Barnett Shale Helps Fight Recession
The United States may be slipping into a recession, but the economy in Texas, and especially North Texas, is expected to remain robust, due in part to the natural gas drilling in the Barnett Shale.
This activity has helped the Texas oil and gas industry return to the heights not seen since the early 1980s energy boom. The result is the creation of many new jobs and a general expansion of the state and local economies.
In 2007, 28 percent of all new jobs in the United States were created in Texas, with over half of those in the natural resources and mining sector which includes natural gas extraction and production. The Barnett Shale region, which includes at least 18 counties and covers over 5,000 square miles, has already been responsible for the creation of an estimated 55,000-plus new jobs. That number is expected to double over the next 10 years, according to a 2007 economic study by The Perryman Group, which was commissioned by the Fort Worth Chamber of Commerce.
What may come as a surprise is that most of these new jobs are not in the oil and gas industry, but rather cover virtually every sector of the economy. According to Richard Fisher, president of the Federal Reserve Bank in Dallas, “Even though only 2 percent of our employment is related to oil and gas…we are (all) the beneficiaries and Fort Worth particularly, because of the Barnett Shale”.
The widespread benefits of drilling in the Barnett Shale are the result of a phenomenon that economists call “the multiplier effect”. The process starts with the new dollars that are pumped into the economy from the bonuses and royalties paid to home owners and land owners to lease their mineral rights and the additional wages paid to workers in the newly created jobs. For example, Tarrant County is estimated to have more than 1,000 landmen handling mineral rights leases for energy companies, and at least that many more scattered throughout the Barnett Shale region. Most of those jobs did not exist a few years ago.
New and expanded expenditures are also made my local governments that are receiving bonuses and royalties from leasing the mineral rights under parks and other public land. The City of Fort Worth, for example, has already received almost $40 million from mineral leases. The City expects to receive as much as $1 billion more over the next 25 years. This money that the City might not otherwise have had will be spent on public improvements, creating more new jobs and expanded payrolls.
The recipients of all this “new” money spend it at local business establishments on food, clothing, housing, automobiles, entertainment and the like. The businesses receiving those dollars will then spend that money on additional employees, expanded inventories and new locations. This process will be repeated over and over, resulting in a multiplied effect on the entire economy.
Even better news is that we are just at the beginning stage of all this economic growth. Drilling in the Barnett Shale is expected to continue for many years to come and each well is expected to produce natural gas for three decades or longer. As horizontal drilling and water fracturing technologies improve, more gas will be produced from new and existing wells and the life of all wells will be extended.
All and all, there is no question that gas drilling is a boon to the North Texas economy, bringing new jobs and business growth in all kinds of industries, not just the energy sector. We are fortunate to be living in an area that is somewhat insulated from any downturn in the national economy. Virtually everyone in the region stands to benefit in some way from the Barnett Shale for years to come.
Ed Ireland, Ph.D. is executive director of the Barnett Shale Energy Education Council, a consortium of eight of the leading energy companies operating in the Barnett Shale that are dedicated to promoting energy education and best practices as it relates to oil and gas leasing, drilling, production, transportation and marketing in the Barnett Shale. For more information, please visit www.bseec.org.