Saturday, March 31, 2012

To The Editor: Severance Taxes, and the Under-Appreciated Downside of Home Rule

This is a snippet from the 2011 assessment roll for the Town of Smyrna, Chenango County, NY.  (Click it into a new window to see it all clearly.)  The taxable real property shown is not a Downstater's McMansion, or an Upstater's Fourth-Generation Dairy Farm — assessed at nearly $3.6 million, or a full market value of $5.5 million and some change.  Instead, it's the Corey 1, a/k/a the Corey 2H, a natural gas well drilled horizontally in Herkimer sandstone by Norse Energy during the Winter of 2008-2009.  This is a conventional gas well, but I acknowledge it is not an average representative of that group.  State records online from 2010 show it was then the Number 1 producer in Chenango County, and Number 9 statewide. 

Two points on this:

First, I've read some recent belly-aching from certain officials in Ithaca's brainy Tompkins County, complaining about the purportedly uncompensated burden of maybe someday having to add unconventional shale gas wells to this same record-keeping system.  But one can readily see that the civil servants in rustic Chenango County didn't seem to have much trouble adapting.

Second, anti-drillers have long spread the mantra, "There's no severance tax in New York."  But this graphic belies that claim as yet another example of Sneaky MisdirectionThere is a severance tax in New York!  It's derived from a state formula, based on oil and gas production, and efficiently folded into the familiar local property tax system.  As with McMansions and dairy farms, these taxes feed towns, counties, and, in this case, the Sherburne-Earlville School District.  But, no, it's true, they don't feed coffers spent statewide by Albany — which doesn't bother me in the slightest.  So there's your Nugget of Truth in a Gold Field of Opportunity.
Responding to letters on shale gas, from The (Syracuse) Post-Standard, March 29, here and here:

Severance Tax — "Unlike most states, New York does not have a severance tax — levied before extracting..."  Wrong on three levels:  The writer is describing an impact or permitting fee, not a severance tax — which, by definition, is based afterwards on production.  New York already collects permit fees, in line to go higher.  And we already have a local severance tax — in all but name.  Oil and gas wells pay property taxes under a state-supervised formula covering a rolling average of production.  Local governments in productive Marcellus, Utica or Upper Devonian shale zones will spend this money — not unaffected Downstate, or Thruway corridor cities.  It's okay with me if opponents want to argue this tax should go higher, but I won’t stand for their continuing to mislead the public on this point.

Oversight — repeated worries over the sparseness of DEC staffing levels, using a now-outdated forecast for drilling.  The Cuomo Administration has already
repeatedly said the costs of regulation will be borne by the regulated, through fees, and that staffing will ramp up over time, paced with drilling, and occasionally suppressing it, if necessary.  Under the current economics of natural gas oversupply, and of New York's plan to lay out the toughest rules in the world, drilling is likely to go much more slowly than some have hoped, and others feared.

Cumulative Impacts.  Of course shale gas has impacts, and, therefore, cumulative impacts.  Claims these haven't even been analyzed are simply not true — based on the DEC's world-class, 1,000-page study.

But the Really Big Cumulative Picture here — to which some in the environmental community now flinch, when it's disruptive to their persuasive motivations — is that all energy sources have impacts.  Shale gas should be analyzed in that context, not as a Stand-Alone Demon.  Much used to be written about coal, but that must be passé now.  Nuclear, renewables, and even conservation — all have impacts.  And what about the unacknowledged 700-Pound Gorilla in the Room?  What are the cumulative, fully externalized impacts of our oil-protective foreign wars?

Water — "Hydrofracking should not go forward until there are workable disposal solutions."  I'm down with that.  But some eyes must glaze over anytime they’ve faced reporting on the solutions that have already evolved.  PA operators now treat and recycle 90 percent of flowback water, simply reusing it on the next frack job.  Zero-discharge treatment enterprises have sprung up — a helluva business opportunity for an unemployed graduate of SUNY ESF.  Frackers are also starting to use alternate hydraulic media that significantly reduce the perceived burdens of water consumption or treatment.

Home Rule.  If towns in suburban Ithaca want to ban alcohol, roosters, gravel mining, and drilling — seems like it’s no skin off my back.  (Except maybe a nagging fear for the freedoms that individual townspeople must surrender to appease over-zealous town boards, and a budding resentment that this sort of NIMBY behavior — all the benefits of the modern world, but none of the burdens — is inherently selfish and anti-community.)

The Big Picture Again:  I'm here in Syracuse, making coffee, running a computer, and I just heard my furnace switch on again.  My kilowatts come by wire — over easements across somebody's private land — from a locality like Oswego County's Scriba that didn't forbid power plants, not even nuclear.  The natural gas I burn was drilled, fracked and piped out of mostly private lands, in distant places where local governments have been wisely restrained from behaving in panicky ways.

At what point does the Mania for Home Rule become an Abuse of Commerce?  Further balkanizing this state so thoughtlessly will eventually throttle benefits to end consumers — to say nothing of my fellow New Yorkers who need jobs, and landowners who need income.

That’s not my community.

Andy Leahy

Blogging and tweeting as:  NY Shale Gas Now

Friday, March 30, 2012

Dear Governor Cuomo: How About This
For A Second "Energy Highway"?

Dear Governor Cuomo:

I happened to be working from home in Syracuse, March 28 — in fact, telecommuting on a shale gas job in Ohio, believe it or not — and in the background I heard your comments on public radio's "The Capitol Pressroom with Susan Arbetter," regarding your "Energy Highway" ideas.

There was a spot there, sometime between 6:00 and 12:00, where I thought you really got into it, you know? — answering Arbetter's dutiful-but-somewhat-tiresome "Yeah, but's" with this:
"Look, I understand problems, you know?  There are 9,000 reasons why you shouldn't do something.  I tend to be an optimist and focus on how do we get to yes here.  I understand the concerns.  I understand the problems.  I also understand — we need energy.  And, if we're talking about bringing jobs back to this state, you need energy.  And you need a constant supply of affordable energy.  How are we gonna do it?  [In a rumbling, lowered voice] 'Well, I see issues.'  Yeah, I see issues, too.  How do we sit down and get to yes.  And that's the difference — one of the differences — between government being the obstacle and the facilitator.  It's easy to find reasons not to do something.  It really is.  And it's easy to pander to the fears of people.  Yes, but that's not, I believe, doing the job responsibly.  How do you address the problem, but get to yes, so we can move forward?"
Now — of course it occurs to me — we could certainly apply that sort of progressive, responsible thinking to developing shale gas in New York State — as easily as we could apply it to your "Energy Highway" endorsement of the Lake Champlain-Lake George-Hudson River, mostly-underwater, electricity transmission cable idea.

But that's not what I'm writing you about (at least not this time).

Instead, I'm talking about another possible "Energy Highway":  There have been two private sector plans revealed in the last month or so, putting forth the idea of a natural gas pipeline inter-connect that would run from the Northern Tier of PA, briefly through the Southern Tier of NY, and then deep into NY's Leatherstocking Region.  There, at junction points somewhere in Schoharie County, the pipeline would hook into two existing major northeastern transmission lines — one east-bound, feeding Albany and beyond, and the second southeast-bound, sending the natgas to Greater NYC.

From what I understand, these proposals are inspired by a forecast surplus of mostly Marcellus shale gas, coming out of PA, coupled with a deficit of transmission capacity — which will otherwise eventually bottleneck flow at a number of points between the rural production zones, and the largely urbanized, business, residential, and power-generating End Consumers — in both NY and New England. 

The first plan out of the box is called "Northeast Exchange," and it was put forth by El Paso's Tennesee Gas Pipeline.  It may or may not be on hold at this point (see a comment from an apparently knowledgeable anonymous person at the end of my post). 

The second plan is called "Constitution Pipeline," and it comes from a 25-75 joint venture involving Cabot Oil and Gas and Williams Partners.  A month has gone by since the announcement, and I've been hearing — through my own grapevine, as of just this week — that it's already triggering some landwork employment opportunities within Upstate.

The two proposals appear to be in the preliminary stages of competing with each other on two levels — for obtaining enough future contracted flow to justify construction, and — if either manages to get that far along — for winning approvals from federal and state authorities as to "public need."

(It has occurred to me also that these plans might also prove to be in a more subtle competition with an entirely different plan, called "Commonwealth Pipeline," to connect the Marcellus Shale gas fields of PA with markets as far southeast as Baltimore and Washington, DC.  But whether there will be enough natgas to go around for all, so that this won't be an issue — I just don't know.)

Now, I have been around Upstate my whole life, which is long enough to recognize that any such energy infrastructure proposal hereabouts — even a plan for a wind farm — will inevitably inspire Not In My Backyard opposition, often allied with slightly less provincial, supposedly environmentally minded thinkers.  (As a graduate student at the SUNY College of Environmental Science and Forestry here in Syracuse (GPES '95), this was definitely one of the many nettlesome modern-day issues we studied — but never, of course, did we learn exactly how to resolve all of them in bullet-proof ways.)

But, with regard to this PA-NY interconnect pipeline, I have a half-cocked suggestion which might pro-actively limit this kind of conflict.  I wonder if a significant portion of the necessary routing couldn't be much less controversially arranged for, by simply doing this:  Have the State of New York take the lead in negotiating to get paid for an easement, or an easement option, covering a strip of land just inside the fenceline of the already-taken-in-fee Interstate 88 corridor.  (I'm assuming NYS is in title, not USA, but, either way, seems like you could have some influence over the situation.)

Starting in Sidney or Bainbridge or maybe even a point southwesterly, and running as far northeasterly as Central Bridge, that could take up to maybe 80 miles out of the realm of affecting the fields or forests of private landowners.

Of course, there will be a number of landowners with holdings immediately adjoining Route 88 who might still object — either due to the real or perceived impacts, on top of what's already there from the highway, or due to the state beating them out of a business opportunity. 

But, in the latter case, it occurs to me that the state's easement could be generously structured so as to give preference on more or less equivalent terms to any private landowners eager to offer up their parallel footage.  I'm not an engineer, but it seems to me the pipeline — and any necessary above-ground infrastructure, such as valves, connections, and compressors — could be laid out so as to wander back and forth under the highway fence, as necessary or appropriate, keeping the complicated stuff away from both the traffic and people's houses.

And, that way, everybody wins:  Pipeline company; willing landowners; unwilling landowners; NYS; local property tax-collecting jurisdictions; people on the job, or who need a job; and end consumers (including NY residents, businesses, and power plants).

(You know, also, maybe you could even get the pipeline company to help out, down the road, with some of the Route 88 mowing and tree-pruning work, at least in the areas closest to its line.)

There are a lot of factors of economics, geology, topography, wetlands, and so on, that go into planning these things.  And, of course, I'm in no position to say whether using all or part of the Route 88 corridor would make any sense on these grounds.  But, in terms of minimizing the most glaring, publicly perceptible impacts, it seems like doing it that way would be a winner.

I have tried to research issues of public safety so far as the wisdom, or lack thereof, of burying fossil fuels pipelines along or near interstate highways.  But, sorry to say, I haven't found much, one way or the other.  Again, this could very well be an unworkable idea — based just on those sorts of issues.  But I'm sure you've got professionals in your transportation, public service, or environmental departments who could do a much better job of looking into that.

Anyway, I just thought I'd mention it.

Andy Leahy

Blogging and tweeting as: NY Shale Gas Now

P.S. — Good job on the budget!

Thursday, March 29, 2012

The Otselic Statement: Some Upstate Towns Not (Yet) Heard From on Home Rule

I'm calling this "The Otselic Statement" — not the authors.

It is a resolution in the form of a letter to state officials, passed unanimously by the Willet Town Board, representing a community on the banks of one of my favorite rivers, the Mighty Otselic, in Cortland County, NY.

If you've done any poking around on these pages, you can probably tell I have been keeping fairly close tabs on New York's Ongoing Debate Over Shale Gas for going on two years now — including the ruckus over the seemingly unassailable, bedrock-solid "Home Rule" concept.

I've heard about lots of upstate towns, villages, and cities — many of them with little geological prospect of ever even seeing any drilling — confronted with opposition-organized flash mobs, demanding that they zone out drilling, heavy industry, and any associated infrastructure.  Some of these local officials have been pretty easily swayed, and others have been split. 

But I hadn't heard about this.  This is a statement in the opposite direction, from people who tend to speak forcefully, clearly, quietly — and then mind their own business.  I'm told several nearby towns in Cortland County also approved the same text, or something very similar, and I'll update this later on, when I get firmer details.

There's no reason, in my mind, why similarly minded communities on the upper reaches of the Susquehanna watershed, or the Delaware, couldn't or shouldn't do likewise.

That would be nice.  We can always rename the statement later, if you like.

Meanwhile, check it out...
January 4, 2012

Senator James Seward
430 Capitol
Albany, NY 12247

41 S. Main Street
Oneonta, NY 13820

Dear Senator Seward,

We, the Town Board of the Town of Willet, are writing to state that we oppose efforts to overturn the current New York State prohibition for local municipalities to regulate oil and gas drilling through “home rule” laws.

We, unanimously, feel that it would be better to ensure a more uniform rule by continuing to let the State rule in these matters. New York State has spent almost three years of time, effort and money to study the issues surrounding gas drilling. We feel the Towns do not have the time, expertise or money to do their own studies to come to a proper ruling. Nor do we, as a Town, have the resources to defend against any lawsuits from either gas companies or property owners whose rights are violated through such bans, moratoriums or zoning decisions. To give local governments veto power over natural gas drilling through zoning authority will only create more division between government and its townspeople.

We support the DEC’s efforts to study all the different aspects of this issue and welcome their final approval based on unbiased science. We feel the DEC is better equipped to enforce the necessary regulations than each individual Town.

While New York State does allow municipalities to zone mining activities that have significant surface impacts, we feel that the gas industry does not fall into this category. From the sites we have visited, gas wells are not as obtrusive as open mining when completed and surfaces are restored within a short time of surface disturbance.

Rather than opposing the whole industry based on the hysteria of a few, we prefer to move forward towards energy independence, clean energy, economic prosperity for the entire region, while taking a responsible view towards safe extraction of natural gas. Through properly executed road agreements we feel we can protect the Town’s infrastructure without placing an undue burden on the taxpayers.  We also support the property rights of our taxpayers to enter into leases, to allow the extraction of their resources, and to profit by them.

Shale drilling could also mean more money for municipalities in the form of increased revenues from taxes, relieving the tax burden felt by residents. The entire State of New York economy will benefit.

Governor Cuomo promised that the decision to do HVHF will rest on science. Not hysteria, not misrepresentations of facts and data.

We remain hopeful that the SGEIS approval process will be complete so that development of our significant shale resources can commence in 2012.


Alvin Doty, Jr., Supervisor
Willet Town Board


The Honorable Andrew M. Cuomo
Governor of New York State
NYS State Capitol Building
Albany, New York 12224

Commissioner Joe Martens
Department of Environmental Conservation
625 Broadway, 14th Floor
Albany, New York 12233

Assemblyman Gary Finch
Rm 448 Legislative Office Bldg.
Albany, New York 12248

Honorable David Fuller
Cortland County Legislature, District 17
Cortland County Office Building
60 Central Ave.
Cortland, NY 13045

Wednesday, March 28, 2012

Great Quotes of Late in the Fracking Debate

"My property is in Lycoming County, and I'm fortunate that I'm surrounded by the PA State Forest.  I was notified today that I've been pooled for royalties, and I received my first check from Anadarko.  This is going to be a monthly occurrence??  The check stub indicated this check was for gas extracted between December 11th 2011 and January 12th 2012.  Ho-Ly Smokes!"
— 47seijar, a Natural Gas Forums participant, in a  
March 26 entry deep inside a thread entitled, 
"Big Week for PA Royalty Owners — or — 
OMG, Mildred, We've Been Side-By-Sided!"

"Enjoy the weekend, and keep in mind that every single thing that the Tom West's and Henry Kramer's of the world have told you about the law in this area has been dead wrong. Period."

"P.S. Go 'Cuse."

Park Foundation-funded local government lobbyist David Slottje, in a March 23 
email to his anti-frack supporters — apparently rattled by an Oneonta Daily Star story 
by Joe Mahoney.  Industry lawyer Tom West was reported to have recently
unearthed some old papers which could reverse town drill bans — on the 
strength of better documentation of NYS "legislative intent," circa 1981. 
('Cuse exited the Elite Eight the following night.  As for the rest, we'll see.) 

"Look, I understand problems, you know?  There are 9,000 reasons why you shouldn't do something.  I tend to be an optimist and focus on how do we get to yes here.  I understand the concerns.  I understand the problems.  I also understand — we need energy.  And, if we're talking about bringing jobs back to this state, you need energy.  And you need a constant supply of affordable energy.  How are we gonna do it?  [In a rumbling, lowered voice] 'Well, I see issues.'  Yeah, I see issues, too.  How do we sit down and get to yes.  And that's the difference — one of the differences — between government being the obstacle and the facilitator.  It's easy to find reasons not to do something.  It really is.  And it's easy to pander to the fears of people.  Yes, but that's not, I believe, doing the job responsibly.  How do you address the problem, but get to yes, so we can move forward?"
— New York Governor Andrew Cuomo, appearing March 28 on public radio's 
Capital Pressroom with Susan Arbetter — but not actually talking about 
shale gas.  Instead, Cuomo was responding to previously aired criticism 
of his "Energy Highway" plan — which has been so far mostly associated 
with a private sector proposal to import Canadian power through 
a low-aesthetic-impact underwater cable running down the 
Lake Champlain-Lake George-Hudson River corridor. 

"They don't get how close they came to losing 1,100 jobs out of this community...  We could be looking at an entirely different scenario — one where they're packing their bags and leaving the area."

— Delaware County IDA Chair Jim Thomson, March 27, in a story by Lissa Harris of the
Catskills regional blog Watershed Post.  Thomson was referring to drill ban activists 
who nearly succeeded — prior to intercession from the county Planning Board — 
in convincing the Town of Sidney to zone out both natural gas drilling and 
infrastructure.  As first written, the ban was alleged to jeopardize a push 
by 1,100-worker Amphenol to stay put in Sidney, partly by 
converting to natgas — if a proposed supply pipeline 
goes through down the Susquehanna River Valley.
"It is unclear how a comprehensive health impact assessment would be performed on an activity that is not taking place in New York at this time."

— IOGA of NY Executive Director Brad Gill in a March 23 statement 
urging New York leaders to not bother budgeting for a $100,000 study 
of the presumed human health impacts of hydraulic fracturing — pathways 
unspecified.  The proposal was actually dropped days later in the push 
to get an on-time budget — disappointing anti-drilling activists, who 
appear to have been hoping to create another study they 
could then argue New York should await the results on. 

"Thanks for the synopsis...  It helps me to focus when I read the course of events...  I know what I know and I refuse to rewrite or negate the history of events here."
yoko (pen name of Dimock, PA, anti-frack activist Victoria Switzer), in a 
March 19 comment on a blog post by former Binghamton Press reporter 
— now book author — Tom Wilber.  Switzer was reponding to the 
(for some reason, disheartening) news that federal EPA water test results 
showed clean water among 11 of the households that have been locked 
for months in litigation with Cabot Oil and Gas (alleging the opposite).

"Norse Energy CEO Mark Dice awaiting a decision on the environmental approval in New York in a few weeks."

Hegnar Online, an overseas web site for investors, in a March 28 headline 
(Google-translated from Norwegian) for a brief item that 
didn't seem to have much further detail. 

Tuesday, March 27, 2012

Procedural Decisions Issued in Force Majeure Cases: One Arbitrates, Other Proceeds

The main issue:  Does New York State's Still-Ongoing Shale Gas Freeze, begun in 2008, pose enough of an uncontrollable, external, disruptive event to allow industry to declare force majeure extensions on oil and gas leases which otherwise would have by now expired?

The court's answer:  Don't know yet.

(A prior ruling went in the landowners' favor, but was limited to situations in which the leaseholding side at some point failed to tender additional delay rental payments during the time period in which it claimed to be stymied.)

The interim procedural issue:  Do arbitration clauses embedded within some, but not all, of the underlying leases mean the court should defer to a ruling by a yet-to-be-picked, three-person arbitration panel?

The court's answer:  Yes and no.

(Isn't this fun?)

In the first case — a "yes" on arbitration from the court — nearly all the underlying leases carried arbitration clauses (and, for those few situations in which the landowners happened to have struck that paragraph before signing, there will be a time-limited stay).  In the second case — a "no" on a stay pending arbitration in the first — none of the leases explicitly called for arbitration of disputes, and so the court-based litigation proceeds.

That's the word from U.S. District Court Northern Division Judge David N. Hurd, sitting in Utica, in two decisions dated March 20 and 21 (decisions embedded further down).

[First digression:  None of this has yet been picked up on by Upstate's increasingly under-capitalized media, which appear to me to have difficulty recognizing any oil and gas news that's not aggressively touted by either of the well-organized, enviro's versus industry sides in the Ongoing Persuasive Contest Over Hydraulic Fracturing.]

[Second digression:  New York's well-organized and well-funded anti-drilling forces undoubtedly yearn to paint these cases as examples of Shale Gas Martyrdom.  In that dramatic media narrative, landowners are cast as underdogs going up against the collossal natural gas industry — on the excessively hopeful theory that these folks have become positively twitchy about the now-demonized impacts of extracting their previously unknown shale gas resource.  In actual fact, however (and acknowledging that no one can fairly generalize the mental state of all of them), I think it's fair to say that most of the litigating landowners simply want to be free to lease again — on better terms, should such an opportunity ever again arise, now that they know so much more about the business.]

[Third digression:  It's not correct to report or imply that all industry leaseholders have uniformly attempted to invoke force majeure over any of their Upstate leases that lapped into the time period of NY's moratorium.  Here's my evidence:  Talisman Energy of Canada, f/k/a Fortuna, has, since August 2008, recorded surrenders of 87 leases of similar vintage in Cortland County — based on my having taken a quick look at that locality's remarkably progressive, free, online land records system.  Similar facts may be distilled from other County Clerk's Offices where Talisman had recorded leases, but proving it would require burning through both fossil fuels, and much additional unpaid time, and I'm running short in both areas at the moment.]

The first force majeure case features 259 plaintiff landowners, 150 leases, and 10,000 acres in Broome, Tioga, Cortland, and Chemung counties.  The current leaseholder is an arm of Chesapeake Energy out of Oklahoma, which previously arranged a basically two-thirds/one-third split with a U.S.-organized arm of Statoil, Norway's state-owned oil and gas company.  The clocks on these leases all started ticking way back in 1999/2000 (running for ten years), or in 2004/2005 (running for five years), and so they would seem to have expired in 2009/2010 — without development leading to natural gas production from any formation, which turned out to be what happened.  None of the leases explicitly carried a force majeure clause, but the industry's arguments revolve around whether that was implied under basic contracts law.  The landowners' main lawyer is Robert R. Jones of the Binghamton firm, Coughlin & GerhartThomas S. West of Albany represented CHK.

The second case has 55 landowners, 32 leases, and land in Broome and Tioga counties.  Again, the CHK/Statoil joint venture is the current leaseholder, though the leases were originally purchased by a variety of E&P companies then eagerly operating in Upstate between 2000 and 2006.  These deals also ran for five- or ten-year primary terms, and — undeveloped — expired on their face between 2008 and 2011.  Some of the leases in this second case explicitly carried force majeure clauses, but none of them carried arbitration clauses — thus the main reason for the differing procedural outcomes.  The landowners' main lawyer on this one is Scott R. Kurkoski of Levene Gouldin & Thompson, also of Binghamton, and West, again, was the main rep for the industry side.

[Clarification made April 1, based on a helpful, explanatory post on JLCNY's web site from lawyer Kurkoski:  A number of landowners were at some point removed as plaintiffs from this second case — all those with arbitration clauses in their leases — after the significance of the defendant's angle along these lines became clear.]

A key question:  Given that these landowners represent only a small, actually litigating sample of the total universe of Upstate landowners who are similarly affected by this issue, would a result reached solely in arbitration have much of an impact on the rest of the group — without the others having to go through the whole exercise over and over again? 

A court-issued result?

Here's the decision in the first, sending the matter to arbitration:

Wednesday, March 21, 2012

The Desolate Middle Ground on Shale Gas

Something happened last week that represents an unfortunate defeat for the Middle Ground in the persuasive contest enshrouding unconventional domestic fossil fuels, particularly shale gas.

In Congress, March 13, senators couldn’t muster a filibuster-proof super majority to pass a measure, lately given indirect support by the Obama Administration (stories here and here), calling for taxpayers to subsidize vehicles that run on natural gas.  This was intended to displace continued consumption of fuels made from crude oil, which remains substantially imported from problematic nations, and, needless to say, increasingly expensive.

Unlike hydrogen, electric, or other alternatives, natural gas vehicles do not pose so much of an economically-challenged, long-term transformation.  Even while relatively inconsequential New York has lost four years in a shale-directed drilling moratorium — studying the prospect for exploiting its own indigenous resource — natural gas has gone into glut, continentally, and become inexpensive.  Manufacturers have already produced trucks and cars capable of running full- or part-time on compressed, sometimes liquefied, methane.  And, on the fill-up side, there’s a public station even in downtown Syracuse (current price $1.98 per gallon of gasoline equivalent), two more in the suburbs, and still others coming.  In certain cases of back-and-forth transport — such as the United Parcel Service, or public transit like Centro — CNG, LNG, or NGV by whichever acronym already makes economic sense without subsidy.

The feds could have sped up this already slowly rolling train.  But some elected officials instead hung back on the station platform, bickering with inflexibility.

The Republican’s conservative wing couldn’t hack it due to their unrealistic ideological stance that government shouldn’t impose energy policy by meddling in the market.  And some from the Democrat’s liberal wing joined them, largely because its well-meaning, well-educated (but still willfully misinformed) base has lately become riled about the supposed dangers of hydraulic fracturing.

One side’s despised Crony Capitalism sometimes glides seamlessly in waltz step with the other side’s Welfare for Corporate Pigs — even if it’s a gas meter that’s ticking out the beats. 

What a strange dance that is. 

Meanwhile, lost in the middle is a bi-partisan majority — ranging from President Obama to fossil fuels baron T. Boone Pickens — which takes a pragmatic, open-minded view of the whole energy picture:  The burden to consumers, and to the economy, of gasoline and diesel.  The fully external costs of our oil-protective wars.  The shovel-ready jobs represented by federally assisted technological advances in unconventional resources.  And the net environmental (and ethical) benefits of an energy policy in which we Americans seek to manage our own impacts.

The promise of domestic energy represents not just the Same Old Contest between environmentalists and industry.  This debate is also — even more crucially — a contest pitting the middle against both the far left and far right.  In killing this latest version of the Pickens Plan, the middle lost again.  For now.

In New York, there are certainly parallels for this defeat of the middle — which could be one possible outcome of our own Ceaseless Shale Gas Debates.  But I sure hope not.

Instead, I look forward to the day when “Buy Local” includes both sweet corn and shale gas.  Some may be concerned only with visions of their backyard devastation, but I see soldiers coming home from their devastation — and driving to jobs on drill rigs in bi-fuel Silverados.  I see industry, under first-class regulatory oversight, safely fracking shale far beneath land owned by my own fellow Upstaters.

And me, as an end consumer, more than happy to pay for it.

That’s my inter-connectedness of life.  That’s my community.  That’s my home rule.  That’s where I want to go.

Tuesday, March 20, 2012

CHK Sells 415 Wells in NY to Minard Run

Location and sprawl of the Fayette-Waterloo and West Auburn natural gas fields, as approximated by the NYS DEC on a really nice wall map put out back in 1986.  Producing gas wells here appear to be the primary asset recently transferred between Chesapeake and Minard Run.
[I've set up some later-popping details on this transaction in a separate post here.]

[Original post March 19, 2012. Updated March 20 to account for some curve balls which I either missed the first time through, or were later thrown into the electronic records.]

Some unreported oil and gas news became available late last week for those few Upstaters who were not outdoors sunning themselves, but instead were locked indoors, combing the NYS DEC's oil and gas databases, which cover well permits, transfers, and production. 

Here it is:  Chesapeake Energy — the nation's number two natural gas producer, based in Oklahoma, and prior absorber of leading Appalachian producer Columbia Natural Resources — recently sold 415 natural gas wells to Minard Run Oil Co. of the City of Bradford, Pennsylvania.  Minard Run traces its origins back to 1875 in the western PA epicenter of the world's original oil boom, and has long boasted it is the world's oldest family-owned independent — in fact continuously owned by the same family.

The transfer requests were submitted March 14, and approved by the DEC March 15.  The computer records were updated soon thereafter.  The state has a bureaucratic role in keeping tabs on these otherwise completely private transactions because it enforces the public interest in maintaining a responsible party for each well (and — little-appreciated fact here — in making sure local assessors get the gas well tax bills mailed to the right payer).

I have seen no announcement on this yet from either CHK or Minard Run.  But, barring some kind of major malfunction in the electronic records, that's the story, as revealed by a close reading of this otherwise arcane data.

On the basis of well counts, if not actual production, the selection of assets represents most of CHK's New York portfolio of active (or potentially active) wellheads — all, that is, except for its high-producing, horizontally or directionally drilled Trenton-Black River limestone efforts.  As of the time of this writing, CHK is still the listed operator of 64 active, (or potentially active) wells, mostly TBR's, and mostly in the mid-southern or mid-central parts of the state.

Most of the recently transferred wells are in Queenston sandstone production zones ranging across the mid-sections of two Finger Lakes counties — Cayuga (211 wells, all Queenston), and Seneca (184, all Queenston except for two verticals in obscure shales).  These traditional, vertically developed fields have been producing natural gas with little public notice or controversy since they originally broke out in the 1960s.  Known to New York's handful of gas patch veterans as the West Auburn and Fayette-Waterloo fields, CNR bought these interests in 1999.  In 2005, CHK made its entry into Appalachia by buying up CNR basin-wide.

Included on the CHK-to-Minard-Run list are a number of other generally not-yet-producing wells sparsely populating six surrounding counties:  Wayne (2 TBR wells); Ontario (1 Queenston); Yates (5 total — 3 Queenston's and 2 not applicable's); Schuyler (3 Queenston's); Cortland (1 not applicable); and Onondaga (8 Queenston's).

Some of these additional wells were initiated as TBR efforts, but — having proved dry at that horizon — were plugged back to shallower zones more capable of production, as discovered on the way down, either by design or happenstance.  Predecessor CNR was the originator of the TBR play in New York (in Steuben County — where the discovery well was drilled as early as 1985, the field further developed in 1995, and word got out circa 1998).  Since 2008, however, these sorts of historically uncontroversial exploration efforts have been popularly forgotten in the tussle over hydraulic fracturing for shale gas, which is still not permitted on a full scale horizontal basis in New York.

Like shale, TBR represents a high-tech campaign, but, as contrasted to shale, it requires much more involved seismic study in advance of pinpoint drilling, and a gambler's willingness to run the risk of a dry hole (which turned out to be substantial).  Other operators followed CNR's breakthroughs in seismic interpretation with even better results, as represented by the suite of TBR mega-producers in Chemung, Schuyler, and Steuben counties, most of which were either developed, or purchased after development, by the Canadian operator Talisman Energy, f/k/a Fortuna.  Partly due to a shift in investment interest toward fully permitable shale gas out of state, and partly due to sinking market values for natural gas, no new TBR efforts have been drilled in New York since August 2010, when Anschutz Exploration spudded the Dow 2 in Chemung County.

Queenston development has been similarly weak in recent years:  Only three wells listing that rock layer as the intitial target have been started since 2009.

New York's unfortunate state of drilling decline has been covered by this blog in much greater detail here.

CHK had been rumored for at least a couple years to be willing to entertain a buyer for its relatively low-volume, old-school producers.  This move now in New York appears to connect with the company's announced sales of other assets nationally — which have been publicly explained as a way of raising operating cash and driving down debt, both of which have long been lodged as concerns by investors and stock analysts.
I do not know yet to what extent the deal includes CHK's thousands of acres in undeveloped leases.  These are in part geographically intermingled with these wells — which, by definition, drain areas covered by developed, indefinitely running, held-by-production leases (and which therefore would logically have to pass with well ownership, including at least rights to the productive zones).  Some of CHK's undeveloped leases are still ticking within their generally five- or ten-year primary terms, and some may be subject to extensions on grounds of force majeure — due to the superior, unforeseen, disruptive force caused by New York State's now Four-Year-Old Regulatory Sink Hole on Shale Gas.  It remains to be seen whether NY courts will view the state's shale gas blockade as enough of a reason for leaseholders to legitimately invoke this Contracts Law 101 clause.  There are at least a couple cases underway, brought by landowners who are primarily motivated by the hope of being someday free to lease again for more money, higher royalty, and more protectively drafted terms — now that the shale gas genie is out of the bottle.

Note, however, that the locations of the CHK-to-Minard-Run wells are generally too far north or west within Upstate to have obvious, near-term relevance for shale gas.  That's if you believe, as several geologists have put forth, the Marcellus shale is too shallow or too thin in these areas, and the Utica shale remains too much of an unknown.  I say this despite substantial "They're gonna drill everywhere!" hype broadcast hereabouts over the last four years as part of the Ongoing Shale Gas ShowdownAs I've written before, some of that persuasive misdirection has come from the excessively hopeful pro-drilling side, while another five or six helpings' worth have come from the excessively fearful, kill-the-drill side — acting in rare, unscripted agreement with their debating partners.

That being the case, this latest transaction may not represent CHK's loss of interest, or loss of confidence, in some day fracking for shale gas in New York — should the Cuomo Administration finally find a way to push through some Regulatory Resolve on this question.  CHK could still develop natural gas from the Marcellus under current or future leases closer to the heart of the play in the Southern Tier, hugging the State Line, where the shale is virtually a slam dunk, based on production data from PA.

In addition to the number of acres involved, the other main question is the sale price for the overall transaction, which will have to await formal announcements from the buyer or seller.  It may wind up being too minor of a transaction — in the context of CHK's much more involved balance sheet — to be detailed in future quarterly reports.

Friday, March 9, 2012

PA Active Rig Count Looks Headed Below 100

[Leaving same post date, but a quick update here March 27:  It took two weeks, but my headlined forecast proved true as of the week ending March 23 — as shown by an AP story out of Pittsburgh reporting PA was now down to hosting 98 active rigs.]

It doesn't show on my chart yet, because that's based on monthly averages, and the month of March is still going on.  But the weekly active rig numbers issued by oil patch service behemoth Baker Hughes today, March 9, (and at Noon Central Time every Friday), show Pennsylvania having "only" 101 such operations at work in-state.

That's a drop of nine compared to the February 2012 monthly average, and a drop of four from just the prior week.  It's a pretty good sign the Keystone State will soon be dropping below the nice round threshold of 100 rigs.  The last time PA hosted fewer than 100 actually drilling rigs was in Oct. 2010, during a time period when it was on a run-up to its record high of 115 rigs, reached in July 2011.

Meanwhile, based on the last full monthly averages, Ohio had 15 rigs at work, and West Virginia had 28 — both states appearing to continue slight upward trends over the last ten months or so.  New York, needless to say, scored another 0.  In fact, the last time NY had a rig working in-state big enough for Baker Hughes to find it was back in December 2010.

Since most rigs are working on a single well during any given week, the ebb and flow of employment impact can be roughly correlated to the rig counts using the figure of approximately 420 jobs per well — based on the assumptions used in a July 2011 study by an arm of Penn State Extension.  While most Easterners can envision only pickup-driving roughnecks from out of state, jobs tied to fossil fuels extraction are actually spread across more than 150 different occupations — each hard at work in their respective fields, before, during, and after drilling.

A drilling boom in Ohio has been anticipated for months in connection with Summer 2011 revelations that eastern parts of the Buckeye State are blessed with shale gas, shale gas liquids, and shale oil — all from the previously under-recognized rock layer known as Utica shale.  The wetter and oilier portions of Ohio's Utica are said to preserve the economics of unconventional prospects due to higher values for these resources compared to pure dry methane.  Western PA is also known to host similar "wet" fossil fuels — in the Marcellus, and in the not yet widely discussed Upper Devonian — and that may be part of what's keeping that state's rig count from completely crashing.

Methane's market value, meanwhile, has been repeatedly setting new ten-year lows in the mid-$2-per-MMBTU range for most of the winter of 2011-2012.  Those kinds of prices — about one-half or one-third of modern averages — have meant terrific savings for End Consumers, but they are unquestionably alarming for industry, investors, and landowners.  The natgas price drop, though previously attributed at least in part to recessional forces, is now much more clearly seen as a supply-demand trough caused largely by the Shale Energy Technological Revolution's remarkably quick creation of a huge glut.  With those commodity values, it's equally remarkable there are this many rigs still active at all in Appalachia, where — measured in BTU's, at least — the majority of the undeveloped resource remains in the form of dry natgas.

Moves by industry into northeastern U.S. fields, from 2008 onward, have had the unforeseen political consequence of much more widely publicizing (and making controversial) the previously obscure revolution triggered by hydraulic fracturing — which is now much more commonly (and disparagingly) referenced as "fracking," or "hydrofracking."  Contrary to virtually all shorthand descriptions appearing in northeastern media, hydraulic fracturing is not so much a drilling technique, as it is a "completion" technique — most profitably deployed within deep horizontal wellbores drilled beforehand for that purpose.  It is an American technological feat which combines the 1940s-invented fracking, accomplished vertically, with the also 1940s-invented horizontal drilling, and it was pioneered by independent operators (with some federal R&D help, as President Obama recently noted) in the Barnett Shale of Texas.

Though widely and misleadingly described by overdramatic northeastern media as working by "blasting," "shattering," or "breaking up" the shale — or by "flushing out" the fossil fuels — fracking in actual fact works by simply countering natural rock pressure, temporarily, in discrete, one-at-a-time sections of previously drilled sedimentary bedrock.  That high pressure is applied for the purpose of slipping sand (or ceramic beads) into the shalebed's numerous tiny fractures — some old, and some newly created.  After the hydraulic pressure is intentionally eased up, and some of the spent frack water recovered, the "proppants" are left behind, stuck in the cracks, keeping routes through the shale open for the fossil fuels to escape to the wellbore, usually under normal rock pressure.

[Some further miscomprehensions peculiar to the East Coast:  Fracking has become inextricably linked in the public's mind with natural gas production, but — in actual reality, looking at the full picture in North America or worldwide — the technique is just as important for producing unconventional oil or liquids as natgas.  (See, for instance, this recent piece of Reality Correction from the very worthwhile blog of former PA DEP Chief John Hanger.)  Furthermore, though you sure don't hear about this much, fracking is also a key part of the arsenal for several much-less-besmirched enterprises, such as geothermal development, drilling more productive water wells, and still-under-development green dreams to work against global warming by sequestering carbon deep underground.]

My chart above runs the rig data back to October 2004, the month when Range Resources quietly became the first driller in the Appalachian basin to stimulate a horizontal Marcellus well in this way.  Word of Range's surprisingly successful gas-finding results on this and follow-up wells did not get out widely until January 2008, when geologists Terry Engelder of Penn State and Gary Lash of SUNY Fredonia saw through the arcana of industry reports to investors in order to conclude, and publicly release, a significant upward re-estimation of the natural gas content of the Marcellus formation.

Over the time frame of this technological upheaval, the Baker Hughes rig counts are useful in offering a historical comparison of industry's boom or bust response to the varying economic times, geologic fortunes, and regulatory receptions posed by each of these four states.  As you can readily see, drilling in PA was running even or higher nearly every successive month from January 2009 to July 2011, before finally topping out under the downward economic pressure created by the breakthrough's own continent-wide success.  While neither OH or WV has (yet) witnessed anything like the drilling boom which took off in PA, both states have stayed open to such developments — being guided by state administrations and political climates favoring the enterprise.  In NY, by contrast, industry's interest in developing Upstate landowners' previously unknown shale gas resource has been greeted with a chronically delayed regulatory holdup, meshing obstructively with a gathering political firestorm.

In fact, New York on Feb. 15, 2012 — without any media notice whatsoever — reached the Four-Year Mark for its infamous shale gas moratorium.  That is the historical fact if you consider the moratorium's starting point to be Feb. 15, 2008, as I do.  That's the date industry first (unsuccessfully) asked for a drilling permit for a full-scale Marcellus well in the state.  Five months later, on July 23, 2008, New York officials followed their informal bureaucratic hesitation with a more formalized administrative freeze, pending study of the environmental impacts of high-volume completions, and the crafting of tougher operational rules, a process which is still ongoing.

Over all this time, drilling opponents and sympathetic media representatives have largely succeeded in subtly re-framing New York's ban as being a question of whether or not the state will ever allow shale gas development.  Drilling proponents, on the other hand, have insisted upon continuing to view the moratorium as it was originally described — as a temporary measure — preferring to believe that developing the Empire State's indigenous shale gas has always been a matter of when, and how, but not if.  Officialdom has cagily gone back and forth, using either characterization, depending on the person, the timing, or the situation — such as this recent, seemingly supportive-of-drilling statement from Governor Andrew Cuomo.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Baker Hughes has long kept a tally of active drilling rigs for both informational and promotional purposes.  The counts trace their history to 1944, when they were initiated by predecessor Hughes Tool Company (whose founder Howard Hughes, Sr. invented the two-cone rotary drill bit). The Hughes company realized that its sales force generally knew (or could find out) the location by state or province of every single operating rotary rig in the United States or Canada — even those which weren't (yet) using Hughes tools.

The counts have been consistently maintained ever since, and they have become a barometer for the energy sector, and for the economy generally.

Baker Hughes' rig counts are considered more conservative than those broadcast by other outlets, because they only count active, rotary rigs — highly complex operations which are in the midst of placing substantial economic demands on the service, support, and labor sectors.

Rigs are only counted as active if they are being employed anywhere along the line between "spudding in" (or starting a well) and "target depth."  Not counted are rigs that are in the process of being taken down, moved, or rigged up again, or rigs that are being used to support non-drilling chores, such as workovers, completions, or testing. Most relatively small, cable-tool and truck-mounted setups are also excluded from the census.

Wednesday, March 7, 2012

Delaware County Plays David to Gotham City's Goliath — But Small Audience So Far

[Original post March 2, 2012.  Updated here March 7:  Responsive to some gentle nudging via Twitter, more detail on Delaware County's emerging role in Upstate Political Theater was laid out yesterday by Lissa Harris of the regional blog, Watershed Post.  Included was the now-established news that this resolution was, in fact, passed by the Delaware supervisors on Feb. 22, 12 towns to 4.  Harris also threw in some worthwhile, reality-checking calculations regarding Delaware's claimed portion of the disputed no-drill zones, a total of 786,000 acres, or 80 percent of the county's landmass, which breaks down like this:  in upstream watershed (lighter green on NYC's map) = 503,000 acres; out-of-watershed fringe buffer (darker green) = 33,000 acres; and newly proposed, downstream infrastructure buffers (pink and lavender) = 250,000 acres.  That makes Delaware's demand on behalf of its tax-paying, usually-law-abiding landowners a jaw-dropping $103,435-per-acre proposition, spread over 60 years — except, as Harris notes, a significant chunk of this land is already publicly owned, including by NYC.]

This resolution — a demand for $81.3 billion in drill-ban-related reparations from NYS/NYC — was recently either introduced or passed, virtually without media notice, by the Delaware County (NY) Board of Supervisors:
Resolution by Delaware County Board of Supervisors Seeking $81.3 Billion From NYS-NYC Over Catskills Waters...

Some background and some observations:  In order to feel secure in its continued enjoyment of lower-cost, federally waived, unfiltered domestic water from the Catskills Region of Upstate, New York City has already succeeded in using its political muscle to convince NYS DEC regulators to ban drilling for shale gas from on or under all lands uphill of its water reservoirs (lighter green on map below).  Worried also about the Mysteries of the Deep, this no-drill zone extends an additional 4,000 feet beyond the actual watershed divides (darker green on map below).  This fringe zone has already been additionally surrendered by state regulators, even though the much more likely case of occasional, drilling-related surface spills in these areas could not possibly have any impact whatsoever on NYC-bound water, due to the laws of gravity and landscape.
Though these blanket rulings are still technically only in proposed form — via the current draft SGEIS — NYS will not, politically, be able to retreat from any of this, at least not anytime soon.

The only trouble is this:  NYC hasn't purchased all, or even most, of this misleadingly green-shaded land — either outright in fee, or by easement against development.  It's true NYC owns rights to all the land that it long ago flooded, or built upon, to create its water system.  And it's true the city Water Department has made some additional purchases since.  But not much of what lies upstream.  In fact, former DEC Commissioner Alexander "Pete" Grannis used to give speeches in which he pointedly noted that some 70 percent of this upstream land remains privately owned.

These same, pending, but-already-set-in-stone DEC drilling rules similarly limit property rights on private lands upstream of Syracuse's unfiltered supplies, drawn out of Skaneateles Lake.  But there has not yet, to my knowledge, been much protest from landowners or elected officials in the affected areas of Onondaga, Cortland, and Cayuga counties.  (Though I am a Syracuse water consumer and rate-payer — if I may make a suggestion, in the interest of true fairness — these folks should really be hopping on their dial-up connections, and dusting off their calculators, before it all becomes a Done Deal.)

In these drinking water watershed situations (On this phrasing, here's a reminder to Earth Science-impaired media representatives:  All land lays in a watershed), the state's drill/no-drill regulatory distinctions have been unsatisfactorily explained as being not so much about the realistic risk of surface spills, or the unrealistic risk of uncontrolled returns from depth, of spent or unspent frack water.  Instead, it's been explained as being more about the risk of much less spectacular sediment runoff from drillsite and access road construction.  Sediment!  Or, more to the point, it's really more about the regulatory risk that the federal EPA will view such surface disturbances as a reason to strip NYC and Syracuse of their money-saving filtration waivers — regardless of whether there's much actually foreseeable impact from drilling, and regardless of whether there are any public health benefits to be gained from filtering the water supplies already.

Now NYC wants even more land either off-limits to drilling, or under the thumb of its own case-by-case veto.  Recently, Big Apple leaders have pushed for adoption of additional infrastructural buffer zones running for up to seven-miles-wide alongside its aqueducts — an area which covers additional private lands on the downstream side of its reservoirs (pink surrounded by lavender in the map above).  In essence, NYC leaders have become so freaked out about the scenario of deep fracking somehow jostling or infiltrating their aging near-surface water pipes, they have managed to convince themselves, and their expert consultants, that there is actually a rational reason for this kind of preposterously simple-minded regulatory overkill.

Meanwhile — in PA, WV, OH, and beyond — fossil fuels producers are without incident routinely drilling (and afterwards fracking) thousands of mile-long horizontal laterals situate thousands of feet deep, directly underneath an oblivious array of gas pipelines, oil pipelines, water pipelines, streams, rivers, ponds, railroads, highways, homes, businesses, schools, and cemeteries.

Leaving aside the highly questionable risk-assessment validity of these ever-expanding no-drill takings, as put forth by NYC, a question of fairness remains:  Should the many urban, water-drinking, peaceful-of-mind beneficiaries of these regulatory "protections" compensate the many fewer private landowners for their lost economic opportunities? 

Or is it okay for the majority to economically oppress the minority, just because it's politically stronger?  Going all the way back to the days of King George, and to the drafting of the American Bill of Rights, isn't the system of free, private ownership of land intended to set limits upon this kind of oppression?  And should we be careful what we wish for, when we conspire in silence to excuse such blatant exceptions?

Delaware County's resolution says, in all fairness, reparations must be made — and this document is the latest salvo in an Upstate-Downstate dispute which long pre-dates the much younger Shale Gas Debates.

Media coverage has been so inattentive to this rural locale, we are not even able to say with certainty whether this resolution has already passed the whole body, or was merely introduced.  There has reportedly been coverage in at least one ironically pay-to-see Catskills outlet (Hancock Herald), a beforehand forecast in one very small organ (The Mountain Eagle), and a partially viewable story in another also ironically pay-walled operation (Catskill Mountain News).

But, as of the time of this writing, no widely circulated outlet statewide has yet set down this latest chapter.  How can this be?  How can this be — for a story that so well fits the well-established, afflict-the-comfortable, comfort-the-afflicted, media narrative?  It be, because most Northeastern media are only able to see news angles which run in familiar directions. 

Some little guys, they are simply blind to.  And I say that really stinks.

Note that the dollar figure Delaware supervisors arrived at for lost shale gas opportunities by private landowners and their surrounding economies — $81.3 billion, to be paid out over 60 years — is several times larger than even the most exaggerated, higher end of the estimated costs for NYC to simply filter its water, as virtually all other big cities already do.  (I've heard $14 billion, $9 billion, and $8 billion.)

Either way — and I realize this ain't gonna happen, given New Yorkers' White-Knuckled Commitment to the Politics of Fear — to me it's clear it would actually be in the state's net economic interest — and net public health interest — to simply do both:  Filter these water supplies, and drill safely for shale gas!

Tuesday, March 6, 2012

Norse Energy: Two More, Please — Further South, Down in Broome, Closer to PA Line

[Update April 2, 2012:  For the 8th, the Emerson, D. 1H, the proposed Spacing Unit Map has been obtained in PDF form and uploaded here.  For the 9th, the Fritzsch, C. 1H, I put it here.]

Though Google maps notoriously bogs down bandwidth, hang in there while we try it this way this time:

View Two New Marcellus Applications From Norse in a larger map

These markers mark the proposed surface (blue) and "bottom hole" (red) locations for two drilling permit applications filed with NYS DEC by Norse Energy on February 27 and March 1, 2012 — assuming there haven't been any data entry errors, which have plagued prior filings.

The Emerson, D. 1H is more easterly, while the Fritzsch, C. 1H maps out to the west of that.  Both are proposed full-scale horizontal Marcellus shale gas projects in the Town of Sanford, Broome County.

[Corrected March 21, thanks to a sharp-eyed commenter below: 
The landscape under the proposed wellpad locations turns out to drain to the Delaware River watershed via Oquaga Creek, rather than to the Susquehanna — which would have posed fewer regulatory complications.  On closer look, I see the Emerson without question as laying wholly within the Delaware watershed.  And the Fritzsch as proposed appears very close to the unknowing divide — but just a whisker over onto the Delaware's side of the hill.  Norse's applications thus, in one fell swoop, pose an intriguing nudge against two unresolved and here overlapping Shale Gas Moratoria, the first from NY's own DEC, and the second from the federal-state compact known as the Delaware River Basin Commission.  It both saddens me and entertains me that such a seemingly inconsequential distinction — literally, the width of one fallow pasture — could be the deciding factor in triggering a hailstorm of additional red tape.  But that's the complex institutional world New York State chooses to accommodate.]

One notable point is that these wellbore laterals — usually planned to run pretty close to 90 degrees against the shalebed's natural fractures — vary somewhat from the purportedly more typical, slightly northwest-slightly southeast arrangement.

Another notable point is the relatively small unit sizes proposed.  NYS's ultra-conservationist spacing laws were changed in 2008 in order to rationally accommodate the Shale Gas Technological Revolution with low-surface-impact 600-acres-plus-sized units — usually envisioning six laterals drilled from the same centralized well pad.  But these applications from Norse (and some prior) appear to propose putting only the acreage over maybe one lateral at a time through the state's compulsory integration process, which is triggered any time there are any unsigned minority-interest lands involved.

These filings represent the 8th and 9th, post-draft-SGEIS shale gas applications coming from Norse (most Marcellus, but some Utica) — none of which can go forward unless and until Governor Andrew Cuomo gets around to green-lighting the state's new rules for this new method of fossil fuels extraction.  Needless to say, this regulatory re-write has now been under development — and the subject of unprecedented persuasive gyrations, politically — for three and a half years.

Below I've listed selected details on these wells from the DEC database (which you can comb for yourself here).  Applications One, Two, Three, Four, Five and Six/Seven were previously covered on this blog, through annotated details, and occasionally maps, so feel free to poke around.

The 8th application:

API Well Number:  31007300020000
Well Name:  Emerson, D. 1H
Company Name:  Norse Energy Corp USA
Well Type:  Not Listed
Well Status:  App to Drill/Plug/Convert
Objective Formation:  Marcellus
County:  Broome
Town:  Sanford
Status Date:  3/1/2012
Permit Application Date:  2/27/2012
Well Orientation:  Horizontal
Surface Longitude:  -75.48125
Surface Latitude:  42.12631
Bottom Hole Longitude:  -75.468137
Bottom Hole Latitude:  42.122344
True Vertical Depth:  5100
Bottom Hole Total Measured Depth:  9060
Drilled Depth:  9060
Proposed Well Type:  Gas Wildcat
Spacing Acres:  158.27
Last Modified Date:  3/1/2012

The 9th application:

API Well Number:  31007300010000
Well Name:  Fritzsch, C. 1H
Company Name:  Norse Energy Corp USA
Well Type:  Not Listed
Well Status:  App to Drill/Plug/Convert
Objective Formation:  Marcellus
County:  Broome
Town:  Sanford
Status Date:  3/1/2012
Permit Application Date:  3/1/2012
Well Orientation:  Horizontal
Surface Longitude:  -75.521749
Surface Latitude:  42.13475
Bottom Hole Longitude:  -75.524847
Bottom Hole Latitude:  42.125574
True Vertical Depth:  4714
Bottom Hole Total Measured Depth::  8348
Drilled Depth:  8348
Proposed Well Type:  Gas Wildcat [fixed after initial filing]
Spacing:  Non-statutory unit under Title 5; review in progress
Spacing Acres:  161.57
Integration:  Integration order pending
Last Modified Date:  3/2/2012

Sunday, March 4, 2012

Cuomo's Message? Depends What
Your News Source Wants to Hear

It's interesting to me how New York State media can spin the same single radio interview from Gov. Andrew Cuomo in two directly opposite directions — based not so much on what he said, as on what the reporters, and their editors, and their presumed audiences, want to hear.

I think it's a trick of human nature — and we are all, to varying degrees, susceptible to fooling our eyes, ears, and brains.  Tell you one thing, the Ceaseless Shale Gas Debate in New York State makes for One Helluva Magic Show.

On March 2, Cuomo put in another of his occasional appearances on the free-thinking Fred Dicker's "Live From the State Capitol," an Albany AM radio show airing 10 a.m. most weekdays (which, for most Hardcore Citizens of New York, can best be heard via live Internet feed here, or via podcast here, later on, at your leisure).

Judging by the fast fingers viewable nearly in real-time on Twitter, I think it's fair to say that most of the Albany press corps keeps a close eye on these gubernatorial appearances.  And they also routinely click over to his often-same-day appearances on "The Capital Pressroom" with Susan Arbetter, whose public radio show leans way more toward Heart-Rending Leftward Orthodoxy, live most weekdays an hour later at 11 a.m.  (One livestream outlet is here, and the podcasts eventually get posted here.)

The Albany correspondants listen because there's always the chance Cuomo might make some news, and they can't bear the professional humiliation of being caught out of the loop.  As far as news goes, March 2 turned out to be a judgment call.

But, here, you be the judge.

Here's how Dicker's own pro-drilling New York Post ran it — complete with deployment of its "Frack, Baby, Frack!" logo for this continuing saga — in a story by Erik Kriss:
Gov hits gas on drilling plan

ALBANY — When it comes to fracking in upstate New York, Gov. Cuomo says the issue isn’t whether it will happen — it’s how it will happen.
And here's how these same statements from Cuomo ran on anti-drilling Gannett's Politics on the Hudson blog, in a post from Joseph Spector:
Cuomo: No Decision Yet On Hydrofracking

Gov. Andrew Cuomo said today that there’s no new time schedule on when the state Department of Environmental Conservation would finish its review of hydrofracking—which the agency has been reviewing for nearly four years without resolution.
Just as interesting — if an advanced search on Google News two days later can be relied on — not a single Gannett-owned daily newspaper in Upstate made use of, in print or online, Spector's text — even though it was already bought and paid for.

You think that would be the case if Cuomo had said something about shale gas that Gannett wanted to hear?  The editorial message to the front-line scribes is obvious:  "[Yawn...] Next time, find us some real news [that we want to hear]."

But here's what Cuomo actually said:

On recent stories, based on Freedom of Information Law releases, showing that Cuomo (or his staff) had culled out anti-fracking questions in a long-prior online chat:  "Yeah, I think it's a silly point...  I didn't answer all the hydrofracking questions.  Of course not.  Of course not.  [Dicker:  What'd you get — 500 of them?  Cuomo:  Laughs.]  Well, you know, they're organized efforts.  It could be hydrofracking.  It could be whatever it is.  But when you do any situation like this, whether it's a call-in radio, whatever it is, you get organized efforts that will ask the same question a hundred times, a hundred different ways.  Hydrofracking opponents are very well organized.  Whenever I do a venue, I get a lot of hydrofracking questions.  I answered the hydrofracking question the same way I've answered it a hundred times before:  We're in the middle of a process, there's nothing new, DEC is doing the review.  And then there are another hundred questions basically on the same topic the same way, which I didn't answer."

On the DEC's progress in issuing a final SGEIS:  “I have had no recent updates one way or the other in terms of time.”

Nudged by Dicker on recent statements supportive of unconventional domestic fossil fuels, coming in President Obama's State of the Union address, and from his EPA chief Lisa Jackson:  “Well, I'll tell you, I was surprised by [New York City] Mayor Bloomberg’s support, which I hadn’t heard.  I hadn't really focused on, either.  But I hadn't heard that the mayor supported hydrofracking.  [Dicker:  Yeah, he said, Let's get the gas out of the ground, except in my neighborhood, in the watershed of the city.]  The watershed.  But, you know, watershed protections are understandable.  I was also surprised by Lisa Jackson, and the strength of her comment.  They're not especially relevant to DEC.  I don't want DEC making a political decision.  I want them making a decision on the facts.  And that's what they are doing...  We've said that from day one.  So I affirmatively don't want DEC considering politics.”

About the value of natural gas, conceptually:  “Look, natural gas is a great resource.  It helps this country, it helps the economy, in many different ways.  And I don’t think the question was, ‘Should we develop natural gas?’  The question is the protections, and how, and the regulations, and that’s what DEC is working through."

Is that what you wanted to hear?