Perryman: Barnett Shale Production Adding Jobs, Fueling Texas Growth

An economist provides data on job and economic growth from the Barnett Shale in North Texas.

The economic benefits to the overall economy from the oil and gas industry “are immense, and the Barnett Shale continues to generate a significant stimulus,” Dr. Ray Perryman, president, The Perryman Group, told Rigzone.

"In Texas, the industry and related multiplier effects account for about $472 billion in real gross product each year, and add 3.8 million jobs. Royalties also continue to flow to individuals, businesses and taxing entities in the region," Perryman said.

A recent report by The Perryman Group, an economic and financial analysis firm, shows just how important one of the first big shale plays – the Barnett Shale – has been to the economy of Texas, and by inference, how important oil and gas production is to the country’s economy.

Because it is a tight formation that does not easily yield its natural gas reserves, the sprawling, Barnett Shale – which lies beneath much of the Dallas-Fort Worth, Texas area and all or parts of about 17 counties, covering more than 5,000 square miles – initially got off to a sluggish start. However, the formation is believed to contain some of the largest natural gas reserves in the country, and because of the advancements brought on by horizontal drilling and hydraulic fracturing, the formation soon began to be seen as a viable shale formation. 

Since 2001, the Barnett Shale has yielded more than 15 trillion cubic feet of natural gas, according to Perryman’s September 2014 report, “The Economic and Fiscal Contribution of the Barnett Shale.” Oil production in 2011 averaged nearly 20,000 barrels daily; production in 2014 is averaging nearly 4,800 barrels per day.

To fully appreciate job and economic growth data in the oil and gas industry, it is important to take into consideration the “multiplier effect,” which includes the indirect and induced jobs that are added when the oil and gas industry directly hires new people.

Perryman explained that there is not just one multiplier for an area, and that the multiplier varies, depending on the extent to which the associated spinoff activity is kept in the area or obtained externally.

“Multipliers are higher in areas with the full spectrum of support industries. In the Permian Basin and other long-time producing regions, we have seen the development of secondary businesses. In the case of the Barnett Shale, the fact that the play is situated near a large metropolitan area and business complex enhances the economic potential,” Perryman explained, adding that because many firms have located to the area over the past decade or so, the area around the Barnett Shale has a multiplier of 6 or more.