The document discusses the economic impacts of the Haynesville Shale in northwest Louisiana. It summarizes previous studies that estimated the effects of shale development on employment, income, tax revenue, and economic indicators using economic models. It then describes the author's regression model and results analyzing the relationship between shale activity and personal income in northwest Louisiana from 1995 to 2014. While some variables like employment and population correlated as expected, the regression found that natural gas production and new wells drilled did not significantly predict total personal income in the region.

1. The Economic
Impacts of the
Shale on
NWLA
By: Paul Arcement

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

3. The Haynesville Shale
 A large shale formation
 Covers parts of NW Louisiana, NE
Texas, and SW Arkansas
 10,000-14,000 feet underground

4. Shale Formations of the
U.S.

6. Activity
 Most active parishes:
 Bienville
 Bossier
 Caddo
 De Soto
 Red River
 Webster

7. New Drilling Methods
 Horizontal Drilling- at
max depth, well is turned
horizontally, increased
production potential of
single wells

8. 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

9. Why the Haynesville
Shale?
 Born and raised in Shreveport, LA
 Have seen first-hand the changes in the
area over the years
 Hearsay about positive impacts during
market crash years, 2008-2009
 Documentary Freshman year

10. Haynesville Money?
Youree Drive-1990
YouTube
Youree Drive-2014
Google Maps

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

12. Not just Shreveport…
North De Soto
Football Field, De Soto
Parish, 2007
North De Soto Football
Field, De Soto Parish,
Present Day

13. Previous Studies
 Loren Scott (2009)- sought to measure
direct and indirect effects on the LA
economy from the Haynesville Shale
 Estimated impacts on: new sales, new
earnings, new jobs and tax collections
 Makes estimation for lease and royalty
payments, compares it to lottery winnings
 Notes NWLA’s relatively unaffected
economy from ‘08 crash

14. Previous Studies
 Manfred Dix (2008)- exploration,
drilling and production costs of the Shale
in relation to transportation
 Makes 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

15. Previous Studies
 Tim 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
drilling
 Also estimates new wells drilled as a
function of NG price, then of severance
tax

16. Previous Studies
 Thomas Kinnaman (2010)- provides
an economic review of both Considine
papers
 Acknowledges fallacies of both such as:
 Difficulty of gathering information
 Assumptions about lease & royalty
payments
 Possibility of omitted relevant variables

17. Model & Data
 Time Period: 1995-2014
 Panel Data
 Two-Staged Least Squares
The Model:
Ytotal_Personal_Income=β0+ β1NGYP +
β2NewWells + β3ShaleDummy + β4BldgPermits
+ β5Employment + β6Population + C
New_Wells=β1NGYP + β2ShaleDummy +
β3NGFuturesPrice

18. Model & Data
 Endogenous Variables: Personal
Income and New Wells Drilled
 Exogenous Variables: Natural Gas
Yearly Production, Futures Price, Shale
Dummy, Employment, Population,
Building Permits

19. Expectations
Variable Positive Correlation Negative Correlation
*Total Personal Inc
Nat Gas Yearly Prod Yes
*New Wells Yes
Shale Dummy Yes
Bldg Permits Yes
Employment Yes
Population Yes
Nat Gas Futures Price Yes
*=endogenous

20. ResultsRegression Results
Dep. Variable: Personal Inc
Variable Coefficient Std. Error T-Statistic Prob.
NGYEARLY_PROD -0.000012 0.000228 -0.52939 0.5976
NEW_WELLS -225.8999 543.5673 -0.415588 0.6785
SHALE_DISCOVERY 120448.8 73670.48 1.634967 0.105
EMPLOYMENT 238.9154 12.11172 19.72597 0
POPULATION -39.10935 10.71339 -3.65051 0.0004
BUILDING_PERMITS -232.0208 176.8502 -1.311962 0.1923
C -4632441 540902.5 -8.564281 0
R-SQUARED 0.99185
ADJUSTED R-SQUARED 0.99102
F-STAT 1329.223
PROB (F-STAT) 0
INSTRUMENT RANK 12
DURBIN-WATSON STAT 0.733329

21. Descriptive
Statistics
DescriptiveStatistics Mean Median Std.Dev. Skewness
PersonalIncome 2298096 869069.5 2980520 1.621165
NGYearlyProduction 1.15E+08 62787660 1.82E+08 3.985634
NewWells 68.5 37 279.4132 0.009778
ShaleDummy 0.35 0 0.478969 0.628971
Employment 41525.03 13949.5 54166.97 1.410886
Population 75297.88 33737.5 86011.44 1.304009
BuildingPermits 251.775 18 392.997 1.466905

22. Conclusion &
Corrections
 Neither Yearly Production of NG nor
New Wells are good predictors of total
personal income in this case
 Gather producer-specific data on
production
 Form new models testing potential
effects of NG Price and Severance Tax
on Production and Well Count
 Include lease and royalty figures for
indirect effects

23. Sources
 Newmaninc.com
 Youtube.com
 Geology.com
 Dnr.louisiana.gov
 All sources cited in paper

24. THE END