ALBANY, N.Y. (AP) — A debt-laden natural gas drilling company that had counted on tapping the riches of New York's part of the Marcellus Shale filed for Chapter 11 bankruptcy protection Friday while the state's 4-year-old moratorium on hydrofracking remains in place.
Norse Energy Corp., based in Oslo, Norway, that its U.S. subsidiary had filed a voluntary petition for Chapter 11 reorganization.
Norse has 130,000 acres under lease for gas drilling in New York state. But the state Department of Environmental Conservation has had a moratorium on drilling permits since it launched an environmental impact review in 2008.
The DEC is developing new regulations for fracking, or high-volume hydraulic fracturing, a controversial technology used to free gas from shale.
"It isn't just regulatory delays. We had debts incurred outside of New York that we're paying back," said Dennis Holbrook, Norse's Buffalo-based chief legal officer. "But clearly the regulatory delays in New York have had a negative impact on this company."
Norse has been selling off assets, primarily oil and gas leases and some production properties, to pay debts and meet operating expenses. "But over time, the valuations have consistently declined for those assets because of a general perception that New York is not open for business," Holbrook said.
The Chapter 11 filing may "likely constitute an event of default" on a $21 million bond, the company said in a statement.
Norse has been operating in central New York since 1996 and has drilled hundreds of vertical gas wells in sandstone formations. It had applied for dozens of permits to drill in the Marcellus Shale, a gas-rich region underlying southern New York, Pennsylvania, Ohio and West Virginia. While Pennsylvania has seen soaring shale gas production over the past five years, New York has had a moratorium on permits while DEC studies environmental, health and safety concerns related to shale gas development.
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