The Promise of Fracking: Impact on New York

Underlying the debate over the promises and perils of fracking is an often-overlooked number: 1.35 trillion.

That’s the cubic feet of natural gas New Yorkers consumed last year, according to the federal Energy Information Association. New Yorkers use more than twice the volume of gas consumed by Connecticut and Massachusetts combined.

The economics and risks of leasing, drilling and fracking tend to headline the shale gas story. Yet the promise of fracking is as much about how gas is consumed as how it’s produced. As the top natural-gas-consuming state east of Louisiana, New York is a major player.

By enacting a ban on fracking earlier this year, the administration of New York Gov. Andrew Cuomo has shown zero tolerance for shale gas risks to the environment and health.

Yet New York’s appetite for cheap gas produced by the shale boom in Pennsylvania and Ohio is big and growing bigger — a jump of nearly 18 percent from 2009, according to figures from the federal EIA.

For New Yorkers looking for cheap energy, the gas boom in Pennsylvania has lived up to its promise.

This is the last story in a three-part series

Part One: The Environment — The shale gas juggernaut rolling into Pennsylvania came with assurances that fracking never polluted water sup- plies. An examination of the record shows pollution was obscured by regulatory breakdowns and lack of disclosure.

Part Two: Impact on New York —Consumption of Pennsylvania’s cheap fracked gas is surging in New York, where protests, pipelines and new natural gas facilities are part of the current landscape, and the future of a fracking ban is questionable.

The proposed Constitution Pipeline and upgrades to the existing Dominion Pipeline would carry Pennsylvania gas through Southern Tier routes to a distribution hub in Albany. From there, the gas would be shipped to New York City and major northeastern markets.

Those pipelines are two of many gas infrastructure projects taking shape in New York. Crestwood Midstream Partners LP, of Houston, is proposing to repurpose salt mines on the southwest shore of Seneca Lake to store 2.1 million barrels of liquid petroleum gas (LPG). The plan, coupled with a related proposal to expand existing natural gas storage in the salt mines just north of Watkins Glen, would turn the facility into a regional distribution hub.

Just up the shore from the Crestwood site, in Yates County, Atlas Holdings, of Connecticut, proposes to recommission a coal-burning, electric-generating plant with natural gas.

The projects, all pending regulatory approval, face opposition from a well-organized group of fossil fuel opponents who, having stopped fracking at New York’s borders, are shifting their focus to keep Pennsylvania’s glut of fracked gas out of New York.

Sandra Steingraber, an Ithaca College scholar and a high-profile activist and organizer in the Finger Lakes region, noted that one gas project feeds another: “Seneca Lake is located upstream from natural gas infrastructure projects throughout New York state, all of which threaten to keep us tied to a ruinous, fossil fuel-dependent past.”

As production surges and prices fall in Pennsylvania, the profitability of drilling hinges on finding ways to get gas to new markets.

Cabot Oil & Gas, a Texas company that drills gas wells in Susquehanna County, has cut its $1 billion capital investment in the region — including jobs — by half, said Cabot spokesman George Stark.

“We are victims of our own success,” Stark said, adding that he expected drilling to pick up again with the laying of new pipelines in New York. “This isn’t a bust. The pace of infrastructure development has not kept pace with production,” he said.

Findings

• Pennsylvania Labor Department inflated figures to make shale gas industry job outlook stronger than it is.
• Industry is generating millions of dollars in “impact fees” to small-town economies to buy good will near drilling sites in lieu of a more costly state tax.
• Fracking has brought both a rise in crime and influx of money to help rural poverty and public safety.

For now, the discussion of shale gas development in New York has a lot to do with pipelines, but the status of the state’s ban on fracking is still a live issue.

The state Department of Environmental Conservation is reviewing a permit request from a group of landowners in Tioga County to frack a well with gelled propane in the Town of Barton. The technology is not specifically outlined in the state’s ban, which applies to water-based solutions.

If the state allows the Barton wells, it would be under policy developed in 1992 for conventional wells called the Generic Environmental Impact Statement (GEIS). In the absence of regulations, the state has traditionally used guidelines outlined in the GEIS that allow regulators discretion in granting and enforcing permits.

Applying a 23-year-old policy to today’s shale gas development flags the overall soundness of the state’s policy, according to some activists.

“The record shows that the state was woefully unequipped to handle the oil and gas industry even before anybody even began talking about shale gas,” said Walter Hang, an anti-fracking activist and community organizer.

Hang, who owns Toxic Targeting, an environmental data firm in Ithaca, cites examples of spills, methane leaks and water pollution associated with conventional wells in western New York that were never fully analyzed or factored into any of the state’s reviews.

“Things have not really changed,” he said. “The fracking ban will not do what everybody thinks it will.”

OUR VIEW: If NY permits fracking, have clear rules and taxes ready

MORE: Impact fees buy goodwill in drilling communities

The state is considering the Tioga landowners’ application as something different from the type of fracking — high-volume hydraulic fracturing — that spurred the shale boom in Pennsylvania and throughout the country.

In New York, high-volume fracking was the subject of a seven-year review that recently produced the Supplemental Generic Environmental Impact Statement (SGEIS) — an amendment to the 1992 GEIS.

The Snyder well application could represent a workaround of the fracking ban. But it raises a larger question: With changing technology, shifting politics, more money on the table, new markets and surging demand, could a new administration rescind the ban altogether?

A “findings statement,” issued with the SGEIS in June, is the lynchpin of the ban. The statement is an interpretation of environmental and public health risks based on the most current information.

In the statement, the negative impacts of shale gas development, such as traffic and environmental degradation, are weighed against the economic returns. A primary justification of the ban, however, is “current uncertainty” about the science of fracking and its impacts on public health.

Joseph Martens, who was DEC commissioner at the time the statement was released, said a state ban could be lifted with changing technology and more complete understanding of fracking’s impacts.

Deborah Goldberg, a senior council for EarthJustice, a national environmental advocacy firm, called the state’s existing framework an “ad hoc system that is ancient, designed for conventional wells and updated permit by permit by special consideration.” She added, “we would sue in a minute if they tried to proceed under this system.”

In short, the fracking fight would begin anew.

Landowners in favor of shale gas development are ready to take up the fight.

Dewey Decker, Town of Sanford supervisor and second-generation farmer, leased 1,150 acres in the Town of Sanford to XTO Energy for $2,400 an acre in 2008, when the potential of the Marcellus Shale in New York was drawing international attention. XTO was later bought by Exxon Mobil, while the company’s leases in eastern Broome County have been extended indefinitely.

Decker, who was $2.76 million richer after signing the lease and a firm believer in domestic energy production of all kinds, says it’s just a matter of time before the fracking ban is lifted. When it is, he is ready for gas wells on his property.

The seven-year review that produced the state’s supplemental impact statement represents “the most sophisticated, advanced regulations in the country,” Decker said. “We’ve done a lot of homework. How much can you study the same issue?”

For now, at least, the status of the ban is not a pressing issue in Albany.

“We don’t have the public support or interest (in fracking),” said Assemblywoman Donna Lupardo, who sat on an advisory board to Cuomo considering shale gas development policy.

“Not one poll shows us that (fracking) is a path we want to go down,” she said. “If somebody runs on this issue, it will not be a positive outcome.”

New York’s energy policy represents an odd push-pull of demand and resistance at the core of two different energy visions.

Just as state officials consider permits for pipelines and storage projects to move fracked gas to New York markets and beyond, they also are advocating Reforming Energy Vision — a plan unveiled earlier this year by the New York Public Service Commission to break fossil fuel dependency by rebuilding the energy grid from the bottom up.

Though natural gas for home heating has an important place in the state’s broader energy plan, fossil-fuel energy plants connected to the fracking fields of Pennsylvania would eventually disappear under this vision.

Rather than depend on fossil-fuel plants, the vision supports fast-tracking a decentralized network of renewable energy sources, featuring wind and solar.

This comes with a list of ambitious goals: by 2030, reduce greenhouse emissions by 40 percent from 1990 levels, and generate 50 percent of the state’s energy from renewable sources.

Drawing on a $5.3 billion Clean Energy Fund, New York communities can claim $40 million in grants to build local energy systems, called microgrids. Also in the plan: $13 million to finance solar projects in low- and moderate-income areas, improvements to cut energy use in all state buildings and a $1 billion “Green Bank” for public- and private-sector financing of green-energy projects.

Public hearings throughout the state are bringing unions, customers, renewable-energy advocates, public utilities, energy companies and other stakeholders to the table.

Anthony Belsito, an attorney with the Public Service Commission, said the plan was “a big push from the governor on down for greenhouse gas reduction.”

Belsito was speaking before more than 100 people at a hearing recently at Binghamton City Hall. Some held placards that read “No Need For More Gas.” Others, including unionized utility workers, held signs that read “New York Power. New York Jobs.”

“We have a lot of ideas, but we don’t have all the answers,” Commissioner Gregg Sayre told the group.

Critical details, yet to be worked out, involve how and how much stakeholders pay into the system. “We don’t have a sense of what that looks like now,” said Darren Suarez, director of government affairs for the Business Council of New York State, who was preparing to testify at a similar hearing in Syracuse the following night. “What some see as an investment, others see as a cost.”

At one time, renewable-energy development was all about a shortage of domestic energy. That discussion has changed since fracking opened vast new domestic petroleum horizons, including the Marcellus Shale and Utica shales underlying much of the northeast.

Now the discussion is less about running out of fossil fuel than an attempt to find a better plan for the future.

The Reforming Energy Vision project will establish new markets by saving electric infrastructure costs, reducing pollution and providing “local empowerment and resilience” in the system, said Karl R. Rábago, executive director of the Energy and Climate Center at Pace University, in a recent interview.

“The Stone Age didn’t end because we ran out of stones,” he added. “Technological shifts happen for a number of reasons, not just scarcity.”

When Cornell University’s 30-megawatt natural gas-burning plant went online in 2009, it phased out the annual burning of some 65,000 tons of coal, which comes with emissions of toxic mercury, particulates and damage from mountaintop removal in Appalachian back country.

At the time, natural gas was widely touted as a “bridge fuel,” cleaner than coal and a step toward zero emissions.

Cornell’s $82 million plant was hailed by then-President David Skorton as a step in meeting a goal of no net greenhouse gas emissions by 2050. At the ribbon-cutting ceremony, Bruce Nilles, director of the Sierra Club’s Beyond Coal Campaign, said the national environmental nonprofit would “be holding up Cornell as a showcase” for clean energy.

The plant represented fulfillment of fracking’s promise for Cornell and other plants that discontinued coal. As a result, statewide natural gas generation for electricity has nearly doubled from 2003 to 2013, according to figures from the federal Energy Information Administration.

But after witnessing the impacts from fracking over seven years, many environmental campaigns are rejecting the idea that natural gas is an acceptable replacement of coal

Some 50 miles from Cornell University, more than 150 people packed the fire hall in the Village of Dresden in early November for state Public Service Commission hearings. For three hours, the majority spoke out against an application by Greenidge Generation LLC and Greenidge Pipeline LLC to repurpose the former coal plant with natural gas and build an adjoining natural gas pipeline.

This served as a stark contrast to the ribbon-cutting welcome that the Cornell plant received just prior to the acceleration of New York’s anti-fracking movement.

In six years of witnessing the environmental impacts of fracking — a brief period on the scale of long-term energy policy — the Sierra Club had gone from a shale gas backer to one of its strongest critics, reflecting a trend by environmental groups to reject the promise of fracking.

“While fracked gas was once thought of as a bridge fuel, overwhelming evidence shows it is actually a gangplank to climate disaster and a threat to clean and safe drinking water,” Sierra Club Executive Director Michael Brune said in a recent email.

The turnaround is due to a growing awareness of the downside of shale gas development’s impact on water, both from drilling and waste disposal. But it also recognizes a challenge to the long-held belief that natural gas is less likely to accelerate climate change than other fossil fuels. Although it burns cleaner than coal and does not last in the environment like carbon, methane is a potent greenhouse gas.

Brune hailed the state’s fracking ban, the energy vision goals and Gov. Cuomo’s recent rejection of a proposed terminal for liquefied natural gas off the Long Island coast as “the kind of leadership we need to move the Empire State and all of America beyond fossil fuels and toward … an economy powered by 100 percent clean, renewable energy like wind and solar.”

Industry supporters argue that vision is unattainable, naive and economically backward.

New York’s natural gas infrastructure build-out “is not just some boardroom-developed plan by the industry,” said Steve Everley, senior adviser for Energy In Depth, an industry public-relations firm in Washington, D.C. “We’re seeing plans for new pipelines because consumers in the Northeast are demanding natural gas to heat their homes and to keep the lights on.”

The shift of the anti-fracking fight from gas production to infrastructure build-out, according to Everley, is sustained by “a small but loud group of ideological activists … who want to pretend that consumers will be just fine without any new pipelines.”

Regardless of the underlying dynamics, the trend for gas consumption is not likely to reverse anytime soon.

While the New York State Energy Plan, updated this year, reflects the energy vision’s goals to cut fossil fuel emissions and launch an aggressive expansion of renewable energy, it also encourages expansion of natural gas infrastructure to replace heating oil, which is dirty, expensive and a significant heating source in urban areas downstate and elsewhere.

Nuclear power –— which is tallied as renewable energy and generates about a third of the state’s electricity — is a weighty factor in New York’s energy equation. As gas prices fall, other forms of energy, including nuclear, lose ground competitively.

Cost plays a big role. In 2014, New York had the fourth-highest average electricity prices in the United States, according to the federal Energy Information Agency.

With recent reports that the Cuomo administration plans to generate half of New York’s electricity from renewable sources by 2030 as a mandate rather than a goal, more public hearings are likely in the offing over how that comes to pass and who pays.