DECISION DAY: Citing Health Risks, Cuomo Bans Hydraulic Fracturing In New York State

New York Governor Andrew Cuomo has banned hydraulic fracturing, or hydrofracking, statewide. The administration announced today that this method of extracting natural gas from shale beds underlying much of upstate New York could potentially contaminate the state’s air and water resources, and pose unacceptable risks to people.

Gov. Cuomo said that he deferred to his commissioners in reaching the decision.

“I cannot support high volume hydraulic fracturing in the great state of New York,” said Howard Zucker, the acting commissioner of health. Zucker added that he wouldn’t allow his own children to live near a fracking site. “Cumulative concerns” about fracking “give me reason to pause,” he noted at a year-end cabinet meeting held today in Albany.

Department of Environmental Conservation commissioner Joe Martens said that bans or restrictions already in place in the New York City watershed, or in local towns mean that “the prospects for [hydrofracking] development in New York State are uncertain at best.”

The decision ends years of speculation over whether New York would lift a moratorium on hydraulic fracturing. Before today’s announcement, Gov. Cuomo had been waiting on the Department of Health’s long-awaited study on the health impacts of hydraulic fracturing. The health review, which was one component of the State’s environmental impact analysis (known as a Supplemental Environmental Impact Statement, or SGEIS), is a health analysis of shale development and hydrofracking in New York State. Zucker said the health review involved 4,500 staff hours reviewing anecdotal reports and a stack of existing studies.

For further reading, see: http://www.nytimes.com/2014/12/18/nyregion/cuomo-to-ban-fracking-in-new-york-state-citing-health-risks.html?_r=0

Or: http://www.capitalnewyork.com/article/albany/2014/12/8558732/cuomo-concludes-fracking-too-risky-new-york

Or: http://www.health.ny.gov/press/releases/2014/2014-12-17_fracking_report.htm

Or to listen to today’s cabinet meeting: https://soundcloud.com/nygovcuomo/governor-cuomo-holds-cabinet-meeting

COMING SOON: Cuomo Says Fracking Health Study Results to Be Delivered By Year’s End; Possible Moratorium Decision Expected.

New York Governor Andrew Cuomo revealed in a radio interview on Monday that the Department of Health’s long-awaited study on the impacts of hydraulic fracturing for natural gas will be delivered by the end of this year. The health review, which is one component of the State’s environmental impact analysis (known as a Supplemental Environmental Impact Statement, or SGEIS), is a health analysis of shale development and hydrofracking in New York State. New York State has had a moratorium on hydrofracking since the SGEIS review was initiated in 2008. In 2012, New York’s Department of Environmental Conservation Commissioner Joseph Martens asked the Department of Health to assess the potential health impacts of hydraulic fracturing. In 2013, the Department of Health requested additional time for its review. Those study results are expected to be released in the next two weeks.

Gov. Cuomo added that his administration will decide whether hydraulic fracturing should be permitted in New York.Gov. According to reports, Cuomo’s top commissioners and advisers are set to meet today at the state Capitol. The subject of the meeting is unclear, but there is speculation that advisors are meeting to discuss his administration’s decision on whether to lift New York’s ban on hydraulic fracturing. According to one article, key players in the state’s hydrofracking review are expected to attend, including state Environmental Conservation Commissioner Martens and Acting Health Commissioner Howard Zucker.

For more reading see: http://www.13wham.com/news/features/top-stories/stories/cuomo-fracking-study-results-coming-soon-18498.shtml or http://www.democratandchronicle.com/story/news/local/2014/12/17/new-york-andrew-cuomo-fracking-casinos/20527181/

STANDING FIRM: US Energy Industry Well-Positioned to Ward Off OPEC Squeeze Play

OPEC’s recent decision not to curb oil production is widely seen as an attempt to dampen the US shale boom. Last week, the oil cartel announced that, despite rapidly falling oil prices worldwide, it would keep oil production at current levels. OPEC likely hopes that the low oil prices will eventually force U.S. producers—especially those engaged in expensive hydraulic fracturing or horizontal drilling—to throw in the towel. Some commentators speculate that those operators, particularly ones heavily leveraged or already teetering on the edge of bankruptcy, could cut production and jobs, and possibly spark worry in the financial markets.

OPEC has reason to be concerned about the competition. Oil producers in the Western Hemisphere are largely responsible for the supply increase that led to the price drop. According to one recent article, “the U.S. is producing the most crude oil in 30 years, and prices would need to get much worse before the shale boom dies off.” See  http://money.cnn.com/2014/12/02/investing/oil-fight-opec-us-shale-boom/

The larger drilling operators seem well positioned for now. The article cites a recent report by the International Energy Agency that shows that most producers in North Dakota’s Bakken shale formation, an area central to the shale boom, can remain profitable even if oil falls to $42 per barrel. Other industry insiders point to the resiliency of the US energy market. Per Magnus Nysveen of Rystad Energy is quoted as saying “[U.S. Shale producers] will drill as long as they have cash flow from their operations.”

DEAL STRUCK: Texas Gas Drillers Agree With New York to Disclose Financial and Environmental Risks

Two Texas-based natural gas drillers have signed agreements with New York Attorney General Eric Schneiderman to publicly disclose to investors the risks arising from their respective hydraulic fracturing operations. EOG Resources Inc. (EOG) and Anadarko Petroleum Corp. (APC) have agreed to post detailed information and analyses on the financial risks associated with their operations, including:

  • financial risks posed by the environmental impacts associated with fracking — such as effects on drinking water aquifers, as well as those arising from chemical use and handling, water use and wastewater handling and disposal, and air emissions – and detailed discussions of the companies’ efforts to minimize these environmental impacts;
  • financial risks posed by present and probable future regulation and legislation related to fracking, such as state or federal moratoriums, local bans or restrictive ordinances, or requirements for disclosure of chemicals used in fracking fluids; and
  • company strategies and actions for reducing, offsetting, limiting, or otherwise managing the financial effects of regulation, litigation, or environmental impacts related to fracking.

The disclosures, according to the AOG, will aid investors and the public in making better financial decisions about the matters that most impact the financial health of drilling companies. “By joining with my office to commit to greater public disclosure of the environmental and financial risks associated with their actions, these companies are setting a strong example for the rest of their industry,” Schneiderman said.

Although both companies operate in multiple states, including in Pennsylvania where the Marcellus Shale formation reaches well into New York State, neither company currently has operations in New York. This State has imposed a moratorium on hydraulic fracturing pending the completion of its ongoing environmental impact analysis (known as a Supplemental Environmental Impact Statement, or SGEIS).  Governor Cuomo will decide whether to lift the moratorium once the NYS Department of Health completes a health study and the SGEIS is published.

EOG and APC stated that, through online sources and SEC filings, they had already been providing information about drilling practices and risks. The agreements, however, go a step further in terms of the content offered and also aggregates the information in one online location.

The Agreement arises out of formal probe initiated by New York State under the Martin Act, a tool used by the State for the investigation and enforcement of securities laws. The Act authorizes the Attorney General’s office to access a business’ financial records. In 2011, the Attorney General’s office had issued subpoenas to both EOG and APC.

Further reading on the agreements can be found here: http://www.bloomberg.com/news/2014-10-03/anadarko-eog-strike-deal-with-new-york-ag-on-fracking.html

Or here: http://www.ag.ny.gov/press-release/ag-schneiderman-reaches-agreement-natural-gas-developers-increase-disclosure-fracking