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New York Explores Horizontal Drilling in Marcellus Shale

New York Gov. David A. Paterson signed into law last Wednesday a measure that extends the state's uniform well spacing system to include additional wells and drilling activity, including horizontal well drilling, which he said would lead to greater efficiency in processing well permits, notably aimed at drilling for natural gas in the Marcellus Shale formation.

And following right along, the states's Department of Environmental Conservation (DEC) two days later initiated a public process to review its oil and natural gas regulations to include rules for horizontal gas drilling activities.

"Natural gas exploration has the potential to increase domestic supplies of natural gas, create jobs, expand the tax base and benefit the upstate economy. My administration is committed to working with the public and local governments to ensure that if the drilling goes forward, it takes place in the most environmentally responsible way possible. This new law will ensure greater efficiency in the processing of requests to permit oil and gas wells, while maintaining environmental and public health safeguards," Paterson said.

The state's Environmental Conservation Law previously established "spacing units" and "set back" requirements only for some types of drilling activity that did not include horizontal drilling. The bill also adds requirements about how wells may be located within spacing units.

There had been some opposition, particularly to the water requirements necessary for horizontal drilling into the shale field. "Let it be clear: DEC [the New York Department of Environmental Conservation] will be vigilant in ensuring environmental safeguards. Water protection will be a top priority," said DEC Commissioner Pete Grannis.

The governor's office noted the heightened public attention around drilling for natural gas in the Marcellus Shale formation, situated primarily in New York's Southern Tier and the Catskills. To date, four drilling applications have been received by DEC for gas wells in Chenango, Tioga and Chemung counties.

Two days after the governor signed the new law, the DEC announced it has begun work on a supplement to the department's generic environmental impact statement (GEIS), which guides the environmental review of New York's oil, gas and solution mining regulatory program. Specifically, the supplement would address the potential environmental impacts of horizontal gas drilling in the Marcellus Shale formation, which stretches from West Virginia to New York. Horizontal drilling has been used routinely in tight gas formations like the Marcellus Shale for about eight years; but the GEIS was issued in 1992, DEC noted.

While the supplemental GEIS is considered, any entity that applies for a drilling permit for horizontal drilling in the Marcellus Shale and opts to proceed with its permit application would be required to undertake an individual, site-specific environmental review, the DEC said. The review would have to take into account the same issues being considered in the supplemental GEIS process and would have to be consistent with the requirements of State Environmental Quality Review Act and the state Environmental Conservation Law. Four drilling applications have been filed by companies at this point, DEC said.

The supplemental GEIS would address potential adverse impacts resulting primarily from the large volumes of water needed to hydraulically fracture the shale. These potential impacts relate to both the sources of water and any additives used to facilitate fracturing, and the recovery, handling and disposal of water during and after drilling concludes, the DEC stated. In its review, DEC also plans to evaluate the "full range of other environmental impacts that may result from this drilling activity."

By the end of this summer, DEC expects to make a draft scoping document made available for public review and comment. To that end, DEC is planning a series of public hearings beginning in September across the Southern Tier of the state and in the Catskills. A draft Supplemental GEIS is expected to be ready for public review by early next year, DEC said.

In addition, DEC is reviewing a variety of other areas, including staff resources, existing regulations, jurisdiction over water withdrawals, permit application fees and procedures, and legal and regulatory compliance, that could be implicated by increased drilling activity. Because drilling activity impacts local governments as well, DEC will also be looking at ways to enhance the role of local governments in the regulatory process and compliance.

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