BUFFALO – Norse Energy Corp. informed its lease holders late last week that if a resolution barring hydraulic fracturing drilling permits until May 2011 becomes state law, it would suspend their lease terms for the period of the moratorium and tack on the additional time at the end of their terms.
“If S8129 becomes law, it will likely become an event of ‘force majeure’ tolling the lease terms,” wrote Executive Vice President Dennis Holbrook in a letter to several thousand property owners with whom the company has negotiated leases.
The news was no doubt unwelcome by many local property owners who in many cases are dairy farmers already long suffering from poor economic conditions and holding out hope that the natural gas discovered beneath their land will help them meet expenses.
The hyrdrofracking resolution was passed overwhelmingly in the New York State Senate earlier this month and could be taken up by the Assembly after state lawmakers return from summer recess. If it does, and Governor David Paterson signs the moratorium, it would effectively shut down nearly all oil and gas drilling activity throughout the state.
The proposed action comes before much anticipated revisions to New York State Department of Environmental Conservation law governing horizontal hydrofracking. The technique employs large quantities of pressurized water to release natural gas from shale formations such as the Marcellus and the Utica, and has been highly scrutinized by those who fear water, ground and air contamination.
Holbrook wrote that the NYSDEC , which has been drafting the new drilling rules for more than two years, has “a stellar record” for overseeing the oil and gas industry in New York:
“Rather than deferring to the expertise of the NYSDEC on such a scientific matter ... the Senate recently focused on concerns expressed with drilling activities outside of the state and ignored the strong record of oversight by the NYSDEC, whose expertise has been instrumental in effectively protecting our environment for decades.”
Holbrook was referring to reported accidents as some drill sites in Pennsylvania where large scale hydraulic fracturing in the Marcellus Shale has been underway since 2008.
Norse has been one of the most active natural gas exploration and production companies operating in New York State over the past 15 years. The company has paid millions of dollars to local communities as real property taxes and taxes on production.
Whether the Assembly takes up the resolution in mid-September could be a matter of politics. Some Democrats, concerned about the opposition, might prefer to wait until after the election in November.
“There are some marginal Democrats who don’t want it to come up. They want to look anti-gas, but don’t want to oppose it and lose the election,” said Brian Conover, the president of the Central New York Landowners Association, which represents the largest group of property owners in the state who are hoping to lease.
Meanwhile, an Environmental Protection Agency meeting planned in Binghamton and later canceled due to security issues, has yet to be rescheduled. The EPS is conducting hearing to learn the public’s opinion on whether hydraulic fracturing should fall until the federal government’s Safe Drinking Water Act.