* NY officials say gas drilling threatens water
* Industry maintains drilling can be done safely
By Edith Honan
NEW YORK, Oct 23 (Reuters) - New York City officials and environmental groups on Friday urged a ban on natural gas drilling in the city's watersheds, fearing it could contaminate the city's water supply.
Their concern potentially opens a new obstacle for energy companies that extract natural gas from shale formations through a process called hydraulic fracturing, or fracking.
Environmentalists say fracking contaminates groundwater but the industry maintains that strict safeguards prevent any danger to water supplies.
New York State has proposed new environmental rules that would allow drilling for natural gas in the multi-state Marcellus Shale formation, which includes upstate New York. But city officials said drilling should be off limits in watersheds that serve almost 10 million people in and around New York City.
In hydraulic fracturing, a mixture of water, chemicals and other materials like sand are pumped into the shale formation to split the rock and free the trapped gas. Critics say this could result in contaminated ground water.
"This is not a risk that is worth taking when we are talking about something as fundamental as the city's water supply," City Council Speaker Christine Quinn told Reuters.
The New York City Council held a hearing on the issue on Friday and is expected to pass a resolution next week that will ask New York Governor David Paterson to prohibit drilling within the boundaries of the city-owned watershed north of the metropolitan area. Quinn said the city watershed accounts for 6 percent of the shale area in New York state.
No one from the industry was called to testify on Friday.
Quinn and others expressed concern the city would be forced to invest in a $10 billion water filtration system if drilling were permitted. The system would cost hundreds of millions of dollars each year to maintain, officials said.
"We didn't have the money to do that before the recession, and we certainly don't have the money to do it now," Quinn said.
A spokesman for Mayor Michael Bloomberg said the city is studying the matter.
The huge Marcellus Shale formation, which extends across much of Pennsylvania and parts of West Virginia, Ohio and New York, is likely the nation's largest shale reservoir and geologists say it could satisfy U.S. natural gas demand for a decade or more.
Shale gas, or gas trapped in sedimentary beds, is seen as having the potential to provide the United States with affordable fuel that will help drive economic growth, reduce dependence on foreign oil and limit emissions for decades.