Around the nation, the issue of hydraulic fracturing raises passionate arguments from advocates who see the growing industry as a source of good, high-paying jobs and new revenue for state and local coffers. Meanwhile, opponents argue that the new technology being used to extract natural resources could lead to harming the environment. Rather than engaging in the typical legislative battle that's occurred in other states, we took a different tack in Illinois where all parties sat down together for nearly a year and crafted a common sense solution that will allow this industry to flourish.
The final bill was supported by a diverse group including entities like the Illinois AFL-CIO, Illinois Manufacturers' Association, Oil & Gas Association, Sierra Club, Illinois Environmental Council and Illinois Farm Bureau. Both Gov. Pat Quinn and Attorney General Lisa Madigan participated in negotiations. It's truly amazing that such a wide and diverse coalition could agree on this monumental legislation.
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Conventional, or vertical, fracturing has been occurring safely in southern and central Illinois for nearly six decades. New technologies developed in the past decade allow operators to use high volume hydraulic fracturing to reach hydrocarbons that were previously out of reach. Employed safely in dozens of states, hydraulic fracturing uses a high pressure stream of water, sand and chemicals to create small cracks in shale rock allowing the oil and gas to migrate to the well bore for recovery.
Other states have witnessed amazing results from hydraulic fracturing. For example, North Dakota's total oil production has quadrupled since 2005 from 98,000 barrels per day to more than 400,000 barrels today. Experts believe that it could grow to more than 1 million barrels by the end of 2020. North Dakota has the lowest unemployment rate in the country and a $1.6 billion budget surplus. Similar economic success stories are occurring in Ohio, Pennsylvania, Texas, Oklahoma and other states that are using hydraulic fracturing.
Concerns about the potential environmental impact and infrastructure needs associated with hydraulic fracturing's rapid economic growth were raised in other states, so we met them head on in the legislation.
At the front end, industry agreed to pay significant application fees to the Illinois Department of Natural Resources and Environmental Protection Agency to ensure that they have adequate staff to properly regulate the industry. Operators will pay a new graduated severance tax that will ultimately generate hundreds of millions of dollars in new money for state and local governments. Companies are given incentives to make sure that they hire local Illinois workers.
Protecting Illinois' water was a primary concern for all parties and paramount in discussions. All wells must be set back a mandated distance from water sources. The new regulatory framework requires that ground and surface water must be tested prior to drilling, continuously during the well's operation, and after completion of the well to make sure that no contamination occurs. Illinois will have the strongest well construction standards in the nation, and operators must use a closed loop storage system rather that using open pits for storage of fluids.
Any individual or business that may be adversely impacted by hydraulic fracturing will be notified in advance so that they have an opportunity to participate in the application and public comment process. Minimum setbacks are also required so that drill sites are not established in close proximity to homes, churches, schools and businesses.
We're often asked why Illinois should be excited about fracturing. First, hydraulic fracturing will generate tens of thousands of good jobs for Illinois residents and generate hundreds of millions of dollars in new revenue. It will positively impact manufacturing, mining, rail, trucking, construction, road building and other industries, many of which are represented by organized labor. Businesses and residents will pay cheaper prices for energy. Our reliance on foreign oil will continue to decrease. The U.S. Energy Administration predicts that the United States will overtake Russia and Saudi Arabia in the production of natural gas and oil respectively largely as a result of hydraulic fracturing.
The New Albany Shale in southern Illinois holds 11 trillion cubic feet of shale gas. That's enough to meet the needs of 5 million households for 30 years. It's time to put people to work and develop this resource.
• Greg Baise is president and CEO of the Illinois Manufacturers' Association. Michael T. Carrigan is president of Illinois AFL-CIO. Both are co-chairs of the GROW-IL coalition.