New York fracking stalled by court ruling

Financial Times | July 4th, 2014 | Luc Cohen

http://www.ft.com/intl/cms/s/0/91d41d98-0382-11e4-9195-00144feab7de.html#axzz36nB3Jbmt

Jim Worden regrets saying no to the gas companies.

When they first approached him in 2007 offering $10,000 to lease his 254-acre dairy farm in the heart of the Marcellus Shale region, he tried to negotiate a better deal.

But as he and the companies – including Chesapeake and Williams – were hashing out new terms the following year, New York State issued a moratorium on hydraulic fracturing, pending the outcome of a health study. The moratorium is still in place, preventing Mr Worden and others from cashing in.

“I needed the money to survive,” said Mr Worden, who is contemplating selling some of his land if the milk he produces, coupled with some sweetcorn he grows on the side, are not enough. “I’m not there yet but in three to four years I might be.”

Mr Worden is one of many in this struggling, mostly rural New York State region known as the Southern Tier who see natural gas drilling as the most promising path to economic stability.

The state’s highest court made that a lot less likely for landowners on Monday, ruling that municipalities are allowed to institute moratoriums and bans on hydraulic fracturing.

The ruling was the latest state-level victory for anti-fracking activists, who hope their momentum will continue in similar cases being heard in Ohio and New Mexico.

While these decisions are unlikely severely to hamper US natural gas and oil production – activism has been unsuccessful in gas regions in North Dakota and Texas, which lead the country in shale production – they could prevent natural gas production in the shale-rich Marcellus region from reaching its full potential.

“It’s certainly going to send a negative message to the industry,” said Thomas West, a lawyer who represented Norse Energy Corp in the case.

Norse, whose US subsidiary filed for bankruptcy in 2012 because of unsuccessful investments in New York energy, had sued the town of Dryden for enacting a zoning agreement banning oil and gas exploration in 2011.

The Court of Appeals on Monday validated two lower court decisions stating that Dryden and another New York town, Middlefield, were within their rights to ban fracking and other gas activities.

Now, even if governor Andrew Cuomo lifts the statewide moratorium, the practice would not be permitted in the 180 municipalities that have banned or suspended fracking.

The improvement of hydrofracking technology – the process of pumping massive amounts of water, sand and chemicals into a well at high pressure to break shale rocks, letting the oil and gas out – has sparked an energy production revolution in the US by making possible the extraction of natural gas from areas including the Marcellus Shale formation, which spans a region of the northeastern US including parts of New York, Pennsylvania, Ohio and Pennsylvania.

I can’t live in the middle of a drilling field. We had this lovely property?.?.?.?I just despair of seeing it all destroyed by drilling- Eileen Hamlin

Proponents of fracking point to its ability to move the US closer to energy independence, as well as the economic benefits to local communities. It is also seen as a cleaner alternative to coal, and more cost-effective for consumers than oil.

But critics cite environmental risks of groundwater contamination and air pollution, which has been linked to symptoms such as headaches, nosebleeds, and rashes for people who live near drilling and storage sites.

That is what concerns property owners such as Eileen Hamlin, whose 26 acres in Kirkwood, 10 miles west of Windsor, are surrounded by land that has been leased to gas companies. She and her husband, both pensioners, had been planning to stay in their home and hire a live-in caretaker but now plan to sell up and move into senior housing because of concerns over fracking’s impact on their health and the environment.

“I can’t live in the middle of a drilling field,” said Ms Hamlin, who also fears her home will sell for less than its true value because of its proximity to gas wells. “We had this lovely property?.?.?.?I just despair of seeing it all destroyed by drilling.”

Many across the state who share Ms Hamlin’s concerns have organised into grassroots groups and lobbied local governments to suspend or ban the practice. Jerry Henehan, a member of the anti-fracking group Concerned Residents of Windsor, plans to submit a proposal for a moratorium at the town council meeting on Wednesday in light of last week’s court decision.

“If I lived in Pennsylvania, I’d be scared to death,” he said, referring to fears of groundwater contamination in New York’s southern neighbour, where fracking is permitted on a state level.

But Windsor Town Supervisor Carolyn Price said when many residents look across the border at booming shale regions in Pennsylvania, they notice mainly the jobs and prosperity that fracking has generated. Windsor’s population has fallen since 1990 to 6,247 today and residents say the lack of a major industry has made it difficult to convince their children to stay.

“It’s the only thing that’s truly going to save this area economically,” Ms Price said