Under the Surface update tells backstory of NY frack ban Findings statement denouement of environmental epic

On July 23, 2008, New York Governor David Paterson signed a bill authorizing his Department of Environmental Conservation to adjust regulations to accommodate shale gas wells in New York.

The bill was drafted by the DEC. But it was designed around the needs of industry to speed the processing of permits. Because the subterranean footprint for a shale gas well, which runs horizontally, is much larger than a conventional, vertically-drilled well, larger spacing units were necessary to determine the distribution of royalties along the property boundaries above.

The “spacing bill,” as it was known, was essentially a mapping function and did not regulate the mechanics of drilling. But without it, each permit would require a variance – a process that would require public hearings for each well, opening the door for a new set of problems for the industry.

Back in the summer of 2008, conventional wisdom held that shale gas would proceed in New York sooner or later, and the spacing bill was clear evidence that the state was ready to pave the way. But Paterson’s signature came with a catch. Responding to an upwelling of opposition from grass roots environmental and community groups, Paterson directed the DEC to determine whether other aspects of the state’s regulatory framework were suitable to protect the environment and communities in an impending era of unconventional drilling. Until the review was complete, permits would be put on hold.

We all know these events culminated in the announcement of a ban late last year. But the issue was officially put to rest Monday -- six years, 11 months and 24 days after Paterson ordered the review -- with the release of the DEC’s “findings statement.”

The statement found “potential significant adverse environmental and public health impacts associated with high-volume hydraulic fracturing operations.” State oversight could not provide sufficient safeguards against the risks “under any scenario” including “an extensive suite of mitigation measures.” In justifying a ban, the report also cites “limited economic and social benefits” of fracking.

In short: too much risk, too little gain.

The findings statement serves as denouement to a long string of events with which most people who feel passionately about the issue are undoubtedly familiar, but are easy to loose sight of over the course of a seven-year environmental epic.

As it happens, the release of a findings statement coincides with an updated edition of Under the Surface. My book, released today in paperback with a new chapter, provides the backstory to this latest development.  After a journey from the printers to Cornell University Press’s warehouse, readers can now find it in bookstores and online in digital and print format.

One of the more difficult aspects of writing a non-fiction narrative is anticipating events that may affect the outcome of the story.

The fracking story, of course, is full of stories within stories that are compelling and dramatic.  I found plenty of them – from all sides of the issue -- to carry the narrative in the original edition, released at the height of fracking frenzy in the summer of 2012.  As readers know, the narrative takes readers back and forth across the border of New York and Pennsylvania, following a cast of characters in each state both influencing and caught up in very different story lines. In Pennsylvania, the shale gas boom was allowed to proceed with gusto. In New York, Paterson’s policy review put it on hold, and led to events that made the state’s pending policy decision the centerpiece of one of the biggest environmental movements since Love Canal.

The first edition of Under the Surface ends in Pennsylvania with residents of Carter Road locked in a lawsuit against Cabot Oil and Gas over polluted water wells. The Environmental Protection Agency is about to intervene with its own investigation of the problem – setting up a conflict involving the federal government, the state, the industry, and local residents.

In New York, meantime, the anti-fracking movement  -- drawing from events unfolding in Pennsylvania -- is reaching a critical mass of grass roots and institutional activism, while a gas company that already paid farmers in Deposit millions of dollars to lease their land seeks legal means to extend the leases and wait out the moratorium.

I tell both of these stories a in new chapter called Turf Wars, and a new epilogue called The Final Say.

The Home Rule movement – which eventually established a community’s right to determine land use over New York State’s authority to permit shale gas development -- is central to the outcome in New York and a fascinating story in itself.  It unfolded in the small towns of Dryden and Middlefield and other upstate localities, and led to a landmark decision by the state’s high court that gave Governor Andrew Cuomo important legal and political leverage for the eventual fracking ban.

In Pennsylvania, the story is less about David v. Goliath than Goliath v. the Federal Government. The intervention of the EPA in the case of Dimock water pollution ends with a very different but no less influential outcome.

Is it possible that residents of small towns appealing to their town-board have more influence in directing the course of the shale gas juggernaut than the federal government? It’s a question that communities sitting over shale reserves throughout the country are asking, or should be asking.

There is much more to be said about this, and the people and personalities involved in directing the outcomes in Under the Surface are as interesting as the outcomes themselves.

Happy reading.

More on the history of New York’s fracking ban

I accepted a recent assignment for the Press & Sun-Bulletin – recounting how fracking was stopped in New York – with feelings of both eagerness and uneasiness.

Eagerness was due to having a chance to recap the history of a story I have been covering for seven years. The uneasiness stemmed from how I would do this in a newspaper-length article on a 48-hour deadline.

The results ran both in abbreviated and longer versions in the Press & Sun-Bulletin, Pressconnects, and this blog. The long version was 3,700 words -- about 10 times the length of a standard newspaper article. But it was still short considering the scope of the subject. By comparison, I needed more than 90,000 words to tell the story more comprehensively in my book, Under the Surface.

The key players that have shaped New York’ story from the onset number well into the hundreds, and I had space to reference perhaps a dozen in the newspaper piece. Not surprisingly, I have heard feedback from people that my story lacked some perspective. As one source put it, the story of the battle has become the battle for the story.

Two readers touched on particular events relating to a bill, signed by Gov. Paterson in 2008, that was the catalyst for events to follow. The bill would make spacing units for the large unconventional Marcellus gas wells conformable with existing state policy — a move that would effectively streamline the permitting process. Without it, shale gas development would get hung-up on an administrative process designed for the much smaller conventional wells.

The bill was the kind of wonkish-policy instrument that few lay people have the appetite for, and one that induces migraines to reporters writing for mainstream audiences. But it was also the sort of under-the-radar document that offers stakeholders who master it a strategic advantage in influencing important decisions. In this case, it was a necessary component for the gas industry to get things moving in New York. While this policy-making was different from the grass roots aspect of the movement that I report on, the bill ended up being a notable reference point and precursor to the anti-fracking movement.

Although the bill passed overwhelmingly, Assemblywoman Donna Lupardo and a small group of her colleagues voted against, she said, to “send a message to Paterson.” At the same time, she added, “local and statewide activists raised red flags about what this bill would do to speed up the process as well. That helped put the brakes on the whole matter.”

Paterson ordered a hold on permitting pending an environmental review when he signed the bill. But the bill had, for the record, a certain symbolic relevance. More importantly, it was a magnet for organizational involvement in state affairs that, by some accounts, was a forerunner of the anti-fracking movement.

Roger Downs, a program director with the Sierra Club, noted that several environmental organizations were among the first to recognize the significance of this spacing bill, and engage and challenge the DEC about what its impact would be.These groups included the Sierra Club Atlantic Chapter, Catskill Mountainkeeper, Riverkeeper, Delaware Riverkeeper Network, Natural Resources Defense Council, Catskill Center for Conservation and Development, The Wilderness Society and Catskill Citizens for Safe Energy, Damacus Citizens for Sustainability. (I’m sure I am leaving some out.)

Now, moving on to an altogether different thread of the story, Chip Northrup, the drilling-investor-turned-fractivist, offers another critical aspect of the story’s history: economics.

Northrup writes:

We can summarize why fracking was prohibited in New York with a simple construct – the cost/ benefit ratio – what the environmental risks and economic costs would be to the state and it citizens versus the benefits of shale gas industrialization. Initially, this ratio appeared to tilt very much in favor of fracking – at least in the popular press and in the corridors of power – because the gas industry had grossly overstated the benefits of shale gas development while categorically denying the risks and collateral damage associated with it.

You can read Northrup’s full post here.

I am currently finishing an updated version of Under the Surface, Fracking Fortunes and the Fate of the Marcellus Shale, to be published in paperback by for Cornell University Press next year. This will probably be close to 110,000 words. I would like to think, as the subtitle suggests, it covers a lot of ground and offers a pretty good idea of events that distinguish New York from Pennsylvania and the rest of the nation with the unfolding of the on-shore drilling boom. But there will always be more to report. In that spirit, I encourage readers to pass along any of their own stories or recollections.

How Fracking Got Stopped in New York

The following is an uncut version of an article I wrote the Press & Sun-Bulletin. The newspaper version, which ran on Dec. 21, 2014, was cut due to space constraints The full version is reprinted here with permisson of the paper.

One of many protests against fracking in Albany
Photo: James Pitarresi

In certain places in New York, Wednesday’s news of the state’s ban on fracking inspired public celebration.

When a manager at GreenStar Natural Foods Market in Ithaca announced the news over a loud speaker, people in the store began applauding, cheering, shouting and hugging. “People had worked for this for so long,” said Dawn Lodor, an assistant manager at the store, which helped organize opposition to shale gas development.

In pro-fracking camps, the news was met with bitterness and disbelief. Dan Fitzsimmons, head of the Joint Landowners Coalition of New York group, listened to the decision from Cuomo’s cabinet meeting in Albany streamed online to his farmhouse in Conklin. His reaction? “It was like a kick on the gut.” His phone started ringing after that with angry members of the coalition who, in Fitzsimmons words, “feel like they’ve been robbed.”

It was no surprise that the news was emotionally charged. But, for people on both sides of the issue, it was an abrupt endpoint of an epic policy fight that began nearly seven years ago.

New York’s shale gas story will be cast in history as one of false starts, near misses, empty promises, and a grass roots movement of the ages. From the beginning, some harbored great expectations for a shale gas boom in the Southern Tier. In the end it was a bust that never got off the ground.

I began learning the full implications of the shale gas story one day in early May, 2008, when several visitors came to the Binghamton Press & Sun-Bulletin newsroom. These sources included Fitzsimmons, long before he was president of the Joint Landowners Coalition of New York, and Tim Whitesell, Town of Binghamton Supervisor. At the time, few people knew what fracking was, and most associated “Marcellus” with a small town in Upstate New York.

Sitting with a group of editors in “the pit” a wall-less space in the corner of the news room with a sunken floor and a white board where editors jotted story ideas, our sources informed us that agents representing gas exploration companies  – “landmen” – were seeking mineral rights to the land in the towns of Conklin and Binghamton. The landmen tended to approach people with the largest tracts first. These were often farmers or descendents of farmers, and many of them were duly skeptical, but excited.  What was not to like about the notion of abundant energy that could be safely extracted from beneath the land with deals that could make people rich? That was what the landowners were told, at least, and that’s what they hoped for.

At that time, land leases for mineral rights were not unusual in parts of New York state, especially in places in western New York where operators, mostly small independent outfits, had drilled wells for generations. In places east of Owego, and the Finger Lakes region, these leases rarely lead to development and the leasing money was incidental – maybe $5 or $10 an acre. Now, we were told by Fitzsimmons, that landmen were offering hundreds of dollars per acre, with some reports of $1,000 or more. The Marcellus Shale – a rock formation long-known to hold an abundance of gas that was technologically inaccessible – was their target. (The Marcellus ran at an angle from Marcellus, New York, where it jutted above ground, all the way to West Virginia and parts of Ohio and Maryland, where it was more than a mile deep.)

Southern Tier residents were learning that the first successful wells in the Marcellus –featuring a combination of new techniques -- had spurned a burgeoning gas rush just across the border in Susquehanna County, Pennsylvania. Unlike the type of conventional drilling western New Yorkers were familiar with – clusters of vertical wells generally contained in a geographically limited area – this shale gas development involved drilling into rock that extended under entire states. Operations would encompass vast regions. It required unconventional technology. Well bores would be oriented horizontally along the vast mantel of Marcellus rock, and then the bores would be injected with pressurized solutions of unknown but effective chemicals to break the rock and free the gas. The scope, scale, and sums of money were seemingly unprecedented.

For the next six-plus years, the story would be told through several hundred articles in Gannett’s Upstate New York newspapers. It would play out one way in New York, and another way in Pennsylvania, with outcomes that reflect each state’s political attitudes and comfort levels with mineral extraction.

As the price of natural gas approached record highs in early 2008, the fervor over gas development spurred ever more aggressive efforts of landmen charged with securing acreage for drilling. They also fostered growing expectations among landowners seeking a deal of a lifetime. The bidding rose from hundreds of dollars per acre to thousands of dollars per acre, and in the newsroom, we heard complaints from landowners who had signed away their land rights without understanding the value of the mineral resources.

With this concern, early stories seized on the efforts of Chris Denton, an Elmira attorney, and members of the New York Farm Bureau, who became important advocates for landowners. They gave presentations to audiences packing school auditoriums and town halls in places where landmen were sent to secure acreage, which at the height of the leasing frenzy in 2008 included a large part of upstate New York.

Many Southern Tier owners saw the approach of the landmen as a Beverly-Hillbillies–moment. But at his presentations, Denton gave a sobering message: Beware of the industry lease. It’s “a complex-business transaction masquerading as a lottery ticket.” A standard lease was worded in a way that gave operators rights to minerals under their land, of course, but it also gave them rights to do whatever they needed above land to get at riches below.

The state’s permitting guidelines –designed for conventional drilling -- were outdated and insufficient to handle shale gas development. This made matters worse. Landowners had to take matters into their own hands by crafting land-use agreements to ensure environmental safeguards. Denton was the first of several attorneys who would begin advising landowners groups on leasing strategies.

MEGA DEAL

The story went from big to bigger on May 11, 2008 with news from Sanford, a town of 2,400 people on the eastern edge of Broome County. Dewey Decker, town Supervisor, headed a group of 300 farmers – controlling some 50,000 acres – who banded together to leverage bargaining power against companies. None of the landowners would sign a lease without a deal that was acceptable to all. With this technique, the Deposit group landed a deal with XTO Energy for $90 million. That figure would soon grow to $110 million with subsequent sign-ons.

The terms included $2,411 per acre for leasing rights for five years and the same amount for the three-year extension. In addition, if prospectors hit gas, the landowners would get 15 percent of the royalties. Without a single well drilled, many of the farmers, including Decker, made more in a single day than they would their entire lives. Mega deals were also being signed in Pennsylvania, and the media coined a new word for farmers like Decker: Shallionaires.

While the job prospects for rig workers in Pennsylvania remained mostly filled by itinerate crews from Texas and West Virginia, there was a surge of new business for lawyers and accountants. My reporting of the Deposit deal stated it this way: “Now, people who had problems paying property taxes suddenly will have ... more tax problems. Income taxes could immediately bite into a third or more of leasing revenues. ‘It's quite a change, and I hope people can handle it,’ Decker said. ‘The lawyers and accountants are going to make out quite well.’ ”

GREAT EXPECATIONS

News of the XTO deal fueled a gold rush mentality in the Southern Tier.

People began reasoning that, if XTO found resources under the land in the Town of Sanford with that kind of value, then other gas companies prospecting in nearby towns along the Pennsylvania Boarder also harbored riches. Lease offers reported in Broome County towns bordering Pennsylvania soared. In some areas along the Millennium Pipeline, where the market produced a premium for ready access to infrastructure, offers rose to $5,000 an acre or more.

XTO was a $13 billion company that would later be bought out by Exxon Mobil, and a far cry from the smaller independent operators that had done business in New York.  People were rightly filled with a sense that they were heading into unfamiliar territory with the Marcellus prospects, and they began crowding town halls and school auditoriums in their quest for information.

Many of the meetings were sponsored by town officials seeking answers from officials from the state Department of Environmental Conservation about how the impacts from shale gas development would be managed in New York. One such meeting, on July 16, 2008 in the municipal building of the town of Chenango, was crowded with farmers, suburbanites and officials from town, county and state governments. They were not necessarily against fracking, but they had plenty of questions. What about public safety concerns, roads, and waste disposal?

Linda Collart, regional supervisor with the Division of Mineral Resources, assured the crowd that there would be little or no impact; the agency had been managing gas development for generations. In her power point presentation, she showed a picture of what shale gas development would look like: A small valve poking from the ground with a lush meadow of wildflowers and grasses in the foreground an a bank of trees in the background. This was a reclaimed natural gas site, she said, and an example of the expected long-term impact from Marcellus development.

In what would become a defining moment in the local history of the shale play, a person from the back of the room stood up and asked her how local emergency responders could prepare for a spill, fire, or explosion when the industry did not fully disclose the complete chemical content and concentrations of fracking fluids.

“We don’t anticipate any significant emergencies,” Collart said. “These things are rare.”

Another person stood up and asked how regulators were preparing for an influx of drilling that would exceed any historical comparison.

Collart responded, “We have been doing fine so far … No problems!”

Collart stood by that line at several meetings, and the more she gave it, the more agitated and skeptical towns folks became.

A meeting in Greene was scheduled the day after I reported Collart’s responses at the Town of Chenango meeting. For this, Governor David Paterson’s office, responding to growing skepticism about the DEC’s ability to manage shale gas, sent Judith Enck, the governor’s top environmental advisor and Stuart Gruskin, executive deputy DEC commissioner.  As with earlier meetings, the questions reflected frustration from the crowd of more than 500 people who felt they were not getting straight answers, but Enck’s response was different than Collart’s.

“The DEC is going back and doing its homework,” she said. “I’m sure you will hold our feet to the fire and make sure it gets done.”

Later, Gruskin told me that the Greene meeting was a “fork in the road.” He explained: “If there was ever any doubt about the significance of all this, going to that meeting made it clear that it was going to be a really big issue in New York,” he said. “We had to make a decision as to how we were going to approach it.”

Within days of the Greene meeting, the state legislature approved a bill, pushed by gas companies and submitted by the DEC, that would make spacing units for the large Marcellus gas wells more uniform – a move that would effectively streamline the permitting process. Without it, shale gas development would get hung-up on an administrative process designed for the much smaller conventional wells. Paterson signed the industry-supported bill. But, with input from Enck and Gruskin, he also declared that permitting could not begin until the agency under took a comprehensive review of its impacts. The document, know as the Supplemental Generic Environmental Impact Statement (or SGEIS) was born.

At the time, even gas supporters didn’t seem to mind the time out, which they saw as a necessary step to make things move smoothly. “It’s a process in which we will be learning as we move forward,” said state Senator Tom Libous, sponsor of the spacing bill. “We have to make sure the environment is protected. I am pleased so far.” At the time, people expected the review to take a year or less, and shale gas would begin soon in New York.

Before the SGEIS could be finalized, it had to go through a public review process. This standard procedure for public policy would make the document a critical instrument for the anti-fracking movement to delay shale gas until people finally got the answers to the questions raised at public meetings. The more they found out, the more questions they had.

A MOVEMENT BEGINS

The second turning point of the story came with a bang, literally, on New Years Day, 2009 in Dimock, Pennsylvana. An explosion rocked the frozen ground in Norma Fiorentino’s front yard and concrete dust billowed over a gaping hole where her water well was housed. The blast destroyed the well that supplied her trailer on her 7-acre homestead. Though there were no casualties, the incident raised many questions and, eventually, led to state and federal investigations about the safety and viability of shale gas development in Susquehanna County. In months and years that followed, the Pennsylvania state Department of Environmental Protection found that methane was seeping from nearby gas wells drilled by Cabot Oil and Gas into water wells in the area where Norma lived. Cabot responded that methane comes from the ground and factors other than drilling can bring it into contact with water supplies. Cabot denied that its operations caused the problem, and at one point accused the DEP of fabricating the story.

The events in Dimock highlighted a battle over whether fracking was a good thing or a bad thing. At the heart of it was the issue of trust, and who could be believed – industry, government, or neither. The industry, at the time, was standing by a claim that fracking had not contaminated a single water well throughout its history. This motivated journalists, critics, and activists who sensed a bending of the facts and possibly a cover up.

After Norma’s well exploded, Walter Hang, head of an environmental research firm in Ithaca, began searching data bases from the DEC to see if he could find records ot similar incidents in New York State. He uncovered 270 files documenting wastewater spills, well contamination, explosions, methane migration and ecological damage related to gas production in the state since 1979. Those findings were the subject of an article in this paper on Nov. 8, 2009. Continuing his research in 2010, Hang uncovered documents that showed William T. Boria, a water resources specialist at the Chautauqua County Health Department, reported his agency had received more than 140 complaints related to water pollution or gas migration associated with nearby drilling operations. In a 2004 memo summarizing the issue, Boria stated: "Those complaints that were recorded are probably just a fraction of the actual problems that occurred." County health officials tabulated information on 53 of the cases from 1983 to 2008 on a spreadsheet, including one where a home was evacuated after the water well exploded.

The first draft of the SGEIS had been released on September 30, 2009, and by then the anti-fracking movement was becoming a powerful grass-roots phenomenon. The first public hearing on the state’s policy proposal to permit shale gas was held six weeks later at the Chenango Valley High School. It had more the feel of a pep rally than a public hearing.

Lines began forming outside an hour before the doors opened at 5:30 p.m. Some people wore costumes—one was a barrel of toxic waste; another, a gas company executive billionaire with money coming out of his hat. They held signs that read “Don’t Frack on Me” and “You Can’t Drink Gas or Money.”

Drilling supporters were also represented, most visibly by people who wore t-shirts that read “Pass Gas, It’s a Movement.”

Environmental conservation officers wearing ranger’s hats and bearing sidearms stood attentively at various entrances and milled about the lobby as more than 1,000 people filled the auditorium to capacity.

For the next three hours, speakers lined up for a turn at the microphone, where they offered impassioned praise or criticism of the drilling industry and its plans to set up shop in Broome County. The meeting in Broome County was one of four throughout the state, and each drew a large and impassioned response.

In the three-month period allotted for written responses, the agency received more than 14,000 formal comments, and it had to address them all before the plan
could become final. The anti-fracking movement won its first and major victory in stalling a decision on shale gas.

CLOSE CALLS

In the years that followed, those who favored shale gas pressed on in the face of even more delays. With the economy languishing for years following the stock market crash of 2008, landowners kindled hopes of making money with gas leases. In northern Pennsylvania and the Southern Tier of New York, tens of thousands of landowners began organizing into dozens of groups to lease their land. Many were organized through Denton and the Farm Bureau, and Binghamton lawyer Scott Kurkoski.

Continued delays and falling natural gas prices did little to deflate expectations. A  study commissioned by the Broome County government in late 2009 found full-scale Marcellus production could involve up to 4,000 wells, generate $14 billion in local spending, and support between 810 and 1,600 new jobs for a decade.

Although the report lacked an assessment of the social and environmental cost, Broome County government budged $5 million in revenues from the gas rush, before it had even signed a lease. Nathaalie Maxwell, budgeted director at the time cited “conservative” expectations for “a multi-billion industry that has set its sights on Broome County.”

At the time, there was still convincing evidence that major companies were interested in extracting gas from under Broome County. In June, 2009, a coalition headed by Dan Fitzsimmons and represented by Scott Kurkoski, announced a deal with Hess that would generate $66.5 million in lease payments and 20 percent royalties for 19,000 acres of land owned by about 700 people.  The deal failed to close, however, due to differences in how the lease would be structured to control land use. Hess eventually signed a deal with residents in Northern Pennsylvania instead.

FATAL BLOWS

After the Hess deal, political, economic, and social factors continued to erode the chances of shale gas development in New York.

The anti-fracking movement would become galvanized in the summer of 2010, with the premier of Josh Fox’s movie, Gasland, on HBO. Gasland, which was screened in Binghamton and Ithaca, featured a shot of Mike Markham, a resident living near shale gas development in Weld County Colorado, lighting his tap water on fire. The movie, which also featured Norma Fiorentino’s well and other scenes from Dimock, Pennsylvania, became a rallying point for the anti-fracking movement in New York.

The SGEIS was sent back to the drawing board, and when the Cuomo administration issued a revision on September 2010, it was again flooded with comments from well-organized and informed critics that led to another backlog.

In years that followed, New York’s anti-fracking movement blossomed into a celebrity cause, supported by performances, rallies, appearances and speeches by Natalie Merchant, Pete Segeer, Mark Ruffalo, Bobby Kennedy Jr., Yoko Ono, Sean Lennon, Josh Fox and others. A group of professionals added credibility to star power. Sandra Steingraber, a noted author, scholar, and ecologist, became a leading figure and motivational speaker. Tony Ingraffea, an engineering professor with vast industry experience, was also a leading influence in the movement and an organizer of Physicians Scientists & Engineers for Healthy Energy.

The fracking debate in New York would extend to both local and federal governments. In 2010, the federal Environmental Protection Agency was directed by Congress to use a portion of its allotted funding for a peer-reviewed study of the relationship between hydraulic fracturing and ground water. The effort -- championed by (now retired) Rep. Maurice Hinchey, at the time chair of the Appropriations Committee -- included a hearing at the Broome County Forum on September 13, 2010. That event drew about 1,500 people from throughout the region. Notably, the EPA hearing was headed by Judith Enck, who had left her job with the DEC to accept appointment as regional director of the EPA. The results of the study are yet to be released.

Yet the biggest defeat for the shale gas industry in New York, prior to Wednesday’s announcement by the Cuomo administration, did not come until late May of this year. That’s when the state’s high court upheld a decision that allowed local governments to control where and if fracking occurred. The concept, know as home rule, was a result of the court’s ruling to uphold fracking bans in the towns of Dryden and Middlefield. Prior to the decision, the state controlled where gas wells went. The Court of Appeals made clear that zoning and land-use restrictions apply, and towns could not proceed without recognizing fracking as an accepted use.  

The decision by the Cuomo administration to ban fracking statewide Wednesday caught everybody by surprise. Hours before it was announced, I was scheduled to cover a town board meeting in Windsor, where officials intended to discuss changes to land use plans to allow fracking. Windsor was one of many towns along the Pennsylvania border going through that process – which was deemed necessary before the state could issue permits. Now, much to the dismay of people like Dan Fitzsimmons, the issue of local control is moot.

Antifracking activists, who were geared up to fight a decision from the governor’s office that would permit fracking, also have to make some adjustments. Dawn Lodor, the manager at GreenStar said the store had commissioned a bus to take fractivists to a rally in Albany in January to protest fracking. They are still going, but now they plan to make it a public celebration.

Cuomo’s choice to ban fracking driven by science, politics

Tonight, I was scheduled to cover a town board meeting in Windsor, New York, where officials were going to review a plan to change their zoning to allow fracking. The process for a zoning change promised to be long and contentious, and was necessary in light of a recent court ruling putting the decision of whether and where to drill in the hands of local governments.

Things changed dramatically this afternoon, when Governor Andrew Cuomo announced that he would ban shale gas development statewide due to unacceptable health risks. Cuomo’s position, backed by a long-awaited report from the state Department of Health, is a departure from his earlier position that he would allow fracking where local governments favored it. Reporters, pundits and the public they serve are still getting their minds around Cuomo’s emphatic decision, which came after more than six years of policy review. While it puts the matter to rest, many questions remain: What are the legal consequences? Do industry lawyers and supporters, who have been beaten at every turn in their efforts to bring shale gas to New York, have another challenge in them? Or is this the end of the line?

Those answers will come soon, but apparently, from my conversations with sources and a press-release from the Joint Landowners Association of New York, not tonight. The news of the hour is that, after a six and a half-year journey, fracking is dead on arrival in New York. Along that line, I share my response to a request by Andrew Revkin, author of New York Times  Dot Earth, for a "what just happened" analysis. (Revkin’s compilation of reaction from many informed sources can be found here.)

Cuomo’s decision is consistent with his progressive politics that got him to where he is now. It's a bold move and I optimistically take it as sincere attempt to overcome the inertial forces of fossil fuel dependency. Success here could add considerably to his legacy. But he has much more to do. The fracking ban needs to be accompanied by practical reforms and initiatives in energy development & consumption. How much longer will New York City residents have to rely on Fuel Oil as their primary source of heat? What about coal burning plants? I have written about the answer to these questions by a group of scientists and professionals that have contributed to the credibility of the anti-fracking movement. I offer that post again here.)

So why did it take six and a half years? Science takes time. Establishing risks of high volume hydraulic fracturing and the new era of on shore drilling it has enabled is especially difficult because shale gas development is relatively new. The industry controls most of the information and has plenty of legal, scientific and political wherewithal to challenge any conclusions that don’t work in its favor.

Science is part of the calculus. But despite what Cuomo would like us to believe, scientists don’t make these kinds of decisions. The full equation is Science + politics = policy. Cuomo finally got tired of being hounded on the issue by his political base. The movement in New York against shale gas was relentless and it was focused on him. At one point, he told Susan Arbetter, host of Capitol Press Room, that it was the most effective political action campaign he had seen. (I will link to that interview as soon as I find it, but I wanted to get this post up right away.) Activists, both institutional and grass roots, promised to step up their efforts if Cuomo allowed even a single well.

The Home Rule decision by the state’s high court in June, and the depressed price of natural gas made a decision politically easier. Cuomo would have a hard time taking the perceived riches of fracking from landowners back when landmen were at their doors with big checks in hand. Nobody is currently seriously looking at shale gas exploration, much less development, in New York with gas prices as low as they are and the encumbrances of Home Rule.

New York has become a showcase for the anti-fracking movement, and Cuomo's decision today has raised the movement's stature nationally. But it’s also important to remember that Cuomo’s decision is the end-point of a process that started 6-plus years ago - before frack was a bad word. As recounted in my book, Under the Surface, the moratorium issued by Governor Patterson in July, 2008 had nothing to do with organized fractivists, who did not appear on the scene until after Josh Fox’s movie Gasland two years later. New York’s moratorium was the direct results of landowners posing reasonable questions in public hearings about how the state was prepared to govern shale gas development. Six and half years later, Cuomo’s actions have provided the answer: it wasn't then, and it isn't now.

New York’s high court upholds Home Rule bans ... Decision complicates natural gas prospects

It’s settled. There will be no fracking in New York communities such as Dryden and Middlefield – serene and scenic places that have passed rules that find shale gas development incompatible with local land use ordinances.

The three-year battle over jurisdictional control over the industry ended today when the New York Court of Appeals upheld lower court decisions that cedes control over where and if shale gas development can happen from state to local governments. That’s a landmark victory for Home Rule advocates, including residents of more than 170 upstate communities that have passed moratoriums or bans on the controversial process.

But the future of fracking in the Empire state remains more unsettled than ever. All of the communities with fracking bans happen to be outside areas with the strongest prospects for shale gas development. In Southern Tier counties bordering the booming gas fields in northern Pennsylvania, many local governments either support fracking, or have no enforceable policy to prevent it. For every place like Dryden, there is a place like Sanford, a rural community near the Pennsylvania border that sits over 50,0000 acres of the Marcellus Shale, for which XTO Energy – a subsidiary of Exxon Mobile – has paid farmers $110 million just for the chance to test.

Sanford has no land use restriction, and is governed by a town council eager to see  rigs and roughnecks role across the Pennsylvania border and clear pads in the meadows, fields and woodlots of Southern Tier farms. And according to some who have been engaged in the fight since it began with the leasing rush of 2008, the prospect of drilling in these places is more imminent following today’s court ruling.

The court decision in effect provides legal sanction to a plan proposed by Governor Andrew Cuomo in the summer of 2012 to begin issuing permits on a trial basis in areas where communities and industry favor development. As reported by Danny Hakim of the New York Times in June, 2012: “Cuomo’s administration is now trying to acknowledge the economic needs of the rural upstate area, while also honoring the opposition expressed in some communities, and limiting the ire of environmentalists, who worry that hydrofracking could contaminate groundwater and lead to other hazards.”

Walter Hang, a policy analyst who runs Toxic Targeting, an environmental data firm in Ithaca, said Cuomo’s plan from 2012, combined with today’s court ruling, moves New York state a step closer to fracking in these places. “Today’s decision serves up the Southern Tier on a silver platter to allow shale gas development to begin,” he said. “Sure, it prevents fracking in some areas. But it allows it in the five counties along the Southern Tier where it’s most likely to begin. It’s the classic double-edged sword.”

Cuomo’s plan in 2012 to begin fracking in certain localities but not others drew support for those pinning the promise of economic development on the drilling industry, and drew rallies and protests by anti-frackers, who characterized the fracking trials as “sacrifice zones.” Cuomo has been mostly silent on the issue since then.

Not everybody shares Hang’s outlook. Some anti-fracking activists expect that New York’s ruling will not only discourage shale gas development in New York but will also encourage other municipalities throughout the country to establish land use restrictions. (See comments of Mary Ann Sumner, the Dryden Supervisor who helped organize the ban.)  And Brad Gill, executive director of the Independent Oil and Gas Association of New York, called the court decision “one more nail in the coffin” for fracking in the state. Gill’s view, often echoed by other industry supporters, is that drill operators will be less likely to commit capital to area that lacks regulatory uniformity and predictability. There is truth to both of those views, but they overlook the fact that the industry, first and foremost, will follow the geology. Wildcaters, in particular, are likely to seek out niches in unexplored territories, like the Southern Tier of New York.

As with most policy calculations, science and law are fundamental factors, but politics will be the decider.  The Legislature could pass a bill clarifying ambiguous language over the state’s role in extraction operations on which the Home Rule case was built. It’s also possible that the Legislature could ban fracking altogether, although anti-fracking bills passed repeatedly in the Assembly over the years are yet to fly in the Senate.

For now the decision remains firmly in the hands of the governor, who can at anytime enact or withdraw the policy review of fracking, called the Supplemental Generic Environmental Impact Statement. The 1,000-plus page document is as complicated and bureaucratic as its name suggests,  and it's been on hold for years.  Don’t expect that to happen before election. Rocking the boat on this hypersensitive issue would certainly alienate the governor’s progressive base. But after election-day, he has plenty of politic wiggle room and, with today’s Court of Appeals ruling, a clearer view of the legal landscape.

NY shale prospects dim six years after leasing frenzy Industry faces mounting legal, economic hurdles

New York’s Marcellus Shale gas reserves, once thought to be world class, continue to lose their luster along with the gumption to develop them.

Shale gas proponents, once giddy with anticipation during the leasing boom of 2008, know now what they didn’t know then: legal hurdles to overcome state and local roadblocks look more formidable if not insurmountable with each passing court case and hearing, and the resource looks less and less worth the effort under today’s economics.

Given the inherent uncertainty in mineral exploration, much of the impetus behind it boils down to a mindset. While even some of the most ambitious extraction endeavors go bust, it’s a given that resources buried 5,000 feet deep will not be found where nobody chooses to look. And nobody is going to look if they are not allowed to, or if the effort of looking is deemed greater than the rewards anticipated under any scenario.

Two recent indicators of future prospects in New York have, for the most part, slipped under the radar of the mainstream press, but it’s a reasonable bet they have not escaped notice of prospectors and the people who finance them. The first indicator is the status of a lawsuit by industry and a group of landowners to legally force open the Marcellus frontier in New York. I’ll get to that in a minute. The other indicator is the latest assessment of economically recoverable reserves under current market conditions, if the moratorium were lifted or bypassed.

First the economics. Although it may be a fading memory for many, stakeholders will remember a time when New York was expected to join Pennsylvania as a global energy producer with gas from the Marcellus Shale. Many will recall the summer of 2008, when the leasing frenzy – whipped up by a $110 million deal between XTO Energy and landowners in Deposit, New York – sent lease prices soaring along the relatively unexplored fringes of the Marcellus in the Southern Tier of New York.

Since then, the price of natural gas has fallen by more than two thirds. Moreover, New York state’s moratorium on shale gas development, pending a review originally expected to last a year, is about to begin year seven, with no end in sight. In the meantime prospectors have moved on to other ventures, leaving many to wonder when and if they will return to the Empire State. The answer is simple: They will return when and if a) it’s allowed and b) it’s profitable.

The League of Women voters became interested in the profitability issue when the state released its 2014 Energy Plan, which includes vague references to shale gas development within New York’s borders. To help bring things into focus, the league  commissioned petroleum geologist Arthur Berman and petroleum engineer Lyndon Pittinger to assess the potential of the shale gas under New York state in the context of market viability.

The result, a report titled Resource Assessment of Potentially Producible Natural Gas Volumes from the Marcellus Shale, State of New York, was released last month. It begins with varying projections of the Marcellus Shale potential from credible sources that show, if anything, just how uncertain the starting point of that calculation is and always has been. Estimates of the recoverable reserve range from those posed by Penn State geologist Terry Engelder in 2008 -- 489 trillion cubic feet (tcf), with about 71 tcf under New York stat – to those offered by The United States Geological Society in 2011: 84.2 tcf for the entire Marcellus play extending through Pennsylvania and four other states.

To clear up a point of common confusion, these numbers represent “technically recoverable” gas. As Berman and Pittinger point out, the “economically recoverable” figure, which is more relevant, is bound to be lower. Both figures are moving targets. That which is technically recoverable changes with technological advances; economically recoverable resources change with economy, and specifically with the value of the resource. The  value, in turn, is influenced by supply, demand, and infrastructure to get it to market. All of these things are influenced by regulation, which in New York remains unknown.

In a nut, the League of Women Voters report found that the business of fracking in New York, moratorium aside, would not be viable at today’s price -- between $4 and $4.50 per MMBtu, or Million British Thermal Units. The price would have to rise to $6 per MMBtu to encourage exploration and even then production would be modest -- between the 0.8 and 2.5 Tfc. A price of $8 MMBtu would encourage production between 2 to 9.1 tcf -- more than marginal but hardly the bonanza that people were expecting in 2008. For gas to reach $6 MMBtu, Berman notes, “Substantial unforeseen changes in the natural gas supply/demand balance would need to occur.”

(You can hear Berman discuss his report with Capitol Press Room Host Susan Arbetter here.)

It’s fair to note that Berman has long been a critic of shale gas development, and his projections tend to reflect a broader notion that its economic sustainability falls well short of expectations promoted within the field. But he is respected, and even shale gas proponents such as Engelder, given the chance, show no eagerness to flatly dismiss his assessment of New York. “Art may not be that far off the mark although he is usually low relative to other analyses,” Engelder said in a recent email, asking his take on Berman’s work.  “Maybe some of Broome County works at $4 gas,” Engelder added.

It’s also worth noting that Berman’s analysis draws on and expands the same school of thought developed last year by a team comprised of a cross-section of professionals, led by investor Chip Northrup, who happen to be upstate New York residents and who have been conspicuous in the battle to keep fracking out of their state. The team also includes Lou Allstadt, a retired Mobil vice president, Brian Brock, a geologist, and Jerry Acton, a retired systems engineer for Lockheed Martin. (Here's link to Northrup's blog, No Fracking Way.)

Within days of the release of the report by the League of Women Voters, shale gas proponents suffered another discouragement on the legal front. First, some background: Undaunted by a string of defeats in state court that have consistently ruled in favor of municipalities’ rights to ban drilling, a legal team representing landowners and industry filed a suit against New York that claims the indefinite moratorium on shale gas development violates the state’s own policy under the State Environmental Quality Review Act. The state filed a motion for dismissal on the grounds that the plaintiffs had suffered no damages and the moratorium fell well within the state’s right in establishing policy on shale gas, regardless of how long it took to review all the factors.

The complaint was filed by the Joint Landowners Coalition of New York, represented by Scott Kurkowski and funded by the Mountain States Legal Foundation, a group founded by the Koch brothers to fund conservative legal causes. A companion suit was filed by industry lawyer Tom West on behalf of Mark Wallach, a trustee of Norse Energy, a bankrupt drilling company with interests in upstate New York. Morgan Costello of the attorney general’s office provided council for the state.

On April 24, both sides appeared in a hearing before state Supreme Court Judge Roger McDonough. It’s often tough to tell the outcome of a case based on a hearing and prior to a ruling, but by all counts, the judge seemed to lack sympathy for the landowners, and pressed them on the merits of their complaint against the state. Here’s an excerpt from an account posted April 26 on the Joint Landowners website:

Judge McDonough asked if the executive branch can delay forever. Ms. Costello’s answer was that it can take extended time. Judge McDonough seemed to agree with Ms. Costello on the executives role, calling it “separation of powers 101.”

Attorney Tom West for Norse spoke next. The Judge focused on time limits in SEQRA. There are none. He suggested that this should be remedied in the legislature or in the executive branch. As Attorney West kept hammering at the history of delay and the ongoing wrong, the Judge said that he can only take the executive on its word at this stage of the process. (Editor’s note: Motive will emerge in discovery, but we have to get past the motion to dismiss in order to get to discovery.) The Judge sympathized with the frustration but kept returning to time limits in the law.

The blog concluded optimistically that the “judge reserved decision” and though he did not recognize the fracking moratorium as an “illegal delay” under the state’s SEQR policy, there may be an opening for an argument of “unreasonable delay.”

That optimism was not shared by West. In a recent email in response to my query about the status of the case, West was blunt:  “We are not expecting a positive decision based upon the way that oral argument went.” The West Law firm took down the links to the complaints once posted on its website.

While the jury is still out, so to speak, there is little good news based on these recent events for those counting on a near-term future in shale exploration and development in New York, and plenty of good news for those hoping to see New York lay the groundwork to establish itself as an alternative energy trend-setter.

But the story is not that simple, of course, with plot lines extending well beyond New York, and woven deeply into the national and global circumstances that will determine the future of fracking. Those plots are quickly evolving.

One example: The U.S. Energy Information Administration has just cut its estimates of recoverable reserves in the Monterey Shale in California by 96 percent. California, like New York, is politically influential, and it’s hard to ignore other similarities regarding their roles in the fracking saga. In California, the notion that the geology cannot support the hype has enlivened the argument that the fracking bonanza was a bust from start, and has encouraged legislation for a moratorium similar to New York’s.

But while shale gas prospects are dimming in New York and California, they are getting a big push from places inbetween as well as other parts of the world. Global forces are encouraging development of gas reserves in dozens of other U.S. states to capitalize on growing international demand for cheap and readily available fuel sources, with the economic and political equation favoring expediency over externalized costs. Those demands, already substantial and growing in Asia, have spiked in Europe. The age-old call for energy independence is again taking on a new urgency in the Free World, with the Ukraine crises vividly illustrating the danger of energy dependence on unpredictable and unfriendly governments – in this case, Russia.

Many think more gas from the U.S. and a global spread of the fracking gospel is the answer. Michael Lindenberger of the Dallas Morning News, recently reporting on the significance of a deal for Russia to strengthen it’s economic status with a $400 billion deal to export gas to China, cited Texas Senator John Cornyn as characterizing the broad political push for policy to encourage more U.S. exports. More exports, according to Cornyn, make economic sense but, moreover, are justified “because of the competition it would provide for Putin and the Russian monopoly.”

Of course, we are talking about shale gas and fracking, so it comes as no surprise that there is little consensus and much division on the topic. Seamus McGraw, author of End of County, Dispatches from the Frack Zone, has been following the fracking issue since he began writing his book as the shale gas boom first developed in Pennsylvania. He points out that the global economics of shale gas cannot be isolated from the economics of other energy sources, including coal. The political urgency provoked by international threats in areas involving key American interests must account for the practicalities of various solutions. And a primary practicality  of shale gas exports involves infrastructure in place to get energy where it needs to go today, not years from now. And here I will give McGraw the last word. In a recent discussion on my Facebook page, he posted:

You're not going to break Russia's stranglehold (on natural gas exports) because a) they've got pipelines which beat LNG (liquid natural gas) every time, and b) because they can set the price as low as they want to drive us out of market and then jack it back up at will. All this is going to do is drive up prices here to the point that gas may no longer be reliably competitive with coal, choke off any ancillary economic benefits to manufacturing, and concentrate what advantages there are entirely in the industry itself. And even that, as the Russia/China deal demonstrates, isn't going to be nearly as lucrative as the industry imagines. It's a bad deal all around.

Ultimately, global markets along with political considerations will shape the deal, good or bad, and determine whether the value of gas in places like New York ever justifies the costs of extracting it.

NY nat' gas projection exemplifies doublespeak on fracking Cuomo plan bases outlook on conflicting scenarios

Will Fracking be part of New York’s energy picture for the next 20 years, or not? The state’s draft 2014 Energy Plan is supposed to answer this kind of question, and the fact that it appears to but doesn’t represents the politically unwieldy position Governor Andrew Cuomo finds himself in with the fracking debate.

In a recent post, I wrote that the plan “makes no mention of developing New York’s shale reserves through fracking, a discussion that remains the elephant in the room. But the plan gives a nod to the role of natural gas and more infrastructure as part and parcel to some very ambitious, of very broad, goals.”

An astute reader, Keith Schue, flagged this. He pointed out Cuomo's plan does in fact mention fracking, albeit in a convoluted and (in my view) meaningless way. Schue directed me to “Volume 2 – Sources,” and a subsection on p. 88 titled "New York Production Forecast." (Embedded below)

My own review of this section found several things worth noting.  First, the forecast, accompanied by a chart, extends through 2035. During that time, the state’s natural gas production is “expected to decrease significantly,” according to the text, due to a “decline in existing formations” and “lack of new wells being drilled.”

Yet, oddly, the line plotted in the accompanying “figure 32” gas production climbs impressively through that period.

The text attempts to explain this, ignoring the inconsistency in the original analysis that gas production was expected to decline. The graph illustrates “a conservative Marcellus Shale natural gas production level.” This “conservative” level accounts for “potential (my emphasis) permitting and production difficulties related to horizontal drilling and hydraulic fracturing.” It offers this elaboration. “If these difficulties are minimized, Marcellus production levels could potentially be higher.”

Finally, it explains that the graph “would show a forecasted overall decline in production continuing through 2035 if the current prohibition on shale development continues.” It concludes that “Regardless of actions within New York boundaries,” ample supplies of gas exist elsewhere “as long as the interstate pipeline capacity exists.”

In a nut, the plan says that Marcellus gas will make production go up, contingent on unknowable factors if it happens, and go down if it doesn’t; and New York can get gas elsewhere anyway, if their are enough pipelines.

To my eye, the analysis appears at first blush to be vague to the point of meaninglessness. But I will grant that it provides a baseline for discussion and many will find that the very dance around the Marcellus question along with the excruciating qualifications and parsing of language are emblematic of the ambiguous state of our energy future.

Shue, who is working with various environmental and anti-frcking groups, explained in an email that he and others were in the process of “writing an exhaustive critique of the energy plan and will be shining a spotlight on this sly mention of fracking at the hearings too.” I am happy that others are looking carefully at this, and I welcome their assessments.

2014 Draft Nysep Vol2 Sources (Page88) 1

Moratorium or not, NY begins to feel fracking’s impact Outcome rests with future of consumption, production

While New York’s governor Andrew Cuomo has officially tabled a decision over the politically explosive issue of fracking until sometime after elections, his state’s energy dilemma continues to simmer.

For worse or better, the Empire State will continue to feel impacts of the fracking boom for the next decade or more. The question is how big those impacts will be. The answer, to a large degree, rests with the governor, who can direct policy encouraging or discouraging both production and consumption of natural gas, and/or alternatives.

Even with no decision to allow shale gas wells to be permitted within the state, fracked natural gas and oil are flowing into or passing through New York at an accelerated rate as the on-shore drilling boom continues to ramp up nationwide. Crude oil from the Bakken shale in North Dakota has begun passing through New York at an annual rate of 2 billion gallons, traveling by rail to Albany and then down the Hudson River on tankers and on to refineries in New Brunswick Canada. (The oil carries unusual risks. With relatively high concentrations of gas, it has caused explosions after four separate rail mishaps in North America, including one that killed 47 people in Lac Megantic, Canada.)

Numerous infrastructure plans to store and transport natural gas within New York are also well underway. Liberty Natural Gas has proposed a terminal to import gas to communities in New York and New Jersey. The Port Ambrose facility, proposed 19 miles off Long Island, would take in liquefied natural gas (LNG) from ships, convert it back into gas, and pipe it to markets in New York and New Jersey now dependent on heating oil. Anti-fracking activists fear the port will be converted to an export facility. In addition to various pipelines on the drawing board and underway throughout upstate and downstate, there are plans to increase storage capacity. In the Finger Lakes community of Seneca Lake, Inergy Midstream is seeking final approval from the Department of Environmental Conservation to store propane in depleted salt mines, which would serve as a distribution hub through the region. The project faces intense opposition from grass roots and institutional environmental causes.

Over the long haul, the impact of regional and national shale gas development on New York rests with two primary factors: How much gas the state consumes, and how much it produces.

On the consumption side, natural gas is a primary fuel for heating and electricity generation. Based on a draft of the New York State 2014 Energy Plan, recently released by the governor’s office, that trend is destine to continue, like it or not. The plan calls for expansion of natural gas infrastructure to replace heating oil – which is both dirty and expensive -- in urban areas downstate and elsewhere.  Initiative 9 on p. 44 states it this way:

Reduce reliance on petroleum products for heating buildings by supporting the use of clean alternatives to heating oil and expanding access to natural gas in the near term while pursuing strategies to reduce natural gas leakage.

Simply put, natural gas consumption will continue to be a staple in the state’s energy diet with intended improvements to its leaky delivery system.

The plan talks much about consumption and infrastructure of natural gas, but little about production. It makes no mention of developing New York’s shale reserves through fracking, a discussion that remains the elephant in the room. But the plan gives a nod to the role of natural gas and more infrastructure as part and parcel to some very ambitious, if very broad, goals. An overriding goal (rooted in policy from Gov. David Paterson's administration) is to reduce the amount of greenhouse gasses emitted in the state by 80 percent by 2050. It’s important to note that the gauge for measuring this goal is predicated on carbon; and that fuel oil – like coal -- emits much more carbon than gas. Critics like Bob Howarth feel the plan falls well short of fully accounting for the impact of methane. Howarth, a Cornell University ecology professor, is one of several co-authors of a paper challenging the notion that methane is an environmentally sound alternative to coal or other fossil fuels for that matter. “Natural gas is a disastrous fuel,” he said.

There are other aspects to the 2014 Energy Plan, including a $1 billion “New York Green Bank” to invest in “clean energy projects”; an initiative that lists “increased transportation alternatives”; and independent “microgrids” that can offer alternative and backup sources to communities apart from primary  grids.

The plan is easy to look at, with an abundance of glossy and marginally relevant pictures of happy people in scenic landscapes, but difficult to read with bureaucratic jargon that is simultaneously dense and vague. Some critics called out the report for a lack of specifics and the preponderance of gloss. Andy Leahy, a drilling proponent and blogger who has been following developments in New York, wrote in Shale Gas Now that the Energy Plan was “governance of wishful perception” and he suggested it was “catering to the uninformed, wishful desires of everybody in New York who wants to feel vaguely good about the future, but to stay lit and warm throughout, burning what's extracted out of Pennsylvania.”

Others were enthusiastic about the plan. Pierre Bull, a policy analyst for the National Resources Defense Council, wrote on the agency’s blog, Switchboard:

The already-impressive NY-Sun Initiative is about to become one of the most ambitious solar programs in the nation, with the governor committing, through a filing with the state’s Public Service Commission, $1 billion to the program—that’s right, $1 billion—over the next 10 years. (Governor Cuomo’s text also announces a major new program to help K-12 schools throughout New York go solar. You can read more about that here.) The governor’s goal is to install 3,000 megawatts of solar across New York. That’s enough solar to power 465,000 New York homes, cut greenhouse gas emissions by 2.3 million tons annually—the equivalent of taking almost 435,000 cars off the road—and create more than 13,000 new solar jobs. 

If New York expects to become a national showcase for how to dramatically reduce greenhouse gasses, it has plenty to work with. But assessing how that measure is made – and the degree that it includes natural gas -- is critically important.

By design more a PR gloss and political showcase than a technical document, the daft energy plan still serves a critical role as a catalyst for public discourse and involvement on the politics and technicalities of energy delivery. To that end, public hearings will be held around the state in February and March. (Full schedule here.)

The primary question not mentioned in the energy plan is whether New York will allow exploration to begin for shale gas production. With a recent announcement from Department of Environmental Commissioner Joseph Martens that the state will not issue permits until at least 2015, the governor’s staff has put speculation to rest that we will see fracking in New York anytime soon.

But both landowners and industry interests are mounting legal challenges in an attempt to force the governor’s hand. Tom West, an industry lawyer, is a primary figure behind the challenges, which I wrote about here. (Note that a hearing for West’s case, Wallach v New York state, has been postponed until March 7. This is so the complaint can be filed with a parallel case by the Joint Landowners Coalition, represented by attorney Scott Kurkoski of Levene, Gouldin & Thompson and funded by the Rocky Mountain Legal Defense Fund, an NGO that supports conservative causes.

Regardless of how the challenges to Cuomo’s indefinite delay on fracking turn out, another group has brought up a nagging question about the extent of New York’s shale reserves, and whether development is even viable at current prices. Chip Northrup, a former industry investor, accompanied by a group of critics with backgrounds in geology and industry, have been making presentations, most recently to a state Senate committee. The thrust of their argument is that geological data suggest New York’s shale gas reserves are not worth the bother, but speculators who gamble on them may still cause significant environmental headaches for the greater public.

All the speculation, either supporting or undermining the size of the state’s fossil fuel assets, won’t change this underlying reality: Upstate and New York City need lots of energy now, and tend to consume it in its cheapest and most available form.

Veil may be pulled from NY’s review of fracking in 2014 State has 45 days to begin releasing files on health review

Developments on the status of New York and shale gas unfolded on two fronts this week.

The first was widely reported: Joseph Martens, Governor Andrew Cuomo’s, environmental chief, told a legislative panel that the state’s moratorium on high volume fracking, now in its sixth year, would last at least another 14 months – through the next fiscal year. As he has done before, at Wednesday’s hearing Martens repeated what was already known – that the state Department of Health was studying the issue. And as before, he offered no specifics.

The second development, which went mostly unreported, may soon pry loose an explanation. Under the threat of a lawsuit by a citizens action group called Seneca Lake Pure Waters Association, Cuomo’s administration settled a case to release administrative documents, letters, and other records detailing the DOH study that will determine the outcome of the governor’s decision to allow or ban fracking – whenever that decision might come. (Details of the settlement, arbitrated in the state Supreme Court, are posted below.) The state has 45 days from January 10 to release some files, and 75 days to release others to comply with open government laws. The SLPWA, represented by attorney Rachel Treichler, will continue to pursue a legal claim if they find the records that the state releases do not comply with the Freedom of Information request outlined in the settlement, according to Mary Anne Kowalski, SLPWA President

Cuomo’s record on the question of whether the state will allow exploration and development of the Marcellus Shale is characterized by a sense of ambivalence, which is justifiable, and opaqueness, which is not.

Shortly after Cuomo began his first term in 2010, he identified the shale gas question as a priority, and insisted that the policy review that began under the previous administration would be expedited under his leadership.  In June of 2012, Cuomo proposed allowing drillers to begin work in communities where town boards favored it, but not in places opposed. But this and any other indication of industry support that Cuomo has uttered has triggered substantial grass roots protests and critical backlash from influential institutions and individuals within the governor’s political base. In short, fracking opponents characterized places where the state would begin permitting high volume hyraulic fracturing as “sacrifice zones” and they questioned why shale gas development would be allowed in some areas if it was unsafe in others.

Since announcing plans in September, 2012 for the Department of Health to become involved in the review, Cuomo and his staff have refused to talk about the fracking issue except in the most vague terms.  Even outside experts hired to make key assessments are bound by contracts that include a clause prohibiting them from disclosing or discussing the proceedings or records involved.

A pause in the race to frack may be well justified pending a more thorough review of policy, which is antiquated and ill equipped to handle the pressures from wide scale unconventional shale gas extraction. But withholding information – notably the scope, timing, and protocol for the health review -- from the public has invited only suspicion and attacks from parties both for and against drilling. (In addition to the Freedom of Information challenge by the SLPWA, I recently wrote about a legal challenge to the governor’s approach by landowners, represented by industry attorney Tom West.)

At the 2013-14 budget hearings a year ago, Martens told legislators that the policy review, called the Supplemental Generic Environmental Impact Statement (SGEIS), would be finished in “a matter of weeks.” Mysteriously, that proved to be entirely wrong. The administration’s only explanation has come from the vague declaration from Health Commissioner Nirav Shah, summed up in a quote reported by Gannett’s Jon Campbell last month: “Until I’m comfortable with the state of the science, I’m withholding my recommendation.”

It’s a matter of record that there is no money allocated in next year’s state budget for the necessary administrative oversight for shale gas development, or revenues that might come from it, so Martens was obliged to connect the dots for legislators: No budget allocation means no drilling.

Shah, who holds the keys to the decision based on the outcome of his review, is scheduled to testify on budget issues in front of legislators on Monday. Perhaps he will be willing to pre-empt any outfall from the soon-to-be public records leveraged through the tenacity of the Seneca Lake Pure Waters Association with a clearer report of the scope, timing, protocol, and preliminary findings of the health investigation.

So Ordered Stip.

FOILrequest Final

Will law suits bring transparency to NY Fracking decision? Challenge tests Cuomo’s rights to keep review private

New York’s Governor Andrew Cuomo has avoided a decision over the polarizing and potentially damaging issue of fracking for his entire first term, so there is little expectation that he will voluntarily change course during an election year. Yet the governor’s handling of the fracking dispute may become a prominent issue as election time nears, pending the outcome of two law suits that could pry lose information.

How relevant and damaging that information is to either side of the debate remains to be seen, but it will provide potential leverage for both fracking proponents unhappy with the governor’s inaction on the matter, and opponents unhappy with the administration’s secrecy over policy development.

The state’s last public review of draft policy to allow fracking was finished in 2011. Since then, mainstream media outlets have reported on several occasions that a decision was imminent.  In June, 2012, Cuomo staffers told New York Times reporter Danny Hakim that the administration would allow fracking in areas where local officials wanted it -- news that prompted protests and organized opposition from fractivists. Four months later, DEC Commissioner Joseph Martens announced that the agency’s decision would depend on a review of fracking’s impact on public health from New York State Health Commissioner Nirav Shah.

Since then, Martens announced on several occasions that the review would be completed in “a matter of weeks.” Yet that proved to be wrong each time, and lacking any formal timetable, predictions were speculative, based on what appeared to be indecision by the governor himself.

Cuomo has been reluctant to talk about the matter, much less share his strategy on how, when, and whether New York will allow shale gas development. His refrain is “let the science decide,” and with that, he has deferred to Martens. Martens has deferred to Health Commissioner Shah, who is purportedly heading up the health review, which is yet to be shared in any public form. (In his state of the state address last week, Cuomo made no mention of fracking. Moreover, his recently released energy plan calls for increased consumption of natural gas, but doesn’t address the status the state’s policy on whether to allow production.)

Administration officials won’t talk about the fracking issue except in most vague terms, nor will their media staff.  Outside experts hired to make key assessments are bound by contracts that include a clause prohibiting them from disclosing or discussing the proceedings or records involved.

Recently pressed by a reporter on when the public would be able to see the work, Shah replied “When I’m done.” Jon Campbell, of Gannett’s Albany Bureau, reported that quote in an update last month, along with this:

“For the last few months, I’ve said that as the science evolves, we will reflect the science in my recommendations,” Shah said. “As recently as a month ago, we got new data from Texas and Wyoming ,and until I’m comfortable with the state of the science, I’m withholding my recommendation.”

Cuomo said that while his administration has moved quickly on other efforts, such as building a new Tappan Zee Bridge in the Hudson Valley, fracking is a complex issue.

“I want the right decision, not necessarily the fastest decision,” Cuomo said Monday. “When it’s appropriate to move fast, we can move fast. I think we’ve shown that over and over again.”

Cuomo said Monday that there is no timeline, though he “would expect” a decision before Election Day. He said he wouldn’t pressure Shah into a decision.

“But my timeline is whatever Commissioner Shah needs to do it right and feel comfortable,” Cuomo said. “It’s a major decision.”

The reason why the governor is keeping the internal workings of this decision from public view is easily understood but not easily defensible. (More on that here.) From a politician’s view, fracking represents a quagmire of dissention and criticism as much as an economic promise or environmental threat, and Cuomo would be better off without having to make a decision. The next best thing he can do is put if off until after elections.

But that might not be possible. The public expects its elected officials to be up for making hard decisions while accounting for them publically. Cuomo’s unwillingness to share a timeline, protocol, or update on the review (which is subject to public discourse under the State Environmental Quality Review law) has predictably raised challenges from critics, who are now taking the matter to court

Late last summer, the Seneca Lake Pure Waters Association, represented by attorney Rachel Treichler, filed a complaint in state Supreme Court seeking records detailing the mechanics of Cuomo’s administrative directive on fracking. The goal is to assess “what factual information was being collected and reviewed by DOH and the instructions given to DOH staff regarding the DOH health impact study,” according to a statement from the association. The action follows the organization’s unsuccessful attempts to view records related to the study under the Freedom of Information Law.  The DOH denied that request on grounds that the information comes under the category of “exempt intra-agency or inter-agency records.”  The state is now negotiating the case with the advocacy group, with an outcome expected within months, according to sources.

More recently, industry attorney Tom West has filed a complaint on behalf of landowners and Norse, a bankrupt drilling company that operated in upstate New York. The suit, Wallach v. New York State, references State Environmental Quality Review (SEQR) law, which requires environmental reviews to be completed in a timely and public manner. It claims that the delay led to Norse bankruptcy, and is “legally unjustifiable” as well as “arbitrary, capricious and an abuse of discretion.” In an interview last week, West likened the situation to “giving a fan a football during a football game and letting him walk out of the stadium.”  He elaborated: “Government is not allowed to simply shut down this process. They have to finish the game. If they want to say fracking is not safe, then they have to say it. If they want to say fracking is safe within standards, then they have to say it.”

The complaint is scheduled for a hearing Jan. 24. If the case progresses, it will give the plaintiffs leverage of subpoena to produce records and emails that will undoubtedly produce fodder for criticism of the administration’s private handling of the fracking.  A likely outcome of both the Wallach v. New York State and the SLPW case is that the fracking story will morph again from a scientific to a legal to a political issue at a time when the governor is vulnerable to outside pressure.

What are the prospects for New York’s shale reserves? Sociology, ideology weigh heavy in debate over geology

The value of a given shale gas reserve depends on the physical characteristics of the rock. How deep? How thick? How much wet gas? How much dry gas? But as with many aspects of the shale gas debate, there’s more to it. Community attitudes, politics, special interests, markets, and ideological conviction all influence the social and monetary push to get things moving.

Things are not moving in New York, where for years shale gas has been pitched as an economic gift – a windfall for the taking -- by industry public relations campaigns, lobbiest, and landowners seeking lucrative contracts with drillers. Now, fracking critics are drawing on industry’s own data to build a case that the New York’s shale prospects amount to a stillborn promise.

Chip Northrup, a former oil and gas investor from Texas, led a team of professionals who made this case Wednesday night at Cornell University. Presenters also included Lou Allstadt, a retired Mobil vice president, Brian Brock, a geologist, and Jerry Acton, a retired systems engineer for Lockheed Martin. The team, moderated by Cornell engineering professor Tony Ingraffea, spoke at a 200-seat lecture hall brimming   with a supportive anti-fracking crowd that laughed and applauded in response to occasional quips and deadpans by Northrup. (Example: “In Texas, they know better than to spread radio-active flowback on roads…. They use it to induce earthquakes by injecting underground.”)

In a presentation that lasted close to two and a half hours, Northrup and his colleagues drew on data from a handful of exploratory wells in New York and extrapolations from thousands of production wells in Pennsylvania, along with prevailing social factors. Their conclusion: Viable shale reserves in New York are too limited and social resistance too great to produce major development at current prices. Rather than blossoming into the mega-billion dollar industry, as promised, the play is more likely to attract highly speculative exploration around the fringes by wildcatters, storage facilities and pipelines to get Pennsylvania gas to market, and geology that is uniquely suited for the injection of fracking waste from out-of-state operations – factors that Northup likens to “a hangover without the benefit of the night on the town.”

For years, the anti-frackers have waged their war against shale gas development predominantly on environmental grounds with arguments that it’s unsustainable and acutely and chronically damaging to the ecosystem. Wednesday’s presentation shifted the fight to economic grounds, at a time when the industry is sensitive to talk that can discourage investors. Natural gas prices are expected to remain at historic lows for the foreseeable future, cooling enthusiasm to sink capital into exploration and production efforts in new and unproven areas.  (In many ways, the industry is victim to it’s own prolific success in Pennsylvania. Landowners are anticipating the market glut will soon exceed storage capacity, portending even further suppression of prices or a scale back in production. For a recent assessment of the market glut from the view of landowner's forum, click here.)

Economic prospects in New York, meanwhile, are further weakened by regulatory uncertainty. After more than five years of an environmental review, state officials are yet to finalize permitting policy pending questions about public health, and Governor Andrew Cuomo’s lack of commitment is grounded in coordinated opposition from both grass roots and institutional campaigns that represent a significant part of his political base.  (Significantly, Northup and Allstadt are among leaders of their own political action campaign to ban fracking near their homes in Cooperstown. Their fight to put shale gas development in the hands of local town leaders rather than state officials boils down to the outcome of a landmark case now before the Court of Appeals.)

Just as gas proponents were using the promise of wealth to urge state government to begin permitting gas wells when prices were high and interest was booming, critics are now presenting evidence of a flat-out bust as all the more reason to hold back.

Acton's analysis shows colored dots representing viable shale zones 

At Wednesday’s presentation, Brock provided a geological assessment that explained what is widely known about the Marcellus: Production is most viable in the thickest, richest sections at a certain depth, which tapper exponentially from an area just south of New York’s border with Pennsylvania. Acton supported Brock’s characterization with a separate analysis, now circulating on the Internet. Acton used production figures from Pennsylvania wells to assess yields corresponding with certain physical parameters of Marcellus geology, including depth, thickness, and thermal maturity, and then extrapolated the Pennsylvania data to model New York’s production. His conclusion: Reserves under the Empire State remain mostly unviable, with the exception of an area extending slightly into the Southern Tier, just north of the most lucrative part of the reserve in Susquehanna County Pennsylvania.

As with many arguments over shale gas, this one is not so much about the data, but how the data is framed in a broader campaign for or against development. Much of Thursday’s presentation amounted to casting old information in the context of current market conditions. Acton’s map, in fact, was similar to a map created by Terry Engelder, a Penn State geologist and shale authority who has prominently argued in favor of the economic benefits of drilling. Allstadt later used Engelder’s map to support the theme of the Cornell presentation: The New York shale gas cup is far more empty than full.

A map by Engelder used by Allstadt shows conflicting interpretations

Northrup pointed out that while the shale gas footprint in New York is vast, it’s functionally limited by geology, market restrictions, myriad moving parts of corporate portfolios and lease holds, complications and uncertainties posed by unresolved state policy, no drill zones proposed by the state, and bans by municipalities. I’ve heard both shale gas critics and proponents refer to this set of factors as strangulation by regulation. It’s a point that industry lawyer and lobbiest Tom West frequently makes at public talks: given the social resistance it faces in New York, the shale gas industry will simply move on to less restrictive and more productive territory.

Allstadt presented evidence that major companies have tested both the Utica and Marcellus shales in New York and found them unworthy. He cited a handful of test wells with underwhelming results drilled by companies such as Chevron, Gulf, Anschutz, Chesapeake and others prior to the shale gas boom. His point is worth noting, but also in need of context. These test wells were small in number and scattered over a large area. They were vertical wells that used low volumes of fracking solutions, prior to refinements and breakthroughs to adapt the process to Devonian shale. And they don’t correspond with leasing trends that took shape with a better geological understanding of the play that came after 2008. (XTO Energy, later bought by Exxon Mobil, paid $110 million dollars for leases on 50,000 acres spanning parts of Broome and Delaware County in the spring of 2008 after wells were proven in northeastern Pennsylvania.)

By the account presented by Northrup and his group, New York is missing or has already missed the shale gas party. As for what Northrup characterizes as the hangover: New York remains an attractive disposal option for Pennsylvania producers because New York regulations, which haven’t been updated since the late 20th century, allow flow-back to be spread on roads and drill cuttings to be disposed of as conventional waste. Additionally, conventional wells in New York that were drilled and depleted decades ago make, by industry standards, suitable repositories for shale gas waste. From a geographical standpoint, New York is a strategic spot for infrastructure projects to store and transport gas to major northeast markets, and some of these projects are already well underway, including various pipelines and a controversial project to convert old salt mines on the shores of Seneca Lake to natural gas and propane vaults.

Given all these factors, what does New York’s future look like? Allstadt, who has both ample industry experience and a stake in development as an Upsate resident, said a drilling boom is unlikely, but expect some intensive drilling by maverick   companies in communities bordering Pennsylvania.  “There’s always somebody who has to take a shot somewhere, and instead of going to a casino they will drill,” he said. “These are the least reliable outfits. They will drill the wells as cheaply as possible.”

Predictably, the presentation drew admiration from anti-fracking activists and criticism from industry supporters. And while it was an academic exercise that will not alter the geology and arguably has little baring on markets or regulations, it represents a piece to a much larger rhetorical tug-of-war for the hearts and minds of policy makers and politicians. Science can be found on both ends of the rope. Bruce Selleck is a geologist at Colgate University who has identified the prospective area for shale gas development – or “fairway” -- in New York to extend well into upstate New York, west to Chemung County, east to Sullivan County and north to Oneida County. The Marcellus shale alone is capable of producing 5 trillion to 10 trillion cubic feet of gas in New York, by Selleck’s estimate. His take on the presentation at Cornell? “All the blah-blah-blah rhetoric in this 'finding' makes it clear that the folks involved don't want to see gas development in New York - not surprising given the 'experts' involved.” He offered his assessment in a recent email, along with this elaboration:

That companies are dropping leases simply means they are not planning to drill the properties anytime soon, indicating their estimation of the value of the recoverable gas at current prices makes development in these frontier areas non-economic, in the near term.  The dry gas market is flush right now, and will likely remain that way for 3-5 years. The lack of permitting of HVHF in NY is of course an additional factor.

Even if the Marcellus reserve is in the 5 TCF range in NY, development could prove attractively economic down the road when gas prices are higher.  Five TCF of gas would require 2500-4000 wells to ultimately recover that resource. That scale of development would still bring significant royalties to landowners, along with other economic benefits, and all the negative impacts, as well. 

The Utica is even more of an unknown in NY, so any statements made about its potential are based on very little data.  I expect a few of the companies in NE PA will try the Utica at some point soon. 

Policy is made at the crossroads of science and politics. The argument that Upstate New York’s celebrated shale reserves have already been passed over by major players challenges proponents painting the industry as economic salvation for upstate New York, and their corresponding push for legislators and the governor to create a policy infrastructure that enables it. But it’s hard to know exactly where it will lead. The assessment by critics that reserves are economically viable only in a small part of the Southern Tier may give Cuomo political cover to proceed with a plan he has already proposed: Begin issuing permits for wells in areas along the Southern Tier where local officials feel their communities stand to benefit, and see what happens.