If Governor Andrew Cuomo can be taken for his word, the wheels of shale gas development will soon begin turning in New York state, without legislative involvement.
Last week, Cuomo said the long-awaited policy document necessary for permitting high volume hydraulic fracturing wells would be issued “shortly” and, he added, while the legislature is not session as to avoid “a political discussion.” Cuomo has been promising to push forward with the contentious issue of shale gas development and fracking in particular since he took office in 2010, so it’s hard to know what “shortly” means. But stakeholders on both sides are taking his latest remarks seriously. Grass roots anti-fracting groups have turned up the heat with their demonstrations, phone calls, and letter campaigns targeting elected officials. Drilling proponents have fallen into camps both critical and supportive of Cuomo’s recently reported approach to limit the debut of fracking in New York to certain areas, based on the lead of local governments. But drilling supporters are also eager to see some sort of policy that would allow permitting to begin. That is expected to happen through the final SGIES (Supplemental Generic Environmental Impact Statement), which includes the state DEC”s environmental review of shale gas impacts that has been in the works for four years -- the document Cuomo says will be released “shortly”.
Last week, during an interview with the Albany’s WGDJ-AM, Cuomo indicated he was sticking with the idea of letting localities, rather than state government, determine how fracking operations will play out in New York. To do this, the state would count on a process of natural selection, more or less, to approve permit applications, talking into account where local governments want shale gas development for economic reasons, and where they (or the state) wants it banned due to public health and safety concerns.
“Many times a town or a city will say, ‘That’s nice, I’m glad you think that Albany, but stick to Albany, we know better. Government closest to home knows the best.’ “ Cuomo said.
Reading a politician is tricky, but I don’t think I’m going too far out on a limb by characterizing Cuomo’s approach as an attempt to reach a compromise in the highly polarizing issue of fracking. Having been in the news business for some time, I’m also keeping in mind the political strategy of releasing controversial material during a time when the mainstream media, activists, and politicians are distracted. Often this means late on a Friday, during the height of summer vacation, and/or when legislative session is out. In short, upcoming summer months square with that scenario.
In search of more clues as to where and when shale gas permits will be issued in the Empire State, though, I followed the lead of industry watcher and blogger Andy Leahy, and turned to the New York State DEC’s data base that tracks permitting activity. My take is similar to Leahy’s, and it’s really not a big surprise. The companies are setting their stakes down in the south central part of the state, over the richest part of New York’s Marcellus Shale and near major pipeline infrastructure.
Chenango County is one strategic spot. Here Norse Energy, the Norway firm, has been developing the Herkimer Sandstone formation (which does not require frackng) for a decade, and it intends to use its landhold and hardware to begin exploring the Utica and Marcellus shales as it works it’s way south toward the Millennium Pipeline in Broome County. I count 20 Norse permit applications in Chenango County for either the Marcellus or Utica, most of them from this year. If Cuomo releases his permitting document, Norse may also be among the first out of the gate in Broome County, where it this year applied for five shale gas permits in the town of Sanford.
Chesapeake, of Oklahoma City, is also vested in Broome County, with a dozen applications in the Town of Fenton from 2009. In Tioga County, Talisman, a Canadian company, has 11 active shale gas permits applications in the Town of Candor from 2008 and 2009. Carrizo, a Houston company, filed one this year in the Town of Owego.
But while these and other companies are positioning themselves to be among the first to sink shale gas wells in the Empire State, the regulatory and business atmosphere remains unsettled. Permits will likely have to be updated after the SGIES is finalized. Environmental groups, such as EarthJustice, have threatened to stop the industry from advancing with challenges to the legal integrity of a state policy that allows fracking to be tried in some areas while banned in others on environmental grounds. Moreover, the price of natural gas remains low, and some shale gas ventures in New York are languishing. They include a proposal by eCorp to get around the SGIES by using propane rather than fracking fluid to stimulate wells in Tioga County. The proposal, announced in late May, would give landowners a working interest in well operations rather than up-front lease payments. So far, this pay-me-later versus pay-me-now proposition has not generated much enthusiasm from landowners, and there is no deal on the immediate horizon.
Meanwhile, Chesapeake has sold mineral rights to 160,000 acres in the Finger Lakes region to Minard Run, a family-owned company in Bradford, Pa. Minard plans to drill exploratory wells into conventional formations over the next 18 to 24 months, with a “high probability” of also exploring the Utica Shale using unconventional horizontal drilling and high volume hydraulic fracturing in Cayuga and Seneca counties. This is in a region with strong drilling opposition, and could be, under Cuomo’s strategy, excluded from the state’s initial round of permit approvals.
Drilling proponents have questioned the soundness of Cuomo’s approach that allows some state residents to develop their mineral rights, but not others. Meanwhile, the legislative picture remains turbulent during an election year. Many fracking bills were in the pipeline as the legislative session ended last week, but none made it to the floor, indicating a reluctance by lawmakers to attempt to legislate a process that is still in the works administratively. The legislature can convene at any time, and would be likely to do so if the final SGIES – along with issues about where fracking is or isn’t allowed -- raised enough political concern. While any attempts to seriously curb or ban shale gas drilling is not likely to pass the current Senate, controlled by pro-drilling Republican leadership, it will be interesting to see whether the state’s policy, should Cuomo finalize it prior to elections, will stand up to the political test that will come on Nov. 6.
Showing posts with label propane. Show all posts
Showing posts with label propane. Show all posts
Thursday, June 28, 2012
Thursday, March 29, 2012
Propane fracking ambitions to test New York’s policy Issues of technology, geology, politics, and law at stake
A plan announced this week to use propane to begin developing shale formations in New York state will test technology, law, politics, and policy with the latest twist to the controversial fracking issue.
It begins with leaders of a coalition of landowners in Tioga County who have reached a deal, in principle, with gas companies to develop 130,000 acres over the Marcellus and Utica shales. That deal would give landowners a working interest in wells developed by eCorp, and GasFrac Energy Services to use propane fracking to begin exploring the formations in the Southern Tier of New York. The intention is to prove both the worth of the formations and new technology to produce them. eCorp has developed the Stagecoach natural gas storage fields in the Southern Tier of New York. The company’s technical, logistical, and geological experience in the region will serve the project well, according to Chris Denton, an Elmira lawyer who helped broker the deal.
If all goes according to Denton's plan, the partnership between landowners and industry will be able to bypass a moratorium on high volume hydraulic fracking that began with the shale gas boom in New York in 2008. Since then, state regulators have been developing policy for the process used to fracture shale and extract gas with pressurized chemical solutions. Unresolved issues over water consumption, pollution, and waste disposal have been the target of fracking critics and given rise to a national environmental movement to stop shale gas production.
New York state regulators have met with the Tioga County landowner group and company officials to discuss the propane option, said Emily DeSantis, a spokeswoman for the Department of Environmental Conservation. An agency statement provided by DeSantis this morning offers both an encouraging nod to the plan to frack with propane, and an open door for more regulatory review. DeSantis cited a clause in the SGEIS – a policy document to oversee fracking which is still in draft form after nearly four years of work and revisions -- that states propane fracking “not only minimizes formation damage, but also eliminates the need to source water for hydraulic fracturing, recover flowback fluids to the surface and dispose of the flowback fluids. As a result of the elimination of hydraulic fracturing source water, truck traffic to and from the well site would be greatly reduced.”
DeSantis then added in an email: “Our review may require additional information and additional SEQRA analysis, including an EIS, if warranted.” A State Environmental Quality Review (SEQR) and an Environmental Impact Statement (EIS) are both time consuming and costly processes that would require public input and surely be a prime target for protesters and activists opposed to onshore drilling.
Reaction among drilling proponents and opponents to the propane fracking plan has been predictably divisive. Drilling advocates said the propane technology would eliminate the issues associated with water withdrawals and contamination that have been the focus of environmental resistance. Denton, a featured speaker at many landowner meetings, has long held that problems are related to bad actors in the industry and landmen who mislead landowners and enable unfair leases, rather than the extraction process itself. Mishaps and accidents are preventable through strong and enforceable contracts that hold operators accountable. The deal with eCorp and Gasfrac includes strict land use provisions, Denton said, and having landowners involved directly as owners adds a critical level of control over the operations.
Opponents say gas fracking is another unproven and hazardous technology falsely portrayed as environmentally friendly by an industry notorious for withholding information. Tony Ingraffia, a Cornell University engineering professor who specializes in fracturing mechanics and a former industry consultant, is now among the industry’s most outspoken critics. Regardless of what agent is used, shale gas development will disrupt entire regions, according Ingraffia’s assessment. Fracking with propane requires a set of logistical problems that are no less risky than fracking with water, sand and chemicals, he said, including “large quantities of additional, but different chemicals,” compressors, and truckloads “transporting hazardous material, not water.” He added that LPG fracking does not address the problem with brine and other waste produced from gas wells; methane migration, a common problem that has plagued shale gas wells in Pennsylvania despite upgrades in well casing standards; or the impact of global warming from natural gas that is burned as fuel and escapes from the ground during the production process.
Correction: The original version of this post incorrectly stated that eCorp stored liqued natural gas in the Stagecoach field. The Stagecoach field, in Tioga County, stores dry natural gas. eCorp. sold the Stagecoach field to Inergy in 2005.
It begins with leaders of a coalition of landowners in Tioga County who have reached a deal, in principle, with gas companies to develop 130,000 acres over the Marcellus and Utica shales. That deal would give landowners a working interest in wells developed by eCorp, and GasFrac Energy Services to use propane fracking to begin exploring the formations in the Southern Tier of New York. The intention is to prove both the worth of the formations and new technology to produce them. eCorp has developed the Stagecoach natural gas storage fields in the Southern Tier of New York. The company’s technical, logistical, and geological experience in the region will serve the project well, according to Chris Denton, an Elmira lawyer who helped broker the deal.
If all goes according to Denton's plan, the partnership between landowners and industry will be able to bypass a moratorium on high volume hydraulic fracking that began with the shale gas boom in New York in 2008. Since then, state regulators have been developing policy for the process used to fracture shale and extract gas with pressurized chemical solutions. Unresolved issues over water consumption, pollution, and waste disposal have been the target of fracking critics and given rise to a national environmental movement to stop shale gas production.
New York state regulators have met with the Tioga County landowner group and company officials to discuss the propane option, said Emily DeSantis, a spokeswoman for the Department of Environmental Conservation. An agency statement provided by DeSantis this morning offers both an encouraging nod to the plan to frack with propane, and an open door for more regulatory review. DeSantis cited a clause in the SGEIS – a policy document to oversee fracking which is still in draft form after nearly four years of work and revisions -- that states propane fracking “not only minimizes formation damage, but also eliminates the need to source water for hydraulic fracturing, recover flowback fluids to the surface and dispose of the flowback fluids. As a result of the elimination of hydraulic fracturing source water, truck traffic to and from the well site would be greatly reduced.”
DeSantis then added in an email: “Our review may require additional information and additional SEQRA analysis, including an EIS, if warranted.” A State Environmental Quality Review (SEQR) and an Environmental Impact Statement (EIS) are both time consuming and costly processes that would require public input and surely be a prime target for protesters and activists opposed to onshore drilling.
Reaction among drilling proponents and opponents to the propane fracking plan has been predictably divisive. Drilling advocates said the propane technology would eliminate the issues associated with water withdrawals and contamination that have been the focus of environmental resistance. Denton, a featured speaker at many landowner meetings, has long held that problems are related to bad actors in the industry and landmen who mislead landowners and enable unfair leases, rather than the extraction process itself. Mishaps and accidents are preventable through strong and enforceable contracts that hold operators accountable. The deal with eCorp and Gasfrac includes strict land use provisions, Denton said, and having landowners involved directly as owners adds a critical level of control over the operations.
Opponents say gas fracking is another unproven and hazardous technology falsely portrayed as environmentally friendly by an industry notorious for withholding information. Tony Ingraffia, a Cornell University engineering professor who specializes in fracturing mechanics and a former industry consultant, is now among the industry’s most outspoken critics. Regardless of what agent is used, shale gas development will disrupt entire regions, according Ingraffia’s assessment. Fracking with propane requires a set of logistical problems that are no less risky than fracking with water, sand and chemicals, he said, including “large quantities of additional, but different chemicals,” compressors, and truckloads “transporting hazardous material, not water.” He added that LPG fracking does not address the problem with brine and other waste produced from gas wells; methane migration, a common problem that has plagued shale gas wells in Pennsylvania despite upgrades in well casing standards; or the impact of global warming from natural gas that is burned as fuel and escapes from the ground during the production process.
Correction: The original version of this post incorrectly stated that eCorp stored liqued natural gas in the Stagecoach field. The Stagecoach field, in Tioga County, stores dry natural gas. eCorp. sold the Stagecoach field to Inergy in 2005.
Wednesday, March 28, 2012
BREAKING NEWS: Propane fracking deal reached in NY Plan would open 130,000 acres in Tioga County for drilling
The leadership of a group of landowners in Tioga County, New York has reached an agreement with gas drillers to begin developing the Marcellus Shale using liquid propane as a fracking agent.
Brokers of the deal, between eCorp, GasFrac Energy Services, and the Tioga County Landowners Association, believe that fracking with natural gas is not included under a New York state moratorium that prevents drillers from using high volume hydraulic fracturing. The moratorium was put in place in 2008 due to environmental concerns, pending the completion of a review by the state DEC.
Under a Memorandum of Understanding announced this afternoon, the members of the Tioga County coalition will form an LLC called Southern Tier Energy Partners to participate in the deal.
“Our intention is to prove up the play,” said Chris Denton, an attorney representing the landowner coalition. The deal has been accepted in concept by the leaders of the coalition and has to be brought to the membership base of about 2,000 families in coming weeks, Denton said. The deal would give landowners a working interest in the development and production of wells rather than traditional lease payments. It may take several months before the pieces of the deal, including title searches of property owned by the paricipants, will be finalized, Denton said. He could not release more specific details about the terms as of early Tuesday afternoon.
Fracturing shale with propane is a developing technology proposed as an alternative to traditional high volume hydraulic fracturing, a process that uses sand and a proprietary chemical solution, or diesel fuel. Drawbacks to traditional hydraulic fracturing include the large quantities of fresh water required -– several million gallons per well -- and like amounts of waste produced, including brine and organic solvents.
Chevron has used Gasfrac’s proprietary process of fracking with liquefied petroleum gas (LPG) in its $7.3B Piceance basins natural gas project, according to a report from Seeking Alpha. The company’s 2011 annual report supplement noted that the technology is recognized by the World Shale Gas Conference for its economic and environmental performance potential, and “significantly increases production while minimizing water usage.” The company is continuing to test the process. Chevron's assessment of LPG fracturing is the strongest endorsement yet of the process by major company.
Using the process in Tioga County, New York will provide a breakthrough in gas development in a state that has been mindful of concerns with traditional fracturing, according to Denton.
“We’re also concerned about how fracking will affect the environment,” Denton said. The strategy is to show the worth of the Marcellus and the Utica shale’s in Tioga County with initial test wells, which is known in the industry as “proving” a play. The project is intended as a literal proving ground for both the Gasfrac process and the worth of the Marcellus and Utica shale’s under upstate New York and Tioga County in particular, Denton said., and it is a prerequisite to more capital interest.
Assemblywoman Donna Lupardo has been an influence in the public debate over hydraulic fracturing since the Paterson administration ordered the high volume fracking moratorium in the summer of 2008. She has long advocated consideration of alternative, more benign fracking agents. “This certainly takes the concern over water issues off the table,” she said, “and that’s a big one, with the whole issue of withdrawls, contamination and treatment.” It would not address problems associated with methane migration, she added, which continues to plaque shale wells in Pennsylvania, despite stronger standards adopted by the state last year.
The pending environmental review puts a hold on fracking with chemical solution in New York until the impact is better documented and new guidelines are established. The policy review, called the Supplemental Generic Environmental Impact Statement (SGEIS), would not apply to fracking with propane. But some have questioned whether propane fracking is sufficiently covered under pre-existing regulations outlined in the state's orginal Generic Environmental Impact Statement (SGEIS) from 1992. If not, then the Tioga County project would require separate environmental reviews that could be costly and time consuming.
Denton said attorneys and landowners have done their homework. “Our research indicates that we are in good shape,” he said.
Some environmental advocates questioned that assessment. Even if fracking with propane is less damaging than fracking with a chemical solution, other issues associated with shale gas development must be addressed, said Walter Hang, an activist who has organized anti-drilling efforts in New York. They include waste disposal associated with “produced water,” which is fluid that comes from the ground with high concentration of brine, heavy metals and sometimes naturally occurring radioactive particles.
Propane fracking "is not a magic bullet that lets them go forward,” said Hang, who heads Toxic Targeting, an Ithaca firm that compiles environmental data on brownfield sites. “I’m not so sure they (the Tioga County project) will be able to avoid a more vigorous (regulatory) review.”
Brokers of the deal, between eCorp, GasFrac Energy Services, and the Tioga County Landowners Association, believe that fracking with natural gas is not included under a New York state moratorium that prevents drillers from using high volume hydraulic fracturing. The moratorium was put in place in 2008 due to environmental concerns, pending the completion of a review by the state DEC.
Under a Memorandum of Understanding announced this afternoon, the members of the Tioga County coalition will form an LLC called Southern Tier Energy Partners to participate in the deal.
“Our intention is to prove up the play,” said Chris Denton, an attorney representing the landowner coalition. The deal has been accepted in concept by the leaders of the coalition and has to be brought to the membership base of about 2,000 families in coming weeks, Denton said. The deal would give landowners a working interest in the development and production of wells rather than traditional lease payments. It may take several months before the pieces of the deal, including title searches of property owned by the paricipants, will be finalized, Denton said. He could not release more specific details about the terms as of early Tuesday afternoon.
Fracturing shale with propane is a developing technology proposed as an alternative to traditional high volume hydraulic fracturing, a process that uses sand and a proprietary chemical solution, or diesel fuel. Drawbacks to traditional hydraulic fracturing include the large quantities of fresh water required -– several million gallons per well -- and like amounts of waste produced, including brine and organic solvents.
Chevron has used Gasfrac’s proprietary process of fracking with liquefied petroleum gas (LPG) in its $7.3B Piceance basins natural gas project, according to a report from Seeking Alpha. The company’s 2011 annual report supplement noted that the technology is recognized by the World Shale Gas Conference for its economic and environmental performance potential, and “significantly increases production while minimizing water usage.” The company is continuing to test the process. Chevron's assessment of LPG fracturing is the strongest endorsement yet of the process by major company.
Using the process in Tioga County, New York will provide a breakthrough in gas development in a state that has been mindful of concerns with traditional fracturing, according to Denton.
“We’re also concerned about how fracking will affect the environment,” Denton said. The strategy is to show the worth of the Marcellus and the Utica shale’s in Tioga County with initial test wells, which is known in the industry as “proving” a play. The project is intended as a literal proving ground for both the Gasfrac process and the worth of the Marcellus and Utica shale’s under upstate New York and Tioga County in particular, Denton said., and it is a prerequisite to more capital interest.
Assemblywoman Donna Lupardo has been an influence in the public debate over hydraulic fracturing since the Paterson administration ordered the high volume fracking moratorium in the summer of 2008. She has long advocated consideration of alternative, more benign fracking agents. “This certainly takes the concern over water issues off the table,” she said, “and that’s a big one, with the whole issue of withdrawls, contamination and treatment.” It would not address problems associated with methane migration, she added, which continues to plaque shale wells in Pennsylvania, despite stronger standards adopted by the state last year.
The pending environmental review puts a hold on fracking with chemical solution in New York until the impact is better documented and new guidelines are established. The policy review, called the Supplemental Generic Environmental Impact Statement (SGEIS), would not apply to fracking with propane. But some have questioned whether propane fracking is sufficiently covered under pre-existing regulations outlined in the state's orginal Generic Environmental Impact Statement (SGEIS) from 1992. If not, then the Tioga County project would require separate environmental reviews that could be costly and time consuming.
Denton said attorneys and landowners have done their homework. “Our research indicates that we are in good shape,” he said.
Some environmental advocates questioned that assessment. Even if fracking with propane is less damaging than fracking with a chemical solution, other issues associated with shale gas development must be addressed, said Walter Hang, an activist who has organized anti-drilling efforts in New York. They include waste disposal associated with “produced water,” which is fluid that comes from the ground with high concentration of brine, heavy metals and sometimes naturally occurring radioactive particles.
Propane fracking "is not a magic bullet that lets them go forward,” said Hang, who heads Toxic Targeting, an Ithaca firm that compiles environmental data on brownfield sites. “I’m not so sure they (the Tioga County project) will be able to avoid a more vigorous (regulatory) review.”
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