Exciting news has begun to circulate that New York is finally considering reversing its virtual and actual moratorium on hydraulic fracturing that has long stymied Marcellus / Utica Shale development and the hopes of many of its landowners. The Department of Environmental Conservation is about to end its years-long study of hydraulic fracturing through the issuance of a report expected to exceed 800 pages on July 8.
An executive summary of the proposed report suggests that DEC is recommending that the virtual moratorium only be continued as to designated watersheds, certain state lands and areas adjacent to certain water supplies. Approximately 85% of the Empire State's Marcellus / Utica resources may become eligible for development. Joseph Martens, DEC Commissioner, has been quoted to say, "This report strikes the right balance between protecting our environment, watersheds, and drinking water and promoting economic development."
The DEC promises that hydraulic fracturing will only be permitted "under rigorous and effective controls." Many new regulations are, in fact, suggested or actually in the regulatory pipeline. Among them are proposals for the creation of a mandatory third cemented well casing, disclosure of fracturing additives and a requirement that flow-back water not be stored in open pits, but rather in watertight tanks secured within a secondary structure. The potential for the development of regulations that are viewed as reasonable by industry and by New York's militant anti-development groups is less than certain. As a result, successful and timely completion of any regulatory process determined to be essential to the issuance of shale permits is uncertain.
The report will be subject to a 60-day public review and comment period once issued. Even optimistic viewers of New York matters cannot imagine DEC beginning to seriously process Marcellus / Utica permits until sometime in 2012. Less optimistic folk fear that the permitting process may be further delayed by litigation or by continuing regulatory actions.
Read the full New York Draft Generic Environmental Impact Statement concerning shale development: http://www.dec.ny.gov/energy/46288.html
Read the executive summary of the proposed New York Report on Hydraulic Fracturing: http://www.dec.ny.gov/docs/administration_pdf/execsumsgeis072011.pdf
As always, our energy team attorneys stand ready to provide assistance to operators impacted by the New York decision.