Insight: NY water at risk from lack of natgas inspectors?

NEW YORK Fri Jul 29, 2011 1:49pm EDT

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NEW YORK (Reuters) - New York state may have enough natural gas to spark an energy boom, but it could lack the inspectors needed to ensure drilling won't foul its other prized resource -- water.

Home to a portion of the Marcellus shale formation, the country's richest natural gas deposit, New York is mulling plans to end a year-long moratorium on drilling. The ban was put in place due to concerns that a new extraction technique called hydraulic fracturing, or fracking, contaminates water wells.

But the state Department of Environmental Conservation (DEC) has only 14 well inspectors to oversee 13,000 wells. With staff and budget constraints, the agency will struggle to keep up with the flood of drilling applications expected from companies keen to develop untapped reserves should the state lift its ban.

Neighboring Pennsylvania, whose natural gas production has rocketed in recent years thanks to drilling in its slice of the Marcellus, has 202 workers charged with oil and gas inspections for more than 22,000 wells. Eighty-eight of these staffers specialize in actual well inspection.

"Clearly 14 well inspectors is woefully short, they are going to need a lot more," said Timothy Considine, a professor of energy economics at the University of Wyoming and an advocate for drilling in New York.

"The drilling activity in New York could rival Pennsylvania and the requirements for inspections would be pretty significant."

In a draft environmental impact statement this month, the DEC recommended that drilling go ahead with tight regulations, including keeping gas wells away from precious aquifers that supply fresh drinking water for more than 8 million New York City residents and millions more in other cities in the state.

If the ban is lifted, the DEC expects an average of 1,600 drilling applications per year over 30 years, with busy years attracting up to 2,500 applications, it said in its report. Leases could be handed out as early as January 2012.

Fracking involves blasting shale rock with millions of gallons of chemical-laced water to release natural gas trapped in shale rock. While fracking has unlocked huge reserves of natural gas across the United States, environmentalists say the process contaminates water supplies.

Problems of soured water wells or flammable tap water in Pennsylvania have been attributed to methane migration from gas wells due to shoddy casing and cementing, two key areas that well inspectors would check.

So far this year 7,000 inspections have taken place in Pennsylvania compared to 2,460 in New York for the whole of 2010.

TRAINING, FUNDING

Well inspectors take time to train, time the DEC might not have if drilling permits are dished out next year, experts say.

"To be an effective inspector takes five years, at least -- training, shadowing, participating in seminars," said Robert Watson, a professor of petroleum and natural gas engineering at Pennsylvania State University, and also an advocate of drilling in New York.

"It is important to slow the progress of drilling in order for the inspectors to catch up and learn what is going on," he said.

Inspectors monitor all aspects of well drilling, including enforcing well casing and cementing standards and checking wastewater pits and erosion. Most inspectors need about 10 years of industry experience before they are eligible for hire.

The DEC currently has no clear plan for increasing staff, but an advisory panel was set up this month to look into regulatory enforcement and how that can be funded.

"Drilling permits will only be issued consistent with DEC's ability to review and oversee drilling activities and ensure compliance with requirements, regulations and the Environmental Conservation Law," a DEC spokeswoman said.

New York's small ranks of inspection personnel is not unique. In Colorado, where there is more conventional gas drilling, there are just 15 inspectors for 45,401 active wells. Still, in Texas, home to a number of shale plays, there are 88 inspectors.

But the state of New York finances may make staff increases difficult. Last year the DEC lost 131 staff in budget cuts, including one well inspector. Pete Grannis, the DEC Commissioner at the time when the job cuts were being considered, said in a memo that staff cuts would hamper the DEC's ability to inspect oil and gas wells.

One remedy against staffing problems is to have industry pay for it, a method which has helped bolster the inspection ranks in Pennsylvania.

In 2010, after an increase in drilling application fees, the Pennsylvania DEP was able to add 68 people to the 134 already working on oil and gas wells. Pennsylvania's oil and gas program budget is just over $20 million a year, a DEP spokesman said.

"We will be looking at mechanisms for making the industry responsible for the costs of funding adequate inspectors," said Kate Sinding a lawyer with the Natural Resources Defense Council which is looking into the DEC's draft impact statement.

A spokesman for New York state said budget decisions for the DEC will be made after the advisory panel announces its findings.

(Reporting by Edward McAllister; Editing by David Gregorio)

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