After several stumbles, an agreement has been reached on how to regulate “fracking” in Illinois. A House committee could vote on the package Thursday morning.

The oil and natural gas extraction technique known as hydraulic fracturing has been a boon for job creation in places like North Dakota and Pennsylvania.
State legislators want the same in Illinois.
As do oil and gas drillers looking to make a handsome profit.
A coalition of supporters – including certain environmentalists wanting to get the strictest air and water-supply protections as possible – reached an agreement in March. Only for the deal to dissolve.
But now the coalition says it’s resolved those issues.
Tom Wolf heads the Illinois Chamber of Commerce Energy Council.

WOLF: ”And at the end of the day we think we’ve found what I would call the regulatory sweet spot.”

The latest deal gives oil and gas drilling companies tax credits for hiring Illinois residents.
It also addresses fears of some environmentalists that certain forms of hydraulic fracturing might not have been covered by the new rules.
- Amanda Vinicky

http://ilchamber.org/wp-admin/post-new.php

Todd Maisch, the executive vice-president of the Illinois Chamber of Commerce writes that the Illinois Department of Revenue is trying to bypass the state legislature (similar to Obama’s – the Chicago way - bypassing Congress) to enact a delivery tax as a service charge to be paid anytime a delivery is made.

Excerpt:

Legislators in Illinois, and a lot of other states, often debate the merits of a new tax on services.  Differences of opinion on the merits of a service tax can be stark, but there is consensus on one thing: the legislature is the body with Constitutional authority to enact, or not enact, new taxes.

That consensus opinion amongst legislators evidently isn’t shared by the Illinois Department of Revenue (IDOR).  IDOR is pushing a new service tax on deliveries through a rulemaking now before the Joint Committee on Administrative Rules.  The rule would apply sales tax to all separately contracted shipping and transportation.

It’s a tax and clearly beyond the purview of the unelected bureaucracy of the Illinois Revenue Department, but since when do progressives follow the rule of law. Their motto: Never let a good crisis go to waste – in this case – Illinois needs revenue, get it!

Every delivery to a construction site would be taxed for the first time. Consumers would pay not only a delivery charge to the company making the delivery but the delivery tax to the state of Illinois.

This unconstitutional overreach by the Illinois Revenue Department is an effort to find new money for a bankrupt state. This tax will be either directly or indirectly passed on to the consumers. Consumers already pay a sales tax on the item purchased and now a delivery service tax?

If the people of Illinois allow these unelected state bureaucrats to raise our taxes, there will be no limit on their unchecked power and on state taxes in all forms, regardless of who is elected to the General Assembly or who is elected governor!

Illinois businesses are preparing for the Affordable Care Act to go into full effect in 2014, and a leader from the Illinois Chamber of Commerce says some are considering limiting work hours to avoid future healthcare costs. But costs and logistics vary widely across different types of firms.

“It’s one giant puzzle within a puzzle within a puzzle,” said Laura Minzer, the Executive Director of the Health Care Council for the for the Illinois Chamber of Commerce.

She says employers, small and large, are scrambling to figure out which provisions of the federal law will apply to them and their employees. Businesses with under 25 employees may become eligible for tax credits for providing health care, while businesses with over 50 workers could face fines if they don’t provide affordable insurance for all employees working 30 hours or more.

The number of workers receiving employer-sponsored health care has declined steadily in recent years. Now, Minzer says limiting employee hours to under 30 is on the table for some bigger businesses worried about new health care costs.

“The cost of their benefits is not going down and it will not go down with this law,” said Minzer. Indeed, insurance premiums have been steadily rising, and experts expect to see a continued rise nationwide. But cuts to hours may be nothing new: the proportion of workers in part-time jobs has been on the rise since 2007.

One in five adults in Illinois is currently uninsured, and if they can’t get employer insurance, some will become eligible for government subsidies through the “marketplace” (formerly known as the exchange), which is a state and/or federally-run service intended to centralize and streamline shopping for private health insurance. Sliding scale subsidies in the form of tax credits will be available to those making up to four times the federal poverty level. Currently, Illinois has agreed to an insurance marketplace run jointly by Illinois and the federal government, but Minzer says the Chamber of Commerce supports opening a state-run marketplace by 2015.

“Even with all the concerns that we have about affordability, we see value in…the fact that you have a one-stop-shop for health insurance,” said Minzer. “The state is in a better position to administer that.”

States also have the option to expand Medicaid eligibility to adults making up to 138 percent of the federal poverty level, an option that’s already being piloted in Cook County. However, because of a controversial Supreme Court decision, states can opt out of the Medicaid expansion, and Illinois has yet to pass a bill that would expand Medicaid statewide in 2014.

Perhaps surprisingly, the Illinois Chamber of Commerce also supports the Medicaid expansion.

That’s because there’s a benefit for business: employees who receive Medicaid would do so without triggering penalties for their big employers (as opposed to seeking out insurance through the marketplace, which would trigger penalties). Recent reports have found that larger businesses have a financial incentive to support Medicaid expansion and avoid fees for not providing health insurance to low-income employees.

Bills to expand Medicaid and to establish a state-run insurance marketplace are creeping through the Illinois General Assembly, and the federal/state insurance marketplace is slated to open October 1, 2014.

http://www.wbez.org/news/illinois-businesses-work-sort-out-affordable-care-act-107194

The New Albany shale play could add jobs and economic growth to the southern Illinois economy – but only if environmental protestors don’t succeed in banning hydraulic fracturing statewide.

A minimum of approximately 1,000 jobs would be created or supported each year through exploration of the play, which is in its infancy. However, more than 47,000 jobs per year, or more than $9.5 billion of economic impact, could be created or supported if the study’s highest scenario is realized, according to the study conducted by Dr. David G. Loomis, professor of economics at Illinois State University.

Loomis conducted the study for the Illinois Chamber of Commerce Foundation in response to environmental groups’ push for a moratorium on hydraulic fracturing as the Illinois General Assembly seeks to create regulations governing fracking.

The foundation decided it wanted to put some numbers down for the industry’s economic impact if the play becomes productive, Tom Wolf, executive director for the foundation’s energy council, told Rigzone.

The foundation shied away from a study focused on oil because of uncertainty surrounding the amount of oil in the New Albany shale play.

Some companies are looking at the play for its oil potential, Wolfe noted anecdotally. The state has produced oil from conventional resources since 1905.

While the play might not turn out to be productive, particularly with current natural gas prices, crafting a regulatory model on hydraulic fracturing will create a roadmap for the industry so oil and gas companies know where to go.

Wolfe said the foundation is fine with regulating hydraulic fracturing, but wants to see it done in a way that does not stifle economy activity.

“Illinois is in no position to turn its back on the play’s potential and the jobs and tax revenues it would generate,” Wolf commented.

New tax revenue sources are needed as the state continues to grapple with financial challenges, including underfunded state worker pension funds.

A report by the Illinois State Financial Task Force, “Just the Facts: A Primer on Illinois Pensions”, noted that Illinois’ five state pension plans are not sustainable, with an aggregate unfunded pension liability of $83 billion in fiscal year (FY) 2011. The growth of the unfunded pension liability of the plans from $20 billion in FY 1996 to $83 billion is partly due to the “Great Recession”, but also inadequate state funding, lower than expected returns on pension fund assets and changes in actuarial assumptions played a role.
To address underfunding, state contributions to the pension plans have grown dramatically from FY 2008 to FY 2013.

The task force was formed in 2006 by the Civic Committee of The Commercial Club of Chicago in an effort to reform the state’s pension, retiree health care programs and last spring proposed substantial cuts in other areas of Illinois’ budget.

In FY 2008, pension contributions used six percent of general funds revenue; in FY 2013, they will consume 15 percent, even after the recent tax increase.

“The growth in general funds pension contributions from 2008 to 2013 represents $3.5 billion that could have gone to other critical state programs,” according to the report.

The $3.5 billion is larger than the entire general funds appropriation to the Department of Human Services in Illinois Gov. Pat Quinn’s proposed FY 2013 budget, and more than half of the general funds appropriation to the state Board of Education.

“Those extra resources could have ameliorated the deep Medicaid cuts currently under consideration, or funded increases in General State Aid to Illinois’ public schools, or paid the bills owed to financially-strapped social service agencies,” according to the task force report.

Job creation has also been a priority for the state after it suffered consecutive monthly declines in employment in 2008 and 2009. Illinois added over 167,000 private sector jobs since January 2010, when job growth returned.

The state’s unemployment rate declined from 9.7 percent in December 2011 to 8.7 percent in December 2012, but the December 2012 percentage was still higher than the U.S. national unemployment rate of 7.8 percent, according to a Jan. 17 press statement from the Illinois Department of Employment Security (IDES).

The bill that would regulate hydraulic fracturing is under negotiations. Senate Bill 3280, which would include a requirement for companies to disclose the chemicals they use in hydraulic fracturing fluids, has been the subject of intense and serious negotiations among legislators, oil and gas industry representatives and their allies and environmental groups, Wolf commented.

Wolf said he hopes to have a bill in place at the end of the assembly’s five-month session in May that will hit a sweet spot – one in which the environment is protected and provides the industry the certainty it needs to be successful.

New Albany Resource Estimates, Illinois Drilling Activity

The New Albany play is estimated to hold shale gas resources off 11 trillion cubic feet (Tcf), and is the fourth largest play of the U.S. Northeast region, according to a 2011 estimate by the U.S. Energy Information Administration (EIA).

The New Albany shale play formation covers 60,000 square miles across Illinois, Indiana and Kentucky and lies at a depth ranging from 600 feet to 5,000 feet. The play may hold oil resources as well, but it is too early to give an estimate of its size or economic impact, said Loomis.

Approximately 155,000 oil, gas and injection wells have been drilled in Illinois since exploration first began in 1853, according to the Illinois Department of Natural Resources website. The state’s oil production peaked between 1955 and 1963 with average yearly production of 80 million barrels. Currently, Illinois’ yearly production is approximately 10 to 12 million barrels per year.

Most oil production occurs in the southern portion of the state in the Illinois Basin, a geological structure that also covers western Kentucky and western Indiana, according to the Illinois Department of Natural Resources. The majority of wells in the state are stripper wells with a daily production of 1.5 barrels per day.

Study Examines Total Impact of Direct, Indirect and Induced Employment Impact

In the study, Loomis examined the total impact on direct, indirect and induced impact on employment under three different scenarios:

Loomis noted that the high scenario is similar to historical employment impacts of shale gas in Arkansas, Pennsylvania, Louisiana and Texas’ Eagle Ford play. He points out that several national studies of the economic impact of shale gas, including the October 2012 report by IHS Global Insight, which reported the total number of direct jobs generated by shale gas activity stood at 187,360 in 2012 and would rise to 436,773 jobs by 2035.

“In summary, the number of jobs coming from shale gas plays is large and is expected to get much larger in the coming years,” said Loomis. “Many earlier studies have updated their estimates which proved to be too low in the early years.”

Besides oil and gas drilling, the sectors with the largest employment impacts in the low, medium and high scenarios in order of impact are:

• Food services
• Private hospitals
• Real estate establishments
• Wholesale trade businesses
• Health practitioners
• Architects and engineers

The local labor impacts under the three local content assumptions, which include wages and benefits, is estimated to range from $53.8 million to $484.6 million.

No exploratory drilling had taken place in the New Albany play in Illinois as of third quarter 2012.

“Much more will be known about the potential for future drilling after the first test sites are completed and analyzed,” according to the report.

New Albany, N.Y. Marcellus, Monterey All Have Huge Production Potential

Breitling Oil & Gas CEO Chris Faulkner told Rigzone that the company has accumulated 10,000 acres in the New Albany shale play, where the company will start shooting seismic soon, with plans to drill later this year or in 2014. Faulkner said that the New Albany play offers a mix of oil and associated natural gas, similar to the Bakken shale play.

In southern Illinois, Faulkner is seeing local residents battling over whether to allow hydraulic fracturing of shale. Opponents of shale fracking include NIMBYs (Not In My Back Yard) as well as farmers who may not need the money. But their neighbors whose farms are not doing as well may want shale exploration and production on their land.

The New Albany Shale play in Illinois, along with the Marcellus shale play in New York and the Monterey play in California, are the three areas in the United States with huge oil and gas production potential, Breitling commented.

But these same three areas also share another characteristic: the existence of a tremendous amount of anti-fracking activity. The move by many states to update their oil and gas regulations to account for new technology as well as how to manage fluid disposal and water treatment presents an Achilles heel for environmentalists.

“It’s black or white with environmentalists. They don’t want fracking, whether there’s regulations or not,” commented Faulkner, who said he found the opposition troubling due to the huge economic opportunity for jobs and state and federal tax revenues associated with these plays.

“The trouble with environmentalists is they are against every form of energy – wind power because it kills birds, solar because of they don’t want the chemicals used in manufacturing photovoltaic components, nuclear because of a possible meltdown, and coal because it is dirty.”

Faulkner believes New York will set some standards for hydraulic fracturing regulations that only Illinois and California will adopt. While a moratorium on hydraulic fracturing might be implemented around New York’s watershed and other regulations be put in place, he doesn’t see the state banning the practice altogether.

He also doesn’t see the U.S. federal government overstepping the states’ authority in regulating fracking on private or state owned lands, even though federal guidelines are being crafted by the U.S. Environmental Protection Agency.

Groups Seek to Impose Hydraulic Fracturing Ban in Illinois

Concerns over hydraulic fracturing that have sprung up in other parts of the country –including heavy traffic on roads and concerns over fracking’s impact on local water supplies – also have cropped up in Illinois. Southern Illinoisans Against Fracturing Our Environment (SAFE) launched a website earlier this year with the intent of banning hydraulic fracturing in southern Illinois.

The Carbondale, Illinois-based group in a Jan. 15 letter to Illinois county officials asked how local government units in the state would decide to address hydraulic fracturing as oil and gas companies lease mineral rights across Southern Illinois to explore the New Albany Shale. SAFE urged county officials to sign a letter supporting a moratorium on high-volume horizontal hydraulic fracturing in the state “until it can be shown that this practice will be done without harming the health, future economic viability, environment, or quality of life of residents of Illinois.”

“Currently, in Springfield, politicians are working without public oversight on a bill to ‘regulate’ fracking in Illinois,” SAFE commented in the letter. “Regulation has proven meaningless in other states in regard to providing public and environmental safety.”

SAFE noted that governments cannot regulate the amount of water used in fracking and its impact on drinking water supplies.

“Secondly, the state does not have the money, the manpower, nor a system in place to monitor, regulate and enforce an industry that is so dangerous and complicated.”

Another group, Food & Water Watch, has been seeking to impose moratoriums on high-volume horizontal hydraulic fracturing in U.S. states, including Illinois. The national group participated in local campaigns in Anna and Carbondale to bank hydraulic fracturing.

The national group has also been targeting 2016 presidential hopefuls Gov. Mario Cuomo of New York, New Jersey Governor Chris Christie, Governor Martin O’Malley of Maryland, and Colorado Gov. John Hickenlooper in their efforts to ban fracking, saying any moves by the four governors to support hydraulic fracturing “will come back to haunt them in 2016″.

The Sierra Club and Natural Resources Defense Council are also among groups seeking to ban hydraulic fracturing in Illinois and around the country.

Late last year, Alto Pass became the first Illinois municipality to specifically ban hydraulic fracturing within city limits. The town of Carlyle, Illinois, in January 2012 banned all drilling or operations of oil and gas wells within its city limits, including hydraulic fracturing. Other Illinois cities and counties have also passed or called for bans on hydraulic fracturing.

While environmentalists have successfully pushed counties that have not traditionally had oil and gas development to pass moratorium, they want to go a step further and see a statewide moratorium passed.

“In fact, they even say they want a ban in their mission. So you know they’re not pushing a moratorium to ‘allow more time to study,’” said Taylor Smith, policy analyst with The Heartland Institute, in an email to Rigzone.

“I think the controversy over hydraulic fracturing, and the fact that it can now be done horizontally and at high-volume does play a role in the opposition,” said Smith.

“But I think a bigger reason is the overall expansion that will happen if regulations are finalized and signed into law, thus lifting the de facto moratorium in place, since no company will invest or drill if they don’t know what the rules will be. The move would allow oil and gas development to take place in both areas that haven’t traditionally had development, and areas that have had it, but now possibly to a greater degree,” Smith commented.

Between 30,000 and 50,000 wells have been hydraulically fractured in Illinois since the 1950s, the Interstate Oil & Gas Compact Commission (IOGCC) reported on its website. None of these wells caused any harm to groundwater, IOGCC added.

http://www.rigzone.com/news/oil_gas/a/124235/New_Albany_Shale_Could_Create_Jobs_Economic_Growth_in_Illinois

By BRIAN BRUEGGEMANN — News-Democrat

Illinois House members passed the Illinois House Speaker’s plan to reform state pensions Thursday. The plan raises the retirement age of workers under 45, calls for higher employee pension contributions, and limits the cost of living adjustment retirees may collect. The pension system is currently underfunded by 97 billion dollars. Madigan’s plan now heads back to the Illinois Senate. Meantime, the controversial plan received the backing of the governor and the Illinois Chamber of Commerce.

http://centralillinoisproud.com/fulltext?nxd_id=322102

A group of House Republicans are calling for a vote on a bi-partisan fracing agreement currently stuck in the Rules Committee.

Enlarge image

graphic representation of fracing treatment used in a horizontal well to extract shale gas

House Bill 2615 establishes the permit process, property owner notification, defines prevention standards and public input timelines. State Representative Mike Bost of Murphysboro Tuesday joined other GOP lawmakers in calling for the measure to be released from the Rules Committee for prompt consideration by the full House. He says expanding the fracing industry in Illinois will create more jobs and grow the economy.

According to an Illinois Chamber Foundation study, new natural gas production in Illinois could create anywhere from one to 47,000 jobs.  The study concluded fracing in Illinois, under modest assumptions, would be a significant creator of new jobs translating into billions of dollars in economic impact for the state.

Those opposed to fracing cite environmental concerns including the impact on ground water and the availability of fresh water in the quantities needed for high volume hydraulic fracturing which can use millions of gallons of water during a single fracturing process.  Most of the Hydraulic fracturing is expected to take place in a 17-county area in the New Albany Shale area of southern and southeastern Illinois.  The Mt. Vernon based  Illinois Oil and Gas Association says more than 500,000 acres have already been leased in the region with more than $200,000,000 invested in those mineral rights.

The Illinois chapter of the Sierra Club says it’s already legal in Illinois and without regulation. That’s why it agreed to a deal with business leaders on legislation it says would strictly control fracing. Others – like Carbondale Attorney Rich Whitney with the group Southern Illinoisans Against Fracturing Our Environment – say that was a sell-out: “The problems is so much of the focus went to that and trying to compromise with the industry people, they gave up half a loaf before they even started the fight… and it’s our view you have to start by demanding the whole loaf. Right? If you fight for the whole loaf, you may end up with half a loaf. But if you start out fighting for half a loaf, you end up with crumbs.”

Whitney says problems with the proposed regulations range from allowing fracing too close to lakes and water wells to stripping municipalities of control over the drilling. Whitney says Illinois should put a moratorium on fracking, so there’s time to study the potential consequences.

http://news.wsiu.org/post/house-republicans-call-vote-fracing-legislation