High-volume oil and gas extraction probably won't begin in earnest in Illinois until next year because the state must first adopt rules and hire dozens of new employees to help regulate an industry eagerly pushing into new territory.
Gov. Pat Quinn promised a quick signature on a measure the legislature approved last week that would impose the nation's strictest regulations on hydraulic fracturing, or "fracking," which he says would create thousands of sorely needed jobs in southern Illinois.
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But it will take three to six months for the Illinois Department of Natural Resources to adopt rules to mirror the legislature's regulations. The agency must hire more than 50 engineers, inspectors, lawyers and other experts for its regulatory program. And companies that want to drill first must register and qualify to frack in the state before applying for a permit. All that will take many months and perhaps as long as a year, industry and environmental groups said.
"I think that fracking should not move forward in Illinois until the whole process ... is completed," said Henry Henderson, director of the Natural Resources Defense Council's Midwest office. His group helped negotiate the regulations, which stemmed from an unusual collaboration between lawmakers, regulators, industry and environmental groups. "There is a significantly serious process before us to ensure the technology to enforce the rules is in place," he said.
DNR Director Marc Miller said the agency must spend about $5 million to get the program off the ground. The Legislature included $6.1 million in the state budget for the next fiscal year, which begins July 1, but Miller said the agency has enough financial flexibility to begin hiring right away. Drillers will pay an $11,000 fee to the DNR for each permit, but it will be a while before the agency collects enough money to make the program self-sufficient, Miller said.
"In order to do this well, we will need to have these people on board to carry out," the regulations, he said. "We will need many more people than in the past to do the work and do it well."
That's partly because energy companies, which already have leased hundreds of thousands of acres, are eager to begin fracking, but also because the legislation requires that the DNR issue a permit within 60 days of receiving an application.
Fracking uses a high-pressure mixture of water, sand and chemicals to crack and hold open thick rock formations, releasing trapped oil and gas. Combined with horizontal drilling, it allows access to formerly out-of-reach deposits.
Until now, Illinois had no regulations specifically aimed at high-volume fracking. Companies didn't even have to say what method they used to extract oil and gas, so the DNR had no way of knowing whether it had begun or how extensively. State records indicate that at least one company has begun high-volume fracking.
The regulatory bill creates a template for the DNR's rules. Among the requirements is that oil and gas companies to test water before, during and after drilling, and hold them liable if contamination is found after drilling begins. It also requires companies to tell the DNR what chemicals they use, control air pollution, provide for public hearings and allow residents to sue if they believed they had been harmed.
Miller said the DNR will adopt rules as quickly and thoroughly as possible but acknowledged "it will take time."
Illinois Manufacturers Association Vice President Mark Denzler said it likely will be nine months to a year before fracking can begin. Meanwhile, companies still are leasing land and getting other matters in order so they can apply for permits and begin drilling as soon as possible, he said.
"You're not going to have a glut or a rush on the first day," Denzler said.
Nonetheless, some drillers already are asking how soon they might be able to apply for permits, said Brad Richards, executive vice president of the Illinois Oil and Gas Association. He said he has "cautioned people not to expect (fracking) to emerge overnight" and he would expect perhaps dozens -- not hundreds -- of new wells next year.
"I think it will take a while for this to ramp up," he said. "Companies are going to be very deliberate" about engineering and geological studies, meaning that "full-scale development is still probably a few years away."
The industry is eyeing the New Albany Shale formation in southern Illinois, where they hope that significant oil deposits lie 5,000 feet or more below the surface.
While many southern Illinois communities are eager to reap the promised economic benefits of fracking, officials in five counties passed resolutions supporting a moratorium, worried that local roads will be torn up by heavy trucks or that they won't be ready for an onslaught of new residents. Some environmentalists and property owners fear that fracking will pollute and deplete water resources regardless of regulations.
Annette McMichael, a Johnson County property owner, suggested opponents will ensure that residents are allowed to exercise all their options, including for public hearings, as the process goes forward.
"We can't fight Springfield. We tried and we lost," McMichael said. "But we definitely feel energized and galvanized."