Hoping to head off threats of a state moratorium on hydraulic fracturing (fracking), Illinois leaders, the exploration and production (E&P) industry and conservation groups on Thursday firmed a mutual agreement on a bipartisan bill (HB 2615) that establishes rules for unconventional drilling using stimulation techniques.

With support from the governor and both houses of the Illinois Assembly, along with environmental heavyweights that included the Natural Resources Defense Council, HB 2615 is seen as a “manageable, balanced” approach to the controversial industry practice that has been around for decades in other states, Illinois Oil and Gas Association (IOGA) Executive Vice President Brad Richards told NGI on Friday.

Officials with some Illinois-based environmental groups told reporters last Thursday that the measure is likely to zip through the legislature because of the unusually broad-based coalition that is backing the bill, which also includes regulatory agencies and Illinois Attorney General Lisa Madigan. “I would be surprised if we were still haggling over this at the last few days of the session,” Richards said.

“It is not a perfect bill by any means,” Richards said. “We have our share of concerns, but the political realities being what they are, we felt this is manageable and hopefully it will strike the balance we are searching for and allow development to move forward.” According to a report in the Associated Press, Richards’ counterpart at the Illinois Petroleum Council, Jim Watson, a former Illinois state lawmaker, echoed these sentiments, saying the industry was “anxious to invest,” even by enacting “the nation’s toughest [fracking] regulations.”

Richards confirmed that interest is hot in plays covering up to 12 counties in southern Illinois, including the New Albany Shale (see Shale Daily, Dec. 17, 2012). The interest is mostly in oil, given today’s market, he said. “In the deeper parts of the Illinois Basin, it is likely to be oil and natural gas liquids.”

Illinois’s proposed Hydraulic Fracturing Regulatory Act would require E&P operators to conduct baseline tests on water before, during and after drilling, and it holds the operators them liable for any contamination found after the drilling begins. The bill would require E&P operators to disclose the chemicals used and to control emissions from the work, along with being subjected to scrutiny in public hearings and from potential lawsuits from residents who believe the drilling activity is harming them.

The bill also would authorize the Illinois Department of Natural Resources to adopt rules “as may be necessary” to fulfill HB 2615’s intent, and it would create a “Mines and Minerals Regulatory Fund.”

Even with the broad-based support, some critics and lawmakers opposed to the legislation are calling for a two-year moratorium on unconventional drilling using fracking to study potential contamination and health effects. Richards predicted that this opposition would be drowned out if the state legislators fast track the measure to the governor’s desk before the scheduled adjournment of the Assembly in late May.

In the meantime, Richards said acreage leasing in the southern part of the state is booming.

“We have probably had a half-million acres leased in southern Illinois,” he said, adding that the per-acre prices paid have steadily gone up and are currently in the $350-500/acre range, with “pretty generous” royalty arrangements. While there are up to a dozen counties experiencing the leasing spurt, the “epicenter” is found in Wayne, White and Hamilton counties, the heart of traditional oil production in the state.

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