Proposed Drilling Regulations Could Stymie Fracking Plans in New York

While New York State’s moratorium on natural gas drilling via high-volume, horizontal <"">hydraulic fracturing officially expired on July 1, it doesn’t look like frackers will have quite the free hand they sought to exploit natural gas deposits in the state’s Marcellus shale region. According to a report from Reuters, half the land energy companies had leased for drilling may now be out of bounds, thanks to new rules New York regulators are expected to finalize early next year.

The proposed regulations would impose off-limits buffers around New York waterways that are 20 times larger than buffers set by its neighbor, drilling-friendly Pennsylvania. The restrictions have some drillers reconsidering their business plans in the state, and possibly even abandoning plans to frack in New York altogether.

“This (lease buying) was all done without the knowledge that the DEC was going to propose these increased setbacks,” Thomas West, an attorney in Albany New York who represents oil and gas companies, told Reuters. “It has a significant impact on the drillability of this acreage.”

In New York, fracking has been particularly controversial. The state’s natural gas-rich Marcellus shale region includes the entire Catskills watershed that provides New York City with all of its drinking water.

The strict boundaries were put in place amid concerns that drilling fluids used in fracking and methane could find their way into underground water sources and taint supply for millions of homes across the state. Concerns were heightened by several high-profile pollution incidents, including an April blow-out at a Chesapeake Energy natural gas well in Pennsylvania that caused fracking fluids to spill into local waterways. A concerted public relations effort on the part of the industry was unable to turn New York policy in the drillers’ favor, Reuters said.

The impacts of this strict regulatory environment are already being felt:

• Royal Dutch Shell, which according to Reuters has leased about 90,000 acres for drilling in New York, estimates that 40 percent of that land could be off limits under the proposed law.

• Inflection Energy, which has released 15,000 acres in New York, is reconsidering drilling there after studies showed that about 60 percent of its acreage might not be drillable.

• Norse Energy, which leases 180,000 acres in New York, and moved its headquarters to Buffalo, announced lay-offs of half its staff last month and is considering leaving the state.

According to Reuters, Governor Andrew Cuomo plans to allow the New York State Department of Conservation (DEC) to start issuing drilling permits next year, and has been hoping to spur a natural gas boom like the one seen in Pennsylvania. The DEC estimates New York could add nearly 55,000 jobs and $1.7 billion in revenue because of fracking.

Some, however, believe even the DEC’s proposed regulations don’t go far enough. For one thing, the current proposal doesn’t require buffers around New York City’s aqueducts. The New York City Department of Environmental Protection (DEP) is calling for a seven-mile buffer from old underground water pipes that feed the state’s major cities, according to Reuters.

“These tunnels were not designed to withstand this type of subsurface activity,” said DEP commissioner Carter Strickland in a statement this month. “By the time one knows there is a problem, it may be too late to avoid serious impacts.”

The state DEC has scheduled public hearings on the proposed fracking regulations for November 16 in Dansville, November 17 in Binghamton, November 29 in Sheldrake and November 30 in Manhattan.

This entry was posted in Hydraulic Fracturing / Fracking. Bookmark the permalink.

© 2005-2019 Parker Waichman LLP ®. All Rights Reserved.