Fracking, also know as hydraulic fracturing, is pretty controversial among environmentalists. The process threatens groundwater, but then natural gas burns much cleaner than coal.
Another issue affecting the fracking debate involves jobs. With the natural gas boom fueled by fracking, we’re now seeing a ton of drilling for gas, and also oil, and that’s creating many jobs.
On the East Coast, abundant natural gas flowing from the Marcellus Shale formation, which runs through New York, Pennsylvania, and Ohio, is enriching farmers who lease their lands to production companies and is estimated to have created 60,000 jobs in the region, with another 200,000 possible by 2015.
Cheap domestic energy is also good news for the manufacturing sector. “The discovery and development of North America’s shale resources has the potential to be the most remarkable source of economic growth and prosperity that any of us are likely to encounter in our lifetimes,” U.S. Steel CEO John Surma told the Congressional Steel Caucus in a late March hearing. It’s a virtuous cycle: More drilling requires more steel, and lower energy costs give U.S. steel producers a cost edge. This at a time when the Department of Energy reports that the energy intensity of U.S. steel companies is now among the lowest in the world.
In St. James Parish near Baton Rouge, ground was broken last year for a $3.4 billion steel plant being built by Nucor Steel (NUE), the first major facility built in the U.S. in decades. U.S. Steel is investing in a new facility in Lorain, Ohio, and V&M Star Steel (the North American subsidiary of the French pipemaker Vallourec) plans to spend $650 million on a small-diameter rolling mill in Youngstown, Ohio.
It’s not just Big Steel that will benefit. Feedstock made from cheap natural gas is a boon for the petrochemical industry. Citing “the improved outlook for U.S. natural-gas supply from shale,” Dow Chemical (DOW) says it will build an ethylene plant for startup in 2017. (Ethylene is used to make things like plastic bottles and toys.) Dow will also restart its ethylene plant near Hahnville, La. Shell, which is building a new petrochemical refinery in Pennsylvania, is also considering a $10 billion Louisiana plant to convert natural gas to diesel. “Low-cost natural gas is the elixir, the sweetness, the juice, the Viagra,” says Don Logan, president of the Louisiana Oil and Gas Association. “What it’s doing is changing the U.S. back into the industrial power of the day.”
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