Confronted with mounting debt and falling prices, the company that first developed one of the country's ten largest fields of natural gas is selling off its assets.
The Houston-area Southwestern Energy first began activity in the Fayetteville Shale play, a 50-to-500 foot thick sediment layer about a mile underground located across a wide swath of northern Arkansas, in 2002.
But, though estimates say gas reserves within the Fayetteville Shale can last until 2050, all drilling has stopped since 2016. Now, Southwestern Energy is selling its assets in the region to Oklahoma City-based Flywheel Energy for nearly $2.4 billion.
Most of the play's wells used for hydraulic fracturing, or "fracking", were concentrated in the mostly rural counties of Conway, Faulkner, Cleburne, Van Buren and White. Essentially, fracking is a way of releasing built-up gas by breaking up the underground rock by forcing water, sand and other chemicals into it.
Jason Hayes leads the Chamber of Commerce in the Van Buren County seat of Clinton, but at the height of the shale boom he worked as a loan officer.
"So we tried to warn our clients, you know, 'This isn't going to be here forever,'" Hayes said. "Let's save, let's do this, let's do that, but with any newfound money... it tends to go out as quick as it comes in."
But with those newfound mineral leases and royalty payments came numerous complaints of earthquakes, noise and air and water pollution. Studies have found carcinogens like benzene and formaldehyde near gas wells in Arkansas. In response, the Arkansas Department of Environmental Quality banned new disposal wells in areas that felt the most frequent earthquakes.
Mervin Jebaraj, the director of the Center for Business and Economic Research at the University of Arkansas Walton College of Business, says fracking is costly, and natural gas prices have fallen, making it unprofitable.
"It is my understanding that the reserves are part of the problem, but also the price. So unless you see the price climb up dramatically, you’re not going to see a whole lot of activity," Jebaraj said. "So you’ve seen most of the major players that did participate in the shale play back in its heyday are selling their assets at bargain prices."
The total amount of gas produced in Fayetteville Shale counties fell from over 900 billion cubic feet in 2011 to a little over two-thirds of that last year, according to the Arkansas Oil & Gas Commission. Natural gas prices reached a peak of $12 per million British thermal unit in 2008. But, for the past year, that price has struggled to get over $3 per million Btu.
Other companies that followed Southwestern Energy's lead in developing the Fayetteville Shale have sold their assets to smaller companies. The play's second-largest producer, Chesapkeake Energy, sold off its stake in the region in 2011.
As was the case with Chesapeake, the buyer for Southwestern's assets is a smaller, newer company; Oklahoma City-based Flywheel Energy, LLC. In addition to all of Southwestern's assets in the region, Flywheel is also absorbing a sizeable portion of the company's debt.
Jebaraj said the economic impact of the shale was welcomed in the predominantly rural northern parts of the state, where employment growth outpaced the rest of the state in the 2000s. He says the Fayetteville Shale's heyday came more or less at the same time as the Great Recession.
"It's fair to say that the Fayetteville Shale Play provided sort of a short-term boost to the economy here in Arkansas, like an additional stimulus, if you will, during that recession," Jebaraj said. "So we kind of didn't feel the worst effects of the recession at that time because of the additional jobs that came to the state from the Fayetteville Shale Play.
"When that went away… we felt some of the effects of the recession much later than the rest of the nation."
Falling prices have caused a glut in the natural gas market, but a recent study by oil-and-gas giant BP shows natural gas consumption in 2017 grew by 3 percent, the fastest since 2010.
The single biggest factor in that growth? China.
As the country struggles to cut down on pollution, China is moving increasingly toward cleaner energy sources. That means renewables like solar and wind, and liquid natural gas. But, as the Trump administration grapples with China over trade tariffs, U.S. natural gas exports could be hit with tariffs of their own.
China has already threatened a 25 percent tariff on American exports like natural gas, which would make it harder for American gas producers to find buyers overseas.
For now, though, Jebaraj doesn't expect a spike in natural gas prices without a helping hand from the Organization of the Petroleum Exporting Countries, or OPEC, which oversees most of the world's oil reserves. He said OPEC can decide when to flood the market with reserve fuel, and did just that when it appeared fracking was taking off.
"You see natural gas, as well as close substitutes like oil, and the glut of all those things in the market is what pushed the prices down. In part, you've seen a lot of fracking action going on in the early 2010s, and in response, OPEC decided to open up the spigots to push the price down and make most of these unprofitable."
Flywheel Energy declined an interview until the sale is final, but a statement said "the best is yet to come," and that the Fayetteville Shale is uniquely positioned to provide affordable gas for years to come.
In Clinton, Jason Hayes hopes that means a return to where his town has already been.
"We're hoping that, with the transition, it becomes a lot more active around here," Hayes said. "Because [Flywheel has] invested quite a bit of money, and from the outside looking in, you just don't know if they've got enough [of a] portfolio to just let something sit, or if that's got to actually be earning it's keep."
This story is produced by Arkansas Public Media, a statewide journalism collaboration among public media organizations. Arkansas Public Media reporting is funded in part through a grant from the Corporation for Public Broadcasting, with the support of partner stations KUAR, KUAF, KASU and KTXK and from members of the public. You can learn more and support Arkansas Public Media’s reporting at arkansaspublicmedia.org. Arkansas Public Media is Natural State news with context.