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New York Gas Production Declined Last Year

Natural gas production from wells in New York state hit the fourth-highest level ever last year. However, production of 50.32 Bcf was off 8% from the 2007 level, according to the New York State Department of Environmental Conservation (DEC).

The 2008 production was 9% less than the all-time high of 55.157 Bcf set in 2006. Production was driven by prolific wells in the Trenton-Black River formation in the Finger Lakes region and by increases in production from traditional New York formations.

The Trenton-Black River formation remains New York's dominant gas production zone, accounting for 69% of production in 2008. One hundred wells were productive in the formation, supplying 34.8 Bcf. One well, the "Gross D1" in the town of Corning in Steuben County, produced 2.11 Bcf -- enough to heat more than 30,000 homes for a year. Still, because some of the wells operated only part of the year, Trenton-Black River production was down from 2007 when it produced 41.3 Bcf. That 16% decline was offset by a 13% gain in other producing formations.

While the Trenton-Black River formation has been the dominant play for the past decade, there is significant interest in development of the Marcellus Shale and other unconventional gas reservoirs in New York, DEC said. Trillions of cubic feet of gas -- some estimate as much as 500 Tcf -- lay thousands of feet underground in the Marcellus, which stretches from West Virginia to New York.

DEC said it is assessing the potential environmental impacts from the high-volume hydraulic fracturing process that is typically used to stimulate wells in unconventional plays. The technique has generated controversy in New York and elsewhere over fears that it can lead to polluted groundwater. In New York some are seeking to have the practice banned in the Marcellus Shale (see NGI, June 15; June 8; June 1; March 16). DEC's analysis is to be published in a draft supplemental generic environmental impact statement, expected to be released before the end of this summer.

Oil production increased 3% in 2008 to 397,060 bbl, an increase corresponding with high oil prices during part of the year.

Statewide, 13,684 wells were reported as active in 2008. In addition to oil and gas wells, this included 952 underground natural gas storage wells, 142 brine production wells and 96 geothermal wells. Since the late 1800s, more than 75,000 oil, gas and salt mining wells have been drilled in New York.

"Oil and gas drilling in New York has been around since the 19th century and is an important industry, with hundreds of drilling permits issued every year," said DEC Commissioner Pete Grannis. Market value of oil and gas produced in 2008 is estimated at $486 million. Landowners received $60.9 million in royalties and local government taxes on the market value of production were $14.6 million.

DEC issued 737 drilling permits in 2008, up from 577 in 2007. Permits issued included 429 for natural gas wells, 250 for oil wells, 22 for geothermal wells, 14 for brine production wells, 12 for stratigraphic wells, seven for underground gas storage wells and three for monitoring wells.

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