On June 17, 2013, the Illinois Assembly enacted the Hydraulic Fracturing Regulatory Act. See Public Act 098-0022. This Act empowered the Illinois Department of Natural Resources (“Department”) to regulate hydraulic fracturing in throughout the State of Illinois. This blog entry summarizes key aspects of this newly enacted law.
Hydraulic fracturing or “fracking” is a process used to exploit oil and gas formations previously deemed either too difficult to reach or unproductive due to greatly diminished output. Fracking is the process of pumping, under high pressure, engineered fluids containing chemical and natural additives into the natural gas or oil well. This process creates and holds open fractures in the oil or natural gas formation. These fractures, by increasing the exposed surface area of the rock in the formation, allow oil and gas to flow up through the well. Thus, fracking allows the extraction of oil or natural gas from previously unavailable sources, including tight sands, shale gas, coal bed methane (CBM), and other unconventional shale formations.
This Act applies to all wells where high volume horizontal hydraulic fracturing operations are planned, have occurred, or are occurring in the State of Illinois. The provisions of the Act are in addition to the requirements set forth in the Illinois Oil and Gas Act. However, the Act expressly makes clear that if there is a conflict between it and the Illinois Oil and Gas Act, that the Hydraulic Fracturing Regulatory Act supersedes the provisions of the Illinois Oil and Gas Act.
Setbacks and Prohibitions
The Act sets forth certain setbacks and prohibitions on hydraulic fracturing activities. Under the Act, no well site where high volume horizontal hydraulic fracturing operations are proposed, planned or occurring may be located: (i) within 500 feet of any residence or place of worship unless the owner of the residence or governing body of the place of worship expressly agrees in writing to a closer well location; (ii) within 500 feet from any school, hospital, or licensed nursing home facility; (iii) within 500 feet from any existing water well or developed spring used for human or animal consumption unless the owner of the well expressly agrees in writing to a closer well location; (iv) within 300 feet from any perennial spring or from the high water mark of any river, natural or artificial lake, pond or reservoir; (v) within 750 feet from any nature preserve or any site located on the Register of Land and Water Reserves; or (vi) within 1,500 feet from any surface water or groundwater intake of a public drinking water supply. The Act has very specific distance restrictions with respect to well placement. Additionally, if a water source identified in subparagraph (iv) above, is wholly contained on an owner’s property, then the owner may expressly agree, in writing to a closer well location.
The Act specifically prohibits the injection or discharge of hydraulic fracturing fluid, produced water, BTEX, diesel, or petroleum distillates into fresh water, as well a prohibits the high volume horizontal hydraulic fracturing operations by knowingly or recklessly injecting diesel fuel.
The Act also contains permitting requirements for high volume horizontal hydraulic fracturing operations. Namely, persons may not drill, deepen or convert a horizontal well where high volume horizontal fracturing operations are planned or occurring or convert a vertical well into a horizontal well without a permit issued by the Illinois Department of Natural Resources and authorizations required by the Illinois Oil and Gas Act. Furthermore, if multiple wells are to be stimulated using high volume horizontal hydraulic fracturing operations from a single well site, then a separate permit is required for each well at the site. The Act contains public comment periods applicable to each permit. The public comment period begins seven days after receipt by the Department and last thirty days.
Additionally, when a permit application is submitted to conduct high volume horizontal hydraulic fracturing operations for the first time at a particular well site, any person having an interest may file written objections to the permit and request a public hearing. This hearing must occur during the public comment period. Such hearings must be conducted in accordance with the contested case requirements of the Illinois Administrative Procedure Act. Finally, the Department’s decision to grant or deny a permit is considered a final administrative decision subject to judicial review under the Administrative Review Law.
Well Preparation, Construction and Drilling Requirements
The Act also contains specific well preparation, construction and drilling requirements. The Act also sets forth certain operational requirements, including requirements related to integrity tests and monitoring, fluid and waste management, and emissions controls.
Water Quality Monitoring Requirements
The Act also contains water quality monitoring requirements. Sampling related to water quality monitoring must analyze for PH, total dissolved solids, dissolved methane, dissolved propane, dissolved ethane, alkalinity, specific conductance, chloride, sulfate, arsenic, barium, calcium, chromium, iron, magnesium, selenium, cadmium, lead, manganese, mercury, silver, BTEX, and gross alpha and beta particles to test for the presence of any naturally occurring radioactive materials.
Rebuttable Presumption of Pollution or Diminution
Also, of significance is the Act’s inclusion of a presumption of pollution or diminution. This provision states that there is a rebuttable presumption for purposes of evidence and liability regarding claims of alleged pollution or diminution of a water sources as a result of hydraulic fracturing operations. The Act sets forth specific defenses that may rebut this presumption. These defenses are: (i) the water source is not located within 1, 500 feet of the well site; (ii) the pollution or diminution occurred prior to hydraulic fracturing operations or more than 30 months after completion of such activities; or (iii) the pollution or diminution occurred from a cause other than hydraulic fracturing operations.
Plugging and Restoration
The owner of wells used for hydraulic fracturing operations must also comply with plugging and restoration requirements, which must be undertaken pursuant to the Illinois Oil and Gas Act. Additionally, the Act requires to be plugged all previously unplugged well bores within 750 feet of any part of the horizontal well bore that penetrated within 400 vertical feet of the formation that will be stimulated as part of the high volume horizontal hydraulic fracturing operations. Restoration of lands used to a condition as closely approximating the pre-drilling conditions that existed before the land was disturbed for any stage of site preparation activities, drilling, and high volume horizontal hydraulic fracturing operations. Restoration shall be commenced within 6 months of completion of the well site and completed within 12 months. Restoration shall include repair of tile lines, repair of fences and barriers, mitigation of soil compaction and rutting, application of fertilizer or lime to restore the fertility of disturbed soil, and repair of soil conservation practices such as terraces and grassed waterways.
The Act provides that the Department will adopt rules for seismic activity attributable to hydraulic fracturing operations. The Department will adopt such rules in coordination with the Illinois State Geological Survey. The Act does mandate that the rules developed employ a “traffic light” system allowing for low levels of seismicity while including additional monitoring and mitigation requirements when seismic events are of sufficient intensity to result in a concern for public health and safety.
Illinois joins five other Midwest states (North Dakota, South Dakota, Kansas, Nebraska and Michigan) to enact or propose legislation aimed at regulating hydraulic fracturing operations. Advances in horizontal drilling deep underground has enabled the United States to become the world’s largest producer of natural gas (and oil), surpassing Saudi Arabia and Russia.
In fact, according to the Energy Information Association, in 2015, OPEC countries (excluding Iran) will earn $375 billion less in net oil revenues than they did just two years ago. The dramatic change is due in large part to the plummeting price of crude oil. Oil prices are sliding largely as a result of booming production from U.S. shale plays. Domestic oil output eclipsed 9.1 million barrels per day this month—the most oil we’ve pumped in almost three decades and a 78 percent increase since January 2008. The ability to extract oil and natural gas from dense shale rock formations is a recent phenomenon made possible by innovations in horizontal drilling and hydraulic fracturing.
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