Monday, July 23, 2012

Shale gas holds timeless impact on smalltown USA

Values that define the shale gas controversy are embodied in the physical aspects of rural landscapes of Pennsylvania and upstate New York – something I was reminded of in a visit to Cooperstown last week. Cooperstown is the seat of Otsego County, one of many upstate New York communities whose character is derived from a legacy of preservation. It’s a place of natural beauty, history, and gentrification featuring attractions such as Otsego Lake, headwaters of the Susquehanna River watershed; the National Baseball Hall of Fame; the Farmers' Museum; the Fenimore Art Museum; Glimmerglass Opera; and the New York State Historical Association. Otsego 2000 is a preservation agency founded in 1981 to protect the area’s natural and cultural assets. Executive Director Ellen Pope explained that the agency strives to keep the natural landscape more or less the way William Cooper (and his famous son James Fenimore Cooper) saw it 225 years ago. That vision doesn't include shale gas development and its related build out of well pads, pipelines, compressor stations, and accompanying truck traffic.

The rush to exploit the Marcellus Shale in Pennsylvania, by comparison, reflects an altogether different comfort level with resource extraction, shaped by a much different history. The Drake oil fields in northwestern Pennsylvania gave birth to the modern petroleum industry in the 19th Century; the anthracite coal mines in northeastern Pa. fueled the industrial revolution; quarry operations, both family owned and commercial, still provide product ranging from blue stone for upscale building projects to gravel for highways and infrastructure. Marcellus shale gas wells coming on line since 2007 are fueling electricity generation, petrochemical industries, and heating homes and businesses. The hard, dangerous, and messy story of mineral extraction is told in the scars that still mark the Pennsylvania countryside: acid mine drainage, inextinguishable fires like the one in Centralia, Pa.; ecological disasters and fatalities, and abandoned gas wells and drilling operations gone wrong that have contributed to methane seeps and explosions.

Mineral reserves seen as an economic windfall in Susquehanna County, Pennsylvania are considered a liability to land preservationists in Otsego County, New York. The shale reservoirs underlying both states– the Marcellus and the Utica -- are much closer to the surface in the Cooperstown area, and therefore less viable as primary targets for exploitation in the near future. But development of petroleum plays tends to lead to the discovery of new horizons and pay zones in adjoining areas. Shale gas plays that start in the center and work out can suddenly accelerate with an expansion in markets and a related jump in the value of the resource. So it is that Otsego County, an area drawing the casual interest of prospectors and speculators, remains on the battlefront of the shale gas war, with the Town of Middlefield playing a central role. A fracking ban in 2011 by the Middlefield Town Board drew a lawsuit by Jennifer Huntington and Cooperstown Holstein Corp. claiming the ban violates her rights to reap economic benefits of a lease to develop mineral rights on her 400 acres. The state Supreme Court upheld the ban in February. The industry is appealing the case, along with a similar state Supreme Court decision upholding a ban in Dryden in the Finger Lakes area. The landmark Middlefield/Dryden case will determine the extent that towns can determine their own destiny regarding shale gas development – a concept know as home rule. (As of now, the state and industry decide where the wells go.)

I met Pope in the courtyard of the Brewery Ommegang, where I gave a talk (hosted by Otsego 2000) about the unfolding policy developments that will influence the shale gas play. Much of my talk and the subsequent discussions were focused on the immediacy of the policy debate in the context of a highly anticipated release of New York state’s permitting guidelines after four years of deliberations and drafts. The backdrop for the evening – a countryside much the same as the Coopers saw it -- was a reminder of how the policy formulation playing out in courts and government halls will have timeless ramifications.

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