Denver-based Inflection Energy has leased 3,000 additional acres in Broome County, NY, in the midst of the Marcellus Shale, bringing the total under its control in the state to approximately 15,000 acres. The county is located on the border with Pennsylvania, where the privately held exploration and production company holds more than 6,000 acres.
Inflection will have to clear local and state hurdles before it can begin drilling on the acreage. Twice last year Broome County legislators rejected applications from Inflection to lease acreage for natural gas drilling (see Shale Daily, Nov. 22, 2010), and New York -- which has operated under a de facto moratorium on horizontal drilling for nearly three years (see Daily GPI, July 28, 2008) -- is considering legislation to suspend until June 1, 2012 the issuance of new permits to drill that use hydraulic fracturing to extract natural gas or oil (see Shale Daily, May 19).
"We are cautiously optimistic that the regulatory process will come to a close in a manner that will allow this property to be developed," said Inflection CEO Mark Sexton. "At the same time, we remain concerned about the amount of time that it is taking for New York State to establish standards for the development of shale resources in New York State."
Inflection said it spent about $8 million on signing bonuses for the acreage. "Under the lease terms, the landowners agreed to share in the risk of the current regulatory environment by allowing the leases to be extended to accommodate the current moratorium on drilling and completing shale gas wells," Inflection said.
Similar lease deals would likely follow a decision by the state to allow development of shale resources, according to Sexton.
"The landowners and communities in New York's Southern Tier will finally start to realize the economic benefits that Pennsylvanians have been enjoying for several years now if industry is allowed to move forward with environmentally responsible development. The real economic value in New York State will be recognized and appreciated when the natural gas resources in New York State are developed and producing," he said.