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Shale oil find fuels boom in U.S. business
Question of the Day
To John LaRue, the renaissance in U.S. manufacturing is no dream. It’s already here.
As executive director of the Port of Corpus Christi, Texas, his business is booming and he has aggressive plans to expand and take advantage of the trend. He expects the local economy to double maybe triple in size within a few years as U.S. industries flock to the area, joined by foreign companies as far afield as Italy, Austria and China, all racing to take advantage of the cheap and plentiful oil and natural gas.
To Mr. LaRue, it all started with a major oil find a few years ago in the Eagle Ford shale deposits 60 miles up the road. That oil had been locked up for millions of years in deep underground bedrock and suddenly came available because of technologies developed by U.S. oil companies to extract oil from shale.
While the Eagle Ford gusher was the initial big draw in a world where oil-thirsty consumers have driven prices to $100 a barrel, the field also proved to have plenty of natural gas that became a powerful attraction for industries that use gas as a feedstock and to power factories.
U.S. and foreign manufacturers have announced plans to open plants in Corpus Christi for making steel and plastic products as well as building pipes needed to transport the oil and gas. Cheniere Energy Inc., a Houston gas transport firm, has asked the Energy Department for approval to invest $10 billion into building a massive facility for liquefying and exporting some of the Eagle Ford gas.
All of that comes on top of the port’s vital role in shipping the Eagle Ford crude oil to Gulf Coast and East Coast refineries that desperately need new sources of light, sweet crude to satisfy demand for highly refined gasoline in the most populous region of the country. Getting the oil out of the area was not easy at first because not enough U.S.-made vessels were available to ship all the crude to meet East Coast demand. But shippers are making do with barges while a shipyard in Philadelphia is building more tanker vessels to accommodate the stream of oil coming to market, he said.
Mr. LaRue estimates the port’s oil- and gas-fed manufacturing boom to create 350,000 factory jobs paying $60,000 to $80,000 a year, with thousands more jobs in construction and other industries that feed into and service the manufacturing plants.
“Unemployment is down to 6 percent. It had been as high as 8.5 percent, 9 percent” during the recession, he said. “I attribute most of the reduction to Eagle Ford.”
Shale boom fuels renaissance
Corpus Christi’s experience is repeated in areas across the country. North Dakota’s prolific Bakken Shale formation has turned the state into the nation’s second-largest oil producer. Pennsylvania refineries and shipbuilders are mobilizing to tap into the shale boom. Railroads and chemical industries are being transformed and strengthened as they take advantage of business opportunities stemming from the rising flow and falling costs of oil and gas. Economists foresee a potential rebirth of manufacturing including such basic industries as steel and plastics that had gone overseas and that many Americans thought they would never see again.
General Electric Co. chief executive Jeff Immelt is one captain of industry who is convinced that American manufacturing can rise again, thanks to the shale revolution. He announced plans last week to build a research facility in Oklahoma City to develop state-of-the-art technologies for the oil and gas companies that are pioneering in the field of energy extraction from shale.
“The availability of shale in the United States and around the world has to be one of the biggest game-changers I’ve seen in my career,” he said, but technologies still are needed to ensure that the gas and oil can continue to be extracted at low cost and without serious harm to the environment.
“Can we develop the technologies to extract it sustainably? If we do, we’ll have cheaper energy. We will power a manufacturing renewal” and even possibly achieve energy independence in North America once again, he said.
Other businessmen and economists agree. Nariman Behravesh, chief economist at IHS Global Insight, said the shale revolution is causing a “tectonic shift” in manufacturing that promises to revive a swath of American industries, transform the global industrial landscape and dramatically reduce chronic U.S. trade deficits.
“This development is improving the manufacturing competitiveness of the United States” by attracting “energy-intensive investment” from Europe, Latin America and Asia and encouraging U.S. producers to keep jobs and plants at home rather than ship them overseas, he said.
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