Activists’ Prediction That Illinois Shale Development ‘Gone’ Is Way Off Base

Some in the anti-fracking movement are predicting the demise of shale development in Illinois before the first high volume hydraulic fracturing treatment has even been conducted.

Southern Illinoisans Against Fracturing Our Environment’s Annette McMichael recently had the following to say to the Springfield State Journal-Register when asked about Illinois’ shale development prospects in the face of plummeting oil prices:

“Personally, I think it’s probably gone away. From what we’re hearing, with the price of oil, it would be tough for them to break even. …They’re not going to get much out of it, but they’re still out there.”

However, the celebration – based on what’s become of the notion of peak oil and other dubious forecasts made about an unpredictable industry over the years – seems premature.

Granted, it is true that falling oil prices have, at least in part, prompted shale producers to take a conservative approach in Illinois in recent weeks. Not surprisingly, activity has been slow to develop in the New Albany Shale play since the Illinois Hydraulic Fracturing Regulatory Act’s rules were approved in November.

But McMichael is misinterpreting this cautious approach as a sort of industry surrender or abandonment. Oil prices – like most commodity prices – have risen and fallen for as long as there has been a market for energy. That reality may not be apparent to ideological opponents of affordable energy, but it does help explain why companies that have leased 600,000 acres and already spent more than $400 million in Illinois aren’t panicking.

While SAFE is busy declaring premature victory in the Land of Lincoln, Illinois leaders are quietly taking steps to finally get serious about accommodating shale development.

A bipartisan committee of Illinois leaders from the private and public sector – including former Gov. Jim Edgar and former Obama administration Chief of Staff Bill Daley – recently sent Gov. Bruce Rauner a list of recommendations for his first 100 days in office. At the top of their list of recommendations for re-shaping Illinois’ image is “jump starting” hydraulic fracturing in the Land of Lincoln.

One of the group’s suggestions is to sufficiently staff the Illinois Department of Natural Resources so that it can respond faster to fracking permit applications. There are currently not enough staff members to oversee the process, as reported by the Chicago Tribune on Nov. 6, 2014:

To gear up for fracking, the Department of Natural Resources has hired 32 people to aid in reviewing applications, mostly lawyers and engineers. Initially, the agency had four staffers assigned to that role. About 20 more people, mostly well inspectors, are called for in the agency’s budget.

Expediting the permitting process to resemble neighboring Indiana would go a long way toward repairing Illinois’ reputation as a place that is difficult to do business in. That’s one reason the committee has suggested hiring a marketing firm to create a new business-friendly brand for Illinois.

Considering the business-savvy Rauner, a former private-equity investor, is inheriting perhaps the worst financial situation in the nation, he is expected to heed that recommendation and many others.

State officials have also approved a new degree program at Lincoln Trail College in Robinson that will help prepare that region’s workforce for an industry that an Illinois Chamber of Commerce study reports could create up to 47,000 jobs.

With the help of area industry leaders, Lincoln Trail College will offer a Petroleum Drilling Technology program starting this coming fall semester. The program will prepare students for jobs in the planning, development and operation of oil and natural gas extraction and processing facilities, with a focus on horizontal, high volume hydraulic fracturing.

LTC President Kathryn Harris explained that the program will help replenish an aging workforce in an industry that is poised for tremendous growth in Illinois:

“We work hard to adapt to the needs of our local industries. Through the years, we’ve added programs and classes to help make sure our students can get good jobs and to help make sure our local businesses can find the skilled people they need to fill those jobs. Fracking is coming to Illinois soon, and that will mean good jobs. This program will help people get skills they need to find jobs in the field.”

It appears likely that other colleges will follow LTC’s lead, considering the Illinois Department of Employment Security forecasts a 23 to 24 percent increases in the need for oil and gas roustabouts, general oil and gas drilling operations and derrick operation through 2022.

The oil and gas industry already is responsible for 236,000 jobs in Illinois and 932 Land of Lincoln jobs are within the industry supply chain, representing five percent of the state economy.

Interestingly, LTC officials got the idea for starting the program after visiting an Ohio community college offering a similar program. Ohio’s Utica Shale – which is said to be the U.S. shale play almost comparable to Illinois’ New Albany – has produced 712 wells and $22.8 billion in economic development projects. It has been estimated that Illinois shale development could have a $9.5 billion economic impact.

That said, who can blame state officials for looking at shale development as part of a potential solution?

No Comments

Post A Comment