With more than enough drilling opportunities that await development in the Marcellus Shale, Chesapeake Energy Corp. on Wednesday confirmed that it has “no intention” to drill natural gas wells in upstate New York’s watershed, which supplies water to nine million people, including New York City.

Chesapeake is the largest leaseholder in the Marcellus Shale, with an estimated 1.5 million net acres spread across northern West Virginia into Pennsylvania and across portions of the southern tier of New York. The voluntary decision to not drill in New York’s southern tier, which is in Upstate New York, signaled that Chesapeake did not want to wage a battle with environmental groups that have called on the state to ban drilling in the watershed.

Despite criticism by some environmental groups, the New York Department of Environmental Conservation (DEC) recently issued a draft Supplemental Generic Environmental Impact Statement (SGEIS), which would allow drilling in the watershed as long as producers followed criteria that included disclosing the content of the hydraulic fracturing (fracing) chemicals they would use to drill wells (see Daily GPI, Oct. 2).

Even with tentative approval to begin developing its New York leasehold, Chesapeake CEO Aubrey K. McClendon said “it has become increasingly clear to us over the past few months that the concern for drilling in the watershed has become a needless distraction from the larger issues of how we can safely and effectively develop the natural gas reserves that underlie various counties in the southern tier of New York and create high-quality green jobs in the southern tier and throughout the state.”

According to McClendon, his company is “the only leasehold owner in the New York City watershed, and so Chesapeake is uniquely positioned to take this issue off the table and allow the discussion to proceed constructively on natural gas development in the southern tier. The small amount of acreage Chesapeake had acquired within the watershed region — fewer than 5,000 acres — was largely obtained as a result of leasing land outside the watershed from property owners who also had tracts within the watershed. This leasehold is immaterial to Chesapeake and also does not appear prospective for the Marcellus Shale.”

The Oklahoma City-based independent “believes it can drill safely in any watershed, including New York City,” said the CEO, who pointed to the findings in the SGEIS. However, “we have chosen to focus our efforts on more promising areas for gas development in the state. We fully support setting high environmental standards for the extraction of natural gas from the Marcellus Shale and we look forward to continuing that process with the state.”

McClendon in September had called on his peers to disclose data about chemicals used in fracing fluids (see Daily GPI, Sept. 28), and he said his company supports DEC’s decision to have all frac vendors register their products and reveal the chemicals used in them. “We applaud the process they have undertaken and believe it to be a good model for other states.” The chemicals used in Chesapeake’s frac operations are available on its website and at www.hydraulicfracturing.com.

“We’ve said all along that drilling in the New York City watershed is a terrible idea,” said Earth Justice spokesperson Deborah Goldberg. “We’re glad to hear that Chesapeake Energy understands the risk and has promised not to drill in this area.”

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