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First Fracking Permit Granted in Illinois Returned by Company

December 27, 2017

Kansas-based Woolsey Energy withdrew its first in the state of Illinois permit application for drilling, citing low commodity prices and Illinois’ burdensome permitting process.

Less than two months after Kansas-based Woolsey Energy received approval to drill in the New Albany Shale formation in White County in southeastern Illinois, the company withdrew its permit application, citing low commodity prices and Illinois’ burdensome permitting process.

Illinois has officially allowed high-volume hydraulic fracturing (also known as “fracking”) since the state’s Hydraulic Fracturing Regulatory Act (HFRA) became law in 2013, but the Office of Oil and Resource Management did not issue its first permit to drill until Woolsey gained its permit in September 2017.

Upon returning the permit on November 6, Mark Sooter, Woolsey’s vice president for business development, said the primary reason the company was doing so was the state’s difficult, burdensome permitting process, NGI’s Shale Daily reported.

“The process we have gone through to receive a permit was burdensome, time-consuming, and costly due to the current rules and regulations of the State of Illinois, and it appears that this process would continue for future permit applications,” Sooter told Shale Daily.  “Also, the drilling and completion requirements under the HFRA are stringent, which will make future development costs of the New Albany Shale excessive and the obligations for compliance on our staff demanding.”

No Fracking Takers

Just a year after HFRA became law in 2014, the Illinois Department of Natural Resources adopted 150 pages of  rules revising HFRA, adding new restrictions and requirements to what was already considered one of the most stringent such laws in the country.

Illinois state Rep. Tom Morrison (R-Palatine) told Environment & Climate News the state will miss out on energy jobs and associated revenue unless it relaxes its fracking regulations.

“Unless some changes are made [in HFRA], drillers are going to choose to extract oil and natural gas from other states that are not as cumbersome for them to do business in, and Illinois will be missing out on all the revenue sitting right beneath her feet,” said Morrison. “A 2012 Illinois Chamber of Commerce report estimated the New Albany shale formation could create or support an additional 47,000 jobs annually in the state, along with $9.5 billion in annual economic development.”

Forgone Environmental Gains

Fracking now accounts for 51 percent of all crude oil production in the United States, the U.S. Energy Information Administration (EIA) reports. EIA also estimates the continuing switch of electricity-generation fuels to fracking-produced natural gas is responsible for 63 percent of the drop in U.S. energy-related carbon-dioxide emissions over the past decade. The rise of hydraulically fractured shale gas as a replacement for coal is a primary factor in the United States now enjoying its lowest level of carbon-dioxide emissions since 1989.

Isaac Orr, a research fellow for energy and environment policy at The Heartland Institute, which publishes Environment & Climate News, says the slow pace of permitting approval and high regulatory barriers to fracking in Illinois encourage oil and gas operators to pursue production opportunities in states with more favorable regulatory climates.

“Fracking in Illinois has been stymied by a variety of factors, and many of these are political rather than geological,” Orr said. “The Illinois Legislature passed a law allowing hydraulic fracturing, but the Illinois Department of Natural Resources was slow to implement these regulations, and by the time companies were able to apply for permits, oil prices crashed below $30 per barrel.”

“This was crucial for two reasons,” said Orr. “Although low oil prices resulted in less drilling throughout the United States, the effects were particularly stark in Illinois because the long, drawn-out process of permitting wells in the state means there was no oil and gas production activity in the region, and drillers wanted to focus their drilling in regions that were already proven winners, rather than take on additional risk by starting drilling in a new area.”

Timothy Benson (tbenson@heartland.orgis a policy analyst with The Heartland Institute.

Internet Info:

Troy Cook, Jack Perrin et al., “Hydraulic fracturing accounts for about half of current U.S. crude oil production,” U.S. Energy Information Administration: https://www.eia.gov/todayinenergy/detail.php?id=25372

Author
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
TBenson@heartland.org @BenceAthwart

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