The Independent Oil & Gas Association of New York (IOGA) has submitted 119 pages of comments to the state Department of Environmental Conservation (DEC), just before the deadline to comment on the proposed rules governing high-volume hydraulic fracturing (HVHF).
In a letter to the DEC on Jan. 11, IOGA Executive Director Brad Gill said the association — whose members include operators anxious to drill in the Empire State — supported the agency’s efforts and applauded many of the safeguards outlined in the revised draft of its supplemental generic environmental impact statement (SGEIS) on HVHF.
“However, without improvement, the more excessive, unproven and unnecessary limitations run the substantial risk of making the exploration and development of unconventional natural gas in New York noneconomic,” Gill said. “As a result, New York’s regulations and requirements, if finalized without amendment, will be viewed by industry as too challenging and restrictive to allow for cost competitive development in the current and forecast natural gas market.”
Specifically, IOGA said it takes issue with the DEC’s vision for permit processing, setbacks and prohibitions; air and water quality regulations; water withdrawals, and minimum natural flow requirements. The association also disagrees with proposals to eliminate the maximum bond requirements for wells, and for making it mandatory that operators submit a transportation plan for each drilling permit, apply for stormwater permits, and certify that for each drilling permit the most environmentally friendly — or “green” — fracking fluids are being used for HVHF.
IOGA also accused the DEC of obsessing over worst-case scenarios.
“Regulatory requirements must take care not to unduly burden the public and private sector with requirements that do not have any corresponding benefit to environmental quality or public safety,” Gill said. The DEC’s proposals, in their current form, “will put New York at a competitive disadvantage to neighboring states and cost New York State and its residents billions of dollars in lost economic opportunity.”
On the issue of permitting, IOGA said the DEC was vague over how much time it would take to process a drilling permit application. The issue is compounded by the suggestion that many of the reviews be sequential, it noted.
“Nowhere in the [SGEIS] is there a clear table and flowchart of what is required in a permit application to drill a well,” IOGA said. “More importantly, there are both internal and external points of approval for specific reports, plans and requirements. There are no time frames associated with approvals to be obtained from both inside and outside the DEC. Therefore, a great deal of regulatory uncertainty in the process exists.”
The DEC has proposed prohibiting well pads in the watersheds of New York City and Syracuse, an adjacent 4,000-foot buffer zone, as well as within a 500-foot buffer of a primary aquifer and on some state lands (see Shale Daily, Dec. 4, 2012). Setbacks would have to be 2,000 feet from a primary aquifer; 2,000 feet from public water supply wells and reservoirs; 500 feet from private drinking water wells and domestic springs; 1,000 feet from New York City’s subsurface water supply infrastructure; 500 feet from a principal aquifer; and 150-500 feet from a tributary, depending on if it is tied to a public drinking water supply.
“When these prohibitions and setbacks are mapped against leasehold interests, it often becomes impossible to lay out units or site well pads in a manner that makes development in New York State economically viable,” IOGA said. The “acreage available to develop the shale resources in New York is far less than the 80% being predicted by the DEC and may approach numbers as low as 40-50%, if not lower.”
Nationwide, extraction activities are exempt from National Pollutant Discharge Elimination System and the federal Clean Water Act (see Shale Daily, Oct. 11, 2012). However, IOGA contends that the DEC is disregarding the exemptions by requiring operators to obtain stormwater permits, which “unnecessarily creates requirements unique to the natural gas industry that are far too numerous, unnecessarily prescriptive and lacking the requisite flexibility.”
The association also said it was “unreasonable” for the DEC to consider eliminating bonding limits and not encourage blanket bonds or other sources of funding that may be cost effective to the oil and natural gas industry.
“The DEC needs to keep in mind that shale gas wells are expected to be productive for decades. As such, requiring individual bonding for each well will tie up capital unnecessarily. Bonding is only necessary where an operator defaults on its plugging and abandonment obligations. In recent times, there have been no such defaults. Accordingly, the [proposal] goes too far.”
IOGA also derided a proposal to require a transportation plan for drilling permits. “All of this is duplicative and unnecessary where an operator has entered into a road use agreement [with a local government],” IOGA said. “The submission of a road use agreement, therefore, should obviate any requirement for a transportation plan.”
In addition, it said it was unnecessary to require a review and certification of every single permit application to ensure the operator is using additives in HVHF that are the least toxic to the environment.
“During the time that the DEC has been evaluating environmental impacts associated with HVHF, considerable progress has been made with the industry ‘greening’ the hydraulic fracturing process,” IOGA said. “Several years ago, it was not uncommon to see as many as 20 chemical additives being used in an effort to improve the efficacy of the stimulation technique. Today, many operators are using as few as six chemical additives and have reduced the volumes of additives without compromising efficacy.
“It is important to stress that all decisions concerning the makeup of hydraulic fracturing fluid are based upon an engineering evaluation that alters the additive mix to maximize the efficacy of the hydraulic fracturing process within the target formation. Very often, adjustments are made in the field based upon data obtained during the hydraulic fracturing process. Given the great progress that has been made by the industry without compromising efficacy, there is no need to mandate this type of analysis.”
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