Rules, Bans on Fracking Exert Stress on Gas Companies in NY

By Mireya Navarro, NY Times 
Published: January 3, 2013

[NOTE: Edited by RL for OV 2/7/13]

In three decades of drilling, John C. Holko said, his oil and gas business has never faced such a hostile environment.

Brendan Bannon for The New York Times

Dennis Holbrook, executive vice president of Norse Energy[which filed for bankruptcy in December — [RL Ed note], said he believed gas drilling could be done safely.

Years after he negotiated leases for gas drilling in upstate New York [Chenango County, where Oxford is located — RL Ed note], strict rules on fracking that state environmental officials proposed threaten to put 20 percent of that land off limits, he estimated. And local drilling bans adopted by town boards could put him out of business altogether, he said.

“Why should I put money in the ground if any one of the towns can say no at the next town meeting?” said Mr. Holko, the president of Lenape Resources in western New York. “The issue of home rule is the demise of the industry.”

In November he sued the State DEC and Avon, N.Y., in Livingston County, seeking $50 million in damages for lost business since the town enacted a ban on all drilling last summer.

By late February, Gov. Cuomo is expected to decide whether fracking, a controversial drilling process that is already under way from Pennsylvania to Texas to North Dakota, will be allowed in New York. Any decision will be made against a backdrop of ferocious opposition from environmental groups, which say fracking poses too high a risk of groundwater contamination, air pollution and other environmental problems.

But a mix of local drilling bans and some of the tightest drilling regulations in the country raise questions about whether the process could flourish here.

Beyond those constraints, natural gas prices have declined sharply in recent years, limiting potential profits even as technology opens the way for the exploitation of vast shale gas resources. Fracking involves pumping millions of gallons of water and chemicals into underground shale to release natural gas.

Gas companies have a long history of conventional drilling in New York, and if prices rise from their current lows and there is money to be made, there is no question that gas companies will want to do business in the state, industry officials say.

“Certainly there are companies that, once they get a green light, will come in and drill,” said Brad Gill, executive director of theIndependent Oil and Gas Association of New York, which represents 400 drillers and drilling-related businesses.

But he and others in the industry argue that New York’s proposed rules would significantly limit opportunities for both companies and the upstate communities that hope for a surge in drilling jobs and an economic boom.  [Ed note:  After this article was published, the DEC received 204,000 public comments on its proposed regulations.  The vast majority of comments were negative and demanded much stricter revisions, thereby limiting opportunities for drilling even further.]

Mr. Gill contends that the drawn-out nature of state deliberations on whether to allow fracking — the process has been under way for four years — has allowed many land leases to expire and prompted some companies to walk away and focus their resources on drilling in other states.

Companies like which have drilled with conventional methods in New York and had hoped to expand into hydraulic fracturing, have moved operations to Pennsylvania, Mr. Gill said. Another company based in New York, Norse Energy [Ed note: Norse holds the majority of leases in the Oxford area] filed for bankruptcy in early December.

Gas industry officials contend that the proposed regulations would block access to up to half the land they might have drilled — by mandating setbacks, for example, or by prohibiting drilling through aquifers, in grasslands or near streams, private water wells and water supplies used for crops and livestock. (This is in addition to outright bans in the New York City watershed in the Catskills and other sensitive areas.)

Meanwhile, Governor Cuomo has said that towns and cities should have a say in a decision about allow drilling within their boundaries, which companies say raises far too much uncertainty for their business. So far, two of the bans have withstood court challenges.

In a November 19 letter to Mr. Cuomo, Mr. Gill said that his own trade group had lost at least 10 member companies to other states in the last year and that he could not overstate “the dramatic unattractiveness of New York to our industry.”

Tom S. West, an industry lawyer in Albany, said the proposed rules would add anywhere from $500,000 to more than $1 million more per well in extra fees and planning costs.

But in documents, officials with the State Department of Environmental Conservation have deemed some of the industry’s cost estimates “excessive.” They predict that fracking in New York would be undertaken by large multinational companies that could afford the costs of drilling in the state.

Studies commissioned by the state project that the drilling process in New York could create 17,600 construction jobs and more than 29,000 indirect jobs. Under a conservative chain of events, state officials say, more than 42,000 horizontal and vertical wells would be developed over 30 years.

Michael A. Levi, an expert on energy and the environment at the Council on Foreign Relations in New York, said too many variables were at work for anyone to predict how many companies would invest in fracking in the state, and how quickly, should the state give the go-ahead.

Companies with leases and other investments in New York will be more likely to drill than companies that are doing business elsewhere and prefer to wait and see what the first wells drilled in New York yield, he said.

“It’ll vary from company to company,” he said. “But if there is money to be made, Santhat will be done.”

Mr. Holko of Lenape Resources, which has acquired drilling rights on about 100,000 acres of land in more than a dozen towns, said the amount of land actually opened up to drilling would make the difference in deciding whether it was economically viable. “When you start taking away land mass” through state regulations, he said, “everybody will evaluate their individual acreage, and from that they’ll decide whether it’s worth pursuing in New York.”

To those seeking a ban on hydraulic fracturing, no set of state rules would suffice to safeguard water supplies, public health and the environment.

“We’re putting fracking in the same category as smoking,” said Sandra Steingraber, a distinguished scholar in residence in environmental studies at Ithaca College who leads the coalition New Yorkers Against Fracking.  “The only way to make smoking safe is to not smoke.”

Despite the constraints, Dennis Holbrook, executive vice president of Norse Energy, said he looked forward to the day when the industry could prove the naysayers wrong. He said his company still held drilling rights over 130,000 acres of land and planned to seek new capital by forming a partnership with an investor once hydraulic fracturing is allowed.

“My hope is that if the industry has an opportunity to drill,” he said, “the public will be reassured that this can be done safely.”

How the DEC Gutted the Fracking Regulations

Chip Northrup

January 24, 2013

Brian Brock FOIL’d copies of the DEC’s proposed fracking regulations from the 1992 GEIS, as previously reported here.  The DEC reduced the results of their workshops from 1992 to 1997 to proposed regulations. They then redacted them – eliminating entire sections of the proposed regulations or putting a line through them in 2000.  They then pretended that they had lost the proposed regulations entirely – during the entire four (4) year dSGEIS review process.

Brian FOIL’d them, and on the appeal of his denied FOIL, obtained a copy. Here are a few examples of what environmental protections were proposed (long before the dSGEIS hearings) and what was eliminated or changed prior to the December 2012 draft.

Three examples:

FIRST, the DEC eliminated the definition of waste.  The original version listed the following but the 2012 includes NONE:

(i) used completion, treatment and stimulation fluids including frac fluids, acid and produced sand;

(ii) waste fluids from drillstem testing, blowout preventer testing and other test procedures;

(iii) waste packer fluids and waste fluids from well swabbing or well blowback;

(iv) paraffin treatment wastes and other waste solvents and cleansers;

(v) production and fluid treating equipment wastes including, but not limited to:

(a) injection fluid pretreatment wastes; and

(b) gas processing wastes including, but not limited to: glycol based compounds, used scavenging materials and used filters and backwash;

(vi) accumulated solids and other residual materials removed from tanks, piping, lines, production separators and other equipment as part of a maintenance procedure, before replacing equipment or during well plugging . Accumulated solids and other residual materials include, but are not limited to: tank bottoms, emulsions, and paraffin buildup

(vii) trash, rubbish and other miscellaneous wastes including, but not limited to: open or empty sacks, bags and containers of supplies, surplus materials and old liners;

(viii) equipment maintenance wastes”

SECOND, the new regulations allow gas companies to bury waste without your permission.  The underlined was omitted.

“(iv) The pit liner may be buried with the pit contents provided the liner is slashed to allow drainage. Landowner permission is required

THREE, All regulations over shale gas industrial infrastructure: pipelines, gathering systems, gas processing, compressors and other equipment were completely eliminated.  Here’s what was cut from the DEC’s responsibilities:

1. The department has the authority to review the following:

(i) the gathering lines between the oil well and the tank battery; and

(ii) the lines from the gas well to the separator outlet.

2. The department may set specific requirements for any pipeline or gathering line

associated with or supporting operation of any well or facility subject to Parts 550 560 of

this Title concerning: Revisions Since 10/97 Workshop Draft 90

(i) siting, design and construction;

(ii) operation and maintenance;

(iii) submission of maps, including maps of abandoned lines. The map must include

a notation indicating the year of the North American Datum used to prepare the map;

(iv) sampling and analysis of line contents;

(v) testing for leaks or other suspected problems; and

(vi) plugging, abandonment and reclamation.

The retrieval of this missing document shows the decisive influence of gas company lobbyists and lawyers in curtailing the DEC’s protections of leaseholders, their neighbors and the community. That is what the DEC has been HIDING from leaseholders and the public.

Out in left field
-by Peter MantiusCorning Leader <>
Posted Feb 06, 2013 @ 11:38 AM
Corning, N.Y. —

A disturbing picture is emerging of the narrow subagency of state government that Gov. Andrew Cuomo is relying on to write the regulations for fracking in New York.

The Division of Mineral Resources, or DMN, was formed in 1983 as a unit of the state Department of Environmental Conservation (DEC) to regulate oil and gas exploration and production.
Throughout its 30-year history, DMN has operated as a powerful industry-friendly fiefdom run by only two directors, Gregory Sovas (1983-2001) and Bradley Field (2001-present), who have watched five governors come and go.
The division defines its role as “the fostering, encouragement and promotion” of oil and gas development. Its mission statement conspicuously omits any acknowledgement of responsibility to protect human health and the environment.
And DMN has for decades displayed an aversion to establishing formal regulations for oil and gas development.
In 1994, the division’’s chronic neglect of both environmental protection goals and energy development regulations was highlighted in an in-depth analysis of the DEC by the Interstate Oil and Gas Compact Commission (IOGCC) and the federal Environmental Protection Agency(EPA). Its September 1994 report zeroed in on DMN practices and recommended more than a dozen corrective steps. (Don’’t look for the report on the DEC website. It’’s not there. Just Google “IOGCC New York 1994.”)

The IOGCC team, made up of officials from six different states, called on the DMN to “revise its rules to explicitly incorporate protection of human health and the environment and craft a mission consistent with this goal and objective.”
Nineteen years later that still hasn’’t happened.
The IOGCC team also concluded that DMN’’s oil and gas regulations were years out of date and required immediate revision. It brushed aside Sovas’’ claim that imposing conditions on permits for drilling was regulation enough.
The report noted that New York’’s oil and gas regulations dated back to 1972, and it called for the DMN to “establish and adhere to a schedule for completing its rule revisions as soon as possible.”
The DMN had started a rules revision process in the mid-1980s, culminating in a 1992 generic environmental impact statement for oil and gas projects. But that effort stopped short of its stated intention of establishing actual rules and regulations. In September 1994, the IOCGG team wrote: “The DMN hopes to publish proposed rules in early 1995, but has no schedule for final issuance.”
More foot-dragging followed. Sovas’’ division did get around to proposing draft regulations late 1997 and even held public workshops on them. But the DMN claimed as recently as last year that all copies of those drafts had been lost.
Brian Brock, a geologist from Franklin, eventually obtained under the Freedom of Information Law details of those draft regulations, as well as revisions DMN made to them in 2000 before the entire effort “got lost.” One provision — deleted in 2000 — had called for the DMN to assume explicit responsibility “to protect the public from hazards to public health, safety, and welfare that may result from regulated activities.”
But why bother? Who’’s looking?
Brock also unearthed documents showing that the DEC agreed to a follow-up review by the IOGCC in 2005. But the agency postponed it until 2006 and then cancelled the follow-up entirely. Seeking an explanation, Brock was referred to DMN director Field, who is New York’’s representative to the IOGCC.Brock said he didn’’t receive a response.
While spurning independent advice to move toward best practices in state oil and gas regulation, the division has worked assiduously to meet the needs of its energy industry clients.
For example, in 2005, the DMN allowed a lobbyist for Chesapeake, a leading natural gas driller, to draft legislation that enables drillers to compel landowners to participate in drilling projects regardless of the negative effects on their mortgage and home insurance contracts, let alone their health. The bill, one of the most extreme in the United States, passed easily because the DEC actively pushed for it.
Gov. Cuomo has never ordered a course correction.
He’’s offered platitudes about establishing drilling rules based on the best science, but he continues to let Field– — a signer of a petition that denies a human role in global warming –– to run the show.
Field’’s backward-looking oil and gas regulation division used the totally out-of-date 1992 GEIS as its template in drafting the latest supplemental generic environmental impact statement, or SGEIS, for high-volume, horizontal hydrofracking –– a process that didn’’t exist in 1992.
Cuomo could have and – should have – insisted on broader input into the SGEIS from other state agencies: the state Department of Health (health impacts), the state Department of Transportation (roads and infrastructure costs), and the state Public Service Commission (gas pipelines and compressors issues). Instead, the governor left the fate of state fracking regulation to a climate-change denier.
The public received DMN’’s latest draft regulations in December without an opportunity for a public hearing. A 30-day window for written comments drew more than 204,000 responses, overwhelmingly negative.
Cuomo has until the end of February to decide whether or not to rubber stamp the DMN’’s belated and slapdash regulations.

If he does, he turns his back on regulatory best practices and science.
Peter Mantius is a freelance journalist from Schuyler County who follows shale gas drilling issues. He is a former reporter at the Atlanta Journal-Constitution and former editor of two business weeklies in the Northeast.