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New York County Weighing Marcellus Drilling Options

One New York county in the midst of the Marcellus Shale may be looking to promote natural gas drilling in an effort to regain jobs that have left the area since the Empire State instituted a de facto moratorium on drilling two years ago.

Broome County, which is located on the Pennsylvania border, earlier this month held a public hearing in Binghamton, NY, on a proposed resolution that would name the county as lead agency in a State Environmental Quality Review Act (SEQRA) review process that is required for the county to enter into natural gas leases. The hearing, which attracted about 60 speakers, became a public debate of the pros and cons of natural gas drilling, according to Inflection Energy CEO Mark Sexton.

"The responses were about 50-50," Sexton told NGI. "The people who were against drilling were the people who would be against drilling anywhere at any time, any place...people who were speaking on behalf of drilling saw it as a good opportunity to kick start the Broome County area economy and to encourage and create jobs, especially jobs that are currently going to Pennsylvania since New York has a de facto moratorium on drilling and completing wells in the Marcellus."

In July 2008 New York Gov. David A. Paterson directed the state's Department of Environmental Conservation to prepare a supplemental generic environmental impact statement (SGEIS), effectively placing a moratorium on much of the Marcellus development in the state (see Daily GPI, July 28, 2008). The SGEIS was requested because the original generic environmental impact statement was completed in 1992, before current shale development technology was on the table. The SEQRA designation process was prompted by the state's work on the SGEIS, which is not expected to be completed until next year (see Shale Daily, Oct. 13).

With the moratorium still in place, Broome County is expected to vote by the end of November on an Inflection proposal to pay the county $2,250-2,750/acre to lease 3,200 acres for five years for natural gas drilling. The proposal was tabled by legislators Thursday (Oct. 21) and moved to the agenda of their Nov. 18 meeting. It is the second lease offer Inflection has made to Broome County. The previous proposal, which would have paid $3,000/acre for 5,500 acres, was withdrawn by County Executive Barbara Fiala this summer after the 19-member county legislature made it clear that it would not approve the plan. Both proposals offered a 20% royalty rate.

The area is seeing fewer and smaller lease offers and if the county turns down the latest Inflection proposal it isn't likely to see any more "for many years to come," Fiala recently told Binghamton's WBNG-TV.

Denver-based Inflection removed from its second proposal some Marcellus acreage that Sexton said includes county parkland or acreage adjacent to parkland.

"Some of it is what I call parklands in waiting. It could be parkland down the road," he said. "We excluded some lands that were in areas that we felt were sensitive so that it would not be an issue." In its proposal, Inflection said it would perform no surface operations on parkland and flood control areas.

Fiala has said the areas removed from the second proposal will remain available for lease proposals in the future.

Inflection, a privately held natural gas exploration company with holdings in both the Marcellus and Utica shale plays, is also seeking a zoning variance from the town of Vestal in Broome County to build a gas metering station to connect to a New York State Electric and Gas pipeline.

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