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.