Illinois contains the largely untapped New Albany Shale, an approximately 60,000-square mile shale formation located partially in Southeastern Illinois within the Illinois Basin.1 The U.S. Energy Information Administration has estimated that the New Albany shale contains approximately 11 trillion cubic feet of recoverable natural gas and 189 million barrels of oil, but these estimates are outdated and are likely to be revised upward in the future.2
Statutory and Regulatory Framework
The Illinois Department of Natural Resources (“DNR”) regulates the oil and gas industry and has primary authority to regulate hydraulic fracturing activities in the State, with the assistance of the Illinois State Geological Survey, Illinois State Water Survey, State Fire Marshal, and the Illinois Environmental Protection Agency.3
In June 2013, Illinois adopted the Hydraulic Fracturing Regulatory Act, which applies to all high volume hydraulic fracturing operations that use more than 80,000 gallons of hydraulic fracturing fluid per stage or more than 300,000 gallons of hydraulic fracturing fluid total on wells drilled at least 100 feet horizontally.4 The Act requires baseline groundwater testing before drilling,5 the use of tanks rather than pits for wastewater storage,6 and chemical disclosure reports both before and subsequent to the performance of fracturing activities.7 The Illinois Oil and Gas Act also applies to hydraulic fracturing activities, supplying the requirements for, among other things, permitting, drilling, operating, and plugging and abandonment of wells in the State.8
In November 2014, Illinois adopted regulations implementing the Hydraulic Fracturing Regulatory Act.9 At least one lawsuit was filed challenging the regulations, alleging that the DNR had failed to follow proper procedures under the State’s Administrative Procedure Act when it approved the regulations.10 The plaintiffs in this suit were denied a preliminary injunction by both the state trial and appellate courts,11 but have continued to litigate the issue.12
Notably, the Illinois regulations implementing the Illinois Oil and Gas Act include provisions aimed at controlling instances of induced seismicity.13 Specifically, these regulations apply to “all Class II UIC disposal wells that inject any Class II fluids or hydraulic fracturing flowback from a high volume horizontal hydraulic fracturing operation permitted by the [DNR] under the Hydraulic Fracturing Regulatory Act.”14 The regulations generally implement a “traffic light” system, whereby the DNR notifies Class II UIC well permittees within a certain radius of the epicenter of seismic activity of an alert; as the magnitude of an earthquake increases, the radius in which Class II UIC well permittees are notified expands.15 These notifications are generally referred to as “green light,” “yellow light,” and “red light” alerts, depending on the magnitude of earthquake.16 Where a particular well has been suspected of having triggered induced seismicity, the regulations give the DNR the power to require the Class II UIC well permittee to perform seismic monitoring.17 Moreover, the DNR may issue cessation orders under a variety of circumstances, including to all wells that receive a red light alert and are within 6 miles of the epicenter of the earthquake.18 Wells that receive a cessation order must meet with the DNR and the Illinois State Geological Survey and provide well data for the last six months to facilitate a settlement agreement that includes induced seismicity mitigation measures.19
Recent News and Developments
Due to the low prices of oil and natural gas, Illinois has not seen recent interest in drilling, and there has not been any demand in the state for hydraulic fracturing permits.20 It has also been suggested that state’s regulatory regime is so “‘onerous’” that it has discouraged permit applications.
Last updated September 2016.