Hydrofracking Runs Up Against Home Rule and Falling Gas Prices
Submitted by Elizabeth Mooney on Thu, 2012-02-23 16:29.
In the first ruling of its kind in New York, a State Supreme Court Justice ruled that Dryden in Tompkins County can use its land use regulation power to ban oil and natural gas production within town limits.
In September, a month after the Dryden Town Board adopted a drilling ban, Anschutz Exploration Corporation, a Colorado driller with 22,200 acres under lease in the town, filed a lawsuit arguing that the town's authority did not extend to regulating or prohibiting gas drilling, The New York Times reported.
Lawyers representing Anschutz said the company might appeal or instead pursue a "takings" claim against the town - based on the principle that private property should not be taken without just compensation. The company had spent more than $5 million securing land leases from Dryden property owners and could claim the lost value of its assets, including any profits it would have derived from exploiting the mineral rights under the land, he said.
Meanwhile, after nearly four years of regulatory review functioning as a de facto moratorium, New York's portion of the Marcellus remains untapped by high-volume hydraulic fracturing. Now, natural-gas giants like Chesapeake Energy and Consol Energy are pulling back on shale-gas drilling in other states and focusing on so-called "wet gas" not found in New York.
It's largely because natural-gas prices have dropped to lows not seen since 2002. The price plunge is caused by a glut of natural gas in the market, in part because of a steady increase in the amount of shale gas produced in other states. That's good news for consumers, but it has forced some gas companies to shift their strategy in order to turn a profit, The Poughkeepsie Journal reported.
As the Journal said: "It all raises the question: Has New York missed the gas-drilling boom? Most experts say no, but several said low natural-gas prices could have an effect on the pace drillers set in New York should the state allow high-volume hydrofracking."
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