* Drilling called 'unacceptable threat' to drinking water
* Gas industry says shale drilling completely safe
(Adds reaction from mayor, governor, analyst)
By Edith Honan
NEW YORK, Dec 23 New York City urged the state
to ban natural gas drilling in its watershed on Wednesday,
becoming the most powerful opponent to date of a process that
critics say is poisoning drinking water.
Shale gas trapped deep underground is considered one of the
most promising sources of U.S. energy, but environmentalists
and small-town neighbors of drilling operations -- and now the
biggest city in the United States -- are seeking to limit its
The drilling process known as hydraulic fracturing, or
"fracking," involves blasting through rock with a mixture of
water, sand and a proprietary list of chemicals used to split
the shale formation and free trapped gas.
Steven Lawitts, the city's top environmental official,
called fracking techniques "unacceptable threats to the
unfiltered fresh water supply of nine million New Yorkers,"
putting the city at odds with the gas industry, which considers
shale drilling completely safe.
"Based on all the facts, the risks are too great and
drilling simply cannot be permitted in the watershed," said
Marc LaVorgna, a spokesman for Mayor Michael Bloomberg.
The 2,000-square-mile (5,200-square-km) watershed is tiny
compared to the largest known U.S. shale formation, which
extends below the surface in much of Pennsylvania and parts of
New York, Ohio and West Virginia.
The opposition from New York City adds heft to the ranks of
fracking critics and could embolden state and local authorities
elsewhere, though many are strapped for cash and badly need the
revenue that comes with drilling.
Geologists say the Marcellus Shale formation could satisfy
U.S. natural gas demand for a decade or more, providing a
relatively clean form of fossil fuel and helping promote U.S.
New York state Governor David Paterson, who will play a
major role in deciding the future of drilling next year as he
slashes state services to close a $3.2 billion budget deficit,
said he was still listening to "all points of view."
"We've actually extended the public comment period because
of the grave concern that so many who we trust, like the mayor,
are raising in this issue," Paterson told reporters.
Major natural gas producers and oilfield service companies
like Schlumberger Ltd (SLB.N) and Halliburton Co (HAL.N) have a
stake in shale gas production, and Exxon Mobil (XOM.N) cited
the potential for unconventional gas production in its $30
billion bid to take over XTO Energy XTO.N this month.
The deal includes a clause that would allow Exxon Mobil to
back out if the U.S. Congress bans or severely regulates the
process used to extract gas from shale rock.
Some companies like Chesapeake Energy Corp (CHK.N) had
announced they would not seek to drill in the New York
watershed, which lies about 90 miles (140 km) north of the
Terry Engelder, a Penn State University professor of
geosciences, said New York City's demand may improve prospects
for passage of the "Frack Act," federal legislation that would
require gas companies to disclose the chemicals they use.
"It shines a brighter light on the Frack Act because New
York is a significant enough fraction of the U.S. population
that care will be taken," he said.
Ray Deacon, an analyst with energy-focused Pritchard
Capital, acknowledged the reluctance of companies to provide
details on the fracking fluid because "it's kind of the secret
sauce that makes the rock break apart."
Shale drilling companies say the industry maintains strict
safeguards to prevent any danger to water supplies. But
neighbors of drilling in several states report fouled water and
increased illness since drilling began.
Earlier this year, New York state proposed new rules that
would allow drilling for natural gas in the Marcellus Shale
formation. New York City is asking the state to exclude the
watershed from the areas that can be drilled.