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Famous Fayetteville Bringing Fortune to Arkansas

Many hope that unconventional gas resources, such as the Fayetteville Shale play in Arkansas, will help make up for declining production in conventional basins. As the role of the Fayetteville Shale grows to help meet this goal, Arkansas can look forward to seeing its coffers grow, too.

Oil and gas companies are expected to spend about $3.8 billion between 2005 and 2008 on the Fayetteville Shale, according to a University of Arkansas study.

Development of the Fayetteville Shale will have an estimated $5.5 billion economic impact on Arkansas through 2008, says the study, which was funded by Fayetteville Shale pioneer Southwestern Energy Co. The play has the potential to be one of the most significant tax revenue generators in the state's history over the next 10 to 15 years.

The play will have its greatest impact in 10 counties throughout central Arkansas, creating 9,683 full-time equivalent jobs and generating $357.7 million in state and local taxes.

Southwestern has had significant success developing the Fayetteville shale gas play in the Arkoma Basin (see NGI, April 24). The shale in the unconventional gas reservoir is a Mississippian-age shale that is the geologic equivalent of the Barnett Shale found in North Texas. Southwestern said it currently has 101 Bcf of reserves in the play, which makes up about 12% of its total proved reserves. The company holds about 875,000 net acres in the play area.

"The increased activity in the Fayetteville Shale play by energy companies like Southwestern Energy is expected to have a significant positive economic impact in Arkansas in the years to come," said Southwestern CEO Harold Korell. "We sponsored this study because we believe an early focus on quantifying these effects will better position state and local officials and others to prepare for rapid growth in the oil and gas industry in Arkansas."

The university's Center for Business and Economic Research (CBER) of the Sam M. Walton College of Business conducted the research. Southwestern is credited with demonstrating the economic viability of the Fayetteville when it drilled the play's first test wells in 2004.

"The play's greatest benefits to the state of Arkansas are that it will provide an economic stimulus and will diversify the employment base, reducing the dependence on manufacturing and retail, and providing many jobs with above-average pay," said Jeff Collins, an economist and director of CBER. "In addition, one of our biggest national challenges is the growing shortage and rising cost of energy. The Fayetteville Shale play has the potential to make Arkansas a major player on the national energy production scene."

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