* NY takes steps toward allowing natural gas drilling
* Proposed drilling rules face tough scrutiny
* Well casing standards may not be stringent enough
* Tight budget will make enforcing regulations difficult
By Edward McAllister
NEW YORK, July 18 (Reuters) - New York has touted its new rules on natural gas drilling as tough measures meant to keep its drinking water pure, but one cornerstone of its proposed regulation may fall short of existing industry practice.
As New York state moves to lift a year-old drilling ban imposed due to fears over an extraction technique called hydraulic fracturing, or fracking, the New York Department of Environmental Conservation (DEC) this month issued a series of recommendations that will form the basis of future regulation.
As industry and environmental groups pore over the 1,000-page draft environmental impact statement, one section is gaining attention. Natural gas well construction could become a key battleground in the debate over allowing fracking in New York state.
The New York DEC regulations would require natural gas drillers to use three layers of well casing to help prevent flammable gas underground from leaking into local water wells.
Casing helps prevent gas leakage, or methane migration, which can happen when wells drill through or near shallow aquifers.
But in neighboring Pennsylvania, whose regulations are considered less onerous than New York’s, drillers have already taken measures to put more than three layers of casing in most wells. And even with more than three layers of casing, Pennsylvania still has problems with well construction, and worries persist about leakage from wells into water supplies near a number of drilling sites.
Drilling has contaminated water wells near the Marcellus shale formation, according to the Pennsylvania Department of Environmental Protection.
Those problems helped inspire the ban in drilling in the New York portion of the Marcellus, considered the richest U.S. natural gas deposit, holding decades of supply.
“Well casing is a big issue and people should be concerned about that because in other states where they have already been burned, they are doing more,” said James Gennaro, chairman of New York City’s Committee on Environmental Protection.
The top four natural gas drillers in the Pennsylvania portion of the Marcellus shale, which account for about half of the wells drilled there, already commonly use more than three layers, or strings, of well casing, they told Reuters.
“The DEC took from Pennsylvania that if we add a third layer of casing all will be well, but there have almost always been at least three layers of casing in Pennsylvania wells in the Marcellus and in some cases more,” said Tony Ingraffea, professor of engineering at Cornell University in Ithaca, New York. “The DEC is acting as if this is news.” (Factbox on Marcellus Pa. gas drillers: [ID:nN21288012])
The Pennsylvania DEP found that improper casing and cementing led to methane leakage in wells across Pennsylvania’s Marcellus in 2009, many of which had three layers of casing, Ingraffea said.
The issue is central to the question of resuming natural gas drilling in New York. Environmentalists, drillers and lawmakers continue to argue over whether the phenomenon is a natural occurrence or the direct result of fracking.
“It can occur in rare instances, but has nothing to do with hydraulic fracturing,” said Matt Pitzarella, a spokesman for Range Resources one of Pennsylvania’s biggest gas drillers.
Fracking involves blasting shale rock with millions of gallons of chemical-laced water and sand to release trapped gas.
In its environmental impact statement, the DEC said: “Gas migration is a result of poor well construction. As with all gas drilling, well construction practices mandated in New York are designed to prevent gas migration.”
The DEC recommends major watersheds that supply most of New York’s cities remain off limits, and no drilling will go ahead in New York until the DEC’s draft impact statement is finalized after a 60 day comment period starting in August. Permits could be issued as early as Jan. 1, 2012.
Range Resources, the second biggest natural gas driller in the Pennsylvania Marcellus, uses at least four layers of casing in its Marcellus wells.
“Range and most operators set 5 strings fully cemented to surface no matter where we drill in Pennsylvania,” company spokesman Matt Pitzarella said. Range has no plans to drill in New York.
Chesapeake Energy (CHK.N) and Talisman Energy TLM.TO, also major drillers in Pennsylvania, use at least three strings, they said. Chevron, the biggest driller by well number through its acquisition of Atlas Resources, said the majority of its wells use four layers. All three companies have acreage in New York state.
A recent study from Duke University, which said that fracking could be safe if closely monitored, showed drinking water supplies near drilling sites can be affected by gas migration. [ID:nN09253840]
Central to good well construction is the cementing between the well casings. Cement jobs must go to the surface of the well to fully protect shallow aquifers. New York regulation has been increased in the DEC report to include cement bond logs and pressure tests.
“Is better cementing and extra well casing going to solve the problem? I don’t know, but it is something that needs to be looked at,” said John Williams, groundwater specialist for the U.S. Geological Survey in New York.
The National Resources Defense Council, an environmental group, said it was looking at the issue of well casing in the DEC report.
Despite the extensive DEC report, some question whether operations on the ground will actually be different for gas drillers in New York compared to Pennsylvania.
In New York, there are proposed buffers between drilling wells and water sources — 4,000 feet for watersheds, 2,000 feet for primary aquifers, 500 feet for private water wells — and the DEC’s recommendations are far more detailed than the Pennsylvania laws. But where companies can drill, there is the potential for business as usual, some say.
“I don’t believe at first blush that there are going to be substantial differences,” said Thomas West, an attorney representing oil and gas companies in Albany, New York.
“Some of the casing regulation is in the DEC report and this is a case where they have added more detail to the permit conditions, but they might not be actually over-regulating the industry,” West said.
Environmentalists have tentatively praised the DEC report, especially its protection of New York’s prized watersheds, but concerns remain about whether regulations can be enforced. Without constant supervision, oil and gas companies will keep making mistakes, environmentalists say.
But with a tight budget and limited resources, there is concern about New York state’s ability to police drillers.
“You can have great regulations on the books but if there are not armies of people watching and ensuring compliance and taking vigorous enforcement actions when there are violations then those regulations don’t mean anything,” said Deborah Goldberg, a managing attorney at public interest law firm Earthjustice. (Reporting by Edward McAllister; Editing by David Gregorio)