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NY shale gas rush unlikely in 2013 if gov gives OK

Published on NewsOK Modified: December 25, 2012 at 8:46 pm •  Published: December 25, 2012

The DEC has had a moratorium on gas wells using horizontal drilling and high-volume hydraulic fracturing since it began an environmental impact review in July 2008. The technology frees gas by injecting a well with millions of gallons of chemically treated water at high pressure to crack rock deep underground. Environmental groups say it could contaminate air and drinking water supplies, but drillers and the DEC say state regulations and industry safeguards protect against harm.

In September, Environmental Commissioner Joe Martens rejected demands by environmental and health groups to conduct a health impact assessment before finalizing the regulations. Instead, he asked Health Commissioner Nirav Shah to review potential health impacts, with the help of nationally recognized outside experts. DEC had to file for a 90-day extension on its regulations, which had a deadline of Nov. 29, to allow time for Shah's review.

The agency released revised regulations on Dec. 12 and is taking public comment on them through Jan. 11. The revisions include changes made in response to public comments, such as increased distances between gas wells and residences, allowing for public comment on individual permit applications and stricter disclosure requirements for fracking chemicals.

Further complicating the picture for the industry is that dozens of New York communities have enacted bans or moratoriums on drilling. Judges sided with the towns in two industry challenges of such bans, which the industry claims are invalid based on a state law saying only the state can regulate oil and gas development.

"One question still unanswered is the role local governments will play in this process," said John Holko, president of Alexander, N.Y.-based Lenape Resources, a well driller. "When you're spending the kind of capital necessary to develop these resources, you want to minimize risk. You want clear regulatory control."

Industry appeals of bans in the towns of Middlefield and Dryden are expected to be heard in Albany in February. And Holko and his company have sued the town of Avon over its drilling ban.

The cost of compliance with New York's regulations will also play a significant role in how willing companies are to invest in drilling in the state, said John Conrad, a geology consultant based in Poughkeepsie. But West said the cost difference between New York and other states has been shrinking as other states beef up their own regulations.

Conrad said some operators may drill a well or two to determine an area's production potential and then shut in the wells until gas prices are higher. Some of those wells have already been started.