Proposed fracking legislation expected to unleash Southern Illinois oil boom
Source: http://www.courierpress.com, May 15, 2013
By: Len Wells
A compromise has been reached in the Illinois legislature on a bill that would regulate the practice of high volume, high pressure hydraulic fracturing in Illinois. If approved, proponents believe an oil boom will be unleashed in Southern Illinois as producers target the oil-rich New Albany Shale formation.
The House bill, drafted with the help of industry and some environmental groups, was introduced in February with strong bipartisan support. However, the bill became stalled over an amendment requiring energy companies to hire Illinois-licensed water well drillers, which industry officials claimed was unnecessary for oil and gas drilling.
Under a compromise reached Tuesday, the water well component of the bill was removed, and instead, a provision was added that would give oil producers a break on severance, or “extraction” taxes if more than half of their workers were hired from Illinois and paid prevailing wages.
Some out-of-state drilling activity has started already in Southern Illinois. Near Johnsonville, Ill., in northern Wayne County, SM Energy of Denver, Colo., has started an exploratory well. Les Wilson Drilling Company, Inc., of Carmi, Ill. is the contractor on the project.
Strata-X, another Denver, Colorado-based company is poised to launch a major drilling project called the “Vail Project.” Strata-X had already acquired a 100 percent working interest in 47,850 gross acres of oil and gas exploration rights in two Southern Illinois counties. The company plans to target a dolomitic reservoir that is located beneath the New Albany Shale formation.
Last month, Strata-X executed a drilling contract with Les Wilson, Inc.’s rig No. 25 to begin its exploratory project. The company has submitted an application to the Illinois Department of Natural Resources to begin their project. The target vertical depth is 4,500 feet with a horizontal leg of 4,300 feet for a total drilling length of 9,300 feet. Work could begin, company officials say, by early June.
Supporters of hydraulic fracturing say the process is safe and will create tens of thousands of jobs in Southern Illinois. Illinois Gov. Pat Quinn has promised to sign the fracking bill if it reaches his desk.
Illinois’ regulatory bill has been touted as the toughest in the nation with provisions that include holding drillers liable for water pollution and requiring them to publicly disclose the chemicals they use. Opponents say they worry that fracking could cause air and water pollution and deplete water resources needed for other uses.
Brad Richards of Fairfield, Ill., Executive Vice President of the Mount Vernon, Ill.-based Illinois Oil and Gas Association, said he is “thrilled” that a compromise has been reached that will satisfy labor and industry interests.
Fracking is not new to Southern Illinois. Hydraulic fracturing of oil bearing formations has been a common practice throughout the Illinois Oil Basin since the 1950s. However, the horizontal drilling aspect of energy exploration is something that’s new to the regional oil patch.