Friday, August 08, 2008

New York Sits Atop Major Natural Gas Formation?

And no, we're not talking about the hot air formed here (that would be the New York State Capitol building in Albany). We're talking about the Marcellus shale formation. What does the Marcellus shale formation look like? $$$$ if the oil companies can run the gauntlet of environmental review and eco-leftists.

Proponents for drilling for that natural gas note that it would provide immense economic opportunities for upstate New York in both direct and indirect ways. Owners of land would receive income from mining rights. The state would get revenue from severance taxes, and tens of thousands of jobs would be created both directly and indirectly in an area that has been suffering from job losses for more than three decades. Already, we're seeing oil companies opening offices and beginning the process of beginning operations. That translates into real jobs and real opportunities for local communities that have not seen much in the way of economic opportunity for the past three decades.

The formation is believed to sit atop anywhere from 1.9 trillion cubic feet of natural gas to upwards of 500 trillion cubic feet. Techniques developed and used in Texas can be applied to the Marcellus formation in New York, New Jersey, and Pennsylvania to release far more natural gas and increase the rate of return per wellhead. The Marcellus shale formation is several times larger than the Texas natural gas field.

The State is already examining the techniques involved and the environmental impact.
At the direction of Gov. David A. Paterson, DEC officials have begun the work to supplement what is known as the department's Generic Environmental Impact Statement which is applicable to natural gas and oil drilling. The supplement will specifically address the potential environmental impacts of horizontal natural gas drilling in the Marcellus Shale formation, a natural gas reserve that stretches from West Virginia to New York. Drilling into the deep formation was long considered economically unfeasible, but rising fuel prices have spurred new interest from energy companies who have been trying to secure land leases from property owners across a number of counties.

While the process of scoping and preparing the Supplemental GEIS is ongoing, any entity that applies for a drilling permit for horizontal drilling in the Marcellus Shale and opts to proceed with its permit application will be required to undertake an individual, site-specific environmental review. That review must take into account the same issues being considered in the Supplemental GEIS process and must be consistent with the requirements of State Environmental Quality Review Act and the state Environmental Conservation Law. Four drilling applications have been filed by companies at this point.

''New York state is committed to working with the public and local governments to make sure that if drilling in the Marcellus Shale goes forward, it happens in the most environmentally responsible way possible,'' said Pete Grannis, DEC commissioner.
There are concerns about how this might affect the watershed that includes the NYC metro area's upstate reservoirs. It's a discussion worth having, especially if it could result in an economic boon to upstate, provide a stable source of energy to the ravenous appetite for energy in the Northeast, and do so in an environmentally responsible manner.

It remains to be seen if the eco-leftists move to shut down this effort before it gets off the ground. I wouldn't bet against that happening, given that they've sought to restrict construction of new transmission lines across the Southern Tier and seek to restrict construction of new power plants.

I'd further note that the oil companies would likely work on and with Indian reservations in upstate New York, including the Allegheny Reservation, Cattaraugus Reservation, Tonawanda Reservation, Tuscarora Reservation, and Onondaga Reservation. The Tribes may also seek addition compensation since a good portion of the Southern Tier falls within what was once historical tribal lands and the tribes have had longstanding disputes with the state over ownership of lands.

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