American Oil and Gas Reporter - February 2015 - 126

600,000-800,000 acres leased (for unconventional resource development) in
Illinois, and $4 million-$5 million has
been spent on exploration already. But, I
know delays with the HVHF rules have
caused some fatigue among operators."
IOGA President Todd Shulman, vice
president of Shulman Brothers Inc. in
Vandalia, Il., remarks that the association
has devoted countless resources and manhours to the HVHF rules during the past
four years. "We have not had enough development in the area to see whether the
basin is home to a resource play," he
says. "We were frustrated with IDNR
about the entire process, because it could
have finalized the rules anytime, but it
sat on them for several months instead.
We at IOGA hope the delays and price
drops have not caused our members, our
communities, and our basin to lose out
on good resource development opportunities."
Shulman comments that the past four
years working on the rules "have not always been fun, but they have always
been interesting." Fortunately, he reflects,
IOGA was able to keep the legislators'
and environmental groups' focus away
from smaller operators, whose well sites
are not large enough to support HVHF.
"Had we not participated in the discussion,
the final rules would have been a lot
worse for our members," Shulman states.
Weathering The Shift
IOGA is cautiously optimistic about
new Governor Bruce Rauner's energy
policies and regulatory structure, Richards
remarks. "He is not a career politician;
he is not using Illinois as a stepping stone
to something else," Richards comments.
"When he was campaigning for governor,
his office contacted us about setting up
visits to local well sites. We are not
entirely sure about his plans or expectations
for our industry, but we think they will
be friendlier than the previous administration's."
According to Richards, Illinois Basin
activity has slowed since the decline in
oil and natural gas prices began. "The
market shift hurt small, independent operators most," he assesses. "Those folks
make up a good portion of the Illinois
Basin, so this area's production trends
are very sensitive to price swings. Marginal
well operators, especially, are wary of
that because those wells are expensive to
produce."
IOGA reports the Illinois Basin-which
spans southern Illinois, southwestern Indiana, and western Kentucky-usually
supports an average of 35 rigs, but 11 of
them pulled out in late 2014. Richards
says the price drop was not the only

culprit. "It is a combination of several
factors," he affirms. "We lost a few
because temperatures were getting colder;
rig numbers always drop in the winter. It
is also the time of year when road weight
limits are measured and posted, so that
can affect truck traffic to rig sites."
Richards states IOGA members have
seen worse pricing conditions, but they
still seem apprehensive about the market's
instability. "We have not seen any major
panic in the basin," he details. "The price
decline has been dramatic and several
rigs have been idled. But, I would not
say it was an over-reaction because there
is a natural slowdown around this time
of year, anyway. But, production will be
shut in, and there are certainly challenges
out there."
Guard Mounting
As Shulman prepares to finish his
tenure as IOGA president, he reassures
that he still will be active in association
matters, remaining on the Board of Directors for at least another two-year term.
"It has been a trying four years, and
we had to work through some very onerous
issues," he comments. "But, IOGA has
been improving at getting the word out
about this industry and the benefits it
brings to individuals and communities.
Personally, I would not want to be in any
other industry."
Shulman announces that his successor
will be longtime IOGA member Bryan
Dicus, an independent petroleum engineer.
"I have a lot of faith in him," Shulman
affirms. "He is a lot more connected to
the industry than I am. He will have a
better understanding of the challenges
producers face, and interpreting the pulse
of activity in the Illinois Basin."
Dicus, who joined IOGA in 1993 and
is originally from Mt. Carmel, Il., mentions
two priorities he wants to pursue during
his IOGA presidency: addressing conventional operators' challenges, which
include low oil prices; and developing
the Illinois Basin's resource play.
"For the last several years, this industry
in general and this basin in particular
have been playing defense; we tend to be
very reactionary," he comments. "It is
time to go on the offensive and be more
proactive. One example of that is helping
to develop this basin's resource play."
Dicus mentions that he is particularly
excited to see younger professionals working in the basin, some of whom are second- or third-generation operators. "I was
the youngest guy in the room for 10
years or so, but that is no longer the
case," he describes. "It's wonderful to
see the next generation of industry professionals coming into their own. I have

126 THE AMERICAN OIL & GAS REPORTER

been very impressed with our young professionals. I am very proud that they decided to work in our industry in general,
and in Illinois specifically."
During his two-year term, Dicus says
he will work with the Rauner administration on oil and gas issues, and will attempt to help Illinois build a more industry-friendly legislative and regulatory environment. "I hope the administration
will be willing to work with us on some
issues," he says. "Right now, the price
shift has left the basin a bit weak, but our
members are not panicking. Having an
administration that is willing to cooperate
with us on some things will go a long
way to alleviate the strain our members
are feeling."
Annual Meeting
According to Richards, IOGA will
host its annual meeting and trade show
on March 5-6 at Evansville's The Centre.
Richards says he hopes it will have at
least 100 exhibitor booths.
"Last year, we had 80 exhibitors, but
this year, we really want to emphasize
the trade show," he details. "We want to
make the exhibit hall the meeting's centerpiece, and make the atmosphere and
layout more comfortable for vendors,
customers, and all attendees. We plan to
host several breaks and receptions in the
exhibit hall, so exhibitors will have plenty
of opportunities to interact with potential
or current clients."
Richards says IOGA has several feature-topic sessions, including geology,
engineering, insurance and safety, and
regulations. The president of the American
Association of Professional Landmen's
local chapter will give a premeeting address to IOGA members, Richards confirms, to update them on the association's
safety and insurance programs.
According to IOGA, Rich Snyder of
Chesapeake's north exploration division
will lead the meeting's geology session,
during which, Richards says, Snyder will
explain why the Illinois Basin "is not the
blanket play it is portrayed to be."
The engineering session will be led
by Kentucky-based Rugged Telemetry,
which specializes in well and tank remote
monitoring, Richards continues. Additionally, local petroleum engineer Jim
Brooker will be presenting simulations
of gas's effects on waterflooding in an
Aux Vases reservoir and oil-on-top-ofwater recoveries. There also will be a
session on the oil market.
For entertainment, Richards says the
association has booked country singer
Kenny Rogers. After the membership
dinner, attendees will move to the Victory
Theater, which is attached to The Centre.

American Oil and Gas Reporter - February 2015

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