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The NY drilling ban getting closer and closer to being lifted but wait… what now?


Earlier this month New York Governor Andrew Cuomo chose not to extend the moratorium on hydraulic fracing in the state of New York.  While this is a win for the oil and gas industry and New York’s economy, others are still trying to hinder progress and it is local government.  Some municipalities are trying to prohibit gas drilling in their areas.  Recently the NY Department of Environmental Conservation Commissioner (DEC) Joe Martens explained that local government that bans gas drilling will likely end up in court a decision rather than dictated by the DEC.  When the statewide moratorium is lifted the DEC will require operators to adhere to municipal laws and ordinances but if there are any disputes then the DEC will step away and the operators and municipality will have to fight it out in court.  Also, if a local government votes to prohibit drilling all together then operators will have to again fight it in court if they want to drill in the area.  Ultimately the DEC is supposed to be the overseer of drilling activity but the law is such that a judge may have to be the final authority.

What these municipalities fail to see is that drilling in their local areas can have a huge benefit to their local economy.  Not only can it reward private land owners with large signing bonuses and royalties, it will also create new jobs and bring money to their towns and cities as a result of new industry activity.  Natural gas drilling also benefits the state in a big way as seen in a report from the Public Policy Institute in which they predict 62,000 new jobs in New York once the moratorium is lifted.  We can also look at the state that shares this resource to the south, Pennsylvania.  A recent study from Penn State reports that in 2010 the Marcellus Shale created over $11 billion in economic activity and supported 140,000 jobs in the state and with New York State’s current financial issues that would be a welcome boost to their state economy.

I would remise to not mention the risks involved with natural gas drilling and there are risks just like in any other industry.  But just like in any other industry these risks can be managed and regulated which can limit risk and make the rewards that much more appealing.

For more information about Marcellus activity visit the Marcellus Shale folder in DI’s DNA.

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