A recent report by IHS Global Inc., for the Energy Equipment and Infrastructure Alliance (EEIA), estimates that from 2012 to 2025, the equipment rental industry will generate approximately $26.7 billion in additional revenues. The report also estimates that nationwide job growth will be more than 44 percent.
The study, “Supplying the Unconventional Revolution: Sizing the Unconventional Oil and Gas Supply Chain,” provides a detailed analysis of the unconventional oil and gas supply chain over 56 North American Industrial Classification System (NAICS) sectors representing well over 40 percent of the employment across the entire unconventional energy sector.
“The numbers are positive for every NAICS sector analyzed and there are tens-of-thousands of jobs created along with billions of dollars in economic activity over the 2012-2025 period analyzed by this study,” says John McClelland, Ph.D., American Rental Association (ARA) vice president, government affairs, and chief economist. “The details of this report are impressive and the benefits widespread.”
The report shows that the states producing unconventional energy from shale formations benefit substantially from the economic activity generated by developing these resources. However non-producing states also benefit because of the manufacturing, mining, transportation and services their businesses provide as inputs into the unconventional energy sector.
One example of an ARA member directly affected by the unconventional energy boom is Mark Gilbertson, owner, Fargo Rentall, Fargo, N.D., and Chairman of the ARA Construction and General Tool Shared Interest Group.
Gilbertson is quoted in the report saying, “In recent years North Dakota has had a strong economy while much of the U.S. has struggled. Part of this is due to the strong performance of established industries in the state like ranching, grain farming and coal. However, the development of the Bakken Shale formation has been the fundamental driving force in the rapid and sustained growth of the State’s capital stock and specifically in the amount of rental equipment working in North Dakota. We have experienced multiple years of double digit growth in our rental fleet that is only constrained by our access to capital. Simply put, the sky is the limit!”
“ARA became a founding organization member of EEIA and supported the study with our long-term research partner IHS Global Insight because we want to understand the impact of the unconventional oil and gas supply chain on the equipment rental industry,” says Christine Wehrman, ARA CEO. “ARA has a long history of conducting industry research and this study, along with the additional work we are planning with IHS Global Insight on the demand for specific rental equipment in the unconventional energy sector, is an important way we provide value to all ARA members.”
The report estimates that supplying goods and services to shale oil and gas producers will create more than 30,000 new jobs in the next 10 years. The new jobs are in addition to 46,000 existing shale energy supply chain jobs, bringing the total to more than 77,000 over the next decade.
Shale energy supply chain companies include construction contractors, construction equipment manufacturers and dealers, logistics companies, well services providers, professional service providers such as engineering and architectural firms, and providers of materials and supplies such as sand, cement and steel pipe.