Written by Don Briggs
Wednesday, April 28, 2010
The Haynesville Shale’s economic impact is widespread — and staggering.
Over the past few years, the parishes of northwest Louisiana have experienced an unprecedented influx of oil and gas development. It’s no secret that the discovery of the Haynesville Shale natural gas formation is the driving force for this positive growth. Since its discovery in early 2008, the financial impacts created by the development of this remarkable natural gas find have led to the injection of billions of dollars in capital investment and millions of dollars in tax revenues. The Haynesville Shale had since been making headlines in publications throughout northwest Louisiana and the state: “Mineral lease sales bring $4 million,” “Mansfield gets $80,000 in monthly lease sale,” “December mineral lease sale brings approximately $8.8 million,” and “Lease sale means $6.1 million for DeSoto schools.” The size and scope of the financial impact of the shale development has affected the entire spectrum of our community. The state of Louisiana, parish and city governments, business owners, schools, and families have benefited greatly from this tremendous discovery.
Beyond individual lease bonuses and even royalty payments, which do not directly affect every citizen, the taxes paid to local governments and the increase in jobs has had a profound effect on every community in northwest Louisiana. According to Dr. Loren Scott’s 2008 study, “The Economic Impact of the Haynesville Shale,” more than $3.2 billion was paid to private landowners in bonuses for leases and royalty checks. It’s estimated that during 2008, activity in the shale generated approximately $2.4 billion in new business sales within the state of Louisiana. As a result of these activities, nearly $3.9 billion in household earnings was created in 2008. During that year, investment in the Haynesville Shale resulted in the direct creation of more than 430 high-paying jobs and indirectly contributed to the creation of over 32,000 jobs. In addition, state and local tax revenues skyrocketed by at least $153 million.
Let’s take a close look at some of the taxes generated within each specific parish from operations in the Haynesville Shale. According to the Red River Parish Sales and Use Tax Agency, in 2005 the total yearly sales tax revenues for Red River Parish were $2.9 million. Shortly after the Haynesville discovery in 2008, that number jumped to roughly $8 million. In 2009, sales tax revenues climbed to an outstanding $24.5 million. After looking at these numbers, from 2005 to 2009, sales tax collection in the Red River parish rose more than 845 percent. Now you probably want to know what portion of taxes in the parish were paid by the oil and gas companies operating in the Haynesville Shale. In 2006, the total oil and gas related tax assessments was $1.3 million. Fast forward to 2009 and that number swells to $23.4 million.
Across the entire northwest Louisiana region, each parish has experienced similar growth in revenues. In Bienville Parish, the total oil and gas related tax assessments in 2006 was approximately $39 million. As we saw in Red River parish, in 2009 that number in Bienville nearly tripled to $96 million. In Bossier Parish, oil and gas tax assessments in 2006 were $48 million, and in 2009 that number increased to $131 million. In similar fashion, Caddo Parish oil and gas tax assessments were roughly $21 million. In 2009, those assessments rose exponentially to $59 million.
Of all the parishes, DeSoto has experienced the most significant impacts of the Haynesville Shale development. It has been estimated that nearly 5 percent of the entire nation’s drilling is occurring within DeSoto Parish. With such a significant share in the development, it’s certain that tax revenues within the parish would rise to epic proportions. According to the DeSoto Parish Tax Assessor’s Office, the total oil and gas related tax assessments in 2006 was $41.9 million. In 2009, total tax assessments on oil and gas development jumped to $145.8 million.
One thing is certain, the Haynesville Shale is real. As of April 8, 2010, there are 1,113 total Haynesville Shale wells. Of those 1,113 wells, 395 have been completed and are producing wells, 374 are permitted and waiting operations, and 115 are in the process of drilling. These numbers are only a reflection of the initial growth in the Haynesville. As more wells come online, the need for pipeline and gathering systems, processing plants, and other essential infrastructure will significantly contribute to an even larger economic impact for the area. These initiatives mean even more jobs and increased revenue, and will continue to broaden our state’s position as one of the largest producing states in the Union. In the coming weeks, we will release an exciting new study of the 2009 Economic Impact of the Haynesville Shale. Within the report are remarkable new numbers in terms of tax revenue, job growth, lease payments, and royalty and interest payments. In addition, the 2009 economic study will include future projections for 2010 to 2014.
The Haynesville Shale stands to be a tremendous economic engine for local communities, the state of Louisiana, and our entire nation for years to come. Already, in its initial stages of development, the Haynesville has proven just that. Over the past decade, discoveries of unprecedented natural gas shale plays all around the country have changed the dynamics of the energy debate not just in Washington, but around the entire globe. Shale plays such as the Haynesville, the Eagle Ford and Barnett shales in Texas, the Marcellus Shale in the Appalachian Basin, and the Fayetteville Shale in Arkansas are only but a few potential reserves that stand to fuel our nation’s energy needs for decades to come. Producing and developing these superabundant reserves of American natural resources will ensure energy supply for all Americans and significantly contribute to reducing our dependency on foreign sources of oil. Take it from us in Louisiana, we know energy. And we know what the oil and gas industry has contributed to our community.
Don Briggs lives in Lafayette and has been president of the Louisiana Independent Oil and Gas Association since 1992. Matt Ross, LOGA’s assistant director for north Louisiana, contributed to this column.
Total sales tax revenues,
2005 vs. 2009
(Haynesville Shale discovered in 2008)
Red River Parish $2.9 million $8 million
Total oil and gas related tax assessments,
2006 vs. 2009
Bienville Parish $39 million $96 million
Caddo Parish $21 million $59 million
DeSoto Parish $41.9 million $145.8 million