PowerPoint Presentation

The Economic Impacts of the Shale on NWLABy: Paul Arcement

What is a Shale?A type of fine-grained, sedimentary rockFormed from by-products of other rocksFormed from years and years of compaction in muddy, aquatic environments Usually hold fossil fuels such as natural gas

The Haynesville ShaleA large shale formation Covers parts of NW Louisiana, NE Texas, and SW Arkansas10,000-14,000 feet underground

Shale Formations of the U.S.

ActivityMost active parishes:BienvilleBossierCaddoDe SotoRed RiverWebster

New Drilling MethodsHorizontal Drilling- at max depth, well is turned horizontally, increased production potential of single wells

New Drilling Methods

Hydraulic Fracturing (fracking)- water, sand and chemical additives are mixed together into a liquid and injected deep underground to extract resources trapped in formations of rock

Why the Haynesville Shale?Born and raised in Shreveport, LAHave seen first-hand the changes in the area over the yearsHearsay about positive impacts during market crash years, 2008-2009Documentary Freshman year

Haynesville Money?Youree Drive-1990YouTubeYouree Drive-2014Google Maps

Haynesville Money?St. Joseph Catholic Church, pre-2008Newmaninc.comSt. Joseph Catholic Church, July 2008Newmaninc.com

Not just ShreveportNorth De Soto Football Field, De Soto Parish, 2007North De Soto Football Field, De Soto Parish,Present Day

Previous StudiesLoren Scott (2009)- sought to measure direct and indirect effects on the LA economy from the Haynesville ShaleEstimated impacts on: new sales, new earnings, new jobs and tax collectionsMakes estimation for lease and royalty payments, compares it to lottery winningsNotes NWLAs relatively unaffected economy from 08 crash

Previous StudiesManfred Dix (2008)- exploration, drilling and production costs of the Shale in relation to transportationMakes many well-educated, yet heroic assumptions Uses REMI model to determine effects of Shale on: employment, disposable income, Gross Regional Product and state indirect revenue

Previous StudiesTim Considine and Assoc. (2009)- study measures state and local tax revenue, total value and new jobs created from Marcellus Shale in Pennsylvania.Outlines every aspect of natural gas drillingAlso estimates new wells drilled as a function of NG price, then of severance tax

Previous StudiesThomas Kinnaman (2010)- provides an economic review of both Considine papersAcknowledges fallacies of both such as:Difficulty of gathering informationAssumptions about lease & royalty paymentsPossibility of omitted relevant variables

Model & DataTime Period: 1995-2014Panel DataTwo-Staged Least SquaresThe Model:Ytotal_Personal_Income=0+ 1NGYP + 2NewWells + 3ShaleDummy + 4BldgPermits + 5Employment + 6Population + CNew_Wells=1NGYP + 2ShaleDummy + 3NGFuturesPrice

Model & DataEndogenous Variables: Personal Income and New Wells DrilledExogenous Variables: Natural Gas Yearly Production, Futures Price, Shale Dummy, Employment, Population, Building Permits

ExpectationsVariablePositive CorrelationNegative Correlation*Total Personal IncNat Gas Yearly ProdYes*New WellsYesShale DummyYesBldg PermitsYesEmploymentYesPopulationYesNat Gas Futures PriceYes

*=endogenous

Results

Descriptive Statistics

Conclusion & CorrectionsNeither Yearly Production of NG nor New Wells are good predictors of total personal income in this caseGather producer-specific data on production Form new models testing potential effects of NG Price and Severance Tax on Production and Well CountInclude lease and royalty figures for indirect effects

SourcesNewmaninc.comYoutube.comGeology.comDnr.louisiana.govAll sources cited in paper

THE END