Oct 5 2011

New York Shale Gas Lottery 2

Challenge:  Track Record vs. Promises

New York State Has 4,000 Abandoned/Unreported Wells;

35,000 Wells for Which DEC Has No Records

 DEC Deputy Commissioner: “We do not currently have sufficient staff to monitor this program.”

As New York Governor Andrew Cuomo prepares to open the door to shale gas extraction, one remembers that the slogan for the New York Lottery is:  “Hey, You Never Know.”®

This takes on new meaning as, by any definition, this is a heavy industrial activity that will have wide ranging impacts on citizens and communities.  Those impacts include:

  • Where will drilling and ‘frac’ water waste end up?  (And what does “treatment” mean since toxic frac water cannot be made drinkable again.)
  • How do we prevent gas migration (thermogenic) which can contaminate water wells & aquifers (in addition to drilling waste and toxic frac water)?
  • How do we protect community infrastructure such as roads with all of the required heavy truck traffic moving in and out of shale drilling areas?
  • From where comes the 2-9 million gallons of water required to ‘frac’ every well?
  • How do we protect private property rights since the plan is to focus this heavy industrial activity on private land – and New York State has a compulsory integration law on the books (a variation of eminent domain)?

Now is the time to understand how the state proposes to regulate this activity on private land.  Based on that, citizens are encouraged to submit constructive comments to the Department of Environmental Conservation (DEC) regarding its revised Supplemental Generic Environmental Impact Statement (SGEIS).

This is important because it is the instrument by which the state is saying it will regulate this industrial activity.

Meanwhile, a Deputy Commissioner of the DEC acknowledges at a public meeting in Corning, NY, that:  “We do not currently have sufficient staff to monitor this program.”  And two Congressional Representatives – from New York and Pennsylvania – have formed the bipartisan House Marcellus Shale Caucus.  So there is no lack of interest in shale gas extraction issues.

In Part One we shared highlights of recommendations made by an energy industry veteran in a 23-page letter to DEC Commissioner Joe Martens.  Refer to this link: http://www.spectraenergywatch.com/blog/?p=1440

The author of the letter is James “Chip” Northrup, who spent more than 30 years in the energy business, starting at ARCO then becoming an owner, operator, and investor in offshore and onshore drilling rigs, plus oil and gas projects in Texas and New Mexico.  He received an MBA from the University of Pennsylvania Wharton School of Business; and he splits his residence between New York State and Texas.

In this Part Two of the post, we will share additional highlights from Northrup’s letter, a copy of which is attached below under Links & Resources.1

 Northrup:  DEC Not Funded to Enforce Regulations

Northrop connects two vital issues – DEC funding (and its ability to regulate) and a severance or gas production tax.  First, he notes that DEC is “starved of funding – at a critical time (p. 5 of his letter).”

Northrup’s concern is not isolated.  This writer has listened to many citizens as well as public officials at the state and county level express concern that the DEC does not have the funding and staffing to enforce regulations.

In fact, on Sept. 17, in Corning, New York, DEC Deputy Commissioner Eugene Leff (Remediation & Materials Management), said, “We do not currently have sufficient staff to monitor this program.” 

Leff was among several speakers at a public meeting sponsored by U.S. Congressman Tom Reed, who represents the 29th district in NY.  Reed is co-chairman of the recently formed House Marcellus Shale Caucus.

Co-founded by Representatives Tom Reed (R-NY) and Mark Critz (D-PA), the bipartisan caucus has members from New York, Ohio, Pennsylvania and West Virginia.2

In his letter to DEC, Northrup explains (emphasis added):  “While we appreciate that the DEC will use its best efforts to maintain a high standard of oversight, the reality is that the DEC is not adequately staffed and funded for this task as your predecessor made clear before his departure.”

Northrup is referring to Alexander ‘Pete’ Grannis, who was DEC Commissioner from April 2007 to October 2010.  Grannis was fired by Governor David Paterson after the press obtained a memo Grannis wrote about how budget cuts would impair environmental protection in New York.  Reference:  http://www.nytimes.com/2010/10/22/nyregion/22fired.html?emc=eta1

“Nothing proposed has changed that situation; only the rhetoric is different,” Northrop continues.  “The DEC staff we have dealt with have been competent and dedicated individuals.  But the Department is starved of funding – at a critical time.”

“It cannot take care of the legacy problems it currently has, much less take on new ones.  This is evidenced by the fact that the DEC does not have the funds to properly plug and abandon the thousands of orphaned wells that lie rusting away in the state.”

 DEC:  4,000 Abandoned/Unreported Wells

“There are approximately 4,000 abandoned or unreported wells on DEC’s priority plugging list,” according to Emily DeSantis, Assistant Director of Public Information for DEC.  “There are approximately 35,000 wells for which DEC has no records.” 

As DeSantis told this writer, “the proposed dSGEIS requires drilling companies to survey the land generally within one mile of a proposed well location.  If an unplugged deep well is found, DEC would require the operator to properly plug and abandon it before any high-volume fracturing begins.”

The challenge, as we have noted before, is that track records always trump promises.  If New York State cannot clean up old drilling messes, how will it clean up new drilling messes?

Northrup concludes:  “Absent a clear source of funding, the DEC should refrain from issuing permits for HVHF [High Volume Hydraulically Fractured] wells.  The DEC cannot afford to issue permits on wells that it cannot adequately regulate.”

 Northrup:  Tax Production at Wellhead

Northrup’s recommendation is to levy a tax on gas production at the wellhead, also known as a severance tax.  Without it, “the state will not be able to adequately monitor production – nor will it even routinely inspect the wells (p. 6 of letter).”

Gas companies currently lobby against the severance tax in Pennsylvania and New York.  Energy industry veteran Northrup calls this “disingenuous” and says just look at the tax policy in the industry’s home states.  “The question should be not whether there should be a production tax, but what the rate should be.”

And he has a recommendation:  “The rate imposed in the company’s home state would be the starting point.”

“If the lobbyist represented Chesapeake, headquartered in Oklahoma, that answer should be 7%.  If the lobbyist represented Range Resources, Cabot or XTO, headquartered in Texas – the answer should be 7.4% (pp. 6-7 of letter).”

 Northrup:  Unequal Treatment of Water Sources

Northrup writes that, “The proposed ban of drilling within the New York City watersheds creates a double standard that is without scientific merit (p. 11 of letter).”

“The notion that the simple filtration systems of muncipal water plants offers the residents any protection from the wastes found in fracking fluids and flowback is transparently a politically expedient excuse.”

He says (emphasis added), “The amount of protections proposed are directly proportionate to the populations affected.  The more people affected, the greater the protections.  The New York City reservoirs will be protected ostensibly because they have no sedimentation filters while rural water wells will be unprotected, even though they have no sedimentation filters.”

“This clear inequity is confirmed by the addition in Section 3.2.5 of this latest draft of a temporary ban for ‘Primary Aquifers’ – whose only distinguishing characteristic from ‘Principle Aquifers’ is the greater populations served.”

“Next on the hierarchy of protection are lakes that serve municipalities (2,000’), followed by private wells (500’) and last, streams (150’).  The correlation of gas well setback from drinking water to populations served is inequitable and without scientific merit.

Northrup concludes:  “All watersheds should be given the protections afforded New York City, or horizontally hydrofracked wells should not be allowed in any watershed.”

 Setbacks from Drilling – Surface vs. Subsurface

The set back issue raises a question regarding how well the public understands the difference between surface set backs and subsurface set backs.  For example, DEC Deputy Commissioner Leff, at the same public meeting in Corning, NY, said the set back from Primary Aquifers for well pads is 500 feet.

That is the surface setback.  Underground, it is a different story.  Speaking with Deputy Commissioner Leff after the meeting, he said that New York State’s regulatory guidance would permit a driller to run a long lateral drill (horizontal, high-volume hydraulic fracturing) under the Primary Acquifer – as long as, on the surface, the well pad is 500 feet from the aquifer.

To ensure I understood him correctly, I repeated his response and he affirmed it.  The DEC believes such subsurface drilling under a Primary Acquifer would be safe, according to Mr. Leff.

Written comments will be accepted through the close of business December 12, 2011.  For more information, see the third footnote below under Links & Resources.3

While Northrup has not received a response from Commissioner Martens or the DEC to date, Emily DeSantis, Assistant Director of Public Information for DEC,  told us, “Mr. Northrup’s letter is currently under careful review.” 

Links & Resources

1 Energy Industry Veteran James Northrup’s letter to DEC Commissioner Joe Martens – This 23-page letter is detailed, thoughtful and based on experience in the energy industry.  Many benchmark references to similar issues in Pennsylvania, Colorado, Texas and elsewhere.  Pdf file:  Chip-Northrup-Comments-on-Draft-SGEIS(2011)

2 Congressional Marcellus Shale Caucus – Co-founded early in 2011 by Representatives Tom Reed (R-NY) and Mark Critz (D-PA).  It held its first meeting on April 1, 2011.  The bipartisan caucus has members from New York, Ohio, Pennsylvania and West Virginia.  See Reed’s op-ed piece in The Washington Examiner: http://washingtonexaminer.com/opinion/op-eds/2011/04/new-york-and-america-can-profit-fracking-marcellus-shale

3 Public Comments should be made by December 12, 2011 on the revised Supplemental Generic Environmental Impact Statement (SGEIS).  Following are good sources for information.

New York State Department of Environmental Conservation:  Revised Draft SGEIS (September 2011)http://www.dec.ny.gov/energy/75370.html

In addition, check out this helpful guide in the form of a volunteer Wiki website, hosted by the Center for Media and Democracy.  It offers a detailed but user friendly guide for the lay person to understand, analyze and respond to the SGEIS document.  You’ll find analyses by many knowledgeable folks including Chip Northrup, energy industry investor, and Lou Allstadt, former Executive VP of Mobil Oil Corporation: http://www.sourcewatch.org/index.php?title=2011_SGEIS_Flaws%28NY%29

NOTE:  This article is cross-posted on the Accountability Central website at this link: http://www.accountability-central.com/nc/single-view-default/article/voices-from-the-shale-ny-shale-gas-lottery-hey-you-never-knowR-part-2/ Accountability Central is part of the Governance & Accountability Institute, Inc.


2 Responses

  1. Anonymous Says:

    This is good information.
    These old wells with corroded old casing/connections and deteriorated cement, with little or no bonding, is just one more conduit that allows upward movement of fracking and O&G contaminants up to water aquifers from the shale formations. These new shale wells can be ideal with perfect components and cement–and — when the ideal shale wells are fracked (resulting in a vertical farcture) damage will be done so as to allow upward migration, including through these old wells!

  2. Anonymous Says:

    These old, mostly oil, wells basically had zero surface pressure. If they were plugged, they were plugged on the basis of zero surface pressure. A nearby high pressure shale gas well exerts it’s high pressure on the domain of the old well which provides a conduit for the highly pressurized contaminants to get to the water aquifers.

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