Leasing frenzy suggests two Illinois counties on verge of oil boom

On February 22, 2012 — No comments

Could Southern Illinois be on the verge of another oil boom? If the hundreds of millions of dollars being spent to lease enormous tracts of land in Wayne and Hamilton counties is any indication, it’s just around the corner.

In the past several weeks, land agents from several publicly traded oil companies have swarmed into courthouses at Fairfield and McLeansboro to research land titles and begin the process of leasing land for oil and gas production.

“You’ve got to go back to the late 1930s to see anything like this. They started out paying $75 per acre for a five-year lease with a 15 percent royalty,” said Brad Richards with the Illinois Oil and Gas Association. “With competition heating up, the normal range has now risen to $250 per acre and even higher with a minimum royalty of 15 percent.”

Richards believes that when the leasing work is done, 1.5 million acres could be at play in this current leasing frenzy.

Developers are looking at producing oil and gas primarily from the New Albany Shale formation, a formation that was previously overlooked because it was difficult, if not impossible to coax oil or gas from through traditional vertical drilling methods. Many geologists also believed that the New Albany Shale formation was not geologically mature enough to hold commercially viable quantities of oil or gas.

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