Marcellus question: Who will pay to monitor gas drilling?

October 10, 2009
By Tom Wilber
twilber@gannett.com

And now for a little homework ...

The state is asking local government agencies to regulate key aspects of the natural gas industry, raising yet more questions about who will pay for manpower to oversee multinational energy companies setting up shop in Southern Tier's backyards.

The industry's effect on water resources and roads are included in a report released Sept. 30 by the Department of Environmental Conservation outlining environmental concerns from full-scale Marcellus Shale development.

Risks to water, the report says, include turbidity, methane contamination and, to a lesser degree, potential for hazardous chemicals to breach well-bore casings or spill while being handled or disposed of on the surface.

To deal with those threats, the state is calling on local health departments to oversee a testing program of private wells in drilling zones. Testing would begin before drilling starts, and continue for a year after it ends.

DEC would also require drilling companies to work out a plan with local governments to minimize traffic problems and cover damage to roads caused by fleets of heavy equipment, water tankers and drill rigs caravanning from site to site.

The industry's promise of affluence, supporters say, will help the struggling economy and bolster the tax base. Yet officials have yet to figure out how to pay to oversee an onslaught of permitting and drilling activity - mostly in the Southern Tier - that is expected to begin next year.

The county is looking at a 3.9 percent tax hike and job cuts to help balance next year's budget. Gov. David Paterson has ordered state agencies to cut operating expenses 11 percent.

"How will we pay? That is a concern," said Broome County Legislator Stephen Herz, D-Windsor, a member of the Finance Committee.

A proposal to steer industry fees and taxes into the state's general fund died in Albany earlier this year. Assemblywoman Donna Lupardo, D-Endwell, favors a plan to raise permit fees and earmark them for regulatory staffing. So does the industry.

Yet that plan is yet to materialize.

"There will have to be money to pay for staff time, no matter where it comes from," said Chip McElwee, executive director of the Broome County Soil & Water Conservation District, an agency that works with landowners to preserve water resources.

Who pays for what?

The state suspended permitting for the Marcellus last summer in order to take a closer look at an industry expected to change the Southern Tier's economic and physical landscape.

Results arrived last month via the 809-page draft called the Supplemental Generic Environmental Impact Statement. While the proposal lays the ground rules for Marcellus development, it's only one piece of a complicated regulatory puzzle.

Local governments must provide the missing pieces, including the wherewithal to protect water and roads.

The clock is ticking.

The public comment period ends Nov. 30. As of Friday, representatives from industry and government said they are still reading through it. Hard copies were not available at public places, and the DEC still hasn't scheduled public meetings to review it.

While the review proposes a regulatory framework, it does not address costs.

County health agencies, the plan says, would take on a "primary role" in overseeing a program to review water data at private wells within 1,000 to 2,000 feet of a drilling rig, before, during and up to a year after operations. Counties also would flag problems and investigate complaints.

Drilling companies are responsible for testing and sending results to the health department and residents for interpretation.

County officials are still trying to determine how that translates into staffing needs.

Here are the numbers they will work with:

The Marcellus is capable of supporting between 2,000 and 4,000 gas wells in Broome County, based on an economic development report commissioned by the legislature. Each gas well has the potential for producing water testing at multiple spots for years.

How much oversight would that require?

"We have to see how it fits in with our resources," said Robert Denz, director of environmental health for the Broome County Department of Health.

Tough sell

As a preliminary step, the county added $28,000 to the Health Department's budget for 2010 to pay for an additional part-time position to respond to complaints involving drilling's effect on private water supplies. Denz said he did not know whether this would be enough without further evaluating the DEC's proposal.

Any staff additions might be a tough sell, however, given the budget problems.

"Nobody has come to grips with it yet," said Herz, who, as a member of landowner coalition dealing with energy companies, has been following the issue closely. "We are looking at a budget in the county that is pretty harsh."

While officials work on the funding puzzle, the state's regulatory proposal is finding general support among drilling industry leaders and bitter criticism from advocacy groups.

Adam Flint, a member of the Binghamton Regional Sustainability Coalition, said officials are too quick to embrace economic promises of Marcellus development without assessing the costs.

"People are playing fast and loose with the figures," he said. "The reports are not spelling out who pays."

The state report lays the groundwork for drilling to begin. Industry supporters see that as encouraging.

"It seems that the state set the conditions so that actual production could proceed, even under tightly defined parameters," said Chris Tucker, a spokesman for Energy In Depth, a national trade group. "That's why we support this and they (opponents) do not. There is no way to split the baby on this."

Full-scale Marcellus production is on the Southern Tier's threshold. When it arrives and how it unfolds depends largely on how the regulations are crafted. That, in turn, depends on how the public and officials respond to the state's proposal.

They have homework to do in the next few weeks.

Additional Facts
Why it matters
The Marcellus shale runs from the Southern Tier of New York, through the western portion of Pennsylvania into the eastern half of Ohio and through West Virginia. Many gas production companies are now interested in the Marcellus, so they are approaching land-owners with offers to lease the rights to natural gas deposits below houses and farms.

The implications for residents of the region are significant. Gas-leases can generate income for residents, but might create costs for local governments that could be charged with some of the responsibilities for oversight. Gas-drilling in other areas has prompted issues related to pollution, noise, and safety.

http://www.pressconnects.com/article/20091010/NEWS01/910100362/Marcellus+question++Who+will+pay+to+monitor+gas+drilling