Frack-IL-licious: Hydraulic Fracking comes to Illinois

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Frack-IL-licious: Hydraulic Fracking comes to Illinois

By David A. Kelm

Hydraulic fracturing or “fracking” has garnered quite a bit of national and Illinois coverage lately. Stories of unparalleled job growth, U.S. energy independence and boom-times for rural parts of the country have been balanced by reports of environmental concerns, NIMBYism and “rose-colored glasses” syndrome.

On June 17, Illinois finally put in place regulations for fracking in Illinois. To listen to the skeptics, Illinois is soon to become a vast wasteland depleted of all potable water with the population escaping to caves beneath the earth like the Morlocks in H.G. Wells “The Time Machine.” In reality, recent studies are showing that doom and gloom will not come to pass and that fracking can provide a needed energy source, high quality jobs and increased revenues.

Illinois has a long history of hydraulic fracturing going back decades. In the last few years, however, advancements in technology driven by demand for natural gas has allowed energy companies to access deposits previously unreachable. The process involves drilling deep underground, typically more than a mile, injecting pressurized water, sand and additives to fracture the shale deposits thereby releasing natural gas. In Illinois, the New Albany Shale deposit resides in the Illinois Basin and extends from the southeast portion of Illinois into Indiana and Kentucky. Recently, reserves of natural gas in the New Albany Shale deposit were estimated at 86 to 160 trillion cubic feet.

As with all change, a great deal of fear and apprehension has developed amongst groups opposed to fracking in Illinois or any other state, for that matter. Fear of the unknown has also led to misinformation dispensed through major media, the internet and “documentaries” with a strong bias against fracking. There have been wild claims that fracking will dramatically deplete water sources; will contaminate drinking water because of the drilling and additives used to frack; and, will lead to massive earthquakes as a result of the fissures created to release the natural gas.

However, in several studies conducted by state and federal governments, none of these issues has proven valid. Most recently, the US Department of Energy published findings late last month that showed no evidence that drinking water aquifers were impacted by fracking additives. The study was conducted over a year in Pennsylvania, which sits over the Marcellus Shale formation.

Illinois’ new legislation regulating fracking places administration with the Illinois Department of Natural Resources (DNR). While the act took effect upon Gov. Quinn’s signature, it will take a year or so before DNR will bring rules and regulations on line. Passing the act through the Illinois General Assembly was contentious and the process to properly regulate fracking in Illinois will no doubt be equally problematic.

In an article that appeared in Law360 written by Lawrence Falbe and Sandford Stein, the authors anticipate a struggle every step of the way for those seeking drilling permits. Successful applicants will need to overcome active, organized opposition and “successful permitting of the first wells under the new framework will depend on the industry’s ability to successfully ‘make its case’ before the Illinois Department of Natural Resources,” wrote Falbe and Stein.

Once DNR has developed the rules needed to permit a fracking operation, the hoops an applicant will have to leap through are expensive and will take time. Amongst other steps, applicants will have to register with DNR, show proof of insurance, disclose any industry violation, pay a non-refundable fee of $13,500, notify the public and seek public comment that could include a public hearing. The application process and restrictions placed on drilling operations have been called the most restrictive in the nation for fracking and a model for other states looking at harnessing new fracking technology.

Given the enormous size of the New Albany Shale formation, energy companies are eyeing the new Illinois regulations and hopeful that DNR will get the rules in place as quickly as possible. In a recent article, DNR Director Marc Miller indicated that in all reality regulated fracking will not begin until next spring. The process will include the need to hire an additional 50 to 55 state employees to oversee the program. Miller also estimated that 700 to 800 wells could be started per year in Illinois.

Fracking holds great potential in Illinois, particularly Central and Southern Illinois. Illinois State University, in conjunction with the Illinois Chamber of Commerce Foundation, published a study during the discussion over fracking before the General Assembly that showed as many as 47,000 jobs may be created as a result of fracking in Illinois.

The estimate also includes an economic impact to the State of Illinois of over $9.5 billion dollars, which does not include what property owners might see as a result of land leases to drillers. Illinois’ unemployment rate for June 2013 was 49th at 9.2 percent. North Dakota, which has seen a fracking boom in the last few years, was ranked 1st with an unemployment rate of 3.1 percent.

Natural gas extraction by way of hydraulic fracturing is a necessary part an “all of the above” approach to energy policy in the United States. Central and Southern Illinois have abundant coal resources and natural gas reserves that must be exploited for the good of the region, the state and the country. New technology is allowing fracking to be efficient, effective and safe. The State of Illinois, thankfully, is finally catching up with the rest of the country.

kelm

David A. Kelm is an attorney from Chatham with experience in environmental law.

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