New Compulsory Integration Legislation
Two bills have been introduced into the legislature, A10956 and S7758, which provide that integrated royalty owners in the New York Marcellus Shale Region shall receive a royalty equal to the highest royalty in the existing lease in the spacing unit, but not less than 18.75%."
This bill deserves our support. E-mail, write, call (or all three) the legislators listed below. We urge our downstate landowners to do likewise to their legislators. If you live out-of-state, make your interests known. And everybody should tell their neighbors about this bill.
THIS BILL IS IMPORTANT LEGISLATION FOR ALL OTESGO COUNTY LANDOWNERS AND THE FUTURE OF OUR AREA.
Our legislators are:
Assemblyman Pete Lopez
Albany, NY 12248
Phone (518) 455-5363
Senator Jim Seward
Albany, NY 12247
Phone (518) 455-3131
Also thank Donna Lupardo who authored this legislation. Her e-mail is -- Lupardod@assembly.state.ny.us
State Decision Blocks Drilling for Gas in Catskills
Although they did not impose an outright ban on drilling, state officials said that any natural gas company would have to conduct a separate environmental impact review for each well it proposed to drill in the Catskills watershed, which supplies the city.
Those rules also apply to the smaller Skaneateles Lake watershed, which supplies drinking water to
In other areas, companies would face a far less cumbersome permit process that would rely on the state’s own environmental assessment of where drilling can be allowed.
The gas companies planned to rely on a technique known as hydraulic fracturing, also called fracking, which involves blasting water mixed with chemicals into rock at high pressure to extract the gas.
The decision by the State Department of Environmental Conservation also means that
City officials welcomed the announcement. “The additional reviews that D.E.C. has mandated will ensure that the specific and cumulative impacts in the New York City and Syracuse watersheds are understood, and that these unique landscapes are fully protected, as a prerequisite to any drilling activity,” said Cas Holloway, commissioner of New York City’s Department of Environmental Protection.
He said the decision “recognizes that protecting
The two areas lie within the Marcellus Shale region, a subterranean layer of rock stretching from
The Catskills watershed supplies drinking water to 8.2 million people in
While the prospect of drilling stirred deep opposition in
The conservation department’s commissioner, Alexander B. Grannis, said that landowners’ property rights had weighed heavily in the decision not to issue a ban on drilling in the two watersheds. He said that about 70 percent of the property in the watershed is privately owned and that a ban would have undoubtedly brought lawsuits from owners deprived of lucrative leasing deals with gas companies.
“At the end of the day, an outright ban risks very substantial litigation,” he said.
Instead, the department decided to add more scrutiny to any potential application to drill in the two areas, he said.
But while the well-by-well environmental reviews will be a deterrent to the drilling, environmental groups were not claiming victory. Kate Sinding, a senior lawyer with the Natural Resources Defense Council, said nothing but a ban would ensure that gas companies do not exploit the watersheds in the future.
“If they get into the shale and find it productive, they’re going to knock on the door of the watershed,” she said. The two watershed areas account for less than 10 percent of the shale, state officials said. Bowing to public pressure, the Chesapeake Energy Corporation said last October that it would stay away from the
Jim Smith, a spokesman for the Independent Oil and Gas Association of New York, called the state’s regulatory stance “excessive and unnecessary.”
But he said that there was “not a lot of interest in the watershed from companies” at this point at any rate.
State officials said the two watersheds presented additional concerns that had nothing to do with the safety of the drilling, like pollution from increased truck traffic related to the drilling operations.
By omitting the two watersheds, they said, they will be able to focus on the overall environmental safety of drilling.
“Originally, we thought it’d make sense to address all of this at once,” said Stuart Gruskin, executive deputy commissioner of the Department of Environmental Conservation.
“We acknowledge that there’s a separate subset of issues that are independent of the safety of hydrofracking,” he said. “It’s better to leave those issues out of it.”
The Department of Environmental Conservation came under intense pressure after issuing draft regulations governing the drilling last year.
The agency did not specifically call for a ban on drilling in watershed areas, but said it had “serious reservations about whether gas drilling in the
March 18, 2010
Marcellus Drilling News attended the Natural Gas Development Summit held in Binghamton on March 18th at the Regency Hotel. The event was organized and sponsored by the Joint Landowners Coalition of New York. There were about 150 people in the audience, made up of landowners, people from the drilling industry (lawyers, energy companies, engineering companies and others), and the press. It was a half day event, starting at 9:30 am and ending at 12:45 pm. MDN will run a series of posts to cover the presentations. This article contains the opening remarks delivered by Scott Kurkoski, a lawyer specializing in mineral rights with Levene, Gouldin & Thompson. Scott was one of the chief organizers of the event and master of ceremonies.
He opened by stating the purpose of the meeting is to have a discussion about the issues, with an aim to move the issue of drilling in New York State forward. He thanked Broome County Executive Barbara Fiala for hosting the event and for her efforts on behalf of landowners.
Scott next provided the background for where we are now in New York, and how we got here. In 1992, the New York Department of Environmental Conservation created a Generic Environmental Impact Statement (GEIS) to govern oil and gas drilling in New York. Since then, newer technologies (horizontal drilling and hydraulic fracturing or “fracing”) have come along and the DEC, under direction from the Governor’s office, drafted Supplemental (new) regulations to account for these new technologies and their use.
There was a public comment period near the end of 2009 and over 10,000 comments were filed with the DEC. They are now reviewing those comments and it is hoped they will finalize the SGEIS regulations by June of this year so drilling can finally start. However, once the DEC releases the final SGEIS, Gov. Patterson will have to approve it before drilling begins. There was a petition at the meeting for interested people to sign, requesting the Governor approve the regulations immediately upon finalization.
Scott is a member of the Joint Landowners Coalition of New York. He recounted the history of its beginning. A group of 300 landowners in the Deposit area successfully negotiated a $90 million deal with XTO Energy in 2008. (The terms of the deal were $2,411 per acre and 15 percent royalties.) After that deal, landowners throughout the region started to form other landowner groups based on geography. The heads of those groups started to meet informally, and eventually the Joint Landowners Coalition of New York (JLCNY)—which is a “group of groups”—was formed. The JLCNY has 37 member coalitions representing some 800,000 acres and 70,000 people. In January of this year, the JLCNY registered as a 501(c)6 non-profit organization.
According to Scott, landowners care more about their land than anyone else. In many cases, the land has been in families for generations. He said that landowners are “the true environmentalists.” They don’t want their land to be harmed or irreparably damaged. The problem is, according to Scott, landowners have been too silent on the matter of drilling. Their voices need to be heard and landowner coalitions are one of the ways that can happen.
During the public comment period for the SGEIS last December, there started to be loud opposition to drilling. Scott said New York City Mayor Michael Bloomberg and other politicians in the New York City area held frequent press conferences and tried to build a case to ban gas drilling altogether. But there’s a problem with that…there are already 13,000 active non-Marcellus oil and gas wells in New York State! A total ban on drilling is nonsensical.
The long delay in the start of Marcellus drilling is taking a toll on New York. Businesses are going to Pennsylvania and elsewhere. Scott cited two recent cases: An energy company looking to invest $75 million in New York was two days away from closing a deal and pulled out because, “New York is just too unsettled right now.” Once all associated business activity for a deal of that size are considered, losing that $75 million deal was actually losing $300-$500 million in ultimate spending in New York.
Scott recounted the story of another company looking to invest $23 million in a facility in Tioga County, NY, with the promise of creating 450 new jobs. Again, the hurdles were too high and the delays too long. The company decided to take their business, money and jobs over the border to Pennsylvania in January of this year. Another 450 jobs in New York would have been a boon to the Southern Tier region.
An often-heard argument is that, “The Marcellus Shale has been there millions of years, it’s not going anywhere, there’s no hurry to develop it right now.” Scott disagrees. Once companies decide to locate in a different state—they stay there. The jobs never come to New York. Every day New York continues to delay drilling, New York jobs and money disappear.
Drilling regulations in New York will be the strictest in the nation. It begs the question, “So what do we have to fear?” There is no excuse for further delays.
Scott made an impassioned case that New York needs to start drilling soon. And he made the statement that New York City cannot be allowed to speak for Upstate on the matter of drilling.
MORE COVERAGE OF THE BINGHAMTON GAS SUMMIT
FROM MARCELLUS DRILLING NEWS
Binghamton Natural Gas Summit: How Many Jobs Does Drilling (Really) Create?Mar 22, 2010 - Beyond random speculation, is there really any way to know, scientifically and accurately, just how many drilling-related jobs are being created in the Marcellus Shale? Yes there is! And two of the speakers at the Natural Gas Development Summit held in Binghamton on March 18th at the Regency Hotel, who have extensively studied the [...]read more
Gastem, USA: Ross Well results 'promising'; resident voices concerns
By Tom Grace Feb. 2, 2010 Cooperstown News Bureau Results from drilling a vertical natural-gas well on Crumhorn Mountain in the town of Maryland are promising, Orville Cole, president of Gastem, USA, said Monday. ``The thicknesses of the shale were better than expected,'' he said. Thicker shale layers indicate larger, more economically viable, stores of gas. The prospects of the vertical well, known as Ross 1, were covered by financial news services, including Yahoo's, which reported that Gastem's chief executive officer, Raymond Savoie, stated: ``The Ross well, our first well in New York State, has largely exceeded our expectations, and we are accelerating programs. ``Although early, we believe that the area could begin commercial production in the near future.'' Cole said the results of Ross 1 were good but have not altered Gastem's plans. The firm is proceeding methodically, waiting to see what regulations the state DEC will impose on horizontal gas drilling and hydraulic fracturing, he said. ``We're basically planning one to two wells in the county in the next six months, once we get all the necessary approvals,'' Cole said. He said the firm, which holds ``an 80 percent interest (in mineral rights) on approximately 35,000 acres in Otsego County,'' according to Yahoo, is prospecting, trying to determine how much gas underlies the county. ``We don't really know all we need to,'' he said. Asked where Gastem might drill next, he said the firm has many options. With current state limitations on the volume of hydraulic fracturing fluid that can be pumped into vertical wells, Gastem is done at the Ross site for now, he said. If those limits are raised, the well might be re-fracked to shatter rock and release more gas. When a vertical well is promising, it's possible to later drill a horizontal well from the same pad to greatly increase the yield, Cole noted. The Ross well was news in Watertown recently because fracking waste water from Maryland was shipped to Watertown to be treated at the city's sewage treatment plant. In September, two loads of waste water from Ross 1 were rejected by Watertown as too contaminated to be safely processed, according to the Watertown Daily Times. Cole said the situation has been resolved and the waste water processed. ``The water from the site was a heavier brine than Watertown hadn't expected. So they had us take it back to the site,'' he said. ``So we took it back, did the tests and it was determined that Watertown would accept that. We tested the frack water, and it was determined by the DEC _ and I believe EPA had seen the tests _ and the Watertown management to be OK, and it was accepted.'' Nicole Dillingham, president of Otsego 2000, said she is troubled by the difficulty of processing even the limited amount of fracking fluid in the Maryland well. ``This is a vertical well, and the amount of fluid is relatively small,'' she said. ``Can you imagine if it were a horizontal well with a million gallons? Who's going to process that?'' Dillingham said the state and its municipalities are not prepared to handle the flood of fracking fluid, laced with toxic chemicals, that will come if widespread horizontal drilling is allowed to proceed.
By Tom Grace Feb. 2, 2010
Cooperstown News Bureau
Results from drilling a vertical natural-gas well on Crumhorn Mountain in the town of Maryland are promising, Orville Cole, president of Gastem, USA, said Monday.
``The thicknesses of the shale were better than expected,'' he said.
Thicker shale layers indicate larger, more economically viable, stores of gas.
The prospects of the vertical well, known as Ross 1, were covered by financial news services, including Yahoo's, which reported that Gastem's chief executive officer, Raymond Savoie, stated: ``The Ross well, our first well in New York State, has largely exceeded our expectations, and we are accelerating programs.
``Although early, we believe that the area could begin commercial production in the near future.''
Cole said the results of Ross 1 were good but have not altered Gastem's plans.
The firm is proceeding methodically, waiting to see what regulations the state DEC will impose on horizontal gas drilling and hydraulic fracturing, he said.
``We're basically planning one to two wells in the county in the next six months, once we get all the necessary approvals,'' Cole said.
He said the firm, which holds ``an 80 percent interest (in mineral rights) on approximately 35,000 acres in Otsego County,'' according to Yahoo, is prospecting, trying to determine how much gas underlies the county.
``We don't really know all we need to,'' he said.
Asked where Gastem might drill next, he said the firm has many options.
With current state limitations on the volume of hydraulic fracturing fluid that can be pumped into vertical wells, Gastem is done at the Ross site for now, he said. If those limits are raised, the well might be re-fracked to shatter rock and release more gas.
When a vertical well is promising, it's possible to later drill a horizontal well from the same pad to greatly increase the yield, Cole noted.
The Ross well was news in Watertown recently because fracking waste water from Maryland was shipped to Watertown to be treated at the city's sewage treatment plant.
In September, two loads of waste water from Ross 1 were rejected by Watertown as too contaminated to be safely processed, according to the Watertown Daily Times.
Cole said the situation has been resolved and the waste water processed.
``The water from the site was a heavier brine than Watertown hadn't expected. So they had us take it back to the site,'' he said.
``So we took it back, did the tests and it was determined that Watertown would accept that. We tested the frack water, and it was determined by the DEC _ and I believe EPA had seen the tests _ and the Watertown management to be OK, and it was accepted.''
Nicole Dillingham, president of Otsego 2000, said she is troubled by the difficulty of processing even the limited amount of fracking fluid in the Maryland well.
``This is a vertical well, and the amount of fluid is relatively small,'' she said. ``Can you imagine if it were a horizontal well with a million gallons? Who's going to process that?''
Dillingham said the state and its municipalities are not prepared to handle the flood of fracking fluid, laced with toxic chemicals, that will come if widespread horizontal drilling is allowed to proceed.
DEC proposes new Marcellus Shale drilling safety measures, mitigation strategies
ALBANY - The New York State Department of Environmental Conservation released a draft of the Supplemental Generic Environmental Impact Statement (SGEIS) governing potential natural gas drilling activities in the Marcellus Shale formation, Commissioner Pete Grannis announced, Wednesday.
Drilling and Post-Drilling
The SGEIS, available at www.dec.ny.gov/energy/47554.html, expands on the comprehensive Generic Environmental Impact Statement, adopted in 1992, that has prescribed the requirements for the drilling of thousands of oil and gas wells in New York State.
The public comment period on the draft will be open until November 30. DEC will accept comments in writing, either via e-mail, regular mail, direct online submissions or delivered at public-information sessions. The SGEIS web page will contain detailed instructions for submitting comments.
In addition, DEC soon will announce times and locations for a series of public-information sessions. For additional information regarding the draft SGEIS and background material regarding the Marcellus shale formation and gas drilling in New York State, please visit the Marcellus Shale webpage at http://www.dec.ny.gov/energy/46288.html.
For information about the long history of oil and gas drilling in New York, the more than 13,000 currently active wells and production data, go to DEC's oil and gas web page, http://www.dec.ny.gov/energy/205.html.
S T A T E O F N E W Y O R K
2009-2010 Regular Sessions
IN A S S E M B L Y
June 5, 2009
Introduced by M. of A. BRENNAN, COLTON, MILLMAN, FIELDS -- Multi-Spon-
sored by -- M. of A. COOK, GLICK, GOTTFRIED, MAGEE, MAISEL, NOLAN,
ROBINSON, WEISENBERG -- read once and referred to the Committee on
AN ACT to amend the environmental conservation law, in relation to the
regulation of the drilling of natural gas resources
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Legislative intent. 1. The legislature finds that the proc-
2 ess used to stimulate natural gas extraction referred to as hydraulic
3 fracturing utilizes components that are often toxic, that are non-biode-
4 gradable, and that are virtually impossible to remove once they enter
5 the natural environment. Thus, they pose such a high level of environ-
6 mental risk that the policy of the state must be to insure they are
7 excluded from any area that is significant for public drinking water
8 resources or any other area that is environmentally sensitive.
9 2. Natural gas drilling is potentially highly transformative of rural
10 landscapes, offering economic benefits to many landowners, but threaten-
11 ing the property values of other local landowners, traditional rural
12 economic activity, the carrying capacity of local infrastructure, the
13 natural habitat of wildlife, and the public health and quality of life
14 of residents in areas where there is natural gas extraction taking
15 place. Unless these resources are protected in the permitting and regu-
16 latory processes of the state, the costs of Marcellus shale natural gas
17 extraction will exceed the benefits and natural gas extraction will
18 become a fundamentally unfair and divisive process in which the profits
19 of some are subsidized by the costs to others.
20 3. The proposed scope of natural gas drilling across the state of New
21 York will present unprecedented challenges of regulatory oversight.
22 Funding for such oversight must be sufficient to meet this challenge and
23 should come from a series of fees paid by the natural gas industry.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
A. 8748 2
1 Similarly, the natural gas industry should pay for all other costs asso-
2 ciated with natural gas extraction. Otherwise, natural gas extraction
3 will be unfairly subsidized, either by the New York state taxpayer or
4 by the impacts on local human and natural resources.
5 4. One of the chief environmental and infrastructure assets of the
6 state of New York is its drinking water systems, which play a fundamen-
7 tal role in the economic productivity and public health of the state.
8 The legislature finds that no risk to these resources and to the public
9 health of their users is acceptable and that the policy of the state
10 with respect to the management of shale gas extraction must be one of no
11 drinking water risk.
12 5. The purpose of this legislation is to insure that the exploitation
13 of shale natural gas resources is conducted in a manner that is consist-
14 ent with and supportive of New York state's commitment to sustainabili-
15 ty, and is consistent with other state economic development, energy and
16 environmental policies.
17 6. Therefore, in light of the many commitments the state of New York
18 has made to more sustainable development and the critical role greening
19 the state's economy will play in the future prosperity of the state, the
20 only acceptable natural gas extraction practices will be sustainable
21 ones. This act is intended to ensure that that goal is met.
22 S 2. Article 23 of the environmental conservation law is amended by
23 adding a new title 29 to read as follows:
24 TITLE 29
25 REGULATION OF NATURAL GAS DRILLING
26 SECTION 23-2901. NATURAL GAS DRILLING; PROHIBITION NEAR WATERSHED.
27 23-2903. DISCLOSURE OF HYDRAULIC FRACTURING MATERIALS.
28 23-2905. PROTECTION OF OTHER ENVIRONMENTAL RESOURCES.
29 23-2907. PROTECTION OF LOCAL RESOURCES.
30 23-2909. WATER WITHDRAWALS.
31 23-2911. ENFORCEMENT AND FINANCIAL SECURITY.
32 23-2913. OTHER PROVISIONS.
33 S 23-2901. NATURAL GAS DRILLING; PROHIBITION NEAR WATERSHED.
34 1. NATURAL GAS DRILLING SHALL NOT BE PERMITTED WITHIN THE NEW YORK
35 CITY WATERSHED OR AT ANY POINT WITHIN FIVE MILES OF ITS BOUNDARY.
36 2. NATURAL GAS DRILLING SHALL NOT BE PERMITTED WITHIN THE WATERSHED OF
37 THE DELAWARE RIVER, IN ANY RECHARGE AREA OF A SOLE SOURCE AQUIFER, IN
38 ANY AREA WHERE GROUNDWATER CONTRIBUTES A SIGNIFICANT BASE FLOW TO
39 SURFACE WATER SOURCES OF DRINKING WATER, AND IN ANY OTHER AREA WHERE THE
40 DEPARTMENT SHALL FIND PRESENTS A SIGNIFICANT THREAT OF HYDRAULIC FRAC-
41 TURING COMPOUNDS ENTERING INTO A SIGNIFICANT SOURCE OF DRINKING WATER.
42 3. NATURAL GAS DRILLING SHALL BE CONDUCTED IN WAYS THAT DO NOT CONTAM-
43 INATE DRINKING WATER WELLS. IN ANY AREA WHERE NATURAL GAS DRILLING TAKES
44 PLACE AND CONTAMINATION OF INDIVIDUAL DRINKING WATER WELLS OCCURS, THERE
45 SHALL BE A PRESUMPTION THAT THE NATURAL GAS DRILLING IS RESPONSIBLE FOR
46 SUCH CONTAMINATION UNLESS THE NATURAL GAS DRILLER CAN SHOW, BY CLEAR AND
47 CONVINCING EVIDENCE, THAT SUCH DRILLER IS NOT THE SOURCE OF THE CONTAM-
48 INATION. UPON RECEIVING A REPORT OF AN INCIDENT OF WELL CONTAMINATION
49 FROM NATURAL GAS DRILLING, THE DEPARTMENT SHALL INVESTIGATE SUCH REPORT
50 WITHIN TWENTY-FOUR HOURS AND SHALL HAVE THE AUTHORITY TO ORDER IMMEDIATE
51 REMEDIAL ACTION, INCLUDING ISSUING IMMEDIATE CEASE AND DESIST ORDERS
52 WITH RESPECT TO THE DRILLING ACTIVITY. IN THE EVENT THAT THE DEPARTMENT
53 IS UNABLE TO INVESTIGATE SUCH REPORT WITHIN TWENTY-FOUR HOURS, IT MAY
54 REQUEST THAT LOCAL OR STATE POLICE AUTHORITIES CONFIRM THE INCIDENT AND
55 REPORT AND, IF CONFIRMED, SHALL ISSUE A CEASE AND DESIST ORDER TO SUCH
1 DRILLER UNTIL IT SHALL MAKE SUCH INVESTIGATION AND DETERMINE THE PROPER
2 COURSE OF INSURING FULL REMEDIATION.
3 4. ANY SPILLS OR PROHIBITED DISCHARGES OF HYDRAULIC FRACTURING
4 COMPOUNDS SHALL BE IMMEDIATELY REPORTED BY THE NATURAL GAS DRILLER TO
5 THE DEPARTMENT, WHICH SHALL ESTABLISH PROCEDURES FOR RECORDING AND
6 REVIEWING SUCH REPORTS AND FOR ORDERING REMEDIAL ACTION TO CONTAIN THE
7 SPILL AND KEEP THE SPILL OR DISCHARGE INCIDENT FROM BEING REPEATED. THE
8 DEPARTMENT SHALL HAVE THE AUTHORITY TO IMPOSE FINES FOR FAILURE TO
9 REPORT SUCH INCIDENTS, TO ORDER IMMEDIATE CLEANUP OF SUCH SPILLS AT THE
10 EXPENSE OF SUCH DRILLER AND, SHOULD SUCH DRILLER FAIL TO DO SO IN A
11 TIMELY FASHION, TO ENTER INTO THE DRILLING AREA AND DO THE CLEANUP
12 ITSELF, AT THE EXPENSE OF SUCH DRILLER. IN ANY INSTANCE WHERE SUCH DRIL-
13 LER SHALL REFUSE TO CARRY OUT A DEPARTMENT CLEANUP OR REMEDIAL ACTION
14 ORDER IN A TIMELY AND APPROPRIATE MANNER, THE DEPARTMENT SHALL ORDER ALL
15 DRILLING ACTIVITY TO CEASE AND DESIST UNTIL SUCH TIME AS THE SPILL HAS
16 BEEN CLEANED UP AND SUCH DRILLER HAS REMEDIATED THE CONDITIONS OR PRAC-
17 TICES THAT CAUSED THE SPILL.
18 5. ANY DRILLER OF NATURAL GAS WHO KNOWINGLY ATTEMPTS TO COVER UP A
19 SPILL OR PROHIBITED DISCHARGE SHALL BE GUILTY OF A CLASS A MISDEMEANOR.
20 ANY DRILLER OF NATURAL GAS WHO KNOWINGLY DISCHARGES HYDRAULIC FRACTURING
21 COMPOUNDS INTO THE SURFACE WATERS OF THE STATE SHALL BE GUILTY OF A
22 CLASS E FELONY.
23 6. NOTHING IN THIS TITLE OR ANY OTHER LAW OR REGULATION SHALL ALTER,
24 LIMIT, IMPAIR OR OTHERWISE AFFECT THE AUTHORITY OF THE STATE OF NEW
25 YORK, OR THE AUTHORITY OF THE CITY OF NEW YORK IN THE NEW YORK CITY
26 WATERSHED, TO TAKE WHATEVER MEASURES ARE NECESSARY UNDER THE LAW TO
27 PROTECT THE QUALITY AND SAFETY OF THE SOURCES OF THE DRINKING WATERS OF
28 NEW YORK STATE.
29 S 23-2903. DISCLOSURE OF HYDRAULIC FRACTURING MATERIALS.
30 1. ALL COMPONENTS OF HYDRAULIC FRACTURING MATERIALS SHALL BE DISCLOSED
31 TO THE DEPARTMENT AT THE TIME OF APPLICATION FOR A WELL PERMIT FOR THE
32 DRILLING OF NATURAL GAS PURSUANT TO THIS ARTICLE.
33 (A) EMERGENCY HEALTH SITUATION. WHEN A HEALTH PROFESSIONAL DETERMINES
34 THAT A MEDICAL EMERGENCY EXISTS RELATED TO A HYDRAULIC FRACTURING OPERA-
35 TION AND THE INGREDIENTS AND SPECIFIC CHEMICAL IDENTITY OF A HYDRAULIC
36 FRACTURING FLUID IS NECESSARY FOR EMERGENCY OR FIRST-AID TREATMENT, THE
37 HYDRAULIC FRACTURING OPERATOR SHALL IMMEDIATELY DISCLOSE THE SPECIFIC
38 CHEMICAL IDENTITY OF A TRADE SECRET CHEMICAL TO THE TREATING HEALTH
39 PROFESSIONAL, REGARDLESS OF THE EXISTENCE OF A WRITTEN STATEMENT OF NEED
40 OR A CONFIDENTIALITY AGREEMENT.
41 (B) NON-EMERGENCY HEALTH SITUATION. WHEN A HEALTH PROFESSIONAL OR
42 GOVERNMENT AGENCY DETERMINES THAT THE INGREDIENTS AND SPECIFIC CHEMICAL
43 IDENTITY OF A HYDRAULIC FRACTURING FLUID ARE NECESSARY FOR MEDICAL
44 TREATMENT, AN OPERATOR SHALL DISCLOSE A SPECIFIC CHEMICAL IDENTITY TO A
45 HEALTH PROFESSIONAL OR GOVERNMENT AGENCY IF A REQUEST HAS BEEN MADE IN
46 WRITING THAT DESCRIBES WITH REASONABLE DETAIL ONE OR MORE HEALTH OR
47 SAFETY NEEDS FOR THE INFORMATION AND INCLUDES A DESCRIPTION OF THE
48 PROCEDURES TO BE USED TO MAINTAIN THE CONFIDENTIALITY OF THE DISCLOSED
49 INFORMATION. THE HEALTH PROFESSIONAL OR GOVERNMENT AGENCY SHALL AGREE IN
50 A WRITTEN CONFIDENTIALITY AGREEMENT THAT THE TRADE SECRET INFORMATION
51 WILL NOT BE USED FOR ANY PURPOSE OTHER THAN THE HEALTH NEEDS ASSERTED
52 AND SHALL AGREE NOT TO RELEASE THE INFORMATION UNDER ANY CIRCUMSTANCES
53 OTHER THAN TO A HEALTH PROFESSIONAL OR GOVERNMENT AGENCY.
54 2. NO NATURAL GAS DRILLER MAY CHANGE THE COMPONENTS OR COMPOSITION OF
55 HYDRAULIC FRACTURING MATERIALS FROM THOSE SPECIFIED IN ITS PERMIT APPLI-
A. 8748 4
1 CATION WITHOUT FIRST FILING FOR AND RECEIVING A MODIFICATION OF SUCH
3 3. THE DEPARTMENT SHALL ESTABLISH A STANDARD FOR THE COMPOSITION OF
4 HYDRAULIC FRACTURING COMPOUNDS AND REQUIRE NATURAL GAS DRILLERS TO USE
5 SUCH STANDARD. THE DEPARTMENT SHALL HAVE THE POWER TO PROHIBIT THE USE
6 OF SPECIFIC CHEMICALS IN THE COMPOSITION OF HYDRAULIC FRACTURING MATERI-
8 4. HYDRAULIC FRACTURING LIQUIDS AND LIQUID WASTE FROM DRILLING MAY NOT
9 BE STORED IN OPEN LAGOONS, BUT MUST BE KEPT IN CORROSION PROOF TANKS.
10 5. NOTWITHSTANDING ANY OTHER PROVISION OF LAW OR ADMINISTRATIVE DETER-
11 MINATION, HYDRAULIC FRACTURING MATERIAL SHALL BE REGARDED AS HAZARDOUS
12 WASTE AND TREATED AND DISPOSED OF AS SUCH.
13 6. THE DEPARTMENT SHALL ISSUE REGULATIONS REQUIRING THE TRACKING OF
14 ALL CHEMICAL COMPONENTS OF HYDRAULIC FRACTURING MATERIALS AND SHALL HAVE
15 THE POWER TO ENFORCE SUCH REGULATIONS BY APPROPRIATE FINES AND CEASE AND
16 DESIST ORDERS.
17 S 23-2905. PROTECTION OF OTHER ENVIRONMENTAL RESOURCES.
18 1. DRILLERS OF NATURAL GAS SHALL BE RESPONSIBLE FOR MITIGATING ALL
19 DAMAGE TO ANY REGULATED ENVIRONMENTAL RESOURCES, INCLUDING BUT NOT
20 LIMITED TO AIR, WETLANDS, STREAM CORRIDORS, AND ENDANGERED AND THREAT-
21 ENED SPECIES HABITAT.
22 2. WELL PERMITS FOR THE DRILLING OF NATURAL GAS SHALL NOT BE GRANTED
23 IN ANY AREA WHERE SUCH DRILLING SHALL ADVERSELY IMPACT THE RECOVERY OF
24 THREATENED OR ENDANGERED SPECIES OR WHERE IT SHALL DESTROY OR DEGRADE
25 OTHER UNIQUE NATURAL OR SCENIC RESOURCES. WELL PERMITS FOR THE DRILLING
26 OF NATURAL GAS SHALL NOT BE GRANTED IN ANY AREA THAT IS DESIGNATED AS
27 FOREVER WILD UNDER THE STATE CONSTITUTION OR LAWS, IN STATE PARKS, IN
28 AREAS IDENTIFIED FOR STATE ACQUISITION AND/OR PROTECTION UNDER THE STATE
29 OPEN SPACE PLAN, OR IN STATE FORESTS AND STATE PARKS.
30 3. APPLICATIONS FOR A WELL PERMIT FOR THE DRILLING OF NATURAL GAS
31 SHALL INCLUDE AN ASSESSMENT OF ITS IMPACT ON LOCAL BIODIVERSITY
32 RESOURCES AND A SHOWING THAT SUCH DRILLING SHALL BE WITHIN THE LEASEHOLD
33 AT THE LOWEST IMPACT POINT ON WILDLIFE. TO MINIMIZE IMPACT THROUGH
34 EITHER GROUND DISTURBANCE OR TRAFFIC, ALL EFFORTS SHALL BE MADE TO CLUS-
35 TER WELLS, CENTRALIZE OPERATIONS, AND USE TELEMETRY. IF NECESSARY,
36 SEASONAL RESTRICTIONS SHALL BE IMPOSED TO PROTECT WILDLIFE BREEDING OR
38 4. APPLICATIONS FOR A WELL PERMIT FOR THE DRILLING OF NATURAL GAS
39 SHALL LIST ALL EXPECTED EMISSIONS OF AIR POLLUTANTS, INCLUDING, BUT NOT
40 LIMITED TO, ALL GREENHOUSE GASES SUCH AS METHANE. THE DEPARTMENT SHALL
41 HAVE THE AUTHORITY TO SPECIFY LIMITS ON ALL SUCH AIR EMISSIONS AS A
42 CONDITION OF GRANTING SUCH PERMIT, TO REQUIRE APPROPRIATE EMISSIONS
43 MONITORING AND CONTROLS BY THE OPERATOR, AND TO DENY ANY PERMIT WHOSE
44 OPERATION SHALL BE INCONSISTENT WITH STATE POLICY AND REGULATIONS WITH
45 RESPECT TO ADDRESSING GLOBAL WARMING.
46 S 23-2907. PROTECTION OF LOCAL RESOURCES.
47 1. THE DEPARTMENT SHALL HAVE THE AUTHORITY TO IMPOSE FEES TO COMPEN-
48 SATE LOCAL GOVERNMENT FOR ANY COSTS OR IMPACTS IMPOSED UPON SUCH GOVERN-
49 MENTS AS A RESULT OF DRILLING FOR NATURAL GAS.
50 2. THE DEPARTMENT, IN ITS PERMITTING DECISIONS, SHALL TAKE CARE TO
51 INSURE THAT NATURAL GAS WELLS ARE SITUATED IN WAYS THAT MAXIMIZE FIELD
52 PRODUCTIVITY WHILE MINIMIZING IMPACTS ON THE LANDSCAPE. FOR THIS
53 PURPOSE, THE DEPARTMENT MAY, WITHIN SPECIFIC REGIONAL AREAS, ESTABLISH
54 PROCEDURES TO REQUIRE PERIODIC BATCH PROCESSING OF PERMIT APPLICATIONS,
55 INCLUDING MANDATORY DATES FOR APPLICATION SUBMISSION, AND MAY IMPOSE
56 WELL CLUSTERING, CENTRALIZED OPERATIONS, AND THE USE OF TELEMETRY.
A. 8748 5
1 3. ALL SITING OF NATURAL GAS DRILLING ACTIVITY SHALL CONFORM TO LOCAL
3 4. ANY PERMIT HOLDER SHALL BE REQUIRED, AT THE END OF ITS DRILLING
4 OPERATIONS, TO FULLY RESTORE THE DRILL SITE TO ITS PREVIOUS NATURAL
5 CONDITION. TO ENFORCE THE PROVISIONS OF THIS SUBDIVISION, BEFORE ANY
6 LAND CLEARING OPERATIONS RELATED TO DRILLING ARE COMMENCED, SUCH PERMIT
7 HOLDER SHALL FILE WITH THE DEPARTMENT, A NON-REVOCABLE AND BANKRUPTCY
8 PROOF BOND SUFFICIENT, UNDER REGULATIONS TO BE ISSUED BY THE DEPARTMENT,
9 TO COVER ALL FORESEEABLE COSTS OF SITE RESTORATION.
10 5. GAS DRILLING OPERATIONS SHALL BE CONDUCTED IN A MANNER THAT SHALL
11 NOT BURDEN ADJACENT LANDOWNERS AND RESIDENTS. NO NOISE AUDIBLE INDOORS
12 IN RESIDENCES LOCATED ON ADJACENT PROPERTY SHALL BE PERMITTED BETWEEN
13 THE HOURS OF 8:00 PM AND 8:00 AM ON WEEKDAYS AND 6:00 PM AND 10:00 AM ON
14 WEEKENDS. SIMILARLY, NIGHT LIGHTING SHALL NOT BE OBTRUSIVE OR DISRUPTIVE
15 OF LIFE FOR SUCH ADJACENT LANDOWNERS AND RESIDENTS. THE DEPARTMENT SHALL
16 ENFORCE THE PROVISIONS OF THIS SUBDIVISION BY APPROPRIATE REGULATIONS
17 INCLUDING A SYSTEM OF FINES, AND SHALL FURTHER HAVE THE POWER TO ISSUE
18 CEASE AND DESIST ORDERS TO ENFORCE THESE PROTECTIONS AND PROTECT THE
19 QUIET ENJOYMENT OF LOCAL RESIDENTS.
20 6. LANDOWNERS FORCED INTO A PRODUCTION POOL SHALL BE ENTITLED TO
21 RECEIVE THE HIGHEST PAYMENT THAT ANY OTHER POOL MEMBER RECEIVES.
22 7. ANY LANDOWNER WHO ENTERS INTO A CONTRACT OR LEASE TO PERMIT THE
23 DRILLING FOR NATURAL GAS ON SUCH LANDOWNER'S PROPERTY SHALL HAVE A THIR-
24 TY DAY RIGHT OF RECISSION WITH RESPECT TO SUCH CONTRACT. DURING SUCH
25 THIRTY DAY PERIOD, SUCH LANDOWNER MAY CANCEL SUCH CONTRACT OR LEASE AT
26 ANY TIME WITHOUT PENALTY.
27 8. NO WELL PERMIT FOR THE DRILLING OF NATURAL GAS SHALL BE GRANTED FOR
28 A PERIOD LONGER THAN TEN YEARS. ANY PERMIT UNDER WHICH ACTUAL NATURAL
29 GAS EXTRACTION IS NOT UNDERTAKEN WITHIN FIVE YEARS SHALL EXPIRE AND BE
30 DEEMED NULL AND VOID.
31 9. THE DEPARTMENT, IN CONSULTATION WITH THE ATTORNEY GENERAL, SHALL
32 ISSUE GUIDANCE DOCUMENTS TO LANDOWNERS, WITH RESPECT TO THEIR RIGHTS
33 WITH RESPECT TO NATURAL GAS DRILLING CONTRACTS AND LEASES. THE DEPART-
34 MENT IS HEREBY AUTHORIZED TO REQUIRE STANDARD PROVISIONS IN SUCH
35 CONTRACTS OR LEASES IN ORDER TO PREVENT UNFAIR TREATMENT OF LANDOWNERS.
36 10. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, NATURAL GAS DRILLERS
37 SHALL BE RESPONSIBLE FOR THE COSTS OF ALL ENVIRONMENTAL DAMAGE WHICH
38 OCCURRED IN THE PROCESS OF DRILLING FOR AND EXTRACTING NATURAL GAS. THE
39 DEPARTMENT MAY REQUIRE THE PROVISION OF APPROPRIATE FINANCIAL SECURITY
40 TO ENSURE LANDOWNERS ARE PROTECTED FROM ANY CONTINGENT LIABILITY. SHOULD
41 DRILLING ACTIVITY LEAD TO DESIGNATION AS A BROWNFIELD SITE, AS DEFINED
42 IN SUBDIVISION TWO OF SECTION 27-1405 OF THIS CHAPTER, SUCH DRILLER, NOT
43 THE LANDOWNER, SHALL BE CONSIDERED TO BE PARTY IN THE CHAIN OF RESPONSI-
45 S 23-2909. WATER WITHDRAWALS.
46 ALL SURFACE OR GROUNDWATER WITHDRAWALS OF MORE THAN FIVE THOUSAND
47 GALLONS A DAY FOR NATURAL GAS DRILLING PURPOSES, OR MORE THAN ONE
48 PERCENT OF IN STREAM FLOW, SHALL REQUIRE A PERMIT FROM THE DEPARTMENT.
49 THE DEPARTMENT SHALL ISSUE REGULATIONS GOVERNING SUCH WITHDRAWALS,
50 INCLUDING PROVISIONS TO ASSURE THAT WATER WITHDRAWALS ARE LIMITED TO
51 LEVELS THAT DO NOT HARM STREAM ECOLOGY OR FISHERY RESOURCES.
52 S 23-2911. ENFORCEMENT AND FINANCIAL SECURITY.
53 1. NO PERMIT FOR THE DRILLING OF NATURAL GAS SHALL BE GRANTED IF SUCH
54 APPLICANT HAS FAILED TO MEET HIS ENVIRONMENTAL AND FINANCIAL OBLIGATIONS
55 UNDER A PREVIOUS PERMIT OR IF SUCH APPLICANT HAS UNPAID FINANCIAL
A. 8748 6
1 LIABILITIES TO EITHER THE STATE, A LOCAL GOVERNMENT OR A PRIVATE LAND-
3 2. IN DETERMINING WHETHER OR NOT A PERMIT FOR THE DRILLING OF NATURAL
4 GAS SHALL BE GRANTED, THE DEPARTMENT SHALL CONSIDER THE PRIOR RECORD
5 UNDER PREVIOUS PERMITS OF THE APPLICANT. APPLICANTS WHO HAVE SHOWN A
6 PATTERN OF VIOLATION OF PERMIT CONDITIONS OR A LACK OF A PROPER STANDARD
7 OF CARE IN DRILLING OPERATIONS SHALL NOT BE GRANTED A PERMIT.
8 3. A PERMIT FOR THE DRILLING OF NATURAL GAS SHALL INCLUDE APPLICABLE
9 LEASE DOCUMENTS BETWEEN THE DRILLING COMPANY AND THE LANDOWNER OR LAND-
10 OWNERS FOR THE DRILLING SITE FOR WHICH THE APPLICATION IS MADE.
11 4. A PERMIT APPLICATION SHALL INCLUDE A COMPREHENSIVE HYDROLOGICAL
12 ASSESSMENT OF THE SUBSURFACE STRATA INCLUDING THE POTENTIAL FOR ANY
13 FISSURING THAT WOULD DRAW HYDRAULIC FRACTURING FLUID, NATURAL GAS OR
14 OTHER POLLUTANTS INTO WATER BEARING AQUIFER STRATA.
15 5. THE DEPARTMENT SHALL PROVIDE FOR UNANNOUNCED INSPECTIONS OF ALL
16 NATURAL GAS DRILLING SITES AND FOR THE PROVISION OF SOIL TESTING TO
17 DETERMINE THE PRESENCE OF UNREPORTED SPILLS.
18 6. THE DEPARTMENT SHALL REQUIRE THAT ALL CASING CONSTRUCTION BE
19 CARRIED OUT IN THE PRESENCE OF INDEPENDENT QUALITY CONTROL ENGINEERS.
20 THE DEPARTMENT SHALL HAVE THE AUTHORITY TO SPECIFY STANDARDS FOR CASING
21 CONSTRUCTION, INCLUDING COMPOSITION OF CONCRETE AND OTHER TECHNICAL
22 PARAMETERS FOR DEEP WELL CONSTRUCTION TO INSURE MAXIMUM CASING INTEGRITY
23 AND PREVENT LEAKAGE OF HYDRAULIC FRACTURING COMPOUNDS, NATURAL GAS AND
24 OTHER SUBSURFACE MATERIALS INTO WATER BEARING STRATA. THE DEPARTMENT
25 SHALL, OVER THE LIFE OF THE WELL, CARRY OUT PERIODIC INSPECTIONS TO
26 ENSURE THAT CASING INTEGRITY IS MAINTAINED.
27 S 23-2913. OTHER PROVISIONS.
28 1. THE STATE COMPTROLLER SHALL ANNUALLY AUDIT ALL ROYALTY PAYMENTS TO
29 THE STATE AND LOCAL GOVERNMENTS, INCLUDING THE GAS PRODUCTION AND SALES
30 FIGURES ON WHICH THEY ARE BASED, AND SHALL HAVE THE AUTHORITY TO REQUIRE
31 APPROPRIATE FISCAL REPORTING AND RECORD KEEPING BY BOTH NATURAL GAS
32 PRODUCERS AND OTHER DEPARTMENTS OF STATE GOVERNMENT CHARGED WITH THEIR
34 2. THE STATE COMPTROLLER SHALL HAVE THE AUTHORITY TO PERIODICALLY
35 AUDIT PAYMENTS MADE UNDER DRILLING CONTRACTS AND LEASES TO PRIVATE LAND-
36 OWNERS, INCLUDING THE GAS PRODUCTION AND SALES FIGURES ON WHICH THEY ARE
37 BASED, TO DETERMINE THAT THEY ARE IN COMPLIANCE WITH THE PROVISIONS OF
38 THE CONTRACT OR LEASE AND ALL APPLICABLE LAWS.
39 3. THE DEPARTMENT SHALL ESTABLISH AN IMPARTIAL TECHNICAL ADVISORY
40 COMMITTEE, WHOSE RESEARCH AND WORK SHALL BE SUPPORTED BY PERMIT FEES, TO
41 REVIEW AND ISSUE GUIDANCE DOCUMENTS ON GAS DRILLING BEST PRACTICES.
42 SUCH COMMITTEE SHALL INCLUDE AT LEAST ONE REPRESENTATIVE FROM THE
43 FOLLOWING INTEREST GROUPS: THE ENVIRONMENTAL COMMUNITY; THE PUBLIC
44 HEALTH COMMUNITY; AND THE GAS DRILLING INDUSTRY, ALONG WITH PERSONS FROM
45 THE DEPARTMENT OR OTHERS THE DEPARTMENT DEEMS APPROPRIATE. THE DEPART-
46 MENT MAY REQUIRE COMPLIANCE WITH SUCH PRACTICES AS A CONDITION OF PERMIT
48 S 3. This act shall take effect on the one hundred twentieth day after
49 it shall have become a law, provided, however, that effective immediate-
50 ly, the addition, amendment and/or repeal of any rule or regulation
51 necessary for the implementation of this act on its effective date is
52 authorized to be made and completed on or before such date.
The DEC has just released the Final Scope that outlines the topics that will be reviewed in the SGEIS (Supplemental Generic Environmental Impact Statement), expected out sometime this spring.
The SGEIS will analyze the potential impacts of shale gas development using horizontal drilling and high-volume hydraulic fracturing, with particular attention to issues associated with multi-well drilling sites. Heightened attention to the latter topic is a direct result of the scoping process, which also resulted in the following significant additions to the scope:
• Effectiveness of regulations in other oil and gas producing states where high-volume hydraulic fracturing of shale and other low-permeability reservoirs is used.
• Setbacks for multi-well sites and high volume hydraulic fracturing operations from private dwellings or buildings, surface waterbodies, private water wells and springs used for domestic water supply.
• Potential requirements for private water well sampling, testing and monitoring by gas well operators.
• Feasibility analysis of requiring use of green or non-chemical fracturing technology.
• Mechanisms to require notification, review and Department approval of re-fracturing operations.
• Specific air quality topics.
• Evaluation of a phased permitting alternative to the proposed action.
Additional background information was also added to the scope regarding topics which do not require analysis in the SGEIS because the Department already has programs in place to address them.
Lastly, the Final Scope also identifies “prominent issues that were raised during scoping and determined to be not relevant or not environmentally significant or that have been adequately addressed in a prior environmental review.” [6 NYCRR 617.8(f)(7)]
The volume and breadth of the comments received and their careful consideration allows the Department to issue this Final Scope with confidence that the SGEIS will address all relevant potentially significant adverse impacts. The Final Scope will be followed in the Spring of 2009 with a draft SGEIS, and you will have an opportunity to provide comments on that document as well.
by Tom Wilber, Staff Writer February 16, 2009
A review of regulations associated with natural gas drilling is on schedule to be completed this summer, and that could clear the way for energy companies to begin work in the Southern Tier.
Efforts to tap natural gas from the Marcellus Shale deposit were put on hold last summer while the state Department of Environmental Conservation assessed drilling's impact on water, the landscape and communities.
Officials completed another major step in that review earlier this month that laid the groundwork for a regulatory overhaul to oversee a surge in drilling volume and intensity expected with the Marcellus.
"We remain on track to complete this process in the summer," Lori Severino, a spokeswoman for the DEC, said last week. George Miner, president of Southern Tier Economic Growth in
"If that goes through, we'll be back to creating a lot of jobs here," he said
One of those sources of jobs would be Schlumberger Technology Corp., a Houston-based company in the gas exploration field that has purchased 87 acres in The Center in Horseheads for a complex where at least 300 people would work.
Miner said approval of the regulations would speed up Schlumberger's construction timetable.
"They're still going ahead with the project to service
Natural gas companies plan to acquire fewer leases in 2009
Friday, January 16, 2009 Pittsburgh Business Times - by Anya Litvak
No one’s knocking on Gary Sheppard’s door. And judging from the calls he gets as a gas lease educator, no one’s knocking on doors anywhere else.
The land grab in the promising Marcellus Shale has been silenced by a more pressing need: cash.
“Which makes sense because the sheer dollars going around were monstrous,” Sheppard said. “We saw them hit that $3,000 per acre mark. We saw royalty rates change. We heard 17, 18, 19 percent. Of course, we don’t hear anything now. It’s quiet as a mouse.”
For many oil and gas companies looking to secure their fortune in the natural gas reservoir that spans most of the state, the strategy was to grab first and develop later.
Of the estimated $4 billion that has gone into the Marcellus gas play so far, almost three quarters went to land acquisition, said Louis D’Amico, executive director of
But as credit markets collapsed, oil and gas companies no longer had the option of accumulating nonproducing resources at the same rate. A common phrase for 2009 prospectives became “balancing the balance sheet.”
Chesapeake Energy Corp., the nation’s largest natural gas producer and the biggest leaseholder in the Marcellus Shale, drafted a 2009 budget with a $2.2 billion, or 78 percent, reduction in acquisition dollars from last year’s allocation.
Marcellus Shale acreage runner up Range Resources said it will shift its focus on development, cutting leasehold dollars by two-thirds this year. Range currently has 900,000 acres of leased land in Pennsylvania.
“The economy as a whole is experiencing difficult times and companies are being more selective in leasing,” said Ray Walker, vice president of the Appalachia Shale division of Range Resources, in an e-mail.
Denver-based St. Mary Land & Exploration Co., while cautiously announcing its entry into the Marcellus Shale field, told investors it will slash its 2009 exploration and development budget by 54 percent of the 2008 figure.
At least one company is pulling out all together. Canadian-based Unbridled Energy Corp., which set up an office in Sewickley and shelled out a half a million dollars for oil and gas leases in Tioga county, said in late December that it would abandon the venture, along with its interest in 8,000 acres of the Marcellus Shale play, citing “dramatic changes in both the oil and gas industry and the national economy, combined with the extremely tight capital markets.” Instead, the company will focus on developing already held properties in New York.
It is the liquidity crisis, in part, that spurred Moon Township-based Atlas America to “significantly” cut its acquisition budget for 2009, said company President Rich Weber, who declined to disclose a dollar figure for the cuts. “We are still actively seeking additional leases,” in areas strategic to the company’s Marcellus Shale portfolio, he said.
Weber, like others in the field, understands that the lull is not a permanent state. The plunge in energy prices will level and climb back up, said EOG Resources CEO Mark Papa, speaking at last month’s Deloitte Oil & Gas Conference.
“Worldwide oil supply growth prospects are weak and, within five years, oil prices will likely be much higher than today,” his slide show warned.
And while the long-term perspective may soothe long-term worries, gas prices and oil and gas company portfolios are changing to accommodate today.
EOG, one of the largest land holders in the Marcellus Shale, announced Jan. 8 that it will reveal revised production growth targets in February, “due to the current uncertainty in hydrocarbon markets.”
Locally, the good news is that land lulls have spread across the nation.
A few months ago, Bob Dawson, the mid-continent client relations manager with the Texas-based Oil and Gas Clearinghouse, brokered deals where energy companies gobbled up land in Louisiana’s Hainesville Shale at $30,000 per acre.
But just a few days ago, when he tried to unload a property in the same southern rock bed, Dawson couldn’t fetch a single bid.
Frankly, he said, “there was a period of time, six to eight months ago, when people were just way overpaying. You spend $30,000 an acre and you have to drill an $8 (million) to $12 million well.”
Sheppard, who serves as Penn State Extension’s Westmoreland County director, now fields calls from landowners looking to get someone, anyone, interested in leasing their land. He has no answer.
“If the industry is saying ‘Hey, we’ve gotta focus on creating cash flow right now,’ you can understand that,” he said.