Last year alone, the extraction activity of the seven oil and gas firms drilling most of the wells in the Haynesville Shale generated roughly $10.6 billion in new business sales in the state of Louisiana. Those new business sales in turn created new household earnings for Louisiana's residents, resulting in nearly $5.7 billion in household earnings created in 2009, according to an economic impact study commissioned by the Louisiana Oil and Gas Association.

An unprecedented influx of activity and economic expansion has been taking place in northwest Louisiana as a result of the Haynesville Shale. To assess the impact, a study was conducted this year by economist Loren Scott to measure the current and anticipated effects of the Haynesville development on the Louisiana economy. Titled “The Economic Impact of the Haynesville Shale on the Louisiana Economy: 2009 Analysis and Projections for 2010-2014,” the study captures and measures new sales for oil and gas firms, new household earnings for residents, job creation in the state as a result of activity, and tax collections by the state and local governments. 

Data was collected from firms representing nearly 70 percent of the wells drilled in 2009, providing a comprehensive outlay of mineral lease payments, royalty or surface lease payments, direct and indirect taxes paid to the state, and general/administrative payments.  These general and administrative payments included wages and salaries, field office construction, operating expenses, advertising and public relations, community sponsorships and donations and other expenditures.

The study summarizes the impacts on the Louisiana economy:

• The $5.7 billion in household earnings represents about 3.6 percent of the personal income produced in the state in 2009.

• Louisiana’s personal income actually fell by almost $1.2 billion or 0.7 percent in 2009.  Had it not been for the Haynesville Shale activity the decline would have been 4.3 percent.

• Including the direct employment of approximately 4,318 employees and contract workers reported by these firms, there was an increase of 57,637 new jobs within the state in 2009

(As a reference point, there were 59,500 people employed in all of Louisiana’s finance and insurance companies in February 2010.) 

• Louisiana lost 38,500 jobs in 2009, a decline of 2 percent. Had it not been for the Haynesville Shale activity, the decline would have been 96,137 jobs, a 5 percent drop.

“This study serves as tangible evidence to the tremendous economic benefits of natural gas extraction operations in northwest Louisiana," says LOGA President Don Briggs. "As the Haynesville Shale continues to prove its potential, it is important to remember that with the current economic climate and low gas prices, any inhibiting regulatory hurdles at the state and local levels could result in a chilling effect on drilling and certainly decrease these economic projections. As other shale plays around the country are becoming more competitive, it’s imperative we maintain an environment that is open for business to ensure the economical development of this abundant resource in our state.”

Read the comprehensive study here.

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