La. will profit from shale

• By MICHELLE MILLHOLLON
• Capitol news bureau
• Published: Nov 8, 2009

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State officials say a north Louisiana natural gas cache is continuing to generate income for state government.

State Natural Resources Secretary Scott Angelle said the Haynesville Shale field is helping flatten out the rate of decline in revenues from oil and gas production.

But the state is maybe five years away from the tax income that would help prop up state revenues, Angelle said.

New drilling techniques unearthed in north Louisiana possibly one of the largest natural gas fields in history.

State government receives taxes from natural gas extraction plus royalties from production.

Mineral revenues directly contribute more than $1 billion — down from nearly $2 billion in 2008 — to the $8 billion raised from Louisiana sources in the state’s nearly $30 billion annual spending plan, according to the Division of Administration appropriated budget analysis.

The state coffers also benefit from taxes on sales of equipment and goods as well as on income from individuals and companies working the fields. Plus, the state receives revenues from leasing state-owned lands to prospectors.

The days of oil prices creating huge budget surpluses for the state appear to be over for now based on economists’ projections. In the state budget year that starts July 1, a nearly $1 billion shortfall is projected in the revenue that the state uses to pay for expenses.

Angelle said Louisiana accounted for 15.2 percent of the nation’s natural gas drilling activity in late October. Just two years ago, before the Haynesville Shale cranked up, Louisiana only accounted for 7.8 percent of the nation’s drilling activity, he said.

“We have shale fever and I think it’s here … America hopefully will embrace natural gas use,” he said.

But Haynesville Shale isn’t pumping $100 million into state coffers like it did a year ago following a lease sale for state land, according to state mineral board reports.

The revenue still is flowing despite the recession and a dip earlier this year in natural gas prices, according to mineral leases and state officials.

At the moment, the return for the state is modest with bigger payouts a few years away, which officials say is not soon enough to help with a staggering state budget shortfall.