Ten years on, drilling in the Barnett Shale has expanded the economy of the 24-county region in North Texas by 38%, according to a new study that said cumulative economic benefits of the Barnett from 2001 to 2011 include $65.4 billion in gross product for the region and $80.7 billion for the state.
"It is truly an amazing story," said study author Ray Perryman of Waco, TX-based The Perryman Group (TPG). "Even though the level of drilling activity in the Barnett Shale started declining in late 2008, TPG found that the economic impact of the Barnett Shale activities has continued to grow."
TPG was hired by the Fort Worth Chamber of Commerce to tally up the gifts of the Barnett. "We commissioned the study to see how or if the economic downturn had impacted past projections about the industry," said chamber CEO Bill Thornton. "What we found was that it's a bulwark of our economy.
"Here's an activity that was virtually nonexistent a decade ago and now -- thanks to technology developed here -- is generating huge benefits in terms of tax revenues, payroll and personal income for our region and the state."
So far, more than 9 Tcf of natural gas has been produced from the Barnett, according to the study. Last year alone production totaled 1.8 Tcf.
However, in the last year or so producers have been turning their attention away from the Barnett, as well as the Haynesville/Bossier in North Louisiana and East Texas, in favor of liquids-rich shale plays such as the Eagle Ford in South Texas. According to NGI's Shale Daily Unconventional Rig Count, the 57 rigs actively operating in the Barnett for the week ending Sept. 23, 2011 marks a 37% decline from the 90 rigs that were operating in the play one year ago.
But for North Texas the benefits of the Barnett are not dependent on the number of rigs plying the play -- as long as wells there continue to produce, the TPG study said. "The economic impact of the Barnett Shale activities goes far beyond just the drilling of new wells...[T]hese economic benefits will continue as long as the wells produce, which can be 40 or 50 years or longer," Perryman said.
According to Perryman's research, local taxing entities in the region received about $5.3 billion generated by Barnett activities between 2001 and 2011; the state received $5.8 billion. "This year the Barnett Shale and related activity will generate around $730 million in additional revenues for counties, cities and school districts in the region," the study said. "The state will likely receive another $911.8 million, for a total gain in local and state taxes of an estimated $1.6 billion."
However, in the Haynesville Shale to the east, local officials have been cautioned about relying too heavily on their golden goose. While a number of Louisiana parishes have seen property tax and other revenue climb in recent years due to Haynesville activities, Baton Rouge, LA-based economist Loren Scott recently warned that a downturn in the play -- driven by producers' quest for liquids-rich production -- would slow the flow of dollars to local and state coffers (see Shale Daily, May 26).
While the TPG study projects the Barnett will yield $911.8 million to the state this year, that figure is less than the corresponding amount of nearly $1.18 billion in 2008. In 2009 revenue to the state dropped to $774.32 million, but it has climbed since then, according to TPG. Local revenue from the Barnett also peaked in 2008 at nearly $1.05 billion before falling substantially in 2009 and climbing since to the projected $730 million this year.