The abundance of shale gas resources may spark a U.S. manufacturing renaissance with economic benefits that include cost savings, greater investments to expand U.S. manufacturing facilities and increased levels of employment, according to a new report released December 14 by PwC titled, Shale Gas: A renaissance in US manufacturing? .

To achieve these results, however, PwC says that manufacturers must help manage the environmental, regulatory and tax concerns created by shale gas resources.

PwC expects an estimated $11.6 billion in cost savings by 2025 by combining recent natural gas consumption levels with potential natural gas prices under high shale recovery scenarios. Additionally, manufacturing employment could increase by approximately one million workers by 2025 in high shale recovery scenarios.

“An underappreciated part of the shale gas story is the substantial cost benefits that could become available to manufacturers based upon estimates of future natural gas prices as more shale gas is recovered,” said Bob McCutcheon, U.S. industrial products leader, PwC .

He continued, “In fact, the number of U.S. chemicals, metals and industrial manufacturing companies that disclosed shale gas potential and its impact so far in 2011 easily surpassed that of the last three years combined, indicating this is of growing importance in the outlook of U.S. manufacturers.

The significant uptick in shale gas commentary among the manufacturing community reflects the positive influence that shale gas is having from investment, operational and demand standpoints.”

Resulting from production of a stable supply of shale gas, manufacturing industries are able to lower feedstock and energy costs, and are looking to shale gas as a source of growth for their own products. For example, companies that sell goods such as metal tubular products, drilling and power generation equipment should experience a near-term growth in sales as domestic natural gas production rates move higher.

“Manufacturers and communities throughout the country are beginning to see and recognize the real economic benefits of shale gas,” said National Association of Manufacturers President and CEO Jay Timmons. “Shale gas development is a bright spot in our economy and it has the potential to boost manufacturing employment by one million jobs, which are badly needed.”

Shale gas has already contributed to greater manufacturing investments in the U.S., particularly with chemical companies seeking cost advantages by using cheaper ethane, a natural gas liquid derived from shale gas, differentiating themselves from foreign competitors who rely more on oil-based naphtha.

Manufacturers outside the chemical industry have also announced expansion plans due to incremental energy resources, and plan on making investments in the U.S. based upon the opportunity to sell equipment for shale gas plays, according to PwC.

The relatively inexpensive and stable long-term source of natural gas is helping manufacturing companies expand and open more facilities in the U.S., presenting an opportunity to create more jobs in the industry.

“Lower natural gas prices resulting from incremental shale gas production have the potential to add over one million manufacturing jobs in the U.S. by 2025. The expectation of the new shale gas resource providing a significant long-term boost to move the U.S. manufacturing employment needle shines a light across the nation amid the current labor market woes,” added McCutcheon.

Environmental and regulatory concerns of shale gas resources include the rapid decline in production rates for shale as compared to conventional gas, which requires drilling more new wells to offset decline in existing wells. Also, there is a need to build out infrastructure in regions that haven’t already produced significant amounts of natural gas.

“The economic benefits to U.S. manufacturers can’t happen if shale gas is not extracted in a profitable and safe manner. To achieve these significant outcomes, manufacturing companies must effectively communicate the value that shale gas can create for U.S. workers and communities,” concluded McCutcheon.

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China’s capital Beijing plans to implement congestion fees on some of its major, highly trafficked roads, Chinese Xinhua news agency reported on September 2 The measure is primarily meant to help reduce the heavy pollution caused by the high number of cars and it should lead to a decrease in traffic jams.

Hopefully, it will also encourage the residents of the Chinese capital to rely more on alternative-energy, environment-friendly vehicles. Officials also hope that the new congestion charge will inspire Beijing residents to start using public transport more than personal vehicles.

However, the reports did not mention how the fees would actually be collected or any other specific details regarding the manner in which the authorities plan to implement the measure. The plan encourages nevertheless the use of the so-called new energy cars, such as electric vehicles, as an environmentally-conscious alternative to cars which use fuel.

Unspecified incentives to buy new energy vehicles will also be provided. For the same purpose, the plan pledges to build more electric-vehicle charging stations and to upgrade the equipment in the already existing ones.

Measures to reduce traffic pressure have been introduced since the 2008 Beijing Olympic Games, when car owners could use their vehicles only on certain days, depending on the number of the license plate. However, the measures have not had the desired impact and traffic jams continued to remain a problem.

In January 2011, Beijing began capping new car registrations at a price of 20,000 per month, available through a lottery. That has not slowed the increasing traffic to a significant extent, however, it has deprived tens of thousands of hopeful car owners of the possibility of  buying a car.

Beijing also continued to raise parking fees, expand its subway system and build parallel roads, all in an attempt to relieve its heavy traffic. There are voices saying that the measure will probably not have the expected effects, due to the complexity of the problem. “Neither traffic restrictions nor congestion fees can end traffic jams, because they fail to address the essence of the problem,” said Zhang Chang Qing, a traffic law expert at Beijing Jiaotong University.

“Although the plan does not clarify the exact road sections the government is going to charge tolls on, it is simple logic that if it is the Second Ring Road only, people will swarm to Third and the Fourth Ring Road and cause traffic congestion there. Currently, all the rings are already seeing heavy traffic, so I believe the government will have to set up tolls everywhere.”

In 2009, China became the world’s largest auto market, which has led to a constant growth of car ownership. By 2012 the already heavily-trafficked Beijing is expected to have a total of 7 million vehicles on the road.
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The energy company CronocoPhillips and their Chinese section has not effectively stopped or cleaned up offshore spills in the Bohai Bay, according to China’s Oceanic Agency. The spills, which occurred on June 4 and June 17, releasing approximately 700 barrels of oil into Bohai Bay and 2,500 barrels of mineral oil-based drilling mud onto the seabed, have raised an outcry among environmentalists.

The State Oceanic Administration said its investigation discovered that the company had failed to completely clean up damage from the spills and to ensure leaks would not recur. The agency also ordered the company to halt all gas and oil production in the area off China’s eastern coast, until effective measures are taken to prevent further oil leaks as well as ensure that any remaining spills are completely removed.

It also called for a full environmental impact assessment before production can be resumed. CronocoPhillips said it was drawing up a compliance plan along with its partner in the Bohai Bay, China National Offshore Oil Corp (CNOOC). “Activities that are related to depressurizing the field will continue in a safe and environmentally responsible way,” it said in a statement released by CronocoPhillips at the beginning of September.

CronocoPhillips China holds a 49 percent stake in the venture in the Penglai 19-3 oil field, being its sole operator, with CNOOC holding 51 percent. Both companies have publicly apologized for the incident. Initially, CronocoPhillips reported that the spills have been entirely removed. The company also said the fault causing the leak was sealed and that the situation was basically under control.

Despite the companys reassuring statements, the State Oceanic Administration and the Chinese press clearly expressed its dissatisfaction towards the manner in which the oil giant has handled the problem. The People’s Daily severely criticized the company, saying that CronocoPhillips issued misleading statements over the spills while displaying “indifference” over the harm caused to the environment.

According to the publication, CronocoPhillips strove more to protect its image and did not put enough effort into safeguarding the environment after the spill was made public in early June. “There is a sharp contrast between the company’s sensitivity regarding its image and its indifference to the pollution,” People’s Daily commentator Jiang Hongbing said in unambiguous terms.

“After repeated delays and a series of cover-ups and deceptions, production at the Penglai 19-3 oil field has finally been ordered to stop.” The government also says that the spills spread up to 5,5000 square kilometers(2,124 miles) and may have killed scallops.

CronocoPhillips declared that damage to the marine environment was minimized and that oil traces discovered onshore were not related to the spills but were from fuel in the water. The comments made by the oceanic administration at the beginning of September suggest a clash of opinions over how to handle the seeps.

It is believed that pressure had built up underground due to injections used to help force oil from the wells. The notice issued by China’s Oceanic Agency ordered CronocoPhillips to accept CNOOC’S “strict supervision” in preventing further spills and recently has also threatened to sue the company.

Environmental groups complained about the slow pace of the cleaning operations, while fishermen in Shandong, Hebei and Liaoning provinces claim that oil has killed off most marine life. Another consequence of the incident was a drop in CNOOC’s shares in early September, which fell 8.8 percent in Hong Kong.
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