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The Unique Environmental Impacts of Horizontal Hydrofracking in New York

July 30, 2010
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"Otsego Lake is not only an icon of nature in America;
it is in part a reservoir, the source of drinking water for people in Cooperstown…If we take a chance at poisoning the Glimmerglass, we would truly be putting at risk that which sustains us, both morally and physically." — Henry S. F. Cooper, Jr.

Dear Friends of Otsego 2000,

I am pleased to send you a second article by James L. Northrup, on "The Unique Environmental Impacts of Horizontal Hydraulic Fracturing in New York State." (please click on link) This article forms the basis for Mr. Northrup’s comments at the upcoming EPA listening sessions in Binghamton on August 12th. In addition, below is a summary of how New York’s current regulatory scheme differs from other states’ and needs to be updated in order to safeguard our environment before any drilling should be allowed to commence. We will be posting these documents on our website and encourage you to visit the website now to read Otsego 2000 Chairman Henry Cooper’s speech prepared for the County Board of Representatives’ Public Forum last Wednesday.

As always, thank you for your continued support of Otsego 2000 and our work to protect our region.

Sincerely,

Ellen Pope
Executive Director

New York State Regulations for Oil and Gas Compared to Other States
By James L. Northrup

New York State regulations on oil and gas drilling are in need of considerable updating in order to safeguard our environment. Here are some examples:

New York tasks it environmental agency with the issuance of drilling permits. This compromises the DEC’s mission as environmental agency, since the state gains fees from issuing permits and is motivated to issue as many permits as possible. Most other oil and gas producing states keep their environmental agencies out of promoting drilling. Without such independence, the DEC has already been compromised in its environmental duties, as evidenced by the grossly inadequate draft guidelines for horizontal hydrofracking of shale gas.

New York tasks the DEC with forcing compulsory integration of mineral rights owners into unitized well spacings, further compromising the agency’s independence. In layman’s language, this means that the DEC is the state agency that can force unwilling landowners to participate in a well with their neighboring mineral rights owners, even if they did not want to sell their mineral rights. Such "compulsory integration" is illegal in other states and should be illegal in New York. It is a travesty of property rights.

New York does not have a direct tax on gas production.Only two other states lack such a tax. Such a tax, known as a "severance" tax, enables states not only to benefit directly from the oil and gas produced, but also to fund the regulatory oversight necessary to monitor the extraction activity. The amount of oversight and environmental remediation activities is then tied directly to the volumes of gas produced, and not funded from general revenues. All of the fully evolved oil and gas states – Alaska, Texas, Colorado, Louisiana, New Mexico, etc. – have such a tax to fund their regulatory oversight and add to state coffers.

The DEC’s proposed regulations are based largely on antiquated regulationsfor small existing vertical New York oil and gas wells. While the regulations may have been adequate for these relatively small wells, and while the DEC may have been sufficiently staffed and funded to regulate these minor oil and gas fields, the regulations as well as DEC’s staffing and funding are completely inadequate to regulate the massively larger horizontal hydrofracking of the Marcellus Shale. For instance, as originally proposed, the DEC suggested a well set-back of fifty (50) feet from municipal drinking water sources. This meant that a horizontally hydrofracked shale well, which uses over 1 million gallons of fracking fluid, could be the same distance from the shoreline as a small vertical oil well that is a fraction of the size of the shale gas well.

New York offers far less protection of municipal surface drinking water than other states. For instance, most major lakes in Texas are used for municipal drinking water. This means that drilling a well under those lakes would require the consent of the owner, which in Texas is the municipality. This is not the case in New York. Municipalities, which use – but do not own – the lake water, have no oversight in drilling under the lake or next to the lake. The only municipal water sources with any meaningful protection in New York are New York City’s reservoirs and Syracuse’s lake – which have a higher standard of review for wells in their watershed. The rationale for this higher standard, than for other drinking water sources such as Lake Otsego, is that those water bodies do not have filtration systems. Yet, critically, the sediment filtration used by other New York State municipalities will not filter out toxic chemicals or the release of natural gas associated with horizontal hydrofracking of shale gas deposits. The proposed special treatment for New York City and Syracuse residents amount to disparate treatment under the law. In short, it is illegal.

The scope of the activity dwarfs the State’s preparedness. The size of the shale gas formations in New York and the well spacings contemplated will simply overwhelm both the DEC and state government’s ability to respond effectively. The DEC is chronically understaffed and under-funded. The counties where the shale gas is found do not have adequate infrastructure – sufficiently engineered roads and bridges, emergency response training for volunteer firefighters and emergency medical technicians, wastewater treatment facilities – to deal with this level of industrialization. Since the drilling activity is not taxed by the state, and since the drilling companies will not pay much tax in the state, there will be no government revenue to address the upfront costs that drilling represents. While the revenue to the government from the wells may be down the road, the costs to counties will be heavily frontloaded.

We recommend that the New York legislature:

  • Adopt a severance tax on all oil and gas produced. This rate should be comparable to that imposed by other states, and this taxation should be handled by the New York Department of Taxation and Finance.
  • Separate the permitting process from the DEC. Permit applications must, at a minimum, demonstrate that the applicant controls the mineral rights, has sufficient well spacing and set backs, has bonded the well against environmental damage and dry hole clean up, has an approved method or contract to dispose of flowback, has a road use permit from the counties affected, and has collected seismic data on each proposed lateral fracture.
  • Require permit applicants to collect and submit seismic data on each new lateral section to be fracked. Such seismic data will show if any faulting is present in the target zone and if that faulting communicates with any aquifers. This will address the risks of polluting aquifers via localized faulting, having the frack go out of zone, spills, or well casing failures into aquifers. If the seismic data shows that there is any chance that the frack zone will communicate with an aquifer, the permit should not be granted.

    James L. Northrup was in the energy business for over thirty years, having been a planning manager at Atlantic Richfield (ARCO), an independent oil and gas producer, and an owner of onshore and offshore drilling rigs. He attended Brown University and has an MBA from the Wharton School of Business. He is a member of the board of directors of Otsego 2000.

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http://www.otsego2000.org

Otsego 2000 is a not-for-profit organization founded
in 1981 to protect the environmental, scenic, cultural
and historic resources of the Otsego Lake region
and northern Otsego County

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