NEW YORK, Oct 28 (Reuters) - Chesapeake Energy (CHK.N) has decided not to drill for natural gas in the New York watershed, following pressure from environmentalists who say drilling could contaminate water supplies to the New York City area.
The U.S. natural gas producer said on Wednesday that it will not develop its leases in shale gas plays in upstate New York ahead of hearings on state rules on the drilling Wednesday.
"[Chesapeake] has no intention of drilling natural gas wells within the New York City watershed," the company said in a statement.
Extracting natural gas from shale formations involves a process called hydraulic fracturing, or fracking, in which a mixture of water, chemicals and other materials like sand are pumped into the shale formation to split the rock and free the trapped gas. Environmentalists say the process contaminates groundwater.
"It has become increasingly clear to us over the past few months that the concern for drilling in the watershed has become a needless distraction," said Aubrey K. McClendon, Chesapeake's Chief Executive Officer, in the statement.
Chesapeake is the largest shareholder in the massive Marcellus Shale gas formation which extends across much of Pennsylvania and parts of West Virginia, Ohio and New York. It is likely the nation's largest shale reservoir and geologists say it could satisfy U.S. natural gas demand for a decade or more.
Chesapeake said that drilling in shale gas is still safe, though environmentalists see this as a victory against shale development in New York.
"We've said all along that drilling in the New York City watershed is a terrible idea," said Deborah Goldberg, Managing Attorney at environmentalist group Earth Justice which has been campaigning against the development.
"We're glad to hear that Chesapeake Energy understands the risk and has promised not to drill in this area," she added. (Reporting by Edward McAllister)
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