Will 'fracking' bring jobs or an environmental nightmare to Illinois?

News-DemocratNovember 16, 2013 

At the Barb Wire Grill in Fairfield, manager Niki Gray has met a lot of strangers in the past couple years.

In Fairfield, with a population of about 5,000 about a half hour east of Mount Vernon, new faces are easy to spot. So when newcomers arrive at the little diner on Main Street, Gray usually chats with them and asks what brings them to town.

"Oil, right?" she always asks.

"They just kind of nod their head and laugh," Gray said. "It's a small restaurant in a small town, so a lot of the time, I have people I see two or three times a day. In the last two years, I've definitely seen a lot of new faces."

The added business has been a boon for the Barb Wire, especially during an economic downturn.

"We weren't necessarily hurting, but it's definitely been a real blessing the last couple of years," Gray said.

The Barb Wire's experience is illustrative of the type of financial kick-start that proponents of fracking say is coming to Southern Illinois.

Will the controversial oil- and gas-drilling technique be the economic savior that's been promised for the region?

It's too early to know. The state is still finalizing rules for the industry, and the drillers are keeping their information close to the vest.

Some proponents, however, say drillers are beginning to get frustrated with Illinois.

Brad Richards, vice president of the Illinois Oil and Gas Association, said some drillers are looking to shift their investments elsewhere.

"All the legislative action, all of this work to come up with this comprehensive regulatory scheme, it's cast a chill over the leasing activity, there's no question about it," Richards said. "This has been a long time in the making, and quite frankly, some of these companies don't feel welcome in Illinois."

That's fine with Annette McMichael, a leader of Southern Illinoisans Against Fracturing our Environment. McMichael says fracking will be an environmental nightmare, and the group will take any steps necessary to stop it, or at least slow it down. Those steps could include inundating regulators and protesting at drilling sites.

"I don't believe that fracking is a done deal in the state of Illinois," McMichael said.

In the spring, after months of debate, Illinois lawmakers approved a bill allowing fracking. Gov. Pat Quinn signed the bill into law in mid-June, saying it will "unlock the potential for thousands of jobs in Southern Illinois and ensure that our environment is protected."

Industry representatives, as well as environmental groups, had a hand in shaping the law. Legislators said Illinois' fracking law would have the most comprehensive environmental regulations in the nation.

"Comprehensive is probably putting it mildly," Richards said. "It's downright onerous."

The law calls for the state Department of Natural Resources to draft the specific regulations for fracking, then submit them for approval to the Joint Committee on Administrative Rules, a bipartisan group of state legislators. Before submitting them to the committee, DNR must have public hearings and accept public comments on the proposed rules.

DNR has published the proposed rules on its website, and will have two public hearings on them: one Nov. 26 in Chicago and one Dec. 3 in the southern Illinois town of Ina. DNR also will accept public comment on the proposed rules. The comments can be submitted in writing or via the DNR website.

McMichael said her understanding is that the state is required to provide a response to each comment submitted on the proposal.

"I would say our goal is to make sure that each concerned citizen in the state of Illinois provides their comment to the department," McMichael said. "It would be nice if it slowed down the process."

She added: "As I say, every day without fracking is a good day. We're not sure what we will do or what will happen in the foreseeable future. But we have a lot of national attention being focused on the state of Illinois right now, and it's quite possible we'll get quite a few people from out of state that will protest."

Fracking is the common term for hydraulic fracturing. It involves injecting water, sand and chemicals, at high pressure, into underground shale veins. The pressure fractures the rock, allowing oil and gas to seep out.

Opponents say the technique can pollute water and cause earthquakes.

Richards declined to give names of any drilling companies getting cold feet about Illinois.

"Most of these companies didn't advertise that they were here in the first place," he said. "I can tell you that our loss has been Indiana's gain. I can tell you with absolute certainty that there are at least a couple companies that, they've not totally given up on Illinois, but have focused on Indiana because it's a more accommodating place to try and drill oil and gas wells."

Richards said he fully expects opponents to "try to gum up the works a bit." He said Illinois wells will need to be "very successful in order to overcome some of the hurdles that we've put in place, but having said that, that's what we're hopeful for, because the resources are there."

Richards said drilling companies hope the DNR and JCAR rule-making process is finished in February, and then the first permits would be issued within a couple of months after that.

But Richards made that prediction prior to DNR Director Marc Miller telling the Springfield State Journal-Register on Wednesday that fracking is at least a year away.

"We're probably looking at spring before we have the rules approved," Miller said.

Miller also predicted there will be challenges to the individual applications for drilling permits. The permit challenges would push the start of any actual fracking into the fall of 2014, he said.

State Rep. Charlie Meier, R-Okawville, said the timetable is frustrating.

"How is it that Illinois can spend so much time and resources signing up 1,300 people for Obamacare, but we can't do anything that's going to bring billions of dollars into our state?" Meier said.

Who is fracking?

In early October, the Department of Natural Resources began accepting registration applications from firms interested in applying for fracking permits. As of mid-week, no applications had been submitted, but DNR spokesman Chris McCloud said that's no surprise because the final rules aren't in place yet.

"I anticipate that will be happening shortly," McCloud said.

So, for now, it's difficult to get a clear, comprehensive picture of how many drilling companies are interested in Illinois, and how extensive their operations will be. For competitive reasons, the drillers aren't sharing much information.

But there are indicators. The Hamilton County clerk and recorder's office, for example, has taken in roughly $450,000 in the past couple of years just in fees from visiting land researchers. Neighboring Wayne County collected $200,000 in fees.

A Houston company is building a 40-mile-long oil pipeline that will stretch from Wayne County to Patoka, where there's a massive oil storage facility. The year-long construction of the pipeline will employ as many as 800 workers, according to the company building it, Eastern Gulf Crude Access LLC.

One well-drilling company alone, Kansas-based Woolsey Energy, says it invested $50 million so far just in land leases. Company owner Wayne Woolsey said he expects he'll spend up to $100 million drilling just a dozen or so test wells and evaluating them.

Woolsey said the number of people he eventually employs will depend on the success of the venture. For now, his company has a temporary office in Marion, but plans to build an office and operations center in Fairfield.

So far, workers have mostly been securing land leases and drilling test wells.

"I've kept over 100 people busy for the last year and a quarter, working for us in the Illinois basin," Woolsey said.

Woolsey said he knows of two firms that have abandoned efforts to drill in Illinois.

"I've seen two companies get out as a result of not wanting to operate in the state, because of the difficulty. We actually acquired the acreage that they had," he said.

But Woolsey remains optimistic about Illinois.

"I think there's a great opportunity, and I think it's going to happen, no matter what," he said. "I'm making a pretty good-size bet on it already."

Where's the fracking?

Richards said fracking will generally happen in the same places where there have been successful, shallower wells.

He said lease activity has been highest in Hamilton, Wayne and White counties, as well as the counties that surround those -- generally southeastern Illinois.

"To my knowledge, the westernmost extent of the leasing activity, I don't think it's gone any farther west than Washington County or Clinton County," Richards said. He said he knows of one trial well drilled at the intersection of Interstate 64 and U.S. 51, south of Centralia.

"Based on the information we have, you're probably not going to have it go much farther west than that," he said.

Leases have to be recorded with the county before test drilling starts. Some leases have not yet been recorded, possibly for competitive reasons.

Water worries?

Opponents of fracking say one of their top concerns is groundwater contamination. They suggest people have their water wells tested now if they reside near a proposed fracking site. They say the results can be used as evidence if contaminants show up later.

John Riley, vice president of Teklab Inc. in Collinsville, said his lab is one of the few in Southern Illinois that can provide the water testing. He said the test costs $200 to $300, depending on how extensive it is.

"For the cost, there's no reason not to do it," Riley said. "One of the problems is, nobody really knows what they're injecting into the ground. They say it's not much different from what you keep under your kitchen sink. I don't know what you keep under your sink, but I've got some nasty stuff under there."

Riley said Teklab has had only a couple of requests so far for fracking-related water tests, but he expects they'll pick up.

The state's fracking law requires companies to disclose the chemicals they use to the DNR, test nearby water before and after fracking, and assume liability for contamination.

McMichael said all Illinoisans should be concerned about fracking because if the drillers leave an environmental mess behind, all Illinoisans will end up paying for the cleanup. Plus, she said, the welfare of one of Illinois' treasures -- the Shawnee National Forest -- is at stake.

Richards said most of the opposition to Illinois fracking is centered around the Carbondale area. "The irony of that is, there's no leasing activity in Jackson County," he said.

Richards said fracking has "overwhelming support" in places that have benefited in the past from oil drilling.

"In places like Fairfield, I'm sure there are very few people who lay awake at night and worry about it," he said. "And they could sure use the economic activity."

Contact reporter Brian Brueggemann at bbrueggemann@bnd.com or 618-239-2511.

Contact reporter Brian Brueggemann at bbrueggemann@bnd.com or 618-239-2511.

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