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Proposed “Unconventional” Natural Gas Drilling In New York

New York Law Journal

October 23, 2009

The New York State Department of Environmental Conservation (NYSDEC) recently released for public comment its Draft Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program (“Supplemental EIS”). The purpose of the Supplemental EIS is to update NYSDEC’s 1992 environmental impact statement for its oil and gas regulatory programs to encompass new “unconventional” natural gas well applications, which involve horizontal drilling and high-volume hydraulic fracturing of dense, gas-producing rock layers, such as the Marcellus and Utica shale formations.

Over the past few years, drilling in the Marcellus shale natural gas reserves has been a subject of much discussion and debate in New York State. The Marcellus shale extends deep underground from Ohio and West Virginia through Pennsylvania and the southern tier of New York. While conventional gas wells are drilled vertically through rock layers into the geological formation containing the gas, well drillers can now sink a well vertically to the desired formation, then turn the drill horizontally to drill through a larger portion of that rock layer. Because the shale is dense, it must be cracked, or fractured, to release greater quantities of gas.

To fracture the rock and unlock the gas trapped in the shale thousands of feet below the surface, a technique known as hydraulic fracturing is used. Hydraulic fracturing, or “fracing,” involves pumping a large volume of water under pressure into the well. Mixed with the water are biocides to kill bacteria, other chemical agents to help the fracing process, and a “proppant,” such as sand or small ceramic beads, which hold open the new fractures so that gas can flow out. The numerous possible chemical additives used in fracing fluid are listed in Chapter 5 of the Supplemental EIS.

Environmentalists, some local landowners, and New York City have expressed concern that this process for drilling could threaten water supplies, including groundwater and the reservoirs and watersheds that serve New York City, and recent surface spills of fracing chemicals at Pennsylvania Marcellus wells have heightened public concern. The volume of water needed—estimated as much as five million gallons per site[1]—would either be trucked in, increasing traffic, dust and air pollution, or withdrawn directly from local water sources, raising concerns about depletion of local water supplies.

Estimates are that anywhere from 9 to 35 percent of the water used in fracing returns to the surface as “flowback water,” which might contain chlorides and other materials from the well, as well as small amounts of the fracing chemicals, potentially impacting the quality and taste of drinking water or waterbodies. There is little current information on the composition of flowback, but NYSDEC anticipates having greater information for the final generic environmental impact statement.[2]

Despite the extensive controversy over tapping the Marcellus shale, oil and gas exploration in New York State is not a new phenomenon. In fact, the natural gas industry in the United States began in 1821 with a well in Chautauqua County.[3] The Marcellus shale has been tapped for gas in New York since 1880, but exploration in shale diminished after more productive, “conventional” fields were developed. However, opening up the Marcellus shale to gas exploration will put gas operations into areas of the state that have not seen gas exploration at all or certainly on this scale.[4]

New York’s Demand

According to the August 2009 Draft New York State Energy Plan, New York is the fourth largest natural gas consuming state in the nation, using about 1,200 billion cubic feet of natural gas per year. Demand for natural gas is expected to increase as more industrial facilities and commercial and residential buildings shift to natural gas to reduce air pollutants and greenhouse gas emissions associated with climate change. Currently, New York State meets less than 5 percent of its gas demand with in-state production. The Draft Energy Plan therefore concludes that increasing in-state production of natural gas will diversify the state’s natural gas supplies, improving the state’s energy security while also providing economic growth and job opportunities.[5]

Review and Permitting

NYSDEC regulates the drilling and production of gas wells pursuant to the Oil, Gas and Solution Mining Law.[6] NYSDEC completed a Generic Environmental Impact Statement in 1992 (“1992 Generic EIS”) which concluded that individual gas well drilling permits, when no other permits were required, would not result in significant adverse environmental impacts under the State Environmental Quality Review Act (SEQRA). If the proposed application for a well permit conformed with the 1992 Generic EIS, no further SEQRA review was required prior to issuing a well permit. However, for locations in a state Parkland, Agricultural District, or within 2,000 feet of a municipal water supply well, or for a location that required other NYSDEC permits, NYSDEC determined that the action may be significant and would require a site-specific SEQRA determination. NYSDEC also found that drilling gas within 1,000 feet of a municipal water supply well is always significant and would require a Supplemental Environmental Impact Statement.[7]

In 2008, NYSDEC determined that horizontal drilling and high-volume hydraulic fracturing required further environmental review because the process required water volumes in excess of earlier descriptions provided in the 1992 Generic EIS and because issues related to the disposal of the flowback water and the longer duration of disturbances from multiple wells at a single drilling site had not been examined in that 1992 review.[8]

The Supplemental EIS recently released by NYSDEC for public review therefore addresses impacts from horizontal drilling and high-volume hydraulic fracturing in the Marcellus shale on surface water withdrawals, transportation of water to well sites, the use of additives to enhance the fracturing process, water quality impacts, the disposal of the flowback water, space and facilities required at the well site to ensure proper handling of water and additives, and potential impacts at a site where multiple wells will be drilled.

As with the 1992 Generic EIS, horizontal, high-volume hydraulic fracturing applications that conform to the Supplemental EIS will not need further SEQRA review. However, the Supplemental EIS will require additional SEQRA review, including opportunities for public comment, when high-volume hydraulic fracturing is proposed in areas or for activities: (1) shallower than 2,000 feet; (2) where top of the target fracture zone of the wellbore is less than 1,000 feet below the base of a known fresh water supply; (3) where a centralized flowback water surface impoundment plan was not previously approved by NYSDEC; (4) where a well pad would be located within 300 feet of a reservoir, reservoir stem or controlled lake; (5) where a well pad would be located within 150 feet of a private water well, domestic-use spring, watercourse, perennial or intermittent stream, storm drain, lake or pond; (6) where the surface water withdrawal was not previously approved; and (7) in locations determined by the New York City Department of Environmental Protection (NYCDEP) to be within 1,000 feet of subsurface water supply infrastructure.[9]

Impacts and Mitigation

The potential impacts from horizontal drilling and the hydraulic fracturing process are discussed in Chapters 5 and 6 of the Supplemental EIS, and mitigation measures are proposed in Chapter 7. The Supplemental EIS incorporates by reference the 1992 Generic EIS. In general, the Supplemental EIS conclusions and mitigation are quite similar to the 1992 conclusions, but incorporate certain new proposed requirements to address the enhanced public concern and unique aspects of the unconventional drilling.

NYCDEP, which operates New York City’s drinking water system, including the Catskill and Delaware watersheds that sit above the Marcellus shale, has prepared an initial report setting forth the basis for its concerns about the potential impacts of natural gas exploration on New York City’s drinking water.[10] NYCDEP’s report stated that there are numerous reports of water well contamination near drilling operations in the United States; that strict well construction standards and monitoring may reduce, but cannot eliminate potential problems; that miles of new collector pipelines will result in erosion and the threat of explosions and forest fires; that accidental spills have resulted in hundreds of documented ground and surface water contamination incidents across the country; that a regional plan for treating wastewater will be needed; and that drilling could affect ground and surface water quantity, if not managed properly. Regarding water quantity, NYCDEP noted that water withdrawals could affect the water supply reliability, and are a particular concern in the Catskill watershed, which, as discussed below, is not subject to the water withdrawal permitting authority of the Delaware River Basin Commission.

In its Supplemental EIS, NYSDEC concludes that potential degradation of New York City’s drinking water supply and damage to underground infrastructure are “not reasonably anticipated because the target fracturing zones are thousands of feet deeper than any underground water supply infrastructure.”[11] NYSDEC also explains that degradation of New York City’s drinking water supplies as a result of surface spills from drilling activities is not anticipated because: (1) setback requirements will preclude the possibility of the contents of a ruptured additive container or holding tank from reaching a reservoir; (2) storage containers for fracing additives must meet applicable federal or international standards; (3) hydraulic fracturing would be monitored, with more people present on site than at any other time during the life of the well; (4) construction and operation of the site would be done pursuant to a Stormwater Pollution Prevention Plan to prevent fluids from running off the well pad; and (5) many chemicals, if accidentally released, would evaporate.[12]

NYSDEC likewise does not anticipate a high likelihood of groundwater contamination due to hydraulic fracturing. NYSDEC cites a study by ICF International that shows that the likelihood of groundwater contamination from fluids pumped into the well for hydraulic fracturing to be fewer than 1 in 50 million wells.[13] Moreover, regulatory officials from 15 states have recently testified that groundwater contamination from the hydraulic fracturing procedure is not known to have occurred despite the procedure’s widespread use over several decades.[14]

In response to the concern about the volume of water needed for hydraulic fracturing, NYSDEC states that the percentage of surface-—and ground—water withdrawal required turns out to be relatively low compared with current withdrawals, such as that used for power generation, recreation, manufacturing and other uses.[15] Additionally, well operators indicated that centralized water impoundments serving multiple wells could be built that would allow water withdrawal during high flow periods, avoiding withdrawals during low flow periods.[16] Nevertheless, the mitigation chapter makes clear that there is not an overall, statewide jurisdiction over water withdrawals. For example, withdrawals over 100,000 gallons per day within the Delaware and Susquehanna River Basins require approval of the Delaware or Susquehanna River Basin Commissions, but most other water withdrawals do not have such oversight.[17]

Much of the Marcellus formation, including New York City’s Catskill watershed, lies outside of the boundaries of the Susquehanna and Delaware River Basin Commissions. NYSDEC prefers a different method of monitoring and addressing water quantity impacts than the Susquehanna and Delaware River Basin Commissions’ methods, but it is not clear how that method would be implemented.[18]

Air quality, noise and visual impacts were also studied to examine the impacts of having up to 10 well-drilling activities per single well pad. The air quality analysis showed potential exceedances of the one-hour particulate matter sized 10 and 2.5 microns standards. Mitigation could be accomplished by increasing the stack height, erecting a fence to keep out the public, or by adding pollution control equipment. An examination of greenhouse gas emissions, including those from gas extraction, processing, and transportation (895 to 1,350 truck trips are estimated per well), is included in the Supplemental EIS.[19] Methane, the principal component of natural gas, is a potent greenhouse gas, and is estimated to have up to 72 times more warming power than carbon dioxide.

Recent media coverage has focused on fugitive methane emissions from natural gas facilities.[20] The Supplemental EIS indicates that, relative to combustion and process emissions, fugitive methane and carbon dioxide contributions are insignificant.[21] However, given the size of the Marcellus formation and the potential number of new wells and pipelines, NYSDEC should carefully consider fugitive methane emissions and evaluate mitigation, if appropriate.

With regard to visual impacts, rigs used for horizontal drilling could be as high as 140 feet, or 170 feet for drilling multiple wells at a single pad, as compared to the drill rigs examined in 1992 at 30 to 100 feet. Moreover, the duration of drilling is much longer—taking about four to five weeks of continuous drilling per day with an additional three to five days for the hydraulic fracture as compared to the one-to-two week drill time examined in 1992.[22]

As compared to the 1992 Generic EIS, additional noise impacts are also expected from the longer drilling duration, the significant increase in the number of trucks, and from the hydraulic fracturing process itself.[23] The Supplemental EIS, however, acknowledges that the use of multi-well pads will reduce the number of pads on a landscape, thus somewhat limiting the visual and noise impacts.

In addition to existing mitigation and best practice requirements, which are included in the Supplemental EIS appendices, the NYSDEC has proposed many measures, which are described in the lengthy Chapter 7 of the Supplemental EIS. Proposed “Supplementary Permit Conditions for High-Volume Hydraulic Fracturing”[24] include measures such as completion of a required “Pre-Frac Checklist and Certification Form” prior to commencement of fracturing; required testing of residential water wells within 1,000 feet of the well pad prior to site disturbance; limits on the size, construction, and lining of reserve or drilling pits; NYSDEC inspection of well surface casing cementing operations within aquifer areas; pressure tests; the use of steel tanks rather than pits for on-site flowback water; reporting requirements for any “non-routine incident”; fluid disposal requirements; and reclamation requirements. Other mitigation measures include secondary containment for tanks larger than 10,000 gallons or positioned within 500 feet of a water resource; detailed best management practices for the stormwater pollution prevention plan; and reporting requirements for chemicals pumped into the shale.

Conclusion

The Supplemental EIS provides considerable information about the process and impacts associated with drilling for natural gas reserves in the Marcellus shale. However, the analysis often focuses on details and incremental differences from traditional gas exploration, making it difficult to see the overall picture of how the new gas industry will affect the region, particularly in areas that have little or no experience with gas development. Additionally, it often is difficult to determine whether NYSDEC concludes that horizontal drilling and high-volume fracturing would result in significant or insignificant water quality impacts and in what situations additional mitigation would be required.

In light of NYSDEC’s regulations requiring that environmental impact statements be “clearly and concisely written in plain language that can be read and understood by the public,”[25] the final Supplemental EIS should include a reader-friendly Executive Summary, more summarized conclusions in each chapter, and a more macro perspective.  

and Ethan I. Strell are attorneys in the environmental practice group at Carter Ledyard & Milburn.


Reprinted with permission from the October 23, 2009 edition of the New York Law Journal  © 2009 Incisive Media Properties, Inc. All rights reserved. Further duplication without permission is prohibited. Reprint information for the legal properties relative to content searches and copyright clearance is available at www.imreprints.com. For questions contact, reprintscustomerservice@incisivemedia.com or 347-227-3382.

Endnotes


[1] NYSDEC, Supplemental EIS at 6-56.

[2] Id. at 5-99; 5-100.

[3] Id. at 4-2.

[4] Id. at 1-1.

[5] Draft Natural Gas Assessment, New York State Energy Plan, August 2009 at p. 7 to 14, available under the New York State Energy Plan Web site at http://www.nysenergyplan.com.

[6] Environmental Conservation Law Article 23; 6 NYCRR Parts 550-559.

[7] NYSDEC, Supplemental EIS at 1-3 to 1-4.

[8] Id. at 1-4.

[9] Id. at 8-2 to 3.

[10] New York City Department of Environmental Protection, Rapid Impact Assessment Report: Impact Assessment of Natural Gas Production in the New York City Water Supply Watershed, September 2009, available at http://www.nyc.gov/html/dep/html/news/natural_gas_drilling.shtml.

[11] NYSDEC, Supplemental EIS at 6-41.

[12] Id. at 6-41 to 42.

[13] Id. at 6-35.

[14] Id. at 6-37.

[15] Id. at 6-10 to 6-14 based on studies of water use in Susquehanna and Delaware River Basins.

[16] Id. at 5-75.

[17] Id. at 7-4.

[18] Id. at 7-22.

[19] Id. at 6-114.

[20] See Andrew C. Revkin and Clifford Krauss, “Curbing Emissions by Sealing Gas Leaks,” The New York Times, Oct. 14, 2009, A1.

[21] NYSDEC, Supplemental EIS at 6-112.

[22] Id. at 6-132.

[23] Id. at 6-137.

[24] Id. at Appendix 10.

[25] 6 NYCRR §617.9(b).


Christine A. Fazio

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