Otsego County’s gas potential was the subject of a Foothills symposium last Friday. Four gas activists/analysts shared their opinions on geology, production, and industry practice, with a side trip into the usual Doomsday Scenario.
The thrust of their argument was that New York doesn’t have much gas. Because of this lack of gas, the companies left, leaving the scraps to smaller players. The Foothills presenters made forays into Wall Street financing and compared geological factors and production in Pennsylvania and New York, indicating a limited area in New York where drillers could make money. They closed with a litany of a dozen ills, from wrecked roads to global warming. The takeaway was, “There’s nothing here. Don’t drill.”
There was a lot of information served that night, and more than a dollop of truth in most presentations. New York’s gas potential is not that of Pennsylvania. Towns along the border will probably share the Keystone State’s bonanza, but the geology is less favorable moving north.
However, lack of gas wasn’t the reason companies packed and ran, as claimed by one of the presenters. They left because Gov. Andrew Cuomo decided to continue the moratorium, rather than face the antis’ constant barrage. In addition, an adverse home-rule decision in court would allow the change in a single vote on a town board to wipe out millions of dollars of driller investment. With uncertainty like this, no company risks capital.
Horizontal drilling combined with hydraulic fracturing has made shale plays profitable. If drillers can’t frack on the horizontal, they can’t stick around while New York diddles. They leave. That’s why Exxon-Mobil walked away from its XTO leases along the Pennsylvania border. Atlas left Otego for the same reason. Norse went bankrupt waiting. Anshutz went to court, lost, left. Lenape Resources also went to court, lost, but lingers. Gastem left Otsego County but remains cloistered in Chenango County. It isn’t lack of gas; it’s a lack of regulatory certainty.
The business model for the companies interested in our area was local gas for local needs. Their research indicated that their model could work, given high interstate transportation costs to “move the molecule.” There was money to be made in the difference in transportation costs.
In 2010, Gastem fracked the Marcellus and Utica shale formations in Worcester for a combined initial production of over 300,000 cubic feet per day. This pales in comparison to yields in Dimock, but this was a small 80,000-gallon frack in a vertical well by a company with limited goals. Any comparison to the lateral fracks at much higher volume in Pennsylvania is “apples to oranges.”
Would this well have been profitable? We’ll never know, given the circumstances that forced them to return their leases to their partner, Covalent, and leave the county.
Otsego’s potential is unknown. It has to be tested. If there’s no commercially viable gas in Otsego, no one will drill. Period. If there is gas, the usual ecology of a gas field will ensue; drillers will drill, produce, and perhaps be bought out by larger companies. All companies, large and small, have to work under DEC standards. The standards have been five years in the making.
So what motivates the “No Gas Here” message? The Foothills gig is the fourth stop in the rollout, with a “No Jobs Here” sequel scheduled in Albany next month. This takes coordination. This is no spontaneous Mickey and Judy in “42nd Street” — Hey kids, let’s put on a show!!! It’s central planning and message discipline.
For what purpose? Is there a problem? Yes, there’s a problem. For over five years, the prospect of gas development has roiled our community. In the meantime, upstate New York continues to hemorrhage young people, lose jobs and stagnate.
In similar communities throughout the United States, shale gas and oil are creating jobs and growing communities. These natural resources are changing our international balance of payments, shoring up the dollar. The downstream benefits in capital outlay for construction, manufacturing and services are just beginning to surface.
Even foreign companies are moving to the U.S. for cheap energy. This means jobs and more jobs. In the meantime, CO2 emissions are shrinking to 1994 levels. However, New York languishes, with talk instead of movement. Our Foothills friends foresee a renewable energy future … perhaps like Germany’s shift to renewables with its 47 percent increase in electricity costs to consumers last year and a 1.8 percent gain (yes, gain) in carbon emissions. Renewables? Perhaps some day, but not today.
For the future, a suggestion for The Daily Star. Take time to do some original research. This February marks two years that Pennsylvania has been drilling under regulations that New York has been drilling under for over 25 years. What’s the Pennsylvania data show? How many gas wells drilled in that period? How many confirmed water well disturbances? Can these issues be mitigated? Get the facts directly from the DEP.
Unbiased reports on these and other questions would serve our community well by tamping down the hyperbole, and perhaps starting the conversation that needs to be had.
Dick Downey is an Otego resident and a member of the Unatego Area Landowners Association.