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Chamber: IL missing out on $9 billion fracking windfall

Thu, 13 Dec 2012 20:38:19 CST
By: Willis Kern

Chamber: IL missing out on $9 billion fracking windfall The controversial method of extracting natural gas from the earth known as "fracking" is getting a boost from the Illinois Chamber of Commerce. The business group is releasing a study it says points to thousands of jobs and billions of dollars in economic development if the state were to okay the process. WGLT's Willis Kern reports.


"I drank water from a fracking well! Look at me, I look like hell!"

A protester was dressed as a zombie as she wandered the streets of Normal's business district just before Halloween. The advanced process of hydraulic fracturing, or fracking used to extract natural gas from what promoters call "gas rich shale" is now entrenched as a polarizing issue. Environmentalists and others say the process contaminates wells, drains critically-important water supplies and is a good example of business greed over the good of the earth. But the Illinois Chamber of Commerce wants to jump start efforts to regulate the industry. The business group is releasing a study claiming Illinois is missing out on at least 47,000 jobs and $9 billion in economic activity because the state can't agree on regulations for fracking. Illinois State University Economics Professor David Loomis authored the study.

"So we assume there is two years of exploration, then they would hopefully find formations of shale gas there and then move into production mode for the next three years."

That's under what Loomis calls the best case scenario. He says a less robust effort would involve 400 exploratory wells only with no production. That would mean 10,337 jobs. The worst case scenario has only 200 exploratory wells creating 1,034 jobs and a little more than $200 million in economic development.

Multipliers for employment projections

Loomis says he used a multiplier model in determining his job projections. The model took into account direct effects from well construction, but also indirect and induced effects.
"So an indirect effect would be associated with, say, supply chain impacts. Pipe that's sourced from within in Illinois. Then an induced impact would be for those workers that have newly-created jobs. They have income and they spend income at the local restaurants, the local grocery store and so forth."

Fracking opponents say economic benefits are grossly overstated. Bill Rau is with Illinois People's Action, a faith-based group which led that protest in Normal weeks ago. He also criticizes the industry for contaminating and wasting water.

"It takes 3 million gallons of water to frack one well one time. A gas well can be fracked up to ten times. That's 30 million gallons of water. Where is all this water going to come from?"

"The environmental groups are being disingenuous."

Tom Wolf the the Executive Director of the Illinois Chamber of Commerce's Energy Council.

"They're worried that there'll be some companies that'll go out and do this on their own without a permit. Well, companies don't do that now. You need a permit to drill any kind of well in Illinois."

Regulatory efforts stall

The Illinois Department of Natural Resources says the only permit issued as of now is in Wayne County in southern Illinois. That pending application appears to be for low-volume or low pressure, horizontal fracking. A regulatory measure moved through the Illinois Senate last spring that would have jump-started the fracking process in the state, but it stalled at the end of session. And, a last-minute proposal for a moratorium on the industry to allow for more environmental impact studies also died.

But Wolf says he's optimistic. He says lawmakers only have to look at other states that have moved forward with fracking to see Illinois is missing out.

"The last time I checked, Illinois is not booming with extra jobs and money that it can just turn away these opportunities. I believe that the governor, the speaker, the senate president and the other folks in the legislature will see this as an opportunity, one that you can protect the environment and look at an industry and see if it can create jobs. We have an industry here that's not looking for a hand out, but looking for a regulatory road map."

Alternative energy advocate

The study written by ISU Economics Professor David Loomis points to Arkansas, Pennsylvania, Texas and Louisiana as having a high level of historical employment impacts thanks to shale gas extraction. Loomis, who was paid for his work by the chamber, says he has no conflict of interest that could muddy up his report. That's significant because a recent University of Texas study concluding hydraulic fracturing is safe was discredited for being unscientifically sound and tainted by the fact the author sat on the board of a natural gas drilling company and received compensation in excess of a million and a half dollars. The head of the institute that released the study was also forced to resign.

In fact, the State Chamber may have sought a preemptive strike against such criticism by employing Loomis, who's widely seen as a backer of alternative energy sources. He's headed up Illinois' Wind Working Group, a project of ISU's Center for Renewable Energy which he also directs. Loomis backed wind energy in its infancy, and has studied the solar energy economy and analyzed energy supply chains and electric transmission lines. He says natural gas extraction from shale can complement domestic energy independence efforts.

"I like the idea of doing the 'all of the above' as we press forward and explore these different resources."

Until now, lawmakers and others debating fracking had no hard numbers to associate with the industry's potential presence in Illinois, only figures from other states. Loomis says that's no longer the case. In fact, he says $9 billion in economic development may turn out to be a conservative estimate. State Chamber of Commerce officials are hoping he's right about that.


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