Updated Fayetteville Shale Study Projects $17.9 Billion Economic Impact, 11,000 Jobs, $1.8 Billion in State Taxes in Arkansas Over Next Five Years

LITTLE ROCK, Ark. — Within a few short years, the Fayetteville Shale has become one of the state’s most significant new economic engines and is projected to continue making a substantial economic impact on Arkansas over the next five years. A study released Thursday, March 13, provided updated economic impact figures generated by the thriving natural gas industry concentrated in the north central region of Arkansas projecting its impact from 2008 to 2012 to include:

• $17.9 billion overall economic impact;

• More than 11,000 new jobs;

• $1.8 billion in state taxes; and

• More than $150 million in local sales and property taxes.

The study was conducted by the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas. Results of the study were unveiled March 13 by Kathy Deck, the center director. Deck’s research team used a survey administered to more than 80 companies operating in the Fayetteville Shale to help gather data for the study.  The survey included questions about planned expenditures and employment, risk factors such as natural gas price declines and increases in the Arkansas severance tax, and the perceived economic impact of the development of the Fayetteville Shale. The numerical responses were used as inputs to the IMPLAN input/output model, an economic-impact-assessment software system used to estimate the indirect and induced effects associated with direct industry spending.

The center conducted an initial study of the Fayetteville Shale’s probable economic impact on the state two years ago when the development of the unconventional natural gas resource was just getting under way. Based on the best available data at that time, the study projected a $5.5 billion economic impact between 2005 and 2008. Deck said that estimate turned out to be conservative due to accelerated activities in the Fayetteville Shale. She explained the new study was conducted to update and expand the original projections, and this study provides a clearer picture of the industry’s potential economic impact on Arkansas for the years ahead.

“This new industry is providing a much needed boost to the state’s economy,” said Deck.  “As the Fayetteville Shale project grows, it is generating jobs for individuals, business opportunities and income for new and established businesses in a wide variety of sectors, and tax revenues for local and state governments.” 

The study also confirmed the project’s actual impact during the year 2007 in several key areas based on $1.8 billion in direct expenditures by companies including:

• $2.6 billion in total economic impact;

• 9,533 new jobs;

• Nearly $40 million in state income tax including: $29.2 million from exploration and production companies, more than $10 million from mineral rights owners;

• More than $11 million in state sales taxes;

• More than $7 million in local sales taxes; and

• More than $5 million in total property taxes including: $3.7 million to school districts, and $1.3 million to cities and counties.

“The industry’s increasing impact comes at a time when the state has seen continued declines in the manufacturing sector,” said Deck.  “The rise of a new industry to provide economic activity and employment is important for the state and particularly for the viability of many of the communities located in the Fayetteville Shale region.  The jobs already created through 2007 from the Fayetteville Shale project are helping to offset some of the continuing employment losses we are seeing otherwise.”

The Fayetteville Shale economic impact study can be found at http://cber.uark.edu.

About the Center for Business and Economic Research

The Center for Business and Economic Research at the Sam M. Walton College of Business provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.