North Texas economy lifted by Barnett Shale gas

By Anna Driver

FORT WORTH, April 4 (Reuters) - The United States is on the brink of recession, but bonus money, tax receipts and royalties flowing from a shale formation holding a massive amount of natural gas are boosting bank balances across North Texas.

Energy companies are lavishing exploration dollars on landowners, neighborhoods, cities and towns located in the 5,000 square-mile Barnett Shale, where drilling rigs and production equipment are a common sight.

"We're doing a million-dollar remodel of our building right now," said Dan Hendrix, sales manager at the Don Davis Ford Lincoln Mercury car dealership in Arlington, Texas. "I don't see a recession, and I know the economy here is not as bad as it is in other places."

In 2007, the Barnett Shale is estimated to have added more than $8 billion and about 80,000 jobs to the local economy, up from $5.2 billion and more than 55,000 jobs the year before, according to Ray Perryman, an economist hired by the Fort Worth Chamber of Commerce. Oil companies are drilling the Shale in 18 Texas counties, including Tarrant, where Fort Worth is located.

Perryman characterized the benefits from the Barnett Shale as "an economic bonanza," and estimates spending related to natural gas exploration and production now account for about 8 percent of the local economy, up from "almost nothing" in 2001.

"HELPS ME"

Residents and governments benefit by leasing their mineral rights to energy companies; they receive a share of any production profits. The signing of a lease is typically accompanied by a signing bonus, and some have topped $20,000 per acre in the Fort Worth area.

"The Barnett drilling helps the economy and it helps me," said Virgil Fraley, a retiree who is expecting a $22,000 bonus for leasing mineral rights in his neighborhood in Arlington, Texas.

Fraley and his son Gary were attending the second Barnett Shale Expo in Forth Worth last month.

The expo -- sponsored by local businesses and U.S. energy companies that drill in the area including Devon Energy Corp (DVN.N), Chesapeake Energy Corp (CHK.N) and EnCana Corp (ECA.TO) -- was aimed at answering landowners' questions about leasing mineral rights and other drilling issues.

This year, attendance was estimated at 6,000, up from about 5,000 last year.

"We don't see a lot of homes for sale in our neighborhood," Gary Fraley said. "People want to hang on to them to sell the mineral rights."

Trade-offs for landowners who lease their mineral rights include heavy truck traffic, noise from 24-hour operations, possible property damage and pollution.

A projection by the Powell Barnett Shale newsletter shows a well under a 25 percent royalty agreement may bring in more than $2,000 after taxes during the first year of production, with gas sold at $6.00 per thousand cubic feet.

Even so, there are reports of people receiving royalty payments as small as $25 to $50 per month.