American Oil and Gas Reporter - January 2016 - 118

ILLINOIS OIL & GAS
ASSOCIATION
BRYAN DICUS
CONSULTING PETROLEUM ENGINEER
BJ DICUS & ASSOCIATES LLC
CARMI, IL.

FROM THE PRESIDENT
It was a boom that never happened.
Thanks to more than five years of epicscale political foot-dragging, Illinois failed
to prove, much less realize, any economic
benefit from its own potential resource
play. It is a long and sad story.
Beginning in 2010, a surge of interest
and corresponding lease activity began
to shake the Illinois oil and gas industry.
New jobs, personal income growth and
much needed downstate infrastructure
improvements seemed right around the
corner. One would think that Illinois lawmakers rushed to expedite this opportunity
to capitalize on potential new tax revenues.
After all, the state was plummeting into
fiscal despair. But no, after all, this is
Illinois.

It was not until June 2013 that a bill
regulating horizontal high volume hydraulic fracturing was signed into law by
then-Governor Pat Quinn. Although it
was accurately touted as the nation's
toughest standard, the majority of the resource players deemed it workable. Even
so, they did not expect the Quinn administration would not finalize those rules
for more than 500 days. As it turns out,
regulatory uncertainty is fatal.
Moreover, an oil price correction was
not exactly in the plans, but as it started
taking shape, few thought it would be a
huge problem. From the onset of the
lease activity until the final rules' approval,
the Illinois Basin's posted price for a
barrel of oil fell from nearly $100 to

118 THE AMERICAN OIL & GAS REPORTER

about $70 in November 2014.
A new governor was elected and took
office in January 2015. Meanwhile, oil
prices continued to drop and even dipped
below $40 a barrel. The new governor,
Bruce Rauner, strongly supports our industry, but can do little to bring back the
hopes for a boom that could have been.
Opportunities Remain
Illinois' fiscal condition continues to
deteriorate. Oil and gas development-
both conventional and unconventional-
can play a meaningful role in helping
Illinois climb out of this perpetual budget
crisis, but unfortunately, our industry finds
itself in the clutches of a deep downturn.
Our ready and able industry is always
ready to do its part, but until prices rebound, the Illinois Oil & Gas Association
will take what advantage it can. With a
new gubernatorial administration that recognizes our industry's importance, IOGA
has the opportunity to refocus on the
concerns and needs of our state's mainstay
conventional operators.
Policies from the Illinois Department
of Natural Resources need to support existing production and encourage ongoing
oil and gas development. This offers us
an opportunity to address needed improvements with our regulators in Springfield, Il., as well as to teach the public
about oil and gas. We have a great story
to tell.
Once again, the Oil & Gas Advisory
Board was reactivated and was better utilized, as designed, to equitably advance
our industry's regulatory issues. Currently,
the group is working with the Office of
Oil & Gas Resource Management to finally address a long grocery list of procedure, rule and regulation changes and
amendments.
We have addressed what many perceive
as a misapplication of our state's regulating
authority, which was left over from the
previous administration. Much of that
overreach saw the department hit operators
with civil penalties for violations. Many
of those policies and associated penalties
have been revisited and now better reflect
the law's true spirit and intent.
Meanwhile, in the past, anyone who
sought a unitization, integration or special
drilling unit hearing faced a crippled system. The department had not acted on
any such petition for more than two years,
despite the matter's extreme importance
to conventional operators as well as potential resource players. The department
now has 10 days to act on applications.
In 2015, we saw much needed progress
and hearings now are being addressed
with regularity. It is expected that this
positive trend will continue its improve-

American Oil and Gas Reporter - January 2016

Table of Contents for the Digital Edition of American Oil and Gas Reporter - January 2016