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Barnett Shale proves to be a jobs and revenue generator in Texas

As policymakers in Washington continue to debate ways to stimulate the economy and boost revenue, there’s a new case study that shows just what can be achieved when the energy industry is able to invest and produce American energy resources.

On Tuesday, the Fort Worth Chamber of Commerce released an analysis of a decade of drilling in the Barnett Shale natural gas formation in 24 North Texas counties. The study was conducted by the Perryman Group and describes in detail the positive large-scale economic effects generated by drilling in the Barnett Shale.

According to the study, the cumulative regional economic benefits between the 2001 and 2011 period include more than $65 billion in economic output. For 2011 alone, the study estimates the Barnett is responsible for $11.1 billion in annual economic output and more than 100,000 jobs, just in the North Texas region alone. That’s good news going forward.

Barnett Shale development has become an important source of tax revenue to state and local entities. This year alone, counties and cities in the North Texas area are estimated to receive $730 million in tax revenues. When combined with the $911 million in additional tax revenue the state will likely receive, the Barnett Shale is estimated to generate $1.6 billion in tax revenue for the state of Texas in 2011.

These are impressive numbers, and they provide a bit of good news amid the recent flurry of bleak economic forecasts.

The study provides lessons about how an activity that is truly stimulative can spread its benefits through the economy. It details how “direct spending for exploration and production activity related to the Barnett Shale leads to multiplier effects through the economy which, in turn, initiate a chain of spillover business stimulus throughout the area.”

That spillover stimulus is substantial. The calculated economic output for the region is estimated to be 9.4 percent higher than it would be without the Barnett Shale, while personal income in the region is roughly 8.5 percent higher. And approximately 38.5 percent of the incremental growth in the economy of the region over the past decade has been the result of Barnett Shale activity.

I hope this study is widely read by legislators and other public officials in Washington, D.C., and state capitals like Albany and Little Rock, where debates are continuing about the importance of encouraging domestic energy production via shale gas.

The multiplier effect of economic activity rippling outward from shale production is not just confined to Texas, of course. Abundant domestic supplies of natural gas benefit the nation’s economy as a whole. Pennsylvania, North DakotaWest Virginia and many other states can attest to the jobs, royalties and tax revenues that shale production creates. I’ve also written about how the shale gas boom is reinvigorating the nation’s petrochemical industry, which makes plastics and other building blocks of modern manufacturing.

It’s also saving consumers money. Last month the chairman of the Secretary of Energy Advisory Board’s Natural Gas Subcommittee noted in the Washington Post that increased supplies from shale “has meant, since 2009, that consumers’ costs of natural gas to heat homes or generate electricity have fallen by more than half.”

Perhaps the best news of all from the study is that while the production from the Barnett Shale has been a notable source of economic stimulus to Texas as well as an important domestic fuel source for the nation, only a small portion of total estimated production has occurred to date. With increasingly sophisticated technology and growing energy demand, the authors conclude, “The Barnett Shale is expected to continue to generate economic stimulus for local area and state economies for decades to come.”

The Perryman Group’s findings provide policymakers a playbook for spurring economic growth, creating jobs, and reducing deficits by supporting development of America’s enormous unconventional natural gas resources.

  • Worth a deeper look...