Hancock Gas Lease

For some time now, New York City bureaucrats have been advocating an outright ban on drilling within the watershed. It seems that the DEC is punting on the question: rather than issuing an answer one way or the other, they are making the watershed area a separate class of regulations. Any application to drill in this area must be considered on a case-by-case basis. It seems likely that in practice this will amount to an insurmountable hurdle of red tape, becoming a de facto ban.

As reported by the AP:

New regulations announced Friday for natural gas drilling in the New York City and Syracuse watersheds will create a bureaucratic hurdle that effectively prevents drilling there, defusing concerns about possible drinking-water contamination.

Environmental Conservation Commissioner Pete Grannis said the watersheds will be removed from drilling regulations being developed for other parts of the Marcellus Shale region in southern New York. Instead, each gas well would require an individual environmental impact statement, which entails a long, costly and complicated process.

On the other hand, this sacrifice seems to be balanced by a more streamlined process for the remaining areas:

Under the broader regulations, companies applying for drilling permits would have to meet requirements spelled out in a “generic” environmental impact statement but wouldn’t have to do impact statements for each well.

The first question you’re probably asking yourself is: “am I in the watershed?”. Check out this link courtesy of NYC.

The State DEC is working through the heap of comments submitted during the comment period on the draft environment impact statement. According to WXXI Albany, The DEC Commissioner Pete Grannis expects the process to be completed by fall, and that drilling conforming to the regulations might begin in spring or summer of 2011.

Cabot Oil has been fined and given other sanctions for the contamination of residents’ wells in Dimock, PA. This contamination is the result of methane from the gas seeping into the water, and unrelated to the fracking itself, radiation, or other pollution.

An article in the Citizen’s Voice quotes the PA DEP:

Cabot must plug three wells within 40 days that are believed to be the source of migrating gas that has contaminated groundwater and the drinking water supplies of 14 homes in the region. It must also install permanent treatment systems in those homes within 30 days.

Additionally, DEP Secretary John Hanger said his agency is immediately suspending its review of Cabot’s pending permit applications for new drilling activities statewide until it fulfills its obligations under the order issued today. Cabot also is barred from drilling any new wells for at least one year in the Dimock Township area.

This follows an incident last September in which Cabot spilled fracking fluid in the Dimock area.

Thanks to reader Nancy Flaherty, who posted a comment yesterday alerting us to this development.

Yesterday we wrote that prospects for Southern Tier gas drilling look more remote due to the Governor’s political woes. Today we have a counterpoint to that. The Capital Business Council writes that GOP gubernatorial candidate Steve Levy supports developing the natural resources of the Marcellus Shale:

“The Department of Environmental Conservation should allow the process to move forward,” Levy said in a press release. “New York already has the highest environmental standards in the nation. There is no doubt that we can promote exploration while safeguarding our environment and water supply.

“New Yorkers look to their Pennsylvania neighbors and see a burst of drilling activity and they wonder why we can’t do the same here. Especially when the state is trying to close a massive deficit and promote job growth in a region that has been hurt badly by a lagging economy. Unfortunately, right now the American gas drilling boom has been blocked at the New York border.”

The State may now be a step further away from issuing drilling permits. Industry analysts are saying that the political difficulties that Gov. Paterson is experiencing mean that he doesn’t have the political capital right now to bring this thing to a close. Bloomberg news is reporting (via the Buffalo News):

“Up until recently, [Governor Paterson] was in a position to push Marcellus drilling in New York State,” said [industry consultant] Palmerton, who is based in Syracuse. “Given the political pressures right now, I’m very concerned the DEC may be pressed to hold this up until after the election, or delay it for some indefinite period of time.”

The article goes on to mention the Governor’s plans for a tax on extracted gas, but notes that the State Senate has proposed removing that from the budget.

So at the moment, the prospects for gas drilling in the Southern Tier is very cloudy.

If New York City wants to prevent landowners from developing their property, they should buy the development rights to that land. Their refusal to do so just shows that they want to continue to be parasites on the rest of the state, getting their water at our expense.

It seems that State Senator Bonacic (R-C-Mount Hope) agrees with our philosophy. The Times Herald-Record quotes him as saying:

Let them buy the development rights. For those landowners who want to sell their gas rights, let the city pay the same market rate to keep the land undeveloped. We buy agricultural development rights for tracts of land we want to preserve. Let those who oppose the lawful exploration and extraction of gas in the Catskills (do the same). …

If New York City can stop development of energy sources in the Catskills, they can diminish the value of people’s land without compensation.

The article seems to say that the City is turning a deaf ear to these arguments:

While the city’s DEP points out that it has already invested $541 million to buy watershed land, it did not directly address Bonacic’s proposal, except to reiterate the “unacceptable threats” of drilling to drinking water.

“We look forward to continuing a dialogue with elected officials and all stakeholders to protect the watershed during this process,” said a statement by Environmental Protection Commissioner Cas Holloway.

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.”