NORWICH – The primary player in Chenango County’s natural gas industry said Tuesday that the world’s financial crisis has created challenges that will affect its exploration and drilling plans.
Nornew Inc., a subsidiary of Norse Energy of Norway, planned to drill nearly 200 wells in Chenango County over the next four years. Twenty-one are planned for Preston alone, in addition to pipelines and connector lines south through Oxford, Coventry and Bainbridge.
Two successful finds in Smyrna in the Herkimer formation last month, just days before Wall Street began to crumble, boded well for the company’s predictions for future success in that strata and others, including the highly-prized Marcellus Shale.
New reports this morning indicate that Washington’s $700 billion plus rescue package has restored little if any confidence in the global marketplace, as the fall-out from U.S.’s subprime mortgage crisis continues to flow through London, Russia and Tokyo.
“The challenge is obviously where prices are going for oil and natural gas and what the ability to access funds to go out and drill will be,” Nornew spokesman and attorney Dennis Holbrook said. “It’s a reminder to all of us that we have to tighten our belts and be as conscientious as we can to conserve costs.”
The natural gas industry in New York also faces hurdles presented by the state Department of Environmental Conservation. On Monday, the NYSDEC released a preliminary review process for proposed, new environmental regulations of natural gas drilling in the Southern Tier. The 45-page document is the first step in developing supplemental guidelines for issuing permits for gas wells using horizontal drilling technology, the type needed to release the energy source for shale.
Gov. David Paterson requested a supplement to existing regulations to address the potential environmental hazards and water usage for drilling, and the impact on the New York City watershed.
Holbrook said, “We basically have a moratorium on drilling right now even though they don’t want to call it that.”
He was referring to the DEC’s refusal to permit any horizontal drilling in the Marcellus until after the new regulations are in place and what he said were possible future restrictions on water usage for all formations from the Susquehanna River Basin Commission.
“I’m concerned that they may have taken out the minimal threshold that you can operate under. It looks to me like another slow down. ... At a time when we are looking at tight credit markets, and lower oil prices now, coupled with both the state and SRBC both throwing additional challenges out there, it’s scary.”
“I’d like to be more optimistic, but have to remain more cautious in light of the things going on around here,” Holbrook said.
A member of the Central New York Landowners Coalition solicited members this morning to call the New York State Attorney General’s Office to say they want gas companies to pursue their drilling interests in New York.
“We have heard that the Governor is getting swamped with protests from the anti-drilling groups – and he’s being swayed by them. Gas companies are leaving New York to invest in Pennsylvania and West Virginia because of the uncertainty here. If you feel strongly then it would be to your benefit to contact the Governor,” the e-mail said.
As for the process to review DEC’s add-on to environmental regulations, Mike Bernhard, a member of the Chenango County Green Party, said he has no interest in it. He said the process “is being conducted to provide cover for the drive-thru permitting process established by recent bipartisan legislation.”
“As in the case of NYRI, public ‘participation’ is not the same as public decision-making. Why should decisions about our air quality and risks to our water supplies be made at the state level anyway, where Wall Street is in control? Decisions on large-scale corporate energy projects should be made not by unelected agencies, but by elected local governments, accountable to the voters,” Bernhard said.