Exploration, drilling, and production in the Barnett Shale natural gas field have transformed the Fort Worth-area economy with thousands of jobs and millions of dollars in investment. The activity has led to royalty and bonus payments to local residents, cities, school districts, and others totaling millions of dollars each year. It has also upped property tax receipts to counties, schools, and other entities, and opportunities and prosperity for the entire region have increased.
The Barnett Shale is one of the most significant onshore natural gas fields in North America and the largest in Texas. While oil and gas fields are nothing new to the Lone Star State, the Barnett Shale is unique in that much of it is located in a highly urbanized area. In fact, the heart of the field may fall right under the skyscrapers of downtown Fort Worth. There are already almost 500 wells within the city limits, and city officials project that this number will more than double by the end of 2010.
My firm recently studied the economic impact of the Barnett Shale and found that when all major categories of stimulus from the Barnett Shale activity are summed, the result includes $5.2 billion in annual output and some 55,385 permanent jobs. These effects are notable even in Fort Worth’s large and diverse economy. Moreover, the impact is growing, with overall effects almost doubling to an average of more than 108,000 jobs and $10.4 billion in output per year through 2015. Both financial benefits and quality-of-life enhancements are flowing to people across the region from many different socioeconomic backgrounds.
This huge surge in economic activity is generating sizable gains for local taxing authorities. The fiscal impact of the Barnett Shale stems from two primary sources: property taxes paid on oil and gas properties and enhanced retail sales and real estate development due to the economic impact of the Barnett Shale. Our analysis indicates that the total direct and indirect revenue to local governments in the region (excluding royalty and lease payments) was about $227.7 million as of 2006, and will likely increase in the future.
In addition to these major sources of income, the Barnett Shale leads to payments of royalties and bonuses directly to cities, school districts, and others; severance taxes of approximately $165.4 million to the State of Texas in 2006; various permits and fees payable to local governments; other types of levies such as hotel/motel occupancy taxes; and other State revenues stemming from numerous types of taxable activity.
Virtually all economic activity involves some cost in terms of the environment, use of infrastructure, or other trade-offs, and the exploration and development of the Barnett Shale is no different. There is noise, traffic, and water use involved. However, these downside elements of the Barnett Shale are, in most instances, being dealt with so as to minimize their lasting effects.
There is still a substantial quantity of natural gas to be extracted from the Barnett Shale. While ultimate production will be determined by numerous factors (such as the pace of technological development, natural gas prices, geology, and demand from major sectors), the field is likely to see substantial activity for many years.
Prior to the emergence of the Barnett Shale, Fort Worth had established itself as one of the largest cities in the state and a major contributor to overall business prosperity. It is also a central part of a dynamic urban region that recently exceeded six million in population. The Barnett Shale is like ‘icing on the cake’ for an area already performing quite well, and even when the Barnett Shale play has been exhausted, many of its positive effects and the significant economic benefits provided will certainly remain.