New gas boom fills Louisiana government’s coffers

Norita Price Trahan
August 12, 2008
Beulah "Bebe" M. Freeman
August 14, 2008
Norita Price Trahan
August 12, 2008
Beulah "Bebe" M. Freeman
August 14, 2008

A year ago, the good folks up in Northwest Louisiana were excited about the economic potential of having the Air Force’s Cyber Command project perhaps locating its headquarters at Barksdale Air Force Base. That is still a definite possibility that can bring thousands of high paying white-collar jobs to the area.

As exciting as that prospect is, it has a new rival when it comes to blockbuster economic news in the area. Money is flooding into the Northwest Louisiana region for the leasing and development of what may well be the fourth largest natural gas deposit on earth, the Haynesville Shale formation.


The presence of natural gas in the Haynesville Shale has been known for a long time. Only recently has the technology to tap the gas pockets been perfected to make development of the field economically feasible. Now that the formation is being actively drilled, the size of the natural gas reserves within it is becoming better known.

Last March, Chesapeake Energy – one of the major companies drilling and leasing land in the area – estimated the natural gas reserves to be in the neighborhood of 20 trillion cubic feet.

The impact on state and local governments is already significant and may soon be immense.

State Mineral Board Secretary, Marjorie McKeithen, recently noted the escalating impact of the Haynesville Shale play: “This is an extraordinary time for Louisiana, particularly north Louisiana, where we are experiencing something akin to a modern day gold rush due to the excitement about the Haynesville Shale discovery. To put the magnitude of this discovery into perspective: This month’s (June, 2008) lease sale surpassed by more than double the bonus collections for the Fiscal Year 2007-08 combined, almost entirely because of activity in north Louisiana.”


An example of the impact on local governments can be seen from a resolution recently passed by the City Council of Bossier City. The resolution stipulates that the municipality will not accept less than $27,500 per acre for leasing its land for exploration and it must retain 25 percent of the gas produced.

If all 3,300 acres of its available land were leased at its demand price, it would add $90 million to the coffers of the city – not counting any severance tax money it would receive.

One of the largest landowners in Northwest Louisiana is the State of Louisiana. It is hard to estimate at this point exactly how much in new revenues the state stands to gain from the Haynesville Shale development, but it has to be extremely significant.


Louisiana is already benefiting from extremely high global oil and gas prices. Those high prices have already created billions of dollars in surpluses and excess revenues for the state. Most of that money has come from the coastal regions of Louisiana. Now there will be a new stream of mineral dollars descending from the North as well.

With lease payments now hovering in the $25,000-$30,000 per acre range (excluding royalties), every week new millionaires are being created in Northwest Louisiana and the economy of the region is in the initial stages of a mineral-generated boom.

This fantastic economic news will help offset the recent depressing news that hundreds of manufacturing workers are losing their jobs at the General Motors plant in Shreveport.


If the Cyber Command project at Barksdale does come to fruition to an appreciable degree, the combination of these two economic dynamos can propel Northwest Louisiana to new heights and make it a larger economic player in the Deep South.