Deep Diving into the Oil Economics of Illinois
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Illinois is at the epicenter of all discussions about oil shale and fracking in the US. It could be surprising for some that Illinois happens to be the talk of the nation in terms of being the next huge horizontal oil playground in America.
Although Texas and North Dakota continue to be the biggest oil producing states in the country, Illinois is not far behind, and already has some monumental numbers to justify its claims to be part of the oil economy buzz.
Illinois is at the epicenter of all discussions about oil shale and fracking in the US. It could be surprising for some that Illinois happens to be the talk of the nation in terms of being the next huge horizontal oil playground in America.
Although Texas and North Dakota continue to be the biggest oil producing states in the country, Illinois is not far behind, and already has some monumental numbers to justify its claims to be part of the oil economy buzz.
Table of Contents
New Albany Oil Shale has Serious Potential
Formed almost 350 million years ago in a shallow sea across the eastern parts of the US, New Albany Shale is of Devonian age. In terms of chronology, the New Albany Shale is not too different from the big four oil resource plays in the US: The Anadarko Basin / Woodford Shale, The Williston Basin / Bakken Shale, The Michigan Basin / Antrim Shale, and The Appalachian Basin / Marcellus Shale.
The big question then – if the other four source rocks are good enough to have pumped out oil for so many years, why can’t the New Albany Shale be a significant horizontal resource play?
A study conducted back in 2002 regarded the New Albany Shale deep enough to generate as many as 300bn barrels of oil! America will benefit even more than before by producing just a small percentage of this potential. Illinois has produced four billion barrels of oil already, to go with four trillion cubic feet of natural gas. No wonder Illinois’ oil patch has been the topic of conversation, indicating an economic future that will help America rely less on Middle Eastern oil and create jobs.
Most of the production has resulted from 140,000 wells dug in the basin. More importantly, 32,000 of these wells are still in good shape to provide a decent amount of black gold.
Economic Impact of Fracking
Pennsylvania has already seen a fair share of economic growth riding on the fracking boom. Illinois expects to experience a similar boom when it passes a fracking bill and provides the perfect operational, legal, and business environment for oil giants to undertake operations in the state. The economically depressed parts of the state will see several economic opportunities. Depending on the number of wells drilled and their locations, as many as 40,000+ jobs are projected.
These jobs can pay $60,000 or more and get people off the unemployment line. Not everyone can go to college and these can be high paying jobs for high school graduates. Well, with a Republican governor good things can happen. Illinois has been losing businesses to Indiana and Wisconsin, both run by pro-business Republican governors. Illinois is losing this race and needs to catch up. With fracking, Illinois can gain some serious ground.
Smooth Transition
California saw some serious roadblocks to the fracking bill in the state because California has a far left-leaning Democratic governor who is perfectly OK with running this state into the Pacific Ocean.
Illinois is not likely to face the same concerns, which makes fracking appear as a vital part of the near economic future of the state. Moreover, environmentalists are more inclined to align themselves with the economic interests served by fracking in Illinois. Rather than coming across as a threat to the environment, regulated fracking expects to bring some structure to how fracking would take place in an organized manner in the state.
