Exploration and production (E&P) activity in the Barnett Shale is contributing more than $5 billion annually to North Texas coffers and has created about 55,000 permanent jobs in the area, according to a study of energy companies drilling and producing in the 14 counties of the hydrocarbon-rich region.

In 2006 the Fort Worth Chamber of Commerce commissioned the study and unveiled it Wednesday at the Barnett Shale Expo, the largest trade show ever devoted to the Barnett Shale energy industry.

The Barnett Shale now accounts for approximately 5% of the area's total economic output, according to the study. The play's growth has been driving the growth and consolidation of numerous small service and other E&P-related businesses in the area (see Daily GPI, Jan. 31).

"Historically, we see oil or natural gas discovered and then the town springs up around it," said economist Ray Perryman, author of the report, "Bounty from Below: The Impact of Developing Natural Gas Resources Associated with the Barnett Shale on Business Activity in Fort Worth and the Surrounding 14-County Area."

"In this case, we have a big, fully functioning metropolitan area on top of one of the largest natural gas fields in North America," he said. "The Barnett Shale is like the icing on the cake for a city already performing quite well."

Perryman's report is the first complete look at the economic impact of the Barnett Shale on the counties with the most drilling activity: Clay, Cook, Denton, Erath, Hill, Hood, Jack, Johnson, Montague, Palo Pinto, Parker, Tarrant, Wise and Young. Perryman said the Barnett Shale would be responsible for an average of 108,000 jobs and $10.4 billion in output each year through 2015. The economic stimulus from the Barnett Shale ripples through the economy in the form of personal income from jobs, investment and royalty and bonus payments, and from increased tax receipts generated by retail, property and hotel/motel occupancy taxes and local permits and fees. Other findings from the study include:

David Berzina, executive vice president of economic development for the Fort Worth Chamber of Commerce, said the study was commissioned to help local governments plan their revenue windfalls wisely. "The Barnett Shale has the potential to reshape dramatically the budgets of local school districts, cities and other jurisdictions," said Berzina. "Smart growth requires a clear understanding of just how much they can expect from this energy sector and plan ahead."

Seven major energy companies responded to a seven-page questionnaire prepared by the Perryman Group. These companies represent two-thirds of the drilling activity in the Barnett region. The companies were asked to break down by counties the number of full-time employees over the past six years, staffing needs through 2015, annual payroll, operating costs, current and future production levels, charitable contributions and the amount of state and local taxes paid.

Natural gas production in the Barnett Shale has grown sharply in recent years, accounting for 12% of Texas' total production in 2006. Industry observers expect activity to continue for the next 20 to 30 years; however, advances in drilling technology may extend the play's life further. The Barnett covers about 5,000 square miles and portions of at least 14 counties in North Texas.

"While some of the effects of the Barnett Shale may be transitory, the investment of payments currently being received stands to permanently change the economy," said Perryman. "Infrastructure improvements such as flood control will pay off indefinitely. Purchase of assets such as land for parks also will yield permanent benefits. Quality-of-life enhancements will enable the area to compete for desirable economic development of many types."

To see the study, go to barnettshaleexpo.com.

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