Hancock Gas Lease

A non-profit advocacy group for landowners in Broome County. The Joint Landowners Coalition of New York says its mission is

To foster, promote, advance, and protect the common interest of the people as it pertains to natural gas development through education and best environmental practices.

Their general meetings are “held on certain (usually Tuesday) evenings 7-9 pm at Cornell Cooperative Extension”, according to their web site. And they’ve schedule a “Natural Gas Development Summit” on Friday, February 26th, but is open only to invited guests.

The Press and Sun-Bulletin reports that

The JLCNY will be able to accept donations, lobby lawmakers and fight for landowners’ rights and interests. That might include helping landowners in a dispute over how gas is metered as it’s taken from their property, interpretation and compliance of leases, or sorting through how mineral leases affect mortgages.

Last month we reported that Governor Paterson has proposed a 3% tax on royalties from gas. Now we learn what he plans to do with that money. He’s planning to add 35 jobs to the State payrolls, apparently to ensure the safety of our health and environment from drilling operations. As reported in The Press & Sun Bulletin:

New York is budgeting for 35 new positions in the next fiscal year to help oversee production of the Marcellus Shale, if and when it gets there.

While political and regulatory uncertainty clouds the fate of Marcellus production north of Pennsylvania, the staffing proposals are a sign that Gov. David Paterson’s office is preparing.

“If drilling moves forward, we have the infrastructure in place to do it in a safe and responsible way,” said Morgan Hook, a spokesman for the governor.

The staffing initiative would add 29 workers to the Department of Environmental Conservation, four to the Department of Health, and two to the Public Service Commission.

Today brought dueling demonstrations at the Capitol, with groups rallying both against gas drilling and in favor of it. The report in the Ithaca Journal says that hundreds of people turned out for the rally (and that’s with over an inch of rain pouring down there today). They say that there were local Southern Tier people on hand, as well as those traveling from New York City.

From where we sit, it sounds like both sides employed a common tool of exaggeration. Some examples reported; first the pro side:

“The jobs would be astronomical,” said Moore, 49, adding, “Without it, we’re done.”

and sounding off against:

environmental and conservation groups said in a statement that the proposed drilling “is arguably the most pressing threat to the health of the state’s environment.”

Governor Paterson has unveiled his budget proposal for the year beginning April 1. With nearly $1 billion of new taxes and fees, one can only assume it’s an April Fools joke. Some of this is targeted specifically at gas leases. As reported by ABC News:

A 3 percent tax on natural gas extraction from the Marcellus Shale formation in the Southern Tier and in central New York using horizontal wells, raising $1 million starting in 2011-2012.

This isn’t a lot of information, but it does imply a few things.

• Since it says “gas extraction”, I take it to mean taxes on actual gas coming out of wells, as opposed to just leases themselves. Note that some lease contracts make the landowner responsible for these taxes. If you’ve signed a lease you should check on this; if you’re considering it, make sure you understand what the deal will be.
• If they expect to derive tax income from gas drilling, it strongly suggests that they do intend to have wells drilled in 2010, and actively producing gas.
• If they expect $1 million dollars in revenue from a 3% tax, the math says that they expect $33.3 million dollars of gas to be pumped in fiscal 2010.

It seems that America has surpassed Russia in development of natural gas, becoming the largest producer in the world. World Oil Online reports

The US, with its big gas shale resources, has surpassed Russia as the world’s leading gas producer. The US government’s Energy Information Administration (EIA) said US gas production for the year probably rose 3.7% to 624 billion cubic meters, its highest level of the decade. Russia’s output fell 12% to 582 billion cubic meters last year, the Russian energy ministry said this week.

In the US, … lower gas prices last year than in 2008 encouraged the power sector to absorb the booming output from newly developed gas shale deposits. The surprising boost shale gas has given US output has closed the world’s biggest energy consumer to some imports and “created a huge oversupply of LNG in Europe,” Korchemkin said.

Exxon Mobil Corp. has entered the natural gas game by purchasing player XTO Energy. The New York Times article notes

The move — a show of confidence in the future of unconventional resources — could also spur additional investment in domestic unconventional natural gas plays like the Barnett in Texas, Marcellus in Appalachia and Haynesville in Louisiana.

State Senator James L. Seward (R/C/I – Oneonta) has proposed bill S6269 in the hopes of ensuring that gas operations do not damage New York’s water supply. As reported by WBNG 12,

Senate bill 6269 would allow the commissioner of the DEC to require any permit holder who is authorized to drill gas wells to post a bond with the state comptroller. The bond, an insurance policy, would then be available to defray the cost of repairing damage to a water supply.

“Gas exploration historically has been rather safe in New York, but it makes perfect sense to demonstrate continued vigilance in this matter,” Seward added. “This bill would establish accountability and responsibility on the part of gas drilling companies.”

A pretty good overview of the environmental concerns that gas drilling poses has just been published by advocacy group* ProPublica.

The debate over the safety of natural gas drilling has intensified in the past year, even as the nation increasingly turns to cleaner-burning natural gas as an alternative to oil and coal. In Congress, one group of politicians is writing a climate bill that would encourage the use of more natural gas, while another group is pushing a bill that would put a key part of the process under federal regulation and force the disclosure of chemicals used in the drilling process. Neither bill addresses the question of how to encourage energy companies to use existing techniques that lower the risks of environmental damage.

Their discussion is actually quite thorough, I encourage reading it.

My one complaint is their continued economic illiteracy. The article states

Some of their techniques also make good business sense because they boost productivity and ultimately save the industry money — $10,000 per well in some cases.

ProPublica should see the inherent contradiction in characterizing the energy industry as greedy fiends, while at the same time asking us to believe that they’re actively resisting measures that would save them real money.

* They would object to my characterization of them as advocates, preferring to think of themselves as a news agency. But I think their agenda shines through their reporting clearly enough that I have to consider them as advocates. Even so, the referenced article is pretty good.