State’s share of shale soaring

• By MICHELLE MILLHOLLON
• Capitol news bureau
• Published: Aug 24, 2008 - UPDATED: 12:05 a.m.

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The discovery of the Haynesville Shale — a huge natural gas cache in north Louisiana — pumped nearly $100 million into state coffers this month.

More money is expected in September when state government takes bids on the lease of 11,000 acres of land within the shale’s 16-parish zone.

The state is raking in millions. More revenue is expected from tax collections and royalties. And northern Louisiana lawmakers are brainstorming about how to keep at least some of the dollars in what is one of the poorest areas of the state.

“Unfortunately, I think it’s going to hit the North versus South, wetlands versus economic development … all those battles,” said state Rep. Joel Robideaux, No Party-Lafayette.

The shale is thought to encompass 4 million acres and include the parishes of Bienville, Bossier, Caddo, Caldwell, Claiborne, DeSoto, Franklin, Jackson, Lincoln, Natchitoches, Ouachita, Red River, Richland, Sabine, Webster and Winn. The area still is being mapped.

Companies are investing hundreds of millions of dollars into the discovery, which points to the significance of it.

To get to the natural gas, wells are drilled down about 2 miles and then are bored horizontally about 4,000 feet. A single well requires 3 million gallons of water to release — or fracture — the natural gas from the rock.

The discovery is turning farmers into millionaires as companies lease land for drilling. The state is among those landowners.
In one month, the state topped the $61 million made from new leases in the 12 months before the discovery.

Companies pay cash to lease state-owned land for one year. If drilling does not begin within a year, the state gets a second payment.
Normally, the state leases land for $300 to $400 an acre, said state Natural Resources Secretary Scott Angelle.

The Haynesville Shale is generating $27,000 an acre for the state, he said.

Another 11,000 acres of state-owned land goes up for bid in September, although it is not as high quality as the 4,000 acres leased in August, Angelle said.

“There’s a lot of speculation on what the value of the Haynesville Shale is,” Angelle  said. “Based on the mineral leases that have been sold, it certainly is very, very promising.”

To get a handle on the financial impact, the state is hiring an economist to put together a model.