This article is part of an initiative with Understanding Government, a Washington D.C. based nonprofit, called “Government In My Backyard”(GIMBY).

Ever heard of “fracking”? It could bring cash-strapped New York State revenue in the billions of dollars. It could also contaminate groundwater and aquifers with carcinogens and other toxins, pollute millions of gallons of water, and require New York City to build a water filtration plant at a cost of $10 billion.

Hydraulic fracturing, or fracking, uses water and often-hazardous chemicals to push natural gas up out of ancient sediments such as shale deposits. Decisions about gas drilling in the Marcellus shale formation – an ancient sedimentary rock deposit stretching from New York State down to West Virginia – are high on the agenda of the New York State Department of Environmental Conservation in 2009.

Hydrofracking itself is not new to New York. What is new is the water-intensive form of hydraulic fracturing with horizontal wells and toxic chemicals that is proposed in the Marcellus shale region of the State. Thus, while the older wells might use 80,000 gallons of water, the gas drilling that is under review would require more than 1,000,000 gallons of water to be injected deep into the well. The “produced” water coming back out of the well would then need to be stored as it would be contaminated with the fracking fluid chemicals.

Despite the modern setting, the players in this drama are much same as they were when fossil fuels were first tapped in the Northeast more than a century ago. With as much as 500 trillion cubic feet of gas available in the Marcellus shale, fossil fuel companies are pressing New York and other states to allow drilling, while environmental groups and concerned citizens are lining up against large-scale gas extraction, and warning of its dangers. State and local politicians and government agencies are right in the middle of this growing struggle for New York State’s underground resources.

Gas Industry Flexes its Muscles – and “Stealth Politics” Creep into the Picture

As Understanding Government has reported previously, November 2008 saw the first permit request issued by New York State’s Delaware River Basin Commission (DRBC) to Oklahoma-based Chesapeake Energy Corporation to withdraw water in the maximum amount of 999,999 gallons a day from the Delaware River. All that water would be mixed with chemicals and pumped into natural gas wells in a process called hydraulic fracturing, or “fracking,” breaking up underground rock formations to help drive gas to the surface.

With revenues of $7.8 billion in 2007, Chesapeake Energy is one of the 100 largest fossil fuel companies in the world.  Its CEO, Aubrey McClendon, was paid nearly 19 million dollars in 2007.  Also receiving a share of Chesapeake’s revenues has been lobbyist Thomas S. West, a key player in the evolving Marcellus shale drama.  West notes on his corporate profile that he has succeeded in quickly moving major changes through the New York State legislature, including “a major overhaul to New York’s oil and gas law less than four weeks after the legislation was first introduced.”  According to West, this 2005 change took place even as the state was still developing regulations for the old law and dealing with lawsuits about what the old law allowed gas and oil companies to do.

More recently, West’s firm was retained by Chesapeake Appalachia, a subsidiary of Chesapeake Energy, to lobby for legislation to reduce the distance between natural gas and oil wells, known as a “setback” (setbacks also govern how close to other property well owners can drill.) While many states and cities have recently maintained or even increased setbacks for gas drilling, the New York State legislature in July 2008 approved a decrease in setbacks for oil and gas wells from 660 feet to 460 feet. Catskill Citizens for Safe Energy (CCSE), a non-profit organization focused on environmental protection and education, has described this new setback ruling as an example of “stealth politics” because, according to reports on their website, New Yorkers were told no action would be taken on the bill during the summer session. Instead, the bill allowing for more gas and oil drilling facilities to be built was “rushed through committees and passed by both the Assembly and the State Senate. The final vote took place late at night on the last day of the session.”

Environmentalists Accuse New York State of Favoring Big Oil and Gas

Catskill Citizens’ Bruce Ferguson said that the gas spacing bill entirely removed public hearings from the process: “The bill facilitated the kind of drilling [gas companies] want to do in the Marcellus shale by allowing them to do these horizontal wells without having to seek variances. It did away with public hearings.” He added that “under the old law, they would have had to get variances for each of these horizontal wells, and each of those variances would have called for a public hearing. Now they don’t have to talk to the public at all.”

According to Ferguson, six directors from the DEC were present in the room in Albany when he and others went to lobby regarding the bill. “Brad Field was there, Jack Dahl was there, Kathy Sanford was there… They were behind this bill” reducing the space between oil and gas wells. Ferguson believes the reason the bill passed was because the DEC was pushing to pass it. “The DEC, unfortunately, has acted as a shill for the gas industry,” says the environmental activist.

The first public comment period on the hydrofracking process – part of the Supplemental Generic Environmental Impact Statement, or dSGEIS – ended December 15.  Representatives from all sides of the spectrum submitted comments. DEC spokesman Yancey Roy notes, for example, that New York City is starting to voice concerns about its aquifer. “On the one hand we’re getting letters from New York City officials” including city comptroller William Thompson, Jr., “that . . . relate to the question of not having drilling or a moratorium on drilling,” says Roy. But he mentions Upstate politicians with a different point of view: the Delaware County Board of Supervisors have passed a resolution against an all-out moratorium on drilling, and “leaders out in Elmira and Corning have had news conferences saying essentially, don’t delay any regulatory review of drilling.”  The Oil and Gas Association of New York (an industry group of which the energy company Chesapeake is a member) commented on the Environmental Impact Statement, as did public interest groups including Catskill Citizens for Safe Energy, Catskill Mountainkeeper, the Natural Resources Defense Council, Riverkeeper, the Sierra Club, and others.

Congressman, State Legislator Weigh in

At least one person in Washington, D.C. is keeping an eye on what’s happening in New York State. In his comments on the DEC’s environmental impact statement, Congressman Maurice Hinchey (D- 22nd District) cautions that “more than one thousand incidents of contamination from hydraulic fracturing have been reported to courts and state and local governments in a number of states including Colorado, New Mexico, Alabama, Ohio, and Pennsylvania.” Hinchey cites contamination of groundwater in Wyoming after hydrofracking in which the U.S. Bureau of Land Management measured benzene levels at “1500 times the ‘safe’ level for humans.” He suggests an alternative: “non-toxic fracturing fluids, such as those used in offshore locations and other environmentally sensitive locations.”

Rep. Hinchey also flags the DEC’s scant staffing, saying that the DEC should increase drilling fees to fund the extra staff needed to oversee thousands of potential new permit applications.  He also calls for the DEC to analyze, develop and require “best management practices” used in other fracking locations nationwide.

Hinchey draws attention in his comments to the case of the whistleblower Weston Wilson, an environmental scientist working with the EPA in Colorado, who in 2004 criticized the EPA’s conclusions about hydraulic fracturing as “scientifically unsound” and noted that it was “peer reviewed by individuals with direct conflicts of interest. Three of these individuals worked for the gas and oil industry while two others were former employees of the industry.”

It was this 2004 report that led lawmakers to rule that the EPA did not need to monitor hydraulic fracturing in the framework of the Safe Drinking Water Act, leaving states to handle all regulation and monitoring on their own. Congressman Hinchey has vowed to repeal the exemption through the passage of a bill currently before Congress.

EPA is not completely out of the picture. It has issued comments on the environmental impact statement, including a recommendation that the DEC “consider the need for a statewide prohibition against the future siting of critical gas well infrastructure – drilling rigs, mechanical equipment, chemical storage facilities, tanks and ponds – within the 100-year flood plain.” EPA notes that gas drilling contaminants and waste products – “such as drilling spoils, hydraulic fracturing chemicals and wastes, brine, oil and grease… [could] adversely impact water quality in rivers and downstream reservoirs.” This includes New York City’s watershed, for which the EPA writes it will be “seeking some special oversight . . . through cooperative agreements among regulatory agencies with authorities in the watershed.”

New York State Assemblyman Felix Ortiz, a Democrat from Brooklyn, has introduced a bill that would ban the use of toxic chemicals in hydrofracking fluid. The bill notes that fracking solutions “currently used by energy companies typically contain diesel and toxic substances such as benzene, ethyl benzene, toluene, and xylene.” Ortiz’s draft further notes that “[t]hese substances are carcinogenic and can cause mutation in both human and animal life, leading to health complications which can prove to be hereditary.”

Since, as Ortiz’s bill notes, the potential hazard from these chemicals is all the greater “when oil or gas extraction is taking place near a waterway,” he calls for use of “non-toxic, organic compounds” in the fracking fluids, “thereby alleviating a serious risk to public health.” The bill has thus far languished in committee.

Asked about the possibility of using non-toxic fracking fluids, Chesapeake energy lobbyist Thomas West downplayed the toxic nature of the standard fluids used. Indicating that he was speaking for himself alone, West said, “the problem with legislation like that is, there are many things that are carcinogens if put in concentrated form. But the types of materials they use in the fracking process are very diluted materials. It’s 99.5% water.”  West acknowledged that his firm had represented “some of the fracking companies.”

NY State DEC:  EPA Exemption? Not a Problem

How does New York State feel about the EPA exemption? According to DEC spokesman Yancey Roy, the state’s laws “essentially cover that exemption . . . we would be able to enforce all the necessary clean water regulations.” He added, “we think that our state laws essentially fill in where that gap of the exemption would be.”

But with its 19 gas and oil experts on staff, the NYS DEC will be hard pressed to cover new drilling as well as all other gas and oil projects in a state of 19 million people and 47,224 square miles. Citizens at a December 4, 2008 hearing at Sullivan County Community College repeatedly noted the DEC’s meager resources, saying “DEC is insufficiently staffed,” and “[t]he DEC doesn’t have enough staff.”

Roy later amended his description of the 19 staff members, by stating that there were other DEC workers who would assist, such as the “spills” staff who attend to 18,000 spills of various chemicals or other hazardous materials a year. Roy could not confirm the number of spills-related staff members. But the fact that specialists on spills might be commandeered should give further pause to people concerned about their water supply.

Some Neighborly Advice: Don’t Drink the Water

People concerned about hydrofracking in New York State can learn from the experience of Pennsylvanians like Beth and Stephen Hilyer of McKean County, PA. The Hilyers were disturbed one morning this past July to find that their pristine spring had been contaminated by a vertical well drilled by Seneca Resources a mere 800 feet away. “We complained,” said Beth, “and went to the [Pennsylvania Department of Environmental Protection], and they told us, ‘Don’t drink the water.’”

The Hilyers had done a chemical analysis of their spring water prior to the drilling. A post-drilling analysis gives a striking portrait of the contamination. Barium is a heavy metal that is regulated by the EPA, which can cause “gastrointestinal disturbances and muscle weakness.” Long-term exposure can cause high blood pressure. The Hilyers’ water post-contamination had a barium level of 3.30 milligrams per liter, 127 times higher than the allowed limit, and well over the EPA’s maximum contaminant level of 2.00 mg/L. The level of manganese in the water was also three times higher , while the total dissolved solids increased 118 times.

Seneca Resources , a subsidiary of National Fuel Gas Company of Williamsville, NY,  provided the Hilyers with bottled water for drinking and an external tank for household water.

Beth Hilyer says her husband warned the drilling company that their proposed well was too close to their spring. She hopes for improvements with Pennsylvania’s DEP. “I wish they had more inspectors… the DEP is stressed with too many new wells. And especially McKean County — it’s all rural and they don’t think that anybody would care.”

“That could have killed us, you know? It was horrible,” says Hilyer. “I don’t want anything like this to happen to someone else.”

Economic Impact: the Numbers Game, or Gaming the Numbers . . . .

One of the most potent arguments for expanded gas shale development is the economic one. In a time of scarce revenues, NY Governor David Patterson and the state legislature are looking for extra ways to fund the budget. Lobbyist Thomas West points to Pennsylvania’s revenues as a sign of what New York could earn, saying that “the way early returns are coming in from below the border, this will be worth a lot of money to Upstate New York.”

But pinning down exactly how much revenue New York’s portion of the Marcellus shale can deliver to the state through leases, licenses, and taxes is no easy task.  One thing is clear:  once a few big, round numbers get into the mix, they can have significant staying power. Deborah Fasser, a vice president at Corning Place Consulting, which is running a public educational campaign about shale gas drilling for the Independent Oil and Gas Association of New York, says the economic impact of a 300-gas-well scenario to New York State could be $1.4 billion annually.

An even bigger number making the rounds is $2.2 trillion. That number, from a report by the New York State Commission on State Asset Maximization (SAM) estimates that “the Marcellus Shale’s recoverable reserves are 363 trillion cubic feet of natural gas, which equates to a value of approximately $2.2 trillion at $6 per thousand cubic feet (MCF) in today’s dollars.” The report credits an article from The River Reporter, a Sullivan County regional newspaper, for this figure. But that article indicates that the 363 trillion cubic feet estimate was “based on numbers from Chesapeake Energy Corp., one of the largest stakeholders in the Marcellus area,” and no source is provided for the dollar amount.  So New York State is citing a newspaper, which is citing numbers from a gas exploration company, which did not confirm to Understanding Government how it determined this number originally.  What’s the bottom line?  The report concludes that “New York’s portion of the total could reach $210 – $315 billion, assuming that 10 to 15 percent of the reserves are located in New York.”

New Yorkers are left with an unclear picture of potential revenues. But the state’s blue ribbon panel does go on to describe a “good news” version of the impact of gas drilling. No environmental hazards are considered, property owners stand to benefit from lease agreements, and gas drilling even promises to “stimulate education, housing, food, travel, and entertainment sectors as well.” The report mentions not one single potential negative impact of gas drilling.

Do You Really Want 10 Million Thirsty People in New York City?

In calculating the potential costs of hydrofracturing, it’s impossible to ignore the potential costs to water drinkers (that would be everyone) in New York City, which presently gets its award-winning tap water from the Catskill region that could be affected by new gas drilling.  For now, New York City has a “Filtration Avoidance Determination” from the EPA for 10 years (granted in 2007). Following testing of New York City’s drinking water, the EPA exempted the city from having to build a water filtration plant.  But according to NYC comptroller William Thompson, Jr., without the EPA ruling, the City would have to build a filtration plant at a cost of between $6 billion and $10 billion.

Financing the construction of a $10 billion filtration plant, Thompson notes, “would add $730 million per year in debt service expense,” which in turn would require New York to increase water and sewer system budgets and rates by 30%, as well as paying for operating the filtration plant.

More Hidden Costs of Industrial Gas Production

In the absence of firm revenue projections, it’s difficult to say whether the economic benefits to the state would outweigh the loss of New York City’s clean, unfiltered drinking water supply.

But there are other potential costs as well. The Catskills are a prime tourist destination, and an increasingly popular area for second homes. People come to hunt in the woods and fish in pristine streams; there are organic farms and specialized agriculture. Catskill Citizens for Safe Energy notes in comments to the DEC that “if the pristine beauty, abundant wildlife and water and air quality are negatively impacted, high spending city folk will stop coming to the region.” CCSE has urged the state to balance short-term revenues “against the long-term loss of spending by visitors and second home owners.”

CCSE also warns that the gas industry may be shaping reports about the economic impact of drilling. “In some cases,” they write to the DEC, “the authors of the reports are employed by organizations that are funded by corporations or government entities that may have special interests.” The environmental organization recommends that an independent consultant do economic analysis and calls for “concerned citizens” to have “input equal to that of the interested corporations and government entities.”

Another question is whether land owners – many of whom are private citizens leasing land they own to companies like Chesapeake Energy – will get their money. Catskill Citizens for Safe Energy notes that Chesapeake Energy had to be forced to pay an award of $404 million to 8,000 landowners in West Virginia after “improperly withholding royalties on gas extraction.” The land owners had to fight Chesapeake all the way to the U.S. Supreme Court. CCSE has urged the DEC to consider the potential costs of litigation in its economic analysis of gas drilling.

Numbers like $315 billion, $1.4 billion per year, or $2.2 trillion in reserves make the Marcellus shale seem more like a gold mine. These numbers will bring out advocates for energy companies eager to tap the revenue stream, and cash-strapped states like New York might prove vulnerable to such wooing. However, what is the cost of a ruined aquifer? More important, what is the cost of safe drinking water? As of yet, no lobbyist, geoscientist, or New York State government employee charged with protecting the environment has been able to put a number on that.