, it’s up to all of us to work together to seize the promise of America’s unconventional resource blessings.