The Leaflet: Bans and Regulations: Two Sides of the Same Coin

Published November 17, 2017

Officially, Vermont, New York, and Maryland, in that order, are the only states to have passed legislation banning hydraulic fracturing, also known as “fracking.” Illinois’ 2013 Hydraulic Fracturing Regulatory Act (HFRA), which grants permits allowing for high-volume hydraulic fracturing in the state, has ironically acted as a de facto ban – so much so that the first permit to be granted was two months ago, in September, four years after HFRA went into effect.

Wichita, Kansas-based Woolsey Operating Co. was slated to be the first oil and natural gas company to begin its fracking operations in the New Albany Shale formation, located in southeastern Illinois. But alas, not even two months later, Woolsey requested the state’s Office of Oil and Gas Resource Management withdraw its injection well permit, explaining the company would consider reapplying for a permit in the future once “it is economical to pursue the projects contemplated …”

Mark Sooter, Woolsey’s vice president for business development, revealed to Natural Gas Intel’s Shale Daily the primary reason for his company’s quick suspension of fracking production. “The process we have gone through to receive a permit was burdensome, time consuming and costly due to the current rules and regulations of the State of Illinois … Also, the drilling and completion requirements under the HFRA are stringent, which will make future development costs of the New Albany Shale excessive and the obligations for compliance on our staff demanding.”

HFRA was a compromise passed as an alternative to a drilling moratorium and to appease environmentalists who believe fracking induces earthquakes and pollutes groundwater. Regarding the former criticism, researchers at the University of Alberta released a study in June 2017 in which they found no correlation between increased hydrocarbon production (mostly due to large-scale hydraulic fracturing) and increased seismicity rates from 1965 through 2014 in North Dakota, Ohio, Pennsylvania, Texas, and West Virginia, as well as the Canadian provinces of Alberta, British Columbia, and Saskatchewan.

Policy Analyst Timothy Benson wrote in a new Research & Commentary that evidence of groundwater pollution has been scant: “The existing peer-reviewed evidence shows hydraulic fracturing processes do not pose a systemic impact on groundwater. Since 2010, at least 19 of these studies have been produced. These studies are reinforced by the Environmental Protection Agency’s own $29-million, six-year study of fracking’s impact on groundwater sources, which failed to find any systemic impact caused by the 110,000 oil and natural gas wells that have been in use across the country since 2011.”

The economic costs of regulations and bans cannot be understated. In 2012, the Illinois Chamber of Commerce estimated fracking in the New Albany Shale could create $9.5 billion of investment and 47,000 jobs. In a 2016 study, researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology estimate the average household in nine U.S. shale basins has benefited up to $1,900 per year and enjoyed a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

There still remains no fracking in the Land of Lincoln. Lawmakers in other states should consider scrapping or revising their fracking-permitting bills if they include harsh rules and strict regulations that discourage production. Moratoriums on legitimate business activity are typically not based on scientific literature, economic consequences, or personal liberties. Illinois should revisit its de facto moratorium on hydraulic fracturing.


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From Our Free-Market Friends
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