Second Study Underway on Fayetteville Shale

LITTLE ROCK, AR - University researchers have embarked on a second ecomonic study of natural gas drilling in north-central Arkansas.  The effort is intended to help state officials as they consider whether to raise the severance tax on the industry.

The $28,000 study at the University of Arkansas at Fayetteville is funded by five companies operating in the Fayetteville Shale.  Houston-based Southwestern Energy Company first proved in 2002 that the underground formation could be a commercial success.

Officials say an initial study by the university underestimated how much development would occur in the Fayetteville Shale.

The new study will be broader than the first, projecting the economic impact of the shale activity over periods of five and 20 years.  The study should be complete near the end of February 2009, when legislators will be in session and possibly ready to decide on an increase in the severance tax.

(Copyright 2008 by The Associated Press.  All Rights Reserved.)