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Research & Commentary: Illinois Regulations Acting as a de Facto Ban on Hydraulic Fracturing

November 16, 2017

Four Years After HFRA, No Fracking Occurring In Illinois

Illinois has officially allowed high-volume hydraulic fracturing (also known as “fracking”) since the Hydraulic Fracturing Regulatory Act (HFRA) became law in 2013, but the first permit to be granted by the Office of Oil and Resource Management did not appear until September 2017, when Kansas-based Woolsey Energy received the agency’s blessing to begin operations. Less than two months later, however, Woolsey withdrew its permit application, partly due to low commodity prices, but mostly because of Illinois’ burdensome permitting process. Woolsey had originally planned to drill in White County in southeastern Illinois, which is located above the New Albany Shale formation.

Woolsey’s vice president for business development, Mark Sooter, told NGI’s Shale Daily the permitting process the company had to go through in Illinois was “burdensome, time consuming and costly” and that “it appears that this process would continue for future permit applications.”

“Also,” Sooter continued, “in consideration of the current price of oil and gas, the difficult regulatory environment in Illinois and exploration opportunities in other states [emphasis mine], it is in our best interest to discontinue with high-volume horizontal hydraulic fracturing operations in Illinois.”

In 2014, 150 pages of revised rules were filed with HFRA, making what was already a stringent law even more burdensome and causing a vice president of the Illinois Oil & Gas Association to call the rules “unworkable.” Radical alarmist groups are already crowing over the withdrawal and renewing their call for legislators to ban fracking in Illinois, which they say “pollutes our air and drinking water, hurts communities … and is linked to earthquakes.”

The existing peer-reviewed evidence shows hydraulic fracturing processes do not pose a systemic impact on groundwater. Since 2010, at least 19 of these studies have been produced. These studies are reinforced by the Environmental Protection Agency’s own $29-million, six-year study of fracking’s impact on groundwater sources, which failed to find any systemic impact caused by the 110,000 oil and natural gas wells that have been in use across the country since 2011. A 2012 Illinois Chamber of Commerce report estimated the New Albany shale formation could create or support an additional 47,000 jobs annually, along with $9.5 billion in annual economic development.

Another study by researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology (MIT) concludes hydraulic fracturing activity brings $1,300 to $1,900 in annual benefits to local households, totaling roughly $64 billion in yearly household benefits for those living in the nine basins studied. These benefits include a “a 7 percent increase in average income, driven by rises in wages and royalty payments, a 10 percent increase in employment, and a 6 percent increase in housing prices.” 

According to the U.S. Energy Information Administration (EIA), fracking now accounts for 51 percent of all crude oil production in the United States and has transformed the energy outlook of the country over the past decade.

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 has been primarily responsible for the United States now enjoying its lowest level of carbon-dioxide emissions since 1989. 

Four years after the enactment of HFRA, there is no fracking occurring in the State of Illinois. This shows HFRA regulations on hydraulic fracturing are too onerous – so much so that they are acting as a de facto ban on drilling in the state. Legislators should revisit HFRA and see how they can bring Illinois more in line with other states; otherwise they run the risk of seeing the fracking revolution and all its attendant benefits completely bypassing the Land of Lincoln. 

There is no scientific justification for banning hydraulic fracturing or over-regulating it out of existence. Regulation should only be based on the best available scientific literature, not on wild, unfounded claims based on misinformation, fear, and superstition.

The following documents provide more information and economic and environmental impacts of hydraulic fracturing.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/the-local-economic-and-welfare-consequences-of-hydraulic-fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
https://www.heartland.org/publications-resources/publications/impacts-of-the-natural-gas-and-oil-industry-on-the-us-economy-in-2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

What If … Hydraulic Fracturing Was Banned?
https://www.heartland.org/publications-resources/publications/what-if-hydraulic-fracturing-was-banned
This study is the fourth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found by 2022, a ban would cause 14.8 million jobs to “evaporate,” almost double gasoline and electricity prices, and increase natural gas prices by 400 percent. Moreover, cost of living expenses would increase by nearly $4,000 per family, household incomes would be reduced by $873 billion, and GDP would be reduced by $1.6 trillion.

Hydraulic Fracturing a Game-Changer for U.S. Energy and Economies
https://www.heartland.org/publications-resources/publications/hydraulic-fracturing-a-game-changer-for-us-energy-and-economies?source=policybot
In this Policy Study from The Heartland Institute, Heartland Research Fellow Isaac Orr explains the advantages and disadvantages of smart drilling and its alternatives. Orr reviews the background and potential of hydraulic fracturing in the United States and puts that potential in the context of the supply of and demand for oil and gas. He addresses the environmental impacts of hydraulic fracturing, both positive and negative, as well as the public safety issues raised by activists, such as potential harm to drinking water supplies. Orr also discusses how oil and gas production is regulated at the state and national levels and suggests appropriate policies for the industry.

Bill McKibben’s Terrifying Disregard for Fracking Facts
https://www.heartland.org/publications-resources/publications/bill-mckibbens-terrifying-disregard-for-fracking-facts?source=policybot
This Heartland Institute Policy Study, written by Research Fellow Isaac Orr, examines how methane emissions are measured, reports the effect those emissions may have on global warming, and discusses several falsehoods journalist Bill McKibben repeats from the discredited movie Gasland. It also evaluates the available fracking alternatives and discusses the relatively small impact new methane-emissions rules enacted by the Environmental Protection Agency will likely have on Earth’s climate.

Fracking and Earthquakes
https://www.heartland.org/publications-resources/publications/fracking-and-earthquakes
Fracking is responsible for some of the greatest growth in oil and gas production the United States has ever experienced. Yet, as U.S. energy extraction increases, so have concerns about the safety of fracking, with The New York Times linking the practice to “Scores of earthquakes.” Research shows, however, the risk of earthquakes caused by fracking is minimal and can be fixed with modest siting regulations, bonding requirements, and wastewater recycling. Jillian Melchoir of the Independent Women’s Forum writes that it is essential to understand what the science is actually revealing about energy extraction and induced seismicity and to create balanced public policy that allows safe energy extraction to continue.

Injection Wells and Earthquakes: Quantifying the Risks
https://www.heartland.org/publications-resources/publications/injection-wells-and-earthquakes-quantifying-the-risk
This report from StatesFirst, a partnership between the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, states data from the U.S. Geological Survey and several peer-reviewed studies show out of an estimated 40,000 disposal wells across the United States, only 218 of them have been linked to or suspected of being a possible cause of seismicity. This means only 0.15 percent of all Class II injection wells and 0.55 percent of all federally regulated disposal wells in the United States have been tangentially associated with a seismic event of any size.

Fracking Facts: The Science, Economics, and Legal Realities
https://www.heartland.org/publications-resources/publications/fracking-facts-the-science-economics-and-legal-realities?source=policybot
Hydraulic fracturing, commonly known as fracking, has been employed in the United States since the 1940s. Although innovation has improved the precision of the process, the essentials are the same. Utilizing horizontal drilling, a mixture of mostly water, sand, and trace amounts of chemicals, are used to create fissures in underground shale deposits to allow oil and natural gas trapped in hard rock to move toward the surface to be collected. Activists have blamed fracking and the processes associated with it for emissions of pollutants, earthquakes, and even groundwater contamination, though independent evidence consistently shows these allegations to be false. Leigh Thompson of the Texas Public Policy Foundation argues the evidence supporting fracking bans looks slim when attention is drawn to the facts.

Hydraulic Fracturing: Critical for Energy Production, Jobs, and Economic Growth
https://www.heartland.org/publications-resources/publications/hydraulic-fracturing-critical-for-energy-production-jobs-and-economic-growth
Increased energy production on private lands in the United States has been one of the most promising economic success stories in recent years. A large part of the success is due to an energy-extraction process known as hydraulic fracturing. Misconceptions about hydraulic fracturing, also called fracking, abound. The Heritage Foundation’s Nicolas Loris explains hydraulic fracturing is safe when regulated effectively and says fracking greatly increases the nation’s energy production, thus promoting job creation.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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