DALLAS - Governments ranging from north-central Texas school districts to the state itself are reaping an economic bonanza from wells tapping what some say is the largest onshore natural gas field in the United States.

A new report from the Perryman Group, a Waco-based economic and financial analysis firm, said local governments in the 18 counties reporting production from the Barnett Shale formation collected $387.7 million in direct and indirect taxes in 2007, up from $227.7 million in 2006. The revenue figure does not include millions more in lease and royalty payments to governments for natural gas from public land, including parks, schools, and airports.

The state benefited from $715.5 million in Barnett Shale-related taxes and fees in 2007, the Perryman report said, including $212.1 million in energy severance taxes on natural gas production. Total state revenues are up from $490.9 million in 2006.

"Property taxes generated by the expansion associated with the natural gas reserves continue to reshape the budgets of local school districts, cities, and others," the report said. "Retail sales taxes, occupancy taxes, and other sources of fiscal revenue have also risen as the increase in activity works its way through the local and regional economies."

The Barnett Shale, which was formed more than 300 million years ago, lies almost two miles beneath a 5,000 square-mile swath of Texas. It is the largest gas field in the state, with production in at least 21 counties and reserves estimated at up to 39 trillion cubic feet of natural gas.

The core area of the field is located beneath Wise, Denton, and Tarrant counties, but most of the recent activity has occurred in what drillers are calling "the sweet spot" of Tarrant, Johnson, and Parker counties. Fort Worth, which is located in Tarrant County, has some 541 producing wells within the city limit with more planned.

Although production from a typical Barnett Shale well falls significantly after the first two to three years, the wells are expected to produce gas for up to 50 years.

The Perryman Group report said the Barnett Shale activity boosted the multi-county area's economy by $8.2 billion in 2007 and created 83,823 jobs, directly and indirectly.

Activity associated with Barnett Shale production continues to exceed expectations, said Ray Perryman, president of the financial analysis firm that prepared the current report as well as one issued last year.

"In 2007, our analysis of the impact of the Barnett Shale indicated it was like icing on the cake for the already healthy Fort Worth-area economy," he said. "This year, we found that activity in the Barnett Shale is making an even bigger difference, with expansion in benefits surpassing expectations.

"We had an estimate for growth over the next 10 years in the 2007 report, and they did two-and-a-half years of predicted growth in the first year," Perryman said. "When you go out on a limb to predict a 20% growth rate and it is actually 50%, it makes you a little hesitant to make predictions."

Governments in Tarrant County received $112.7 million in taxes from Barnett Shale production in 2007, including $23.5 million to the county, $39.4 million to cities, and $49.8 million to school districts.

Fort Worth expects to receive $972 million from lease signing bonuses and royalty payments over the next 20-30 years, up from last year's estimate of $732 million. The city is using the money to establish a trust fund and to finance several long-term capital projects, including $117 million of improvements at Lake Worth.

Arlington has used $500,000 in revenues from natural gas drilling on city property to fund its Arlington Tomorrow Foundation. The first two wells on 4,266 acres of city-owned property leased to drilling companies began producing at the end of November 2007, generating $54,000 in royalties in the first three months.

Perryman said Barnett Shale wells produced 3.7 billion cubic feet a day, with production by 2015 expected to reach as high as 9.7 billion cubic feet a day.

The full report is available at www.barnettshaleexpo.com/impactstudy.php.


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