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Gas glut mitigates fracking ban

New York State put up the Cuomo Wall last week to keep the natural gas boom from spilling over into the Southern Tier.

By moving to ban hydraulic fracturing in the state, the Cuomo administration slammed the door shut on the natural gas industry and blocked it from drilling the same types of prolific wells that now number in the thousands just across the border in Pennsylvania and in states like West Virginia and Ohio.

Like the Iron Curtain that separated Eastern and Western Europe after World War II, the fracking ban effectively puts up a wall that keeps the shale gas industry out of New York – at least for the time being.

Even after two years of study, the Cuomo administration said there are too many health and environmental risks associated with the drilling technique that has led to a boom in natural gas production elsewhere, while also spawning complaints that it is contaminating drinking water, polluting the air and jamming rural roads with truck traffic.

“I have considered all of the data and find significant questions and risks to public health which as of yet are unanswered,” said Dr. Howard A. Zucker, the acting state health commissioner. He compared fracking to secondhand smoke, which wasn’t fully understood as a health risk until many years of scientific study were done.

“I think it would be reckless to proceed in New York until more authoritative research is done. I asked myself, ‘would I let my family live in a community with fracking?’ The answer is no. I therefore cannot recommend anyone else’s family to live in such a community either.”

But that doesn’t mean fracking won’t ever come to New York. After all, the gas will still be there.

In the short term, there will be lawsuits to challenge the ban and try to overturn it.

In the longer term, more studies will be done to measure the safety of fracking and whether it truly is a danger to the environment. The “more authoritative research” that Zucker talked about last week could lead to a very different conclusion than the one the state reached last week.

And some day, there will be a new governor, perhaps one who takes a more favorable view of fracking.

“This is a political decision. It’s being touted as a science decision,” said Dennis Holbrook, an East Aurora attorney who until last year was a top U.S. executive at Norse Energy, a Norwegian-based company that had rights to drill on 130,000 acres of New York land before running out of money and going bankrupt as the fracking debate dragged on.

“Why did New York have to reinvent the wheel?” Holbrook asked. “You already have 30 states that have looked at this and determined that this is safe to proceed.”

Even if the state had given the green light to fracking, it likely wouldn’t have led to the same type of boom that Pennsylvania now is experiencing, or was projected for New York as recently as 2010, when a state study estimated that shale gas drilling could create nearly 25,000 jobs, said E.J. McMahon, president the Empire Center for Public Policy, a business-backed think tank in Albany.

About 80 communities in New York already have banned fracking, and low natural gas prices, especially in the Marcellus region, are putting a damper on drilling in Pennsylvania and West Virginia, even as better drilling techniques have helped increase the gas production from each well.

Because natural gas production in the Marcellus Shale region is much greater than the capacity of the pipelines that carry the gas to other markets, Marcellus gas prices have dropped, trading at up to a 50 percent discount to the national market price as recently as early fall, according to the U.S. Energy Information Administration.

And shale gas supplies keep growing, even with New York off limits to drillers. Proven natural gas reserves grew by 10 percent last year across the country, with Pennsylvania and West Virginia accounting for 70 percent of the growth, the federal energy agency said in report issued earlier this month. Gas reserves in Pennsylvania grew by 37 percent last year.

Beyond that, state Department of Environmental Conservation Commissioner Joseph Martens noted that shale gas drilling in New York wouldn’t be as economically beneficial as initially anticipated because of the high local cost of industry oversight and the vast areas that would be off limits to shale gas development because of setback requirements, water supply protections and local prohibitions.

In short, it would cost more to drill in New York, and that would make it harder for wells here to be economically viable at today’s lower prices.

The shale play keeps getting bigger, too. The Utica Shale, located below the Marcellus and stretching from West Virginia to the western half of New York, also is showing great potential, although it now is producing only about a tenth as much gas as the Marcellus, according to EIA data.

The Geneseo Shale layer, located above the Marcellus, also could be a lucrative source of natural gas. National Fuel Gas Co. this spring drilled its first well into the Geneseo Shale in Pennsylvania and officials at the Amherst energy company were encouraged by the results.

So there’s plenty of natural gas for drillers to chase, even with New York out of the picture.

That, of course, is small consolation to Southern Tier landowners who had been hoping that fracking would bring them lucrative lease and royalty payments from drillers now focused on other states.

“I think someday it will be allowed,” Holbrook said. “What I can’t say is whether it will be meaningful by then.”

email: drobinson@buffnews.com