Marcellus shale fight continues in New York

Chesapeake Energy Corp. has warned that new rules proposed by New York regulators over shale gas drilling already are unnecessarily onerous and may deprive New York of badly needed revenue by scaring off energy firms.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Jan. 14 -- Chesapeake Energy Corp. has warned that new rules proposed by New York regulators over shale gas drilling already are unnecessarily onerous and may deprive New York of badly needed revenue by scaring off energy firms.

"The measures proposed…will be more burdensome than any of those placed on our industry throughout the United States and will more than adequately ensure that the development of the Marcellus shale natural gas formation in New York will occur with sufficient environmental safeguards," Chesapeake said.

Objections concerning the methods used to extract the gas arose after the New York State Department of Environmental Conservation (DEC) extended the public comment period on the draft supplemental generic environmental impact statement (DSGEIS) governing natural gas drilling activities in the Marcellus shale formation to Dec. 31, 2009, from Nov. 30, 2009.

The DEC invited comments on the DSGEIS, which it said “addresses the range of potential impacts of shale gas development using horizontal drilling and high-volume hydraulic fracturing and outlines safety measures, protection standards and mitigation strategies that operators would have to follow to obtain permits.”

The US Environmental Protection Agency responded by submitting documents of its own to the DEC during the public comment period which closed on Dec. 31, 2009.

EPA said it has "serious reservations" about allowing shale gas drilling in New York City's watershed, and warned of a threat to the drinking water for 9 million people.

"We have concerns regarding potential impacts to human health and the environment that we believe warrant further scientific and regulatory analysis," according to John Filippelli, head of EPA’s strategic planning and programs branch.

"EPA has serious reservations about whether gas drilling in the New York City watershed is consistent with the vision of high-quality unfiltered water supply," Filippelli said in the report.

EPA’s report coincided with statement by Tompkins County, which lies to the west of New York City, saying that its representative joined with federal, state, and local legislators to express “concern about the state's proposed regulatory document issued by the DEC.”

Communicating the County's concerns about gas drilling at the protest in New York City, Tompkins County Legislator Martha Robertson said that many questions about drilling “remain to be answered.”

Earlier, the Tompkins County Legislature “urged that the entire process be reevaluated and that no drilling be permitted using the hydraulic fracturing technique until an adequate environmental review is completed.”

The debate emerged after New York Gov. David Paterson, who is seeking to reduce a $3.2 billion state budget deficit, last year proposed opening the Marcellus shale to drilling using horizontal hydraulic fracturing.

In December, the Independent Oil & Gas Association of New York urged Paterson in a letter to remain committed to his draft State Energy Plan, which supports the expansion of natural gas exploration in the Marcellus shale.

"We believe that New York cannot afford to turn away or postpone the tremendous opportunity for economic resurgence and a clean energy supply presented by the Marcellus shale," said IOGA, along with a coalition of business and economic development groups (OGJ Online, Dec. 29, 2009).

IOGA’s letter followed DEC’s extension of the commentary period as well as reports that New York City urged the state to ban natural gas drilling in its watershed, becoming the most powerful opponent to date of a process that critics say is poisoning drinking water.

Chesapeake has reportedly accused critics of creating fear and panic with misleading or incorrect information with concerns "that have no basis in science or reality."

Earlier this month, Chesapeake Energy Corp. announced a $2.25 billion joint venture agreement with Total E&P USA Inc. in which Total will acquire a 25% interest in Chesapeake’s upstream Barnett shale assets (OGJ Online, Jan. 4, 2010).

Contact Eric Watkins at hippalus@yahoo.com.

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