Policy Documents

The Potential Economic Impact of New Albany Gas on the Illinois Economy

David G. Loomis, Ph.D. –
December 13, 2012

Executive Summary

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.