Haynesville Shale means billions in new business, spending and thousands of jobs
By Vickie Welborn • vwelborn@gannett.com • May 15, 2009

The Haynesville Shale is big business for northwest Louisiana and the state as a whole, and a recently completed economic impact report puts it in focus.

Economic Impact of the Haynesville Shale on the Louisiana Economy in 2008, a 25-page report prepared by Loren C. Scott and Associates of Baton Rouge for the Louisiana Natural Resources Department, estimates:

• about $2.4 billion in business sales have been created in the state;

• nearly $3.9 billion in household earnings were created, including almost $3.2 billion in lease and royalty payments to private landowners. The figure represents about 70 percent of the total expenditures associated with extraction activity in northwest Louisiana natural gas formation and is mostly in the form of mineral lease and royalty payments.

• about 32,742 jobs were created, equal to slightly more than the total employment of all of Louisiana's banks and credit unions.

• state and local sales tax revenue increased by at least $153.3 million, with Red River Parish reporting tax collections up 300 percent in the first quarter of this year.

"The exploration in the Haynesville Shale has generated such intense interest and excitement in the state of Louisiana and has drawn such national attention that I felt it appropriate that we get as clear a picture of the actual impact of the activity as possible," Natural Resources Secretary Scott Angelle says in a prepared statement. "Dr. Scott's study indicates that the Haynesville Shale may be every bit the game changer for our state that we all hoped it might be.

"More and more of our domestic drilling has been for natural gas, which now makes up more than 80 percent of what rigs are drilling for in the U.S.," Angelle said. "I think we are entering the golden age of natural gas. And Louisiana has the opportunity to take the lead in supplying it and showing the rest of the nation how to make the best use of it."

Scott's findings, appearing in a report posted Thursday on Natural Resources' Web site, are based on 2008 activity and are gleaned from information provided by only seven of the 17 companies — representing 72 percent of the acreage — operating in the Haynesville Shale, which primarily is in Caddo, Bossier, DeSoto and Red River parishes.

The study was designed to capture and measure the direct and indirect effects on the state's economy from the participating firms.

Few beyond industry insiders were aware of the Haynesville Shale in early 2008. But it's become an everyday part of life over the past year, making millionaires of private landowners and padding the coffers of government agencies through unexpected bursts of tax revenue.

More importantly, the play — estimated by Chesapeake Energy Corp. to be the largest onshore natural gas find in the U.S. — has somewhat insulated the local economy from the national doldrums, as Scott's report also indicates.

The report notes the drastic job losses at the General Motors Corp. assembly plant in Shreveport, Beaird Industries in Shreveport and Georgia-Pacific operations in Logansport and Webster Parish. But the report suggests the large sums of money pumped into the economy via the Haynesville Shale have spared the area from the effects of the national slowdown.

The shale's "powerful influence," the report states, also is reflected in the jobless totals in Caddo, Bossier and DeSoto, which are bucking the national trend by reporting in February a job loss of less than 1 percent, compared with a 3.2 percent drop nationwide.

Because data are reported by only seven oil and gas companies, "our impact estimates understate the total infusion of new money in the state's economy and, in turn, understate the true impacts on business sales, household earnings and employment in the state," the report says. "Also, we are using a very conservative estimate of the percentage of newly created wealth (e.g. lease payments and royalties) that households will spend on goods and services."

Other notable findings are sales tax revenue being reported in several parishes. Reports indicate:

• in Red River Parish in October through March, sales tax collections were up by more than $5.3 million — a 101 percent increase. In the more recent part of that six-month period — the first quarter of 2009 — collections were up by more than 300 percent.

• in DeSoto Parish over the 12-month period from April 2008 through March, sales tax collections were up by $12.5 million, an increase of 53.6 percent.

• in Caddo Parish from August through February, sales tax collection rose by $16.7 million, or 14.5 percent. This is in a parish where, at this stage of the national business cycle, sales tax collections normally would be decidedly down, the report states.