Analysis of the Shale Gas Revolution and Its Impact on the US Economy

This case study delves into the Shale Gas Revolution, focusing on its origins, impact on the U.S. energy market, and global implications. The study explores the combination of hydraulic fracturing and horizontal drilling, which significantly increased U.S. oil and natural gas production, transforming the country into a leading producer of dry natural gas. The research analyzes the economic and social impacts, including employment opportunities, diversification of global supply, and the U.S.'s relationship with the global oil market. It also examines the challenges and advantages presented by the revolution, the role of regulations, and the potential for replicating this success globally. The study further provides a literature review, research methodology based on secondary research, and detailed analysis of the revolution's effects on various countries. It also discusses economic impacts, social considerations, and offers recommendations based on the findings.

Shale Gas Revolution
Case Study of American Energy Industry

Executive Summary
The Shale Gas Revolution is considered as a mix of hydraulic fracturing and horizontal drilling.
This process made the USA to be capable of extensively increase its production of oil and natural
gas. Today, the USA is the leading producer of dry natural gas in the whole world. It generates
20 percentage of the global supply and 40 percentages from the shale. Increase in this production
leads the U.S to decline the import of net petroleum, ranging 27 percentage of the total
consumption of the US. The extraordinary change in the production of oil and gas, was
considered as a “Revolution” in the US. The country faced increased employment opportunity
from 2010 to 2012, from the oil and gas industry. It is observed that the production of oil and gas
in the United States has diversified the global supply. The other observation is projected on the
association of the U.S with the global market, which affects the price of the oil.US can be
successful with its unique regulations on the rights of the resource land, but the difference in the
geological and political situation demands exceptional approach, to develop the shale resources
in other countries. Thus, the Middle East’s supply interruption could be the reason for hurting the
US consumers and increased challenges. Thus, this project deals with the case study of Shale gas
revolution in the US. The growth of shale gas paved the way for uncertain effects on the U.S
energy market, and these impacts lead to perform various researches to analyze Shale gas
revolution. In the US, the reduction of carbon dioxide emission and greenhouse gas pollution is
noticed due to shale gas. There is argument related to shale gas that, it has some impact on the
U.S government. The shale gas in the U.S is five times inexpensive when compared to the
conventional European gas, which impacts the energy market of the United States.

Table of Contents
Executive Summary...................................................................................................................................2
1. Chapter 1: Introduction....................................................................................................................1
Research Background...........................................................................................................................2
Aim.........................................................................................................................................................3
Objective................................................................................................................................................3
Scope of the Project...............................................................................................................................3
2. Chapter 2: Literature Review...........................................................................................................4
3. Chapter 3: Research Methodology.................................................................................................12
3.1 Secondary Research Methodology..........................................................................................12
3.1.1 Advantages of Secondary Research...................................................................................12
3.1.2 Limitations of Secondary Research....................................................................................12
3.1.3 Techniques in Secondary Research....................................................................................12
3.2 Application of Secondary Research Methodology to the Shale Gas Revolution.................13
3.2.1 Domain Identification: Shale Gas Revolution....................................................................13
3.2.2 Collecting the Data about the History of Shale Gas...........................................................13
3.2.3 Data Related to Shale Gas Involving Different Types of Sources......................................13
3.2.4 Data Analysis Related to the Shale Gas.............................................................................14
4. Chapter 4: Global Implementation of Shale Gas Revolution.......................................................14
4.1 Impacts for the United States of America..............................................................................17
4.2 Impacts for European Countries............................................................................................18
4.3 Impacts for China, Russia and Saudi Arabia........................................................................19
4.4 Economic impacts of Shale Gas Revolution...........................................................................19
4.5 Social Consideration................................................................................................................20
5. Chapter 5: Analysis.........................................................................................................................21
5.1 Economic Analysis...................................................................................................................21
6. Chapter 6: Discussion and Conclusion...........................................................................................31
6.1 Recommendations....................................................................................................................31
References................................................................................................................................................33

1. Chapter 1: Introduction
Shale Gas Revolution denotes the blend of both hydraulic fracturing and horizontal
drilling, which made the USA capable of increasing its oil and natural gas production.
Especially, from the formation of tight oil which accounts 36 percentage of overall production of
crude oil in the USA (The Strauss Center, 2017) at present. American natural gas supplies were
only 1% during 2000, but at present it has increased to 30% (Brooks, 2017). The capacity of
producing oil in USA has decreased its reliance on the overseas’ oil imports. On the other hand it
allows a significant boost to the country in terms of economy, and has been helpful in recovering
from the 2008 recession. The reports state that, the GDP of 2011 for the USA displayed more
than 1.5 percentage of oil and gas and is consistently increasing. This increase in oil and gas led
to employment in the USA during 2010 to 2012, because the oil and gas industry additionally
required nearly 169, 0000 people to work for them. It was observed that the new production
made the USA one of the player in producing oil and gas. Earlier Middle East was the leading
producer and supplier in the world, but the USA’s production has diversified the global supply.
The domestic production of oil and gas is satisfying the consumption of the people in USA. The
fact noticed from the new production is that, the reduction in imports of hydrocarbons
improvises the trade balance of the USA and it decreases the direct financial help to export oil, as
it can counteract to the interests of the USA (The Strauss Center, 2017).
The research determines the USA as the leading producer of dry natural gas in the world,
with 20 percentage of the global supply and 40 percentage from the shale. Whereas, the increase
in the production of domestic oil has reduced the imports of net petroleum to twenty seven
percentage of total consumption of the US. The political figures consider that the boom of shale
can help in nurturing the U.S. with energy independence. But, the point is till the United States
of America is associated with the global market, it is prone to price shocks, because the price of
oil is decided in the global market. However, though the USA proceeds with the shortening of
petroleum with zero, the global price of oil would increase due to the Middle East’s supply
interruption. This would ultimately hurt the consumers of the United States and thus, marketing
the natural gas is incoherent, which leads to various challenges (The Strauss Center, 2017).
In the U.S, the advanced shale oil and gas contains various reason to be taken off. Except
the United States, the other countries surrendered their subsurface mineral rights to the
government. But, in US the land owner has the right to own the hydrocarbon resources. The
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improvisation of oil and gas in the US is the result of the country’s regulations, as it gives the
stability and acceptable permitting process. Hence, the united States have various advantages
because of the big infrastructure network that can manage the growth of the oil and gas sector.
However, success is possible for the U.S from these advantage, but the difference in the new
geological and political situation can demand exceptional method for developing the shale
resources in other parts of the globe (The Strauss Center, 2017).
Research Background
The extraordinary change in the production of oil and gas, was considered as a
“Revolution” in the US. The country like the United States of America is known as a blessed
country, but it is no longer the same. The reason is that, the USA is diversified, and it impacts on
this significant blessing of the country (Brooks, 2017). The unconventional gas and the
unconventional oil has drastically transformed these jargons to shale gas and shale oil. Earlier,
certain places of United States of America never generated much oil or gas, which they actually
produce now. For instance, North Dakota and Pennsylvania is considered as the best example to
show its drastic improvement in production of oil and gas. The shale gas’s boom provided
unexpected impacts on the energy market of the U.S. These impacts caused to conduct various
research for analyzing the Shale gas revolution, and the difference of opinion was observed from
each reports. Similarly, the report of 2010 raised two important questions such as will the
revolution continue further and can it impact in other countries. The answers for these questions
in various reports were uncertain. This uncertainty increased and caused detrainment in the
investment of conventional and unconventional gas. It is observed that various reports have
argued on the increasing demand of gas, which can cause gas shortage in the next decade, that
lead to the increase in the suppliers of such gas. This lead to the threat of uncertainty for
inhibiting the investment in the renewable energy, in the countries which expect that generous
volume of cheap gas should exist for providing inexpensive route for the lower carbon economy,
instead of renewables that costs high. This report created significant division between the shale
gas’s proponents and opponents. On the other hand, it lead to battle between various analysts and
authors to determine the uncertainty of the realistic prospects for shale gas. Thus, it became very
important to generate an original report, which focuses on various developments to emphasize on
these uncertainties. The shale gas in the U.S is five times inexpensive when compare to the
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conventional European gas. This shook the energy market, because of its evident impact on the
U.S.
Therefore, this project report aims to run through all the aspects of Shale Gas Revolution,
right from when it started to the present day. This research projects on what happened since then
and how it could change the present day impacts.
Aim
The aim of this study is to study about the Shale gas revolution.
Objective
The objective of this report is to provide the following:
1) To determine the whether it is a revolution.
2) To analyze its impacts in USA and in various other countries.
3) To understand the general effects of Shale gas revolution.
4) To determine the uncertainty on the continuation of this revolution and its impact
in other countries.
Scope of the Project
The research is based on the secondary research analysis.
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2. Chapter 2: Literature Review
According to (Bellelli, 2013), the natural gas sector of the U.S has seen an extraordinary
change and this change was named as “Revolution”, where the new technologies helped in
increasing the extraction rates of oil and gas. The boom of shale gas is expected to have
uncertain impacts on the energy market of the United States. Followed by the growth of shale
gas in the US, the global supplier like Middle East faced challenges. The author states that when
the US was debated about its revolution, which gave environmental significance and
sustainability for the United States, the other countries had difference in opinion in replicating
the boom of shale gas. The author says that the production of gas is cost-effective due to the
investments made in the techniques for extracting through drilling the horizontal wells and the
hydraulic fracturing or the fracking technique.
The fracking technology provides accessibility to the large range of unconventional gas
resources. Especially, the shale gas that is found stuck in the formation of sedimentary shale
rock. The extraction of shale gas requires injecting the chemicals, water and sand, at really high
pressure.
As per (Kilian, 2016), the author examines the shale oil revolution in the United States.
The authors talk about the evolution of crude oil with gasoline prices. This evolution of oil and
gasoline production changed the historical perspective. It also specifies the uncertainty about the
future production of oil and gas. After this evolution, crude oil was purchased from the refineries
and then it wastransferred asrefined products, like diesel, gasoline and fuel. The shale oil was
distributed in ever growing quantities to the United States. Thecreativity of the U.S oil industry
to make a sweet crude oil resulted in the production of high composite crude and shale oil made
with the proper proportion for the purpose of imitating the mid-grade level of crude oil. The
shale oil’s cost increases the matter for the United States, mainly because the domestic wealth of
the country is getting changed with the foreign countries, where the price of the imported crude
oil increases the economical level of the United States. Moreover, the growth of United State
exports of superior products have further upgraded in terms of trade, which equated with the
past. There will be a restructuring of wealth along with the U.S. economy, but these
distributional impacts are extremely unclear when compared with the special effects of decrease
in the domestic total demand that is associated with the oil imports with large budget.
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Thus, the author determines that, the transformation of shale oil may be a great news to
the legislators, and they are worried for swaying worldwide oil worth shocks. However, those
significant attention considers that the shale oil might revive the whole manufacturing segment
in the United States. Similarly, the manufacturing segment needs to be changed under the
evolving economies in present decades to gain profit from less labor cost in the other countries.
The hope of this trade revival is basically based on the premise that manufacturing on energy and
that shale oil provides a source of low-cost energy, which gives modest edge to the United States
when compared with the evolving economies. The supporters of this opinion hope to gain profit
of blue collar trades to the United States, as firms reexamine the costs and profits of
subcontracting.
As per (Wang and Krupnick, 2015),the shale gas boom in United States supports the
shareholders in the countries that are trying to grow their personal shale gas resources. One
important way to shed light on this problem, is to observe rexperience of the US. While it is
tough to absolutely know the required or adequate conditions for fueling the shale gas boom, a
historic analysis of the US knowledge can at least update the conditions that are aided. A shale
gas boom might occur in a nation without much stated achievement in fitted gas methane, but the
authors review recommends a necessity for a country, to organize its guidelines on eccentric
natural shale gas and oil resources. The shale gas and oil invention is mainly prepared in the
United State economy and it did not depend on the introduced crude oil, which decreased its
contact to the benefit of oil price threats. This has usually concerned with the resource
representatives. So it has improved the entire exposure to limit the overall shale gas price risks.
However, rather than making the economy it clearly specifies that, it is not much dependent on
the global oil marketplaces, as the shale oil explosion has changed the nature of the U.S.
exposure to global oil expense shocks. By the shale gas revolution, the U.S market level
transformed into the next stage. The author states that the important beneficiary of the U.S. shale
oil and gas revolution is that it had not lead to increase in the shale gas buyers or shale gas
manufacturers but lead to the purification of shale gasindustry. It’s used to appreciate more than
25competitive profit over the diesel and fuel producers in the foreign country, because of its
contact to inexpensive crude oil. Thus, between the year 2011 and 2015, there was clear conflict
between the interests of U.S., the refiners and U.S. crude oil manufacturers. Although, it
involved in the special effects of the shale oil boom on yielding and employment are mostly
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focused in the shale oil and refining sector of the economy. However, this does not mean that
increase in the shale oil production has no broader macroeconomic effects.
According to (Aruga, 2016), the effect and impact of the shale gas revolution on the U.S
gas market is quiet a national phenomenon. This revolution mainly concentrates on manipulating
along with the worldwide natural gas market. It also achieves the revolution of shale gas
economy improvement in the global market. The author investigated that, the combination of
natural gas marketplaces are basically surrounded by different shale gas markets. Hence, the
studies are restricted to the County-Level, such as surrounded by the North America or the
Europe. In order to evaluate the shale gas market integration among the intercontinental shale
gas markets, which is mainly used to test and verify the Long-Run marketplace dealings between
the North American and Japanese natural shale oil and gas markets. Also, the author examined
two most important parts in the shale gas revolution. The primary part statistically classify the
breakdown period by using the U.S natural shale oil and gas promoted the shale gas production
period sequence of data. It is also appealed that, the shale gas revolution happened in the middle
of the year 2000 in U.S, by this promoted production, time sequence is the most important point
at which the shale gas revolution began. The secondary part is divide by the U.S, European and
Japanese natural gas rate series by using the break point that revealed in the primary part. It has
verified the overall price contacts between these 3 natural shale gas market changes. Finally, the
author got the results which specified that, the U.S. gas marketplace became more self-governing
from the intercontinental shale gas market. Afterwards, the shale gas uprising happened, but this
revolution has not yet augmented the aggregate of U.S. shale gas distribute and does not
presently guide the intercontinental shale gas market.
As per (Krupnick, Wang and Wang, 2013), the author reviews various impacts of shale
gas revolution on the sectors of electricity generation, transport, and trade in the United States.
Natural gas is being replaced for other gases, mainly coal, in power generation, subsequent in
inferior greenhouse gas releases from this type of sector. The author states that, the US
manufacturing has been declining in recent years, as a result of improved intercontinental
competition, downturn, and an ongoing shift towards the service trade. Such variations in
economic events, organized with development in energy effectiveness, have run to a decline of
20 % in natural gas consumption from the business sector, throughout the past fifteen years.
However, the distinct electric power area, where remaining gas plants are existing for fuel
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transferring, basically these type of projects need huge amount of assets with a repayment time
period of up and about to 5 years. Earlier, they can produce positive money flows. Hence, the
economic welfares in industry look like more susceptible to the shale gas price unpredictability
and to essential concerns about the LNG trades for improving the shale gas price.
According to (Vengosh et al., 2013), the effects of shale gas in recent year’s drilling
technology and production of shale gas exploration has increased in the United States. The
overall improvement on the removal of natural gas resources is from the shale gas basins in the
U.S. the shale gas has continuously increased the responsiveness for potential environmental
significances, for the most part contamination of drinking water aquifers. The most important
serious debates on the topic of environmental protection of shale gas survey as well as the
hydraulic splitting is more and more possible contamination process of drinking water wells in
zones of extensive shale gas process. So, it is useful for the people to know about the effects of
shale gas production. The fragility of the shallow aquifer methods to make a possible
contamination of fleeting gas, fracking liquids, and the development of water can be influenced
by mainly focusing on the hydraulic connectivity between the profound shale gas developments
and also spread over the surface of shallow aquifers. The current experiments are for the purpose
of handling the wastewater, such that it can be produced together with the help of natural gas.
Unconventionally, the entire disposal of wastewaters is completed, with the deep-well injection.
It could prompt, the seismic events in different locations in the U.S.
As per (Cooper, Stamford and Azapagic, 2016), the overall improvement on shale gas
industry in the United States has raised the higher expectations. Thus, theother countries are
trying to increase the domestic shale gas production. This is used to improve the country leading
to lower level energy prices as well as improving the energy security. The author attempts to find
out the shale gas exploitation in a sustainable way. However the shale gas is controversial and is
diverging many people. Different sustainability issues are related with its exploitation. The
indirect impacts of sharp drop in shale gas’s costs need to be prompted. The result in shale gas
costs need to be aided to set a relation between the oil and its transforming cost. The oils are
frequently reflected for gas costs. As an after effect, the reduced gas prices might be an engaging
area in the economic industry that is clinched along with particular chemical manufacturing. This
could be seen in the late investment settled towards the vast concoction companies. For example,
DOW concoction Sasol, will manufacture new preparation destinations in the United States. The
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investigation about the shale gas industry will be predicted on one million employments by 2025,
which with joined work produces improvement in shale gas. Outside the United State of
America, shale gas movement will be a significant part and slacking behind on development,
then there exists the budgetary effects in different nations. It is efficiently evaluated. When
analyzing those assessed generation expense of the U.S breakeven cost, it noticed from the
comparison with shale gas that it is substantially only prepares alongside different nations, due to
lack of improvement. The inspiration for creating the shale gas for a most regions districts may
be on incrementing their energy security. A standout amongst the principle contentions of the
individuals should be restricted to shale gas. It may have high prerequisites that will increment
the anxiety to look intothe water supplies, especially to the water-scarce territories. The authors
examine that, the water consumption is an advancement process about regionally fitting, which
produce resultsthat might be critical. This might incorporate managing water withdrawals, by
utilizing salty water. These are opposed to freshwater, and for reusing water. The creation about
shale gas pose threat to great webpage workers, and additionally people living in close
surroundings. Safety dangers to the specialists, likeincorporate mishaps onsite, and starting with
minor damages fatalities.
According to (Hausman and Kellogg, 2016), the author examines how the shale gas
improvements have affected the welfare of the Unites States and also describes the hydraulic
fracturing and horizontal drilling technology innovation. This innovation is used to extract the
great amount of natural gas from the underground and also the natural gas has been more
profitable. The author explains about the broad scale welfare estimations and implications of
distribution of this resource’s explosion. The people use the new estimation called demand
elasticity’s, which is used to estimate the fall in the natural gas’s costs. The measurement of the
positive welfare impacts the wide sector of gas consumption such as residential, electric power,
commercial including the industrial. The negative impacts for manufacturers, determine the gas
led developed renaissance and license over the prices of the products, which includes commodity
chemicals, retail electricity, and retail natural gas. The shale gas revolution has managed to rise
the welfare for the ordinary gas regulars and creators of dollar 48 billion/day. But, huge data is
necessary to range and estimate the conservational prices of shale gas production. Developments
in data gathering could be enormously prized both for measuring the potential conservational
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impacts from marking and for permitting profitable rule.
According to (Mark Barteau, 2014), Shale gas is a game changer for U.S Economy. It
gave a tremendous growth in the energy market. The country investigated how the shale gas can
be used for the benefits of America. By the use of proper guidance, the power plants operation
along with the natural gas may result in rapid growth. The author states that, the process involved
in Shale gas extraction must be clarified by the government for the benefit of people. The
Federal Agencies can use the technologies like NOAA, DOD for the observation of methane
emission. The author explains how the shale gas turned as a game changer in U.S manufacturing.
The impact of shale gas on the economy of U.S is huge. The shale gas boom creates more job
vacancies and revolutionizes the position of U.S in the universal energy market. The profit of
shale gas invested for the growth of future commercial purposes. The author discussed about the
unfortunate things regarding environment through the use of shale gas extraction process. The
public protests took place against the hydraulic fracturing and drilling techniques, as it produces
harmful effects to the environment. Moreover, as the shale gas process involves drilling and
injecting chemicals, the water was polluted.
As per (Brewer, 2014), Even though shale gas provides a remarkable development, many
countries create it as a controversial one as it can produce awful effects to the environment,
including climate change. The author explained about the shale gas issues related to the society
and environment. Public health, safety and environmental concerns are important as shale gas
exceeds the international boundaries. As the chemicals used in the shale gas extraction process
includes chemicals and drilling process, it may result in earth-quake and health issues. The
analysis, development and merchandising of shale gas become highly arguable around the world.
To recognize the full length of methane emission problem, the knowledge about measurement
and discharge of methane level are expected as requirement. By using appropriate technologies,
the methane emission level can be monitored and controlled. When compared to coal, shale gas
discharges less amount of GHG. International price issue is also one of the controversy about the
shale gas. As the costs of shale gas is available at low price when compared to the natural gas, it
became a serious problem in U.S. In trade, evidently the costs of production and transportation of
shale gas will differ based on the location. Basically in U.S, the shale gas deposits seems to be
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