Gas drillers find welcome mat in New York state

BINGHAMTON, New York (Reuters) - New York landowners whose properties sit on the gas-rich Marcellus Shale are pushing back against calls for greater environmental regulation, saying it has halted the U.S. gas drilling boom at the New York border.

Alex Knapp (L) and his father Albert Knapp of Berkshire, hold placards as they protest in favor of the drilling process of hydraulic fracturing to extract natural gas at the Capitol in Albany, New York January 25, 2010. REUTERS/Hans Pennink

Their concerns have opened a new front in the gas drilling wars, in which environmentalists and neighbors opposed to seeing gas wells in their back yards have put a drag on the exponential growth of onshore U.S. natural gas production.

A group of landowners who stand to earn a windfall from leasing their property to companies like Chesapeake Energy gathered in the town of Binghamton recently to push back against claims that drilling could pose health hazards.

“This is a very depressed area and this is something that will turn this whole community around,” said Dan Fitzsimmons, 54, a leader of the Joint Landowners Coalition, which includes 17,500 families.

“If people are educated with the facts and not with environmental scare rhetoric, I think this thing will move along very quickly,” he said.

Development of the massive Marcellus Shale in several northeastern states holds the promise of providing the United States with an abundant, relatively clean domestic energy source, but environmental concerns that shale gas drilling could contaminate drinking water have created regulatory risk.

New York City, for example, has urged a ban on drilling in its upstate watershed, an unfiltered system that serves 9 million people and accounts for 6 percent of the Marcellus Shale area in New York state.

Critics point to the rural Pennsylvania town where residents recently sued Cabot Oil & Gas Corp, claiming the company’s natural-gas drilling has contaminated their water wells with toxic chemicals and reduced their property values.

New York landowners see a flurry of drilling activity just over the border in Pennsylvania and wonder why it cannot happen in New York, where the state is trying to close an $8.2 billion budget deficit.

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Industry sources privately express their exasperation with New York, saying they have all but given up on the state.

One to two years of drilling in New York could generate $1.4 billion of economic activity, including $108 million in payments to landowners and the creation of hundreds of jobs, according to the Independent Oil & Gas Association of New York.

At issue is a process known as hydraulic fracturing, in which 3.5 million gallons (13.25 million liters) per well plus sand and diluted chemicals are pumped into shale formations at high pressures, cracking the rock and freeing the gas.

“New York state, because of its great environmental laws, has a tremendous opportunity to be a national leader in how this process evolves,” said James Simpson, a staff attorney at environmental group Riverkeeper.

“There’s no question that hydraulic fracturing is here to stay throughout the country and New York state is positioned uniquely to do it right,” he said.


In 2008, Governor David Paterson ordered the Department of Environmental Conservation to study the impact of high-volume horizontal hydraulic fracturing, a process that enables drilling in multiple directions from a single drilling pad.

Chesapeake, the second largest producer of U.S. natural gas, has leased the mineral rights for 1 million acres in New York state. The Oklahoma-based energy company says the process is already heavily regulated and there has never been a documented case of ground water contamination because of hydraulic fracturing.

“There has been a lot of non-factual information shared with the public,” David Spigelmyer, Chesapeake Energy’s vice president for government relations, told Reuters.

The company has fought new federal regulation including the proposed Frac Act, which would give the U.S. Environmental Protection Agency more oversight over natural gas drilling.

“We believe the states are much more ideally positioned to ... regulate this industry,” Spigelmyer said.

Environmentalists -- including many that tout natural gas as a cleaner alternative to other oil and coal -- say the industry has been unwilling to meet them half way.

“As long as the natural gas industry continues to insist that these concerns, these environmental, economic, public health, landowner concerns, are not real... the more powerful this movement will grow,” said Albert Appleton, who headed the New York City Department of Environmental Protection in the 1990s.

Earlier this month, the Onondaga County legislature -- which includes the city of Syracuse -- voted to ban hydraulic fracturing on county-owned land until impacts are studied.

Attitudes are different in Binghamton, a city of less than 50,000 people, where advocates of drilling point to boarded-up store fronts on Main Street.

“We stand on the edge of something here, when done correctly, that can change our area,” said Bryant La Tourette, 47, a landowner who heads the Oxford Land Group. “I don’t see right now any other business that can come here and make this much of an economic impact.”

Additional reporting by Jon Hurdle; Editing by Daniel Trotta