Haynesville Shale economic impact could mean billions

According to a Louisiana Department of Natural Resources study, the Haynesville Shale means billions of dollars and tens of thousands of jobs for the state.

The report, commissioned by LDNR and prepared by Loren C. Scott and Associates, measures the direct and indirect effects on the Louisiana economy from the activities of the extraction firms operating in the Haynesville Shale in 2008. Expenditures provided by the seven of the seventeen firms operating in the shale were used to estimate impacts on new sales for firms, new household earnings for residents, new jobs and tax collections by state and local governments.

The report estimates that he extraction activity of these seven firms generated approximately $2.4 billion in new business sales within the state of Louisiana last year.

New business sales in turn created new household earnings of close to $3.9 billion for state residents. This estimate includes both direct and indirect earnings and includes almost $3.2 billion in lease and royalty payments to private landowners.

Including the direct employment of approximately 431 employees and contract workers reported by these seven firms, there was an increase of 32,742 new jobs within the state in 2008. As a reference point, this is slightly larger than total employment in all of Louisiana’s banks and credit unions.

The job multiplier is remarkably large in this case due to the fact that $3.2 billion in lease and royalty payments were injected into the state’s economy by the extraction firms.

The conservative estimate is state and local tax revenues increased by at least $153.3 million in 2008 due to the extraction activities in the Haynesville Shale. The increase in state and local tax collections generated by the seven firms were calculated by taxes paid directly by the seven firms and additional taxes paid by households who experienced an increase in their household earnings via the multiplier effects.

Most of the impacts estimated are not from extraction or drilling activity, they rely largely on expenditures by lease owners.  Approximately $3.2 billion, or 70 percent, of the total expenditures associated with the extraction activity in the Haynesville Shale for these seven firms were in the form of mineral lease and royalty payments.

The study notes that the multiplier impacts are low estimates and the actual impacts are likely to be larger.

To download the report, go to www.dnr.louisiana.gov/haynesvilleshale/manfred-dix-impact-analysis.pdf.

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