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The passage of a new severance tax on natural gas has sparked new speculation about the future of the industry in Arkansas.
Since the tax doesn't take effect until January 1st, it will be awhile before that speculation turns into any hard facts. But, right now, natural gas production is going full steam ahead.
Chesapeake Energy recently dedicated a new regional corporate office in Little Rock.
(Tom Price, Chesapeake Energy) “Today's event is more than just another office opening, or company expansion. It represents Chesapeake's commitment to the future of Arkansas, and to helping provide the state with sufficient natural gas resources.”
It had been just two weeks since the state Legislature approved an increase in the severance tax. That's the tax charged to natural gas producers for taking a natural resource out of the state. It was the first increase in the tax in 50 years.
But, it was an increase many industry insiders hammered out with the governor, and there are no signs the added cost will have any impact on production.
(Aubrey McClendon, Chesapeake CEO) “We are doubling our rig-count in this play right now, from 12 rigs today to 25. We think that will make us the most active operator in the state.”
McClendon says Chesapeake and other companies will spend between $75 billion and $100 billion in Arkansas during the next decade.
We last did an in-depth natural gas industry update two years ago. At that time, there were 170 gas wells in the Fayetteville Shale. Today, there are 600. And by the end of this year, there will be a projected 1,100.
And the biggest impact for Arkansans is in the job market.
The University of Arkansas Community College at Morrilton received grant money three years ago from Southwestern to start a petroleum technology degree program. There have only been six graduates of the program so far, but five more will get their degree this month, and this fall there will be more than 100 students in the class.
(Curt Hippensteel, UA-Morrilton Instructor) “Many of the people you saw at first came from out of state. I think people realize they have a chance to work in the industry, and even stay close to home. Get a job that will pay them a good living in a new field.”
One of those Arkansans who realized the opportunity is 21-year-old Eric Little. He first got an Associate's degree in criminal justice from Arkansas Tech.
(Eric Little, UA-Morrilton Student) “Driving back and forth for the two years, I saw these rigs out here, and I got interested in it. And started doing research on it.”
He says he'll graduate in December, and is not worried at all about his future.
(Little) “It can offer a career. They'll probably be around for a while. Even if they pull out of here, there will always be natural gas drilling and production.”
(Dale Walker, Southwestern Energy) “We're adding, for example, a lease operator at the rate of one a month. And every few months, we're adding an assistant foreman. These guys will all, coming out of this program, could be qualified to work in that capacity.”
Arkansas led the nation in natural resources and mining job growth last year. Graduates of the program at Morrilton can expect to make between $50,000 and $60,000 a year right out of the gate.
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