By Susan Odum, Extension Educator, Community Economic Development, University of Illinois Extension
If you have been keeping up with current events, you most likely are aware that energy company representatives are researching land records at our local courthouses and working to secure oil and gas leases from mineral rights owners throughout southeastern Illinois.
So what does this mean for the future of Southern Illinois? If we only had a crystal ball, all the speculation could end.
Mineral rights owners would know with certainty whether or not to lease their land, and under what terms, and the fears of those opposed to the process could perhaps be put to rest.
Unfortunately, we are still in a state of uncertainty. Despite the uncertainty, efforts are currently underway to research the topic as it relates to Illinois and also to “take lessons” from representatives from other Midwestern states where massive fracking is currently underway.
As outlined in a May 3, 2012 Illinois Public Media News interview with Sean Powers, David Morse with the Illinois State Geological Survey (ISGS) addressed the issue of fracking, which has led to an economic boom in certain parts of the country over the last 10 years as companies have paid huge lease fees to mineral owners to get at these hydrocarbons.
Morse, in his work with the ISGS, has been looking at the New Albany Shale for the last 10 years, and suggests reasons why the boom hasn’t started in Illinois including: low porosity; low permeability; and fairly low gas content. These factors suggest that the New Albany Shale in Southern Illinois is not as attractive a target as in other areas. Morse continues by saying that the New Albany Shale is also shallower and geologists find that the deeper formations with more pressure contain more gas.
In the interview, Morse also explains that while 10,000 – 30,000 vertical wells have been fracked in the last 50 years here in Illinois, we don’t currently have any large scale massive fracks underway, like in Pennsylvania.
The difference as Morse explains is the quantity of water and sand utilized during the fracking process. Current fracturing operations here in Illinois may utilize 50,000 to 100,000 gallons of water, in contrast with the massive fracks taking place in Pennsylvania that are utilizing perhaps 5 million gallons of water.
When asked by Powers if he feels the wells in the southern part of the state will be productive, Morse responded by saying “some operators have drilled vertical holes and are doing evaluations, but we will have to see.”
In an effort to “take lessons” from other states, the University of Illinois Extension recently partnered with Illinois Farm Bureaus throughout Southern Illinois to host educational workshops entitled: Leasing Farmland for Oil and Gas Production presented by Clif Little and Chris Penrose with Ohio State University Extension.
Little and Penrose have many years of experience in the field and are recognized nationally for their knowledge of leases and working around large oil booms.
During the 2 1/2 hour workshops hosted in locations throughout southeastern Illinois in May and early August, participants were provided with information to help them better understand: the drilling process; basic lease considerations; and the potential long-term economic impacts fracking may have on the region.
During the workshops, Penrose and Little emphasized that while leasing is a personal decision for each mineral rights owner, it is imperative to seek out the advice of an attorney in which you have confidence before signing anything.
Penrose and Little further emphasized the importance of understanding every word of the lease you sign and not to make assumptions as to its content, so you fully understand what you are agreeing to.
Questions for consideration as outlined during their presentations included: does the lease allow for the development of injection wells, storage tanks, roadways, and/or pipelines; if agreed to, where will the wells, tanks, roadways, and/or pipelines be located; are royalties calculated on the gross or the net; what triggers the production clause in the lease; does the lease provide for warranty of title; how long will the production pad be on the property before the property is reclaimed; does the lease grant access to water on the property; what happens at the end of the primary term of the lease; is the lease assignable; does the lease allow for review of production records; and how will arbitration be handled?
Given the uncertainty that still surrounds this issue, Southern Region Community Economic Development Educator Susan Odum emphasizes that the best advice available to date is to look before you lease and continue to seek out further education on the issue before making a decision that may have long-term economic impacts for you as a land owner and for the region in which you live.