The Potential Economic Impact of New Albany Gas on the Illinois Economy
This study examines the potential impacts that hydraulic fracturing of shale gas would have on Illinois economy in terms of direct, indirect, and induced jobs; earnings; and total economic activity. Illinois is home to the New Albany shale gas formation which covers a substantial portion of the southern part of Illinois. It is too early to exactly quantify the total potential of the New Albany play since exploratory drilling is just beginning to be initiated. However, some conservative estimates of the impact of drilling can be developed. There may also be oil in the New Albany shale formation, but it is too early to give a reasonable estimate of its size or economic impact.
The study examined three different scenarios of investment with three different levels of local content. Local content refers to the level of capital and labor that comes from sources within the State of Illinois. The low scenario assumes a low level of exploratory drilling takes place. The medium scenario assumes a more robust level of exploration takes place. The high scenario assumes that this higher level of exploration takes place for two years followed by three years of production. This scenario looks at the ﬁ ve-year annual investment of this mixture of exploration and production. These assumptions are very conservative compared to the investments already taking place in other states. They only account for the drilling investment in the state and speciﬁ cally exclude the land leases and royalty payments to land owners because those payments are highly dependent on the resources that are found.
The total employment impacts (direct, indirect and induced impacts) for the three different scenarios are:
• 1,034 for the low scenario (assuming 10% local content)
• 10,337 for the medium scenario (assuming 50% local content)
• 47,312 for the high scenario (assuming 90% local content)
The high scenario is similar to the historical employment impacts of shale gas measured in Arkansas (9,683), Pennsylvania (44,098), Texas (Eagle Ford only – 47,097), and Louisiana (57,637).
The New Albany shale play is still unproven but has the potential to be a signiﬁ cant creator of jobs for the State of Illinois. Even with the modest ramp-up of jobs assumed in this study, a minimum of 1,000 jobs would be created or supported each year with the potential of 47,000 jobs annually if the highest scenario is realized. This highest scenario translates into over $9.5 billion of economic impact for the state.