What do you know about Norwnew?
Nornew, Inc., a natural gas business with offices at the Eaton Center in Norwich, intends to stay in Chenango County for the long term, company officials say.
While many other gas companies have drilled in the region since the late 1800s, the subsidiary of Norse Energy of Norway has been the predominate player in Chenango County since 1996.
“It was a quiet period for decades here. There wasn’t much out there for a long, long time until Nornew came in,” Vice President of Operations Steven Keyes said.
Newfound methods for extracting the energy source from the promising Marcellus Shale substrata has received the nation’s attention, but there are several layers of subsurface rock here that are being drilled, both horizontally and vertically, for natural gas.
With three rigs constantly in operation, drilling over the past 12 months has been steady. According to Norse Energy’s quarterly report released in August, of the 11 wells Nornew has drilled, all have been successful. The company has applied for 28 permits since the beginning of 2008, with the Department of Environmental Conservation (DEC) approving 12 and still reviewing 16.
Company forecasts are to drill 50 wells this year and 150 in 2009 if market prices remain favorable and state regulations don’t force companies to scale back operations. New York state’s natural gas industry is currently in limbo with new environmental regulations in the works, a moratorium on permits for wells into the Marcellus Shale and a potential ban on drilling below New York City’s drinking water reservoirs in the Catskill Mountains.
If the experts are correct about the prospects for the Marcellus Shale, and drilling proceeds, more than $1 billion could be invested in upstate New York. The influx could result in money for landowners, an increased tax base, jobs and indirect benefits, and lower energy costs for businesses and government buildings.
With current prices hovering at about $8 per 1000 cubic feet mark, and at current royalty rates, Holbrook suggested that the average well could produce $47,500 for the landowners in a particular unit. At 100 acres per unit, that would mean $475 per year per acre. Wells are typically in production from 20 to 50 years.
The state’s system for assessing natural gas (which is classified as real property) is based on an average of production totals from two years prior. The distribution of sales taxes is dependent upon a particular municipality’s levy. In nearby Lebanon, in Madison County, where Nornew has also been actively drilling for some time, the town received $10,300 in taxes this year (from 2006 drilling production).
As of Nov. 1, 2007, the company had paid out $300,000 to individual excavators, haulers and others for work associated with drilling. In total, Nornew has spent $1.7 million in local contracts. Keyes also said the number of job seekers walking through Nornew’s offices had increased immensely in the last 2 to 3 months.
Comparing Nornew, Inc. with “a Procter & Gamble coming into town,” consulting attorney Dennis Holbrook pointed to as many as 100 jobs that could result per year.
“Our intention is to be viewed as a good corporate citizen,” Holbrook said. “We are already hiring people locally as much as possible, and will continue to grow according to the price of natural gas.”
Commerce Chenango representatives said they planned to create a training program for drilling associated jobs, such as welding, but were unsure what skill levels were required.
“We have to be able to provide services in the way that will work for the industry,” President Maureen Carpenter said, “both now and in 10 years from now.” Government Affairs Committee member Steven Palmatier said welders have been calling him to ask what classifications they need and what fee to charge for services.
“You have a learning curve,” Keyes said.
The Chamber is preparing a list of companies that might expand with the help of lower cost natural gas and what companies utilize natural gas in their processes, such as fertilizer, synthetics or plastics manufacturers.
“We should be targeting them,” Palmatier said. “We need to identify these companies whose cost driver is natural gas and entice them to expand here.”
Farm Bureau President Bradd Vickers suggested that Nornew, Inc. could offer well head prices to local businesses and organizations because transporation costs would be less.
“If businesses are in the neighborhood, you should be able to offer pretty close to well head prices,” he told those attending the gathering.
Nornew is in the process of purchasing easements and building a transmission line that would carry natural gas from the well head to existing lines both north and south of the county.
Holbrook said Nornew, Inc. had talked to the Chamber and the Chenango Industrial Development Corporation about businesses that would want pipeline access. “We’ve made them aware that we are interested in pursuing this,” Holbrook said. Under industry regulations, the company can directly serve up to 19 customers. He said an industrial park that might serve several businesses would count as one.
While many other gas companies have drilled in the region since the late 1800s, the subsidiary of Norse Energy of Norway has been the predominate player in Chenango County since 1996.
“It was a quiet period for decades here. There wasn’t much out there for a long, long time until Nornew came in,” Vice President of Operations Steven Keyes said.
Newfound methods for extracting the energy source from the promising Marcellus Shale substrata has received the nation’s attention, but there are several layers of subsurface rock here that are being drilled, both horizontally and vertically, for natural gas.
With three rigs constantly in operation, drilling over the past 12 months has been steady. According to Norse Energy’s quarterly report released in August, of the 11 wells Nornew has drilled, all have been successful. The company has applied for 28 permits since the beginning of 2008, with the Department of Environmental Conservation (DEC) approving 12 and still reviewing 16.
Company forecasts are to drill 50 wells this year and 150 in 2009 if market prices remain favorable and state regulations don’t force companies to scale back operations. New York state’s natural gas industry is currently in limbo with new environmental regulations in the works, a moratorium on permits for wells into the Marcellus Shale and a potential ban on drilling below New York City’s drinking water reservoirs in the Catskill Mountains.
If the experts are correct about the prospects for the Marcellus Shale, and drilling proceeds, more than $1 billion could be invested in upstate New York. The influx could result in money for landowners, an increased tax base, jobs and indirect benefits, and lower energy costs for businesses and government buildings.
With current prices hovering at about $8 per 1000 cubic feet mark, and at current royalty rates, Holbrook suggested that the average well could produce $47,500 for the landowners in a particular unit. At 100 acres per unit, that would mean $475 per year per acre. Wells are typically in production from 20 to 50 years.
The state’s system for assessing natural gas (which is classified as real property) is based on an average of production totals from two years prior. The distribution of sales taxes is dependent upon a particular municipality’s levy. In nearby Lebanon, in Madison County, where Nornew has also been actively drilling for some time, the town received $10,300 in taxes this year (from 2006 drilling production).
As of Nov. 1, 2007, the company had paid out $300,000 to individual excavators, haulers and others for work associated with drilling. In total, Nornew has spent $1.7 million in local contracts. Keyes also said the number of job seekers walking through Nornew’s offices had increased immensely in the last 2 to 3 months.
Comparing Nornew, Inc. with “a Procter & Gamble coming into town,” consulting attorney Dennis Holbrook pointed to as many as 100 jobs that could result per year.
“Our intention is to be viewed as a good corporate citizen,” Holbrook said. “We are already hiring people locally as much as possible, and will continue to grow according to the price of natural gas.”
Commerce Chenango representatives said they planned to create a training program for drilling associated jobs, such as welding, but were unsure what skill levels were required.
“We have to be able to provide services in the way that will work for the industry,” President Maureen Carpenter said, “both now and in 10 years from now.” Government Affairs Committee member Steven Palmatier said welders have been calling him to ask what classifications they need and what fee to charge for services.
“You have a learning curve,” Keyes said.
The Chamber is preparing a list of companies that might expand with the help of lower cost natural gas and what companies utilize natural gas in their processes, such as fertilizer, synthetics or plastics manufacturers.
“We should be targeting them,” Palmatier said. “We need to identify these companies whose cost driver is natural gas and entice them to expand here.”
Farm Bureau President Bradd Vickers suggested that Nornew, Inc. could offer well head prices to local businesses and organizations because transporation costs would be less.
“If businesses are in the neighborhood, you should be able to offer pretty close to well head prices,” he told those attending the gathering.
Nornew is in the process of purchasing easements and building a transmission line that would carry natural gas from the well head to existing lines both north and south of the county.
Holbrook said Nornew, Inc. had talked to the Chamber and the Chenango Industrial Development Corporation about businesses that would want pipeline access. “We’ve made them aware that we are interested in pursuing this,” Holbrook said. Under industry regulations, the company can directly serve up to 19 customers. He said an industrial park that might serve several businesses would count as one.
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