Released December 23, 2014 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--New York State decided last week to prohibit hydraulic fracturing, putting an end to six years of uncertainty about future Oil & Gas development in the Empire State. Howard Zucker, acting commissioner for the Department of Health (DOH) (Albany, New York), recommended that hydraulic fracturing not more forward in the state at a year-end cabinet meeting that was convened by Governor Andrew Cuomo. A statement announcing Zucker's recommendation added that the state's Department of Environmental Conservation (DEC) (Albany, New York) will issue a finding early next year to prohibit hydraulic fracturing in the state.
New York sits atop the northern portion of the Marcellus Shale formation, which could contain up to 410 trillion cubic feet (Tcf) of natural gas, according to a 2011 estimate from the U.S. Energy Information Administration (EIA) (Washington, D.C.), the independent statistical and analytical branch of the U.S. Department of Energy (DoE) (Washington, D.C.). New York's so-called southern tier, which abuts the Pennsylvania state line, has been viewed as a potentially significant source of oil and gas production.
In 2008, the state enacted a temporary moratorium on hydraulic fracturing. That ban had been extended several times as two governors--Cuomo and his predecessor, David Patterson--convened panels of experts to assess the state of knowledge about whether the practice damaged the environment, fouled water or posed health concerns. As those panels considered the evidence, some 170 cities and towns in the state enacted limits or prohibitions on hydraulic fracturing. Six months ago, the New York State Supreme Court upheld the legality of those limits and outright bans.
New York was not a major producer of oil or natural gas, so the decision is not expected to have a major impact on markets. The EIA said oil production in New York State averaged about 25,000 barrels per day in recent years. Gas production peaked at about 5.5 billion cubic feet per day (Bcf/d) nearly a decade ago, but has fallen to about 2 Bcf/d in recent years, EIA noted.
Click on the icons at right to see New York State's oil and gas production levels.
New York is the first state to ban the use of hydraulic fracturing. As such, its December 17 decision could foreshadow more aggressive actions--either tougher regulation, higher set-back provisions or outright bans--by other states. In last month's elections, voters in four cities or counties across three states--Texas, California and Ohio--voted to limit or prohibit hydraulic fracturing in their jurisdictions.
Public fights over hydraulic fracturing's role in oil and gas development have broken out in several states. For years, industry officials have emphasized the need for the industry to more actively engage with stakeholders, to allay their concerns over possible environmental impacts of that development. For more on that, see December 18, 2014, article - Oil & Gas Executives Explain How to Rebalance the Conversation on Unconventional Development, August 11, 2014, article - Billions of Dollars at Risk if Oil & Gas Industry Can't Do a Better Job Telling its Story and June 9, 2011, article - Executives Fret that Public Relations Problems Could Kill the Shale Revolution.
"I have considered all of the data and find significant questions and risks to public health which as of yet are unanswered," Zucker said in a statement. "I think it would be reckless to proceed in New York until more authoritative research is done. I asked myself, 'would I let my family live in a community with fracking?' The answer is no. I therefore cannot recommend anyone else's family to live in such a community either. As the acting health commissioner, I consider the people of the state of New York as my patients. We cannot afford to make a mistake. The potential risks are too great. In fact, they are not fully known."
In conducting its public-health review, the state health department said it reviewed and evaluated scientific literature, sought input from outside public health experts, engaged in field visits and discussions with health and environmental authorities in nearly all states where hydraulic fracturing is taking place, and communicated with local, state, federal, international, academic, environmental and public health stakeholders.
Zucker's counterpart at the state DEC, Joe Martens, told Cuomo's cabinet meeting that he will issue a legally binding findings statement that will prohibit hydraulic fracturing in the state. "For the past six years, DEC has examined the significant environmental impacts that could result from high-volume hydraulic fracturing (HVHF)," he said. "DEC's own review identified dozens of potential significant adverse impacts of HVHF. Further, with the exclusion of sensitive natural, cultural and historic resources and the increasing number of towns that have enacted bans and moratoria, the risks substantially outweigh any potential economic benefits of HVHF."
"Considering the research, public comments, relevant studies, Dr. Zucker's report and the enormous record DEC has amassed on this issue," Martens' statement continued, "I have directed my staff to complete the supplemental generic environmental impact statement" that has been underway for several years. "Once that is complete, I will prohibit high-volume hydraulic fracturing in New York State at this time."
Cuomo's office did not issue a statement after the cabinet meeting, but new outlets quoted him as saying, "I am not a scientist. I'm not an environmental expert. I'm not a health expert. I'm a lawyer. I'm not a doctor. I'm not an environmentalist. So let's bring the emotion down, and let's ask the qualified experts what their opinion is." The governor said this was the most emotionally charged issue he has faced as governor. He was re-elected last month to another four-year term.
Oil and gas interests criticized the decision. Paul Hartman, Northeast director for America's Natural Gas Alliance (ANGA) (Washington, D.C.) issued this statement: "This is an ill-advised decision that denies New Yorkers the opportunity to take advantage of the many environmental and economic benefits that natural gas offers. This has always been a political, rather than a public health decision. Natural gas provides an engine for the economy of New York, which is the nation's fifth largest natural gas user, and the state is forgoing the advantages its neighbors enjoy from natural gas production. The decision to prohibit hydraulic fracturing is based on data that does not justify the Cuomo administration's conclusions. Natural gas has been responsibly produced in communities across the country and we are proud of our industry's safety record."
New York State Petroleum Council Executive Director Karen Moreau said Cuomo acted irresponsibly by issuing a statewide ban on hydraulic fracturing. The decision put the state's economy on a reckless path and ignored the needs of New York families, she added.
"Today's action by Governor Cuomo shows that New York families, teachers, roads and good-paying jobs have lost out to political gamesmanship," Moreau said. "This is the wrong direction for New York, ... particularly when New York depends on safely produced natural gas just over the border in Pennsylvania." Moreau continued, "New York is sitting on a major opportunity to help fuel America's future. Just next door in Pennsylvania, more than $630 million has been distributed to communities since 2012--including more than $224 million in just 2014. These once economically challenged areas are now thriving. The commonwealth has also benefited from over $2.1 billion in state and local taxes generated by the shale energy industry. Revenue from natural gas production supports road and bridge improvements, water and sewer projects, local housing initiatives, environmental programs and rehabilitation of greenways. We are resolved to continue to fight for these benefits in New York." Environmental groups, on the other hand, praised the decision. "It's time for President Obama, the EPA, and states across the country to take all possible measures to protect the tens of millions of people living near oil and gas development outside of the State of New York," Jennifer Krill, executive director of Earthworks (Washington, D.C.) said in a statement. "The time for clean, renewable energy is now."
Paul Ferrazzi, executive director of the Los Angeles-based, anti-fracking Citizens Coalition for a Safe Community, also applauded New York's decision. "Let's hope that California's Governor (Jerry) Brown sees the sanity in Governor Cuomo's decision to ban fracking in New York," he said in a statement.
"The decision by New York will have more of a psychological than fundamentals impact on oil & gas markets," predicted Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Pipelines and Terminals industries. "I can't say the decision was all that surprising, given the ban on hydraulic fracturing in effect since 2008. But given that region's high reliance on gas to generate electricity, I am concerned about potential supply interruptions or price escalations that electricity generators may face because potential new gas supply has been removed from the market. The region's interstate gas pipeline infrastructure is being expanded, but I don't know if that expansion is proceeding fast enough to head off potential price or supply problems going forward."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
New York sits atop the northern portion of the Marcellus Shale formation, which could contain up to 410 trillion cubic feet (Tcf) of natural gas, according to a 2011 estimate from the U.S. Energy Information Administration (EIA) (Washington, D.C.), the independent statistical and analytical branch of the U.S. Department of Energy (DoE) (Washington, D.C.). New York's so-called southern tier, which abuts the Pennsylvania state line, has been viewed as a potentially significant source of oil and gas production.
In 2008, the state enacted a temporary moratorium on hydraulic fracturing. That ban had been extended several times as two governors--Cuomo and his predecessor, David Patterson--convened panels of experts to assess the state of knowledge about whether the practice damaged the environment, fouled water or posed health concerns. As those panels considered the evidence, some 170 cities and towns in the state enacted limits or prohibitions on hydraulic fracturing. Six months ago, the New York State Supreme Court upheld the legality of those limits and outright bans.
New York was not a major producer of oil or natural gas, so the decision is not expected to have a major impact on markets. The EIA said oil production in New York State averaged about 25,000 barrels per day in recent years. Gas production peaked at about 5.5 billion cubic feet per day (Bcf/d) nearly a decade ago, but has fallen to about 2 Bcf/d in recent years, EIA noted.
Click on the icons at right to see New York State's oil and gas production levels.New York is the first state to ban the use of hydraulic fracturing. As such, its December 17 decision could foreshadow more aggressive actions--either tougher regulation, higher set-back provisions or outright bans--by other states. In last month's elections, voters in four cities or counties across three states--Texas, California and Ohio--voted to limit or prohibit hydraulic fracturing in their jurisdictions.
Public fights over hydraulic fracturing's role in oil and gas development have broken out in several states. For years, industry officials have emphasized the need for the industry to more actively engage with stakeholders, to allay their concerns over possible environmental impacts of that development. For more on that, see December 18, 2014, article - Oil & Gas Executives Explain How to Rebalance the Conversation on Unconventional Development, August 11, 2014, article - Billions of Dollars at Risk if Oil & Gas Industry Can't Do a Better Job Telling its Story and June 9, 2011, article - Executives Fret that Public Relations Problems Could Kill the Shale Revolution.
"I have considered all of the data and find significant questions and risks to public health which as of yet are unanswered," Zucker said in a statement. "I think it would be reckless to proceed in New York until more authoritative research is done. I asked myself, 'would I let my family live in a community with fracking?' The answer is no. I therefore cannot recommend anyone else's family to live in such a community either. As the acting health commissioner, I consider the people of the state of New York as my patients. We cannot afford to make a mistake. The potential risks are too great. In fact, they are not fully known."
In conducting its public-health review, the state health department said it reviewed and evaluated scientific literature, sought input from outside public health experts, engaged in field visits and discussions with health and environmental authorities in nearly all states where hydraulic fracturing is taking place, and communicated with local, state, federal, international, academic, environmental and public health stakeholders.
Zucker's counterpart at the state DEC, Joe Martens, told Cuomo's cabinet meeting that he will issue a legally binding findings statement that will prohibit hydraulic fracturing in the state. "For the past six years, DEC has examined the significant environmental impacts that could result from high-volume hydraulic fracturing (HVHF)," he said. "DEC's own review identified dozens of potential significant adverse impacts of HVHF. Further, with the exclusion of sensitive natural, cultural and historic resources and the increasing number of towns that have enacted bans and moratoria, the risks substantially outweigh any potential economic benefits of HVHF."
"Considering the research, public comments, relevant studies, Dr. Zucker's report and the enormous record DEC has amassed on this issue," Martens' statement continued, "I have directed my staff to complete the supplemental generic environmental impact statement" that has been underway for several years. "Once that is complete, I will prohibit high-volume hydraulic fracturing in New York State at this time."
Cuomo's office did not issue a statement after the cabinet meeting, but new outlets quoted him as saying, "I am not a scientist. I'm not an environmental expert. I'm not a health expert. I'm a lawyer. I'm not a doctor. I'm not an environmentalist. So let's bring the emotion down, and let's ask the qualified experts what their opinion is." The governor said this was the most emotionally charged issue he has faced as governor. He was re-elected last month to another four-year term.
Oil and gas interests criticized the decision. Paul Hartman, Northeast director for America's Natural Gas Alliance (ANGA) (Washington, D.C.) issued this statement: "This is an ill-advised decision that denies New Yorkers the opportunity to take advantage of the many environmental and economic benefits that natural gas offers. This has always been a political, rather than a public health decision. Natural gas provides an engine for the economy of New York, which is the nation's fifth largest natural gas user, and the state is forgoing the advantages its neighbors enjoy from natural gas production. The decision to prohibit hydraulic fracturing is based on data that does not justify the Cuomo administration's conclusions. Natural gas has been responsibly produced in communities across the country and we are proud of our industry's safety record."
New York State Petroleum Council Executive Director Karen Moreau said Cuomo acted irresponsibly by issuing a statewide ban on hydraulic fracturing. The decision put the state's economy on a reckless path and ignored the needs of New York families, she added.
"Today's action by Governor Cuomo shows that New York families, teachers, roads and good-paying jobs have lost out to political gamesmanship," Moreau said. "This is the wrong direction for New York, ... particularly when New York depends on safely produced natural gas just over the border in Pennsylvania." Moreau continued, "New York is sitting on a major opportunity to help fuel America's future. Just next door in Pennsylvania, more than $630 million has been distributed to communities since 2012--including more than $224 million in just 2014. These once economically challenged areas are now thriving. The commonwealth has also benefited from over $2.1 billion in state and local taxes generated by the shale energy industry. Revenue from natural gas production supports road and bridge improvements, water and sewer projects, local housing initiatives, environmental programs and rehabilitation of greenways. We are resolved to continue to fight for these benefits in New York." Environmental groups, on the other hand, praised the decision. "It's time for President Obama, the EPA, and states across the country to take all possible measures to protect the tens of millions of people living near oil and gas development outside of the State of New York," Jennifer Krill, executive director of Earthworks (Washington, D.C.) said in a statement. "The time for clean, renewable energy is now."
Paul Ferrazzi, executive director of the Los Angeles-based, anti-fracking Citizens Coalition for a Safe Community, also applauded New York's decision. "Let's hope that California's Governor (Jerry) Brown sees the sanity in Governor Cuomo's decision to ban fracking in New York," he said in a statement.
"The decision by New York will have more of a psychological than fundamentals impact on oil & gas markets," predicted Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Pipelines and Terminals industries. "I can't say the decision was all that surprising, given the ban on hydraulic fracturing in effect since 2008. But given that region's high reliance on gas to generate electricity, I am concerned about potential supply interruptions or price escalations that electricity generators may face because potential new gas supply has been removed from the market. The region's interstate gas pipeline infrastructure is being expanded, but I don't know if that expansion is proceeding fast enough to head off potential price or supply problems going forward."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
