THE LAST CHAPTER (or BLOG): What’s the Use?

As New York Gov. Andrew Cuomo’s decision to ban hydraulic fracturing statewide reverberates across the nation, it seems appropriate to reflect on the state of natural gas drilling in New York and elsewhere. What’s next for energy exploration here? Does New York’s stance mirror the national picture?

Although the answers may vary depending upon your perspective, one thing is clear: hydraulic fracturing is dead in New York State. And it will remain so for at least the near future.

Readers should not be surprised at the Governor’s decision. Let’s consider the political and legal context within which it was made:

  • Vocal anti-fracking protesters met Gov. Cuomo at nearly every public appearance in 2014.
  • New York City, the hub of Gov. Cuomo’s political and financial support, mounted a strong and well-funded anti-fracking campaign focused on the protection of the City’s watershed.
  • Since 2011, over 120 communities across New York State have voted to ban, limit, or delay hydrofracking within town limits.
  • Legal challenges to those restrictions proved expensive and unsuccessful. For example, a gas driller sued the Town of Dryden and lost on the grounds that the Town’s Home Rule authority permitted it to regulate land use within town limits.
  • The New York Court of Appeals affirmed the Dryden decision, drawing a (very) fine distinction between the regulation of land use versus the regulation of the oil and gas industries to uphold Dryden’s ban.
  • New York Attorney General Eric Schneiderman recently used the Martin Act (securities-related legislation) to pressure out-of-state natural gas drillers to agree to disclose to investors the risks arising from their respective hydraulic fracturing operations. The agreement signaled to the energy industry that New York would firmly regulate drilling activities within its borders.

New York State wasn’t having any part of it. Hydrofracking didn’t stand a chance. The picture looks a bit different, however, on the national front.

The United States is now the largest natural-gas producer in the world. America’s so-called “shale boom” has had far-reaching implications for energy markets worldwide. The US, along with other oil and gas producers in the Western Hemisphere, is largely responsible for the supply increase that led to the worldwide price drop in oil. The price drop has stimulated many sectors of the economy, especially since higher oil prices had already been factored into private, public, and military budget forecasts.

As a further result of the shale boom, the US has strengthened her position on the world stage. Our energy supply is no longer subject to the political instability that plagues the Mideast. We’ve leveled the playing field with OPEC. Our non-oil producing allies have also benefited economically from the drop in prices, which ultimately works to our benefit, too. Unlike Gov. Cuomo, President Obama supports hydraulic fracturing, and I anticipate that we’ll see the adoption of national regulatory standards modeled (ironically) after New York’s stringent regulations. Hydraulic fracturing has a future on the national front.

The focus of this blog has always been gas leasing in New York. Without the political will to support hydraulic fracturing in New York, there remains little to say (or write). So, for now, this will be our last blog. I am grateful for your support and feedback, and look forward to serving you in the future.