Sunday, November 16, 2008

Natural Gas Money for New York Staten Island

Natural gas boom could edge into NYC watershed
11/15/2008, 1:40 p.m. EST
The Associated Press

TOMPKINS, N.Y. (AP) — Gary Galley talks about scratching out a living on his farm west of the Catskills Mountains as he feeds his cattle. The big money from this valley land, he believes, could come from a massive natural gas reserve thousands of feet below where he stands.

"Go ahead and drill!" Galley said with a laugh as his cows grazed.

Galley is among dozens of landowners in this rural region 120 miles northwest of New York City who signed lease deals with energy companies that could open their land to drilling. This part of Delaware County sits on the edge of a multistate natural gas reserve called the Marcellus shale formation, and hopes are high here that wells could bring a bonanza of royalty checks and tax revenue.

But there could be a big problem — potentially a $10 billion problem. New York City draws most of its water from in and around the Catskills and city officials are worried about the expected natural gas boom edging into their watershed. Before a single company has applied to drill here, there are rumblings of a high-stakes conflict between watershed residents and the protectors of a water supply for 9 million people.

"This is a particularly extreme example of something that absolutely, positively cannot take place within the confines of the watershed," said New York City Councilman James Gennaro, chairman of the Environmental Protection Committee. "It's laughable, the whole notion that this could take place on any scale."

Marcellus is a deep formation covering parts of West Virginia, Ohio, Pennsylvania and all of New York's Southern Tier. Proponents describe it as an energy game changer, a reserve that will bring Texas oil-like revenues to the East. It has been estimated that the entire formation holds enough natural gas to satisfy the nation's demand for 14 years.

The Catskill Mountains are near the northeast edge of the formation and represent a fraction of Marcellus in New York. Still, land agents have signed lease deals in parts of Sullivan and Delaware counties, suggesting potential.

Drillers largely ignored Marcellus for many years because it was too deep and too expensive to tap. That changed as energy prices skyrocketed and geologists refined a horizontal drilling process to tap deep reserves. Sand and chemically treated water is blasted down the right-angled holes to fracture rocks and release trapped gas.

The process, called "hydrofracking," requires millions of gallons of water, a portion of which comes back up and is stored temporarily on site before being treated. Environmentalists opposed to drilling in the watershed are particularly concerned about water storage.

Paul Rush, a deputy commissioner with the city's Department of Environmental Protection, told lawmakers in Albany at a recent hearing that hazardous compounds used in hydrofracking could pose a "grave threat" to New York City's water. The city is one of the rare municipalities in the nation with a waiver from federal environmental officials that allows it to avoid filtration.

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