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Americas New Energy Future State Highlights Dec2012

Americas New Energy Future State Highlights Dec2012

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Published by Jon Campbell

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Published by: Jon Campbell on Dec 20, 2012
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OVERVIEW

Delaware continues to struggle. The recession placed severe stress on several major financial institutions
that have a large presence in the state. The financial-services sector is one of the largest in Delaware's
economy, and Bank of America is the largest employer in the state's financial sector, with a payroll of
about 7,000. Bank of America, which is headquartered in North Carolina, plans to cut 30,000 total jobs by
2014. Although it is not yet clear how this will affect the bank’s jobs in Wilmington, the sector remains
unstable. Over the next five years, professional business services, education-health services, and
construction will expand at a moderate pace. Employment growth will average 1.2% annually from 2012-
2017, well below the national rate of 1.7%. Delaware does have some significant competitive advantages
compared with other states. These include proximity to large metro areas such as New York City,
Philadelphia, Baltimore, and Washington, D.C.; an above-average share of highly skilled scientific and
technical workers; a critical mass of chemical, pharmaceutical, and biomedical companies; a tradition of
technical innovation; significant research and development spending by such companies as DuPont and
AstraZeneca; modest but steady population growth; a low cost of living; and a favorable regulatory
climate.

CONTRIBUTION OF UNCONVENTIONAL OIL AND GAS

For purposes of this study, the 20 plays examined do not fall within the geographic boundaries of
Delaware. However, supplier networks and trade flows related to unconventional oil and gas activity
resulting from the plays covered in this study support jobs within the state. The economic activity
associated with unconventional gas production directly and indirectly supported almost 2,200 jobs in the
state in 2012.19

This unconventional gas-related employment is expected to increase to over 3,800 jobs
by 2020, and will surpass 4,900 by 2035. These jobs would employ 0.9% of the state labor force by 2035,
helping to reduce unemployment and creating a steady source of payroll growth for the next two decades.

Unconventional gas activity contributed value-added economic activity of $244 million in Delaware in
2012. We forecast that this contribution will grow to $545 million by 2035. As for labor income, the
average annual wage in Delaware in 2012 is $65,000, while the average wage of jobs related to
unconventional gas activity is $67,500.

There is also the contribution of unconventional gas employment to government revenues. In Delaware in
2012, it generated $71 million in taxes for state and federal coffers. This includes $39 million in state and
local taxes, or the equivalent of 1.3% of the state’s 2011 tax revenues.

19

Direct jobs are those created by firms that comprise the oil and gas industry, or by the capital expenditures of related industries;
indirect jobs are those created by suppliers of goods and services to industry. Induced jobs are those that meet the new demand for
consumer goods created by the increased income generated by the direct and indirect jobs.

IHS

53

Employment

(Number of workers)

Direct

Indirect

Induced

Total

2012

67

651

1,476

2,195

2020

150

1,132

2,559

3,841

2035

333

1,419

3,155

4,907

Value Added

(2012 $M)

Direct

Indirect

Induced

Total

2012

11

86

147

244

2020

26

148

241

415

2035

64

187

294

545

Labor Income

(2012 $M)

Direct

Indirect

Induced

Total

2012

7

55

86

148

2020

16

98

151

265

2035

40

123

184

347

Source: IHS Global Insight

($M)

2012

2020

2035

2012-2035*

Federal Taxes

32

56

73

1,312

Personal Taxes

26

47

62

1,098

Corporate Taxes

6

9

12

214

Federal Royalty Payments

0

0

0

0

Federal Bonus Payments

0

0

0

0

State and Local Taxes

39

61

71

1,386

Personal Taxes

9

15

17

342

Corporate Taxes

30

46

54

1,043

Severance Taxes

0

0

0

0

Ad Valorem Taxes

0

0

0

0

State Royalty Payments

0

0

0

0

State Bonus Payments

0

0

0

0

Total Government Revenue

71

117

144

2,698

Lease Payments to Private Landowners

0

0

0

0

NOTES: *2012-2035 represents the total for all years including those years not reported.

Source: IHS Global Insight

Contribution of Total Unconventional Oil and Gas Activityto Government Revenue and Private Lease
Payments:Delaware

Delaware Economic Contribution Summary:Total Unconventional Oil and Gas Activity

NOTES: Numbers maynot sum due to rounding.

IHS

54

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