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Shale Backers Say Proposed New York Frack Rules Too Restrictive

Several key supporters of shale development in New York say the state Department of Environmental Conservation's (DEC) proposed rules governing high-volume hydraulic fracturing (fracking) are too restrictive and in their current form would drive operators to other states.

The calls for more liberal regulation come as the DEC ends its comment period last Wednesday on the revised supplemental general environmental impact statement (SGEIS) on fracking (see Shale Daily, Jan. 12).

Thomas West -- an attorney for The West Firm PLLC in Albany, NY representing oil and gas companies in the state -- told NGI's Shale Daily that he assisted the Independent Oil & Gas Association of New York (IOGA) and various operators on submitting comments to the DEC. He also called many of the DEC's proposals "very unworkable."

"The agency has probably overreacted and gone too far in terms of some of the proposed mitigation measures," West said Thursday, citing well setbacks, testing requirements and the prohibition of drilling in primary and principal aquifers as examples. "We've made some very detailed comments on the regulatory proposals and told them where we thought they had to do a better job of balancing environmental risk with the regulatory responsibilities. We think there are compromises they can adopt that will be just as safe and protective of the environment without making New York noncompetitive."

IOGA called the DEC's proposed regulations "restrictive, inequitable and unjustified" in a letter to the agency last Wednesday (see Shale Daily, Jan. 12). Marcellus Shale Coalition (MSC) President Kathryn Klaber echoed that sentiment in a separate letter to the DEC.

"The MSC has carefully reviewed the proposed [SGEIS rules] and determined that significant barriers to entry would discourage both operating and service companies from establishing significant operations in New York state," Klaber said. "These barriers are created through increased regulatory burdens, uncertainty on the timing of permits and increased capital costs."

Michael Doyle, executive director of the New York State Petroleum Council (NYSPC), a division of the American Petroleum Institute (API), called for an end to the de-facto moratorium on fracking in the state.

"Ending the moratorium would allow New York to lead the way in the responsible development of shale oil and natural gas energy and fully attain the job creation potential of the Marcellus Shale," Doyle said, adding that hundreds -- perhaps thousands -- of oil and gas wells have been drilled for several decades in the Jamestown Aquifer without any significant environmental impacts. "This end of the comment period should mark the beginning of job creation and economic growth through hydraulic fracturing."

Dan Whitten, spokesman for America's Natural Gas Alliance (ANGA), told NGI's Shale Daily that the organization was also hopeful New York would move forward and permit fracking.

Hundreds of land and business owners across New York joined IOGA, MSC and NYSPC in submitting letters to the DEC before last Wednesday's deadline (see Shale Daily, Jan. 10). The agency said it had received a record 20,800 public comments by Jan. 9, but said many more had not been counted yet.

Although the SGEIS is to provide the framework for DEC's fracking permit process, lawmakers in the New York State Assembly are reportedly considering separate measures extending the moratorium on fracking until June 1, 2013 and enacting "home rule" legislation that would give municipalities the power to ban fracking in their communities.

"It's worse than a moratorium," West said of the home rule bill, A3245. "A moratorium is just a temporary ban while you put regulations in place. But empowering a municipality goes well beyond that. It will have a very chilling, if not damning, effect on the investment in the state."

West blasted Assemblywoman Barbara Lifton (D-Ithaca), the primary sponsor of A3245, for her assertion that the home rule bill was consistent with existing state law.

"I think it's a ruse," West said. "If you allow municipality to do anything that's inconsistent with a state program, you put up barriers to development. I think some municipalities would ban fracking because that's the popular opinion. But if you're an operator and you're contemplating investing hundreds of millions of dollars in land rights, are you going to go in and hire pollsters and try to figure what that municipality is going to do within the five year window you have to drill those leases? It's not a logical process."

West is representing Anschutz Exploration Corp. (AEC) in its legal challenge against the Town of Dryden, one of two high-profile lawsuits in New York pitting operators against municipalities. The other lawsuit involves the Town of Middlefield (see Shale Daily, Sept. 21, 2011; Sept. 19, 2011).

"If the legislature empowers municipalities to ban drilling, nobody in their right mind is going to invest in New York," West said. "You can't just turn over the reins to a five-member town board and say they can decide whether or not these resources should be developed. It's not consistent with sound oil and gas law policy or with national security."

In July 2008 then-Gov. David Paterson ordered the DEC to complete the SGEIS, which effectively placed a moratorium on drilling horizontal wells in the New York portion of the Marcellus Shale. Paterson requested the SGEIS because the original impact statement was completed in 1992, before technological changes in shale development. In the closing days of his term Paterson extended the SGEIS deadline until July 1, 2011 (see Shale Daily, Dec. 14, 2010).

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