A headline from the online Chicago Tribune.
Illinois Democrats dawdled so long with passing and implementing legislation to regulate fracking that the possibility of stimulating the economy of Southern Illinois with new oil production has now passed.
That partisan twist isn’t in the Tribune article from which the headline you see, but it’s true.
The irony is that most of the legislators from the affected area are Democrats who campaign on wanting to encourage companies to create more jobs for their constituents.
You can read the Tribune article here.
I’m curious as to how this could ever be seen as a partisan issue or how there was any dawdling.
SB 1715 had many Democratic and Republican sponsors and co-sponsors.
It was introduced on February 15, 2013.
On April 11, 2013, it passed the Senate 51-0.
Then on May 30, 2013, it passed the House 108-9.
It was signed into law on June 17, 2013.
Do they mean the state dawdled on handing out permits?
Like they did with medical marijuana?
Or on putting state employees’ salaries online? Maybe there’s a trend.
One positive way to look at this, however, is to think about how awful it would have been if some fracking company just started doing business a few months ago and then the prices plummeted. Fracking is a very capital intensive project for people starting up.
There’s actually been malinvestment in it due to low interest rates via the Federal Reserve. They’re good at making bubbles.
At least Illinois and its towns didn’t get burned by investing in infrastructure or housing to support an industry which is barely, if at all, profitable with the current oil prices.
Also, from an environmental standpoint, I’m not sure wasting so much water and blasting chemicals into the ground is a good idea.
If your water is poisoned, your job won’t matter much. Ask the people in Ringwood.
And if it’s true that fracking causes an increase in earthquakes, that is something worth considering because southern Illinois is earthquake prone. Southern Illinois is affected by the Wabash and New Madrid Seismic Zones.
You’ll notice there are no nuclear power plants in southern Illinois.
We could create jobs by putting a nuclear power plant there, but we don’t because it isn’t safe.
I like that, what?.
It is profitable.
The United States has become the number one importer of oil and gas in the world.
It’s a fact.
It just gets better for us.
The low prices will have a profitable impact on many industries whose products are made because of oil & gas, such as plastics and more.
Those law makers better get it together.
What happened with the fracking legislation, is after the law was passed, which was the 123 page Public Act Public Act 98-0022 (PA 98-0022), the next step was the Illinois General Assembly (ILGA) Joint Committee on Administrative Rules (JCAR).
http://www.ilga.gov/legislation/publicacts/98/PDF/098-0022.pdf
http://www.chicagotribune.com/business/ct-pro-fracking-1026-biz-20141026-story.html#page=1
http://www.chicagotribune.com/business/ct-fracking-illinois-0125-biz–20150123-story.html#page=1
http://www.ilga.gov/commission/jcar
A state agency, the Illinois Department of Natural Resources is responsible for issuing “High volume horizontal hydraulic fracturing permits” for fracking.
So those rules and that process had to be worked out.
The Flinn Report (named after JCAR founding member Rep. Monroe Flynn) tells the story.
December 1, 2014 (1.5 years after the law passed)
Volume 38, Issue 48
The DEPARTMENT OF NATURAL RESOURCES adopted a new Part titled The Hydraulic Fracturing Regulatory Act (62 IAC 245; 37 Ill Reg 18097), effective 11/14/14, implementing the Act, which authorizes and regulates the practice of hydraulic fracturing (fracking) to unearth oil deposits.
The new Part, which has undergone numerous changes since 1st Notice, defines terms related to fracking, incorporates national standards, and addresses topics such as bond and collateral security; the process for obtaining permits; public comment and hearings; well site preparation and construction; water quality monitoring; plugging and restoration of land after the fracking process is complete; and enforcement of the Act and rules through administrative penalties, remediation or other measures.
Applicants for fracking permits must pay a nonrefundable fee of $13,500, plus a permit bond of $50,000 per permit or a blank bond of $500,000 for multiple permits, and must show DNR proof of at least $5 million in insurance coverage.
Non-refundable fees for modification of a permit or permit application are $13,500 for significant modifications and $5,000 for insignificant modifications.
Changes since 1st Notice include increased penalties for violations (originally, $1,000 per day for each violation, now $5,000/day/violation up to $50,000; penalties for operating violations based on seriousness and past history of violations, originally $100 to $2,500, now $1,000 to $25,000).
Also, public hearings on a well site permit request must be held in the county where the well site is located or within 30 miles of that county (originally, in the county or any other location DNR deems appropriate), radioactivity testing for certain materials has been added, and open storage of radioactive materials has been prohibited.
Other changes include clarifications regarding the permitting process, chemical disclosures, inspections, storage of fluids in reserve pits, reporting of venting or flaring of excess gas, and documentation of technical infeasibility or economic unreasonableness when applying for waivers from emission capture requirements; a simplified hearing request procedure; removal of a requirement that DNR be notified of the results of various tests only during normal business hours; provisions for notifying local health authorities of pollution linked to a fracking operation; and processes for compliance with DNR floodplain regulations.
These amendments are too detailed to describe in their entirety; for further information see this week’s Illinois Register or contact the agency.
Those affected by this rulemaking include small businesses involved in oil extraction, units of local government, non-profits and other landowners.
DNR also adopted amendments to the Part titled The Illinois Oil and Gas Act (62 IAC 240; 37 Ill Reg 18081), effective 11/14/14, concerning mandatory reporting and operating requirements for wells connected to a fracking operation when detectable seismic activity occurs.
Class II wells regulated under this rulemaking must record pressure and flow data on a monthly basis and maintain these records for at least 5 years.
The rulemaking establishes green light (magnitude less than 2.0), yellow light (magnitude 2.0 through 3.9), or red light (magnitude 4.0 or greater) alerts of seismic activity detected by the US Geological Survey or Illinois State Geological Survey.
If USGS or ISGS detects seismic activity sufficient to trigger a yellow light or red light alert, DNR will notify Class II well permittees within a designated radius (6 miles for a yellow light alert, 10 miles for a red light alert) of the epicenter.
Permittees that receive a certain number of yellow or red alerts may be ordered to cease operations under certain conditions.
If DNR determines, after consultation with ISGS, that induced seismicity (an earthquake attributable to high pressure hydraulic fracturing) has occurred, an affected permittee must meet with representatives of DNR and ISGS within 30 days after a cessation order is issued to determine mitigation measures.
Since 1st Notice, the magnitude thresholds for seismic activity alerts have been lowered and the radius from the epicenter that triggers notification to well permittees has been increased.
Businesses with Class II well permits are affected by this rulemaking.
Questions/requests for copies of the 2 DNR rulemakings: Jeffrey P. Smith, DNR, One Natural Resources Way, Springfield IL 62702-1271, 217/782-1809.
http://www.ilga.gov/commission/jcar/flinn/20141126_November%2026,%202014%20-%20Issue%2048.pdf
Oil companies were seeking permission for fracking in Illinois well before the date of the introduction of the bill that finally passed.
Take a look at these images which I found searching Google for “fracking Illinois, 2010”:
https://www.google.com/search?q=fracking+Illinois,+2010&sa=N&rlz=1C1CHFX_enUS579US580&espv=2&biw=1024&bih=685&tbm=isch&tbo=u&source=univ&ei=n1DFVITbPNOGgwTc24H4Cg&ved=0CCQQsAQ4Cg
I don’t think it’s a problem that they’re erring on the side of caution.
Fracking is exempt from federal laws like the Clean Water Act thanks to the Energy Policy Act of 2005, so it’s up to states (which is sort of strange given that water tables don’t start and end on state lines). I’m sure the prices of oil will go back up.
I don’t think the opportunity for fracking is gone forever, but then I’m not sure that’s necessarily a good thing.
Good for jobs, yeah.
As for it being profitable: the numbers I’ve seen estimate it being profitable from anywhere between 40 and 60 dollars a barrel, with most putting it at 50.
Right now the price of oil is under 50.
When fracking really got off the ground, prices were in the 90-115 range.
There are already people being laid off because of the price drop.
What is cheaper?
Shale vs conventional means.
Conventional means are cheaper.
American vs foreign labor wages.
Foreign labor wages are cheaper.
Fracking in America is not the cheapest way to produce oil and Saudi Arabia knows it.
Saudi Arabia is driving the prices down to undercut Iran, because they’re a regional nemesis, and to undercut the American fracking boom.
If they wanted to, they could set the prices below the price that fracking is profitable and still make a profit.
Russia and China are also doing more oil exploration.
Russia is doing a lot of this in the Arctic and China is doing it in Africa.
Fracking is the new gold rush; it will end suddenly and you’ll see many ghost towns.
If it isn’t undercut by cheaper oil, it will simply dry up.
It’s a volatile market and uncertainty looms over its effects to the environment.