Will Most Drillers Even Bother with New York?

New York’s passage of new drilling rules to allow for shale gas drilling has had more twists than a Greek tragedy and has taken longer to finish than a death scene in an opera. MDN has asked the rhetorical question, several times, that even IF new rules are passed and permits are issued, will drilling companies bother to show up? See this MDN article from March of this year. Now, others are starting to raise the same question:

While initially remaining quiet when the Department of Environmental Conservation released its latest review of hydraulic fracturing in September, the gas industry has started publicly pushing back against proposed regulations that some say are "onerous" and could keep drillers out of New York.

"We’re all about seeing the environment protected and having a high environmental bar. Nobody has any objection to that," said Thomas West, an Albany attorney and lobbyist who represents several gas companies. "But if you go to far and it gets too expensive, then New York won’t be competitive with other states like Pennsylvania and Ohio — and we won’t have much drilling or leasing activity."*

One of the chief bones of contention with the proposed new drilling rules are the setback provisions:

Among their [drilling companies’] concerns are the "setbacks" or buffer zones included in the DEC’s recommendations. Included is a ban on surface drilling within 4,000 feet of the Syracuse and New York City watersheds, within 500 feet of primary aquifers or in 100-year floodplains.

[Gregory Sovas, a consultant with the Twin Tiers Landowners Coalition in Steuben County] said the buffer zones would keep horizontal gas wells from servicing the maximum potential area — 640 acres under state law — and could result in more, less-efficient wells dotting the Southern Tier and Catskills regions.

"The (setbacks) aren’t justified and they take a significant amount of acreage out of production," said Sovas, who was the DEC’s director of mineral resources from 1983 to 2001. "Basically, they’ve removed the efficiencies from the process."*

MDN remains hopeful for New York, but the question lingers (with a nod to Field of Dreams): If NY permits it, will they drill?

*Elmira Star-Gazette (Oct 20, 2011) – Industry representatives say DEC hydrofracking rules may keep drillers out

  • Anonymous

    It’s almost seems like you threw your hands up here Jim. But here is the good news. There is fierce competition out there. I have been noticing that on the Discovery channel (and others just like it) Shell Oil, Exxon Mobil, Conoco Phillips and others have been advertising about drilling for Natural Gas. Conoco Phillips latest ad has college students discussing the Marcellus play in the 30 second spot. They are, of course, getting some tax deductions in before the end of the year, but I feel they are sending a message to the plays that have yet been tapped(NY) and to the people who will be graduating soon. We are coming!!!- with Jobs, and money. Do you think Exxon wants to lose it’s share of Marcellus and Utica rich land to Shell or Hess or a smaller company like Norse? No way! In the end it’s about making money for the share holders. He who gets their foot in the door first in NY will be the biggest winner. I think they are all waiting to see if Permits will be issued on existing leases come Dec.12 without major hurdles. If they are issued they will be looking to scoop up as much land as they possibly can. The caviat is no one knows if that is going to happen. So they are holding back with a “let’s see how this goes” attitude. The ball is in the DEC’s court to bring the prosperity to the state. . . So “Let’s see how this goes!!!”

  • I sincerely (and I mean it) hope you are right. I’m not throwing in the towel just yet! I do think drilling will happen in NY, but I also temper my optimism with cold, hard reality and I view my job as delivering my best thinking on the topic…and that best thinking (at least right now) says if I were a driller and saw less regulation and a more friendly tone (with the same amount of gas) just across the border in PA, or even in Ohio, that’s where I would go to do business rather than put up with overzealous regulators in NY. But that’s just me! The real question is, how much regulation of this is really too much? Have we reached that limit? The quotes I’m starting to see in the press indicate perhaps the DEC has gone too far.