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Producers to New York Governor: Don't Forget the Gas Underfoot

New York state economic development and business interests -- led by the Independent Oil & Gas Association (IOGA) of New York -- last week reminded Gov. David A. Paterson in a letter that his draft energy plan includes expansion of natural gas exploration. Producers and others are pushing for adoption of new rules that would allow development of the Marcellus Shale gas play, while environmentalists are lobbying for stricter standards.

The 16 groups said they want the governor to stick to his position, which they said is that expanded gas exploration "would generate economic benefits, including increasing the stable supplies of indigenous fuel, lowering gas transportation costs for consumers, generating new state and local tax revenues and increased revenues for landowners from land use agreements with natural gas companies."

Indeed, the draft plan released last year said "production and use of in-state energy resources -- renewable resources and natural gas -- can increase the reliability and security of our energy systems, reduce energy costs and contribute to meeting climate change, public health and environmental objectives. Additionally, by focusing energy investments on in-state opportunities, New York can reduce the amount of dollars 'exported' out of the state to pay for energy resources" (see NGI, Aug. 17, 2009).

The message was delivered to the governor as the New York Department of Environmental Conservation nears the end of a nearly two-year process to develop a draft Supplemental Generic Environmental Impact Statement (SGEIS), which would guide gas extraction practices in the state. The draft SGEIS proposes new standards to monitor gas exploration in the Marcellus Shale (see NGI, Oct. 5, 2009).

While producers and business interests think the new rules are stringent enough, environmentalists and the City of New York have criticized them for not going far enough. Last week the U.S. Environmental Protection Agency weighed in on the draft document, saying it should be expanded and the review should include other state agencies (see related story).

New York City's Department of Environmental Protection said recently that drilling in the Marcellus poses an unacceptable risk to the city's water supply and called for a ban on drilling in the Catskills/Delaware watershed (see related story).

However, the groups led by IOGA said, "The extremely stringent requirements proposed by the SGEIS provide the public with the necessary oversight that natural gas exploration and extraction will be conducted in an environmentally safe manner."

Based on 300 wells drilled, Marcellus Shale development in New York will generate more than $1.4 billion in annual economic impact, including more than $100 million in lease payments to landowners, $32 million in state tax revenue and tens of thousands of new jobs over time, IOGA contends.

IOGA was founded in 1980 to advance the common interests of oil and gas producers, professionals and related industries in the state of New York. Recently the group launched a pro-drilling petition drive (see NGI, Dec. 21, 2009). At mid-December the petition had about 1,900 signatures. As of last Thursday afternoon the tally had grown to more than 3,000, according to the petition website.

Meanwhile, in Pennsylvania environmentalists are raising concern over emissions from trucks, compressors and processing plants associated with gas production from the Marcellus Shale in that state.

Those concerns are nothing new to those active in the more mature Barnett Shale play of Texas. Last year a study by Dallas-based Southern Methodist University reported that emissions from gas production activities during the summer months in the Barnett could exceed on-road motor vehicle emissions. That study was criticized by the industry, but other studies were more ominous. An interim study released in October by the Texas Commission on Environmental Quality on ambient air quality in the region found harmful concentrations of benzene at some drilling locations (see NGI, Dec. 21, 2009).

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