Source: Chicago Tribune, January 13, 2013
Posted on: http://envfpn.advisen.com
Thousands of landowners downstate have sold their rights to drill for oil and natural gas for upfront fees ranging from $50 to $350 per acre, plus a cut of the profits.
Others are fighting to prevent the drilling out of fear that they could be exposed to drinking water contamination, earthquakes, toxic gases and industrialization.
In the middle of this battle are Illinois legislators who have yet to pass laws to deal with horizontal hydraulic fracturing, better known as fracking. The issue is expected to be taken up again this year.
Horizontal hydraulic fracturing has opened up vast reserves of natural gas deposits in the U.S. that until now were impossible to tap. The drilling technique uses pressurized sand, water and chemicals to crack open layers of rock that trap such fuels hundreds or thousands of feet below ground.
The stampede to unleash such fuels has been compared to the Gold Rush of the 1840s. And in addition to the money being made by landowners in selling drilling rights, the fracking rush has brought jobs to other parts of the country.
“Other states have found the way to find the sweet spot to protect the environment and bring jobs; we should not miss that boat,” said Tom Wolf, executive director of the Energy Council at the Illinois Chamber of Commerce.
For people desperate for jobs, a shale gas boom downstate can’t come soon enough. Many counties are dealing with unemployment rates that top 10 percent.
Proponents of fracking hope to inject new life into areas of the state where a once-vibrant coal industry has declined precipitously. At the same time, there’s a fear drilling will never begin unless the companies that want to extract the gas know what regulatory risks they face.
“If legislation doesn’t pass at some point this year, from the state’s perspective the risk is that the industry might invest elsewhere in other states that have more favorable conditions to invest in and develop these sorts of wells,” said Leonard Kurfirst, a partner at Edwards Wildman Palmer LLP in Chicago who practices environmental law, chemical product liability litigation and regulatory compliance.
The state has laws to deal with gas and oil wells, but those regulations date to 1983 — before modern horizontal drilling techniques were used.
Without meaningful regulation, some landowners are learning that their property rights don’t necessarily extend to what’s buried beneath the surface. Some have found that their mineral rights were sold years before or that if enough neighbors give permission to drill, they can be forced to join them. Others, who want to test their drinking water for the presence of fracking chemicals, are learning they could be denied access to such information if companies claim it’s proprietary.
Commonly referred to as the New Albany shale play, the gas lies in the Illinois basin, a 60,000-square-mile area that encompasses parts of Illinois, Indiana and Kentucky. The U.S. Energy Information Administration estimates New Albany holds 11 trillion cubic feet of shale gas, approximately enough to meet the needs of about 5 million households for 30 years, according to the American Gas Association.
Hydraulic fracturing has been around for more than 60 years, but the modern methods that have led to the shale gas boom were not used until the turn of this century. Unlike vertical wells of the past, modern horizontal wells vastly multiply the exploitable area of a well and involve more chemicals and water.
According to the Colorado Oil and Gas Conservation Commission, about 250,000 gallons might be used to frack a vertical well compared with as much as 5 million gallons to frack a horizontal well.
Southern Illinoisans Against Fracturing Our Environment (SAFE) is one of several organizations and environmental groups that want a moratorium on fracking in Illinois until a task force looks into the risks associated with hydraulic fracturing and recommends what kinds of regulations need to be in place.
The Illinois Chamber of Commerce is among those opposed to SAFE’s proposal, which is similar to what New York state adopted with a four-year-old moratorium that has stalled natural gas development efforts.
“There is no energy source that is perfect for the environment or the economy. If there was, we would be using it,” Wolf said.
Without regulations in place, a tacit moratorium already exists, Wolf said, explaining that drillers won’t go forward with wells only to learn later that they face environmental regulations, new taxes or other unexpected hurdles.
The chamber released a study last month from David Loomis, a professor of economics at Illinois State University and director of the Center for Renewable Energy, estimating that downstate fracking could create 1,000 to 47,000 direct and indirect jobs depending on how many wells were drilled and what level of local resources were used.
Opponents countered that such jobs studies tend to be overly optimistic and don’t take into account harmful environmental and quality-of-life issues that could come with fracking.
Wolf acknowledged that economic benefits from fracking are largely unknown.
“We’re not promising a pot of gold at the end of the rainbow,” he said. “But we are saying that a pot of gold might be there and it’s worth checking out.”
Henry Henderson, director of the Midwest program of the Natural Resources Defense Council, said the regulatory battle in Springfield is not a “jobs versus environment” issue.
“The fact is, there are ways to manage this,” he said. “We’re not talking about not investing. We’re talking about how you set up a series of conditions and standards that can be enforced in order to prevent unintended impacts.”
Henderson said Illinois has a unique opportunity to take a hard look at what other states have learned in hashing out fracking regulations and improve on those laws.
“No state, we think, is doing it entirely right,” he said.
Meanwhile, there are people who fear destruction of some of the state’s most beautiful areas.
“I’m 66 years old, and nothing’s ever kept me up at night until now, and this does,” said Annette McMichael, a member of SAFE.
McMichael said she plans to build a home and retire in a couple of years on land near Shawnee National Forest, where she and her family own a rustic cabin. Although she has refused to sell her mineral rights to prospectors who’ve come calling, she recently learned that oil and gas laws on the books mean she could lose those rights if 51 percent of her neighbors sign leases — commonly referred to as “forced pooling.”
“I just absolutely love the Shawnee. You know that place that you just keep wanting to come back to? I found that place. I don’t want to see it ruined,” McMichael said.
jwernau@tribune.com
At stake with ‘fracking’ legislation
Regulations: If regulations to deal with hydraulic fracturing are too strict, drillers will avoid Illinois. If regulations are too loose, the state could suffer the negative consequences of “fracking” with little or no economic gain.
Water: Groups concerned about the effect that last year’s drought had on the state’s soy and corn farmers want a law that regulates how much water is used in fracking. Industry groups acknowledge that water use is significant but pales when compared with how much is used to generate electricity.
Chemicals: In general, energy companies are willing to provide information about the classes of chemicals used for fracking, but not their exact formulas, which they consider proprietary. Lawmakers are hashing out who, if anyone, will have a right to know those formulations.
Taxes: Lawmakers must decide what, if any, tax to levy. The industry is opposed to paying any taxes. Proponents maintain that taxes are necessary to maintain and upgrade roads that would be subject to increased truck traffic.
Land rights: What rights do landowners retain if they’ve sold their mineral rights? Are they obligated to allow access to their property so drilling can take place underground? Will “forced pooling,” a situation where drilling can go forward if 51 percent of a landholder’s neighbors sign leases, remain on the books? How will adjacent landowners be notified, if at all, that drilling will take place?