As Pennsylvania and Ohio Shale Production Flourishes, New York Landowners Beg for Federal Intervention
There was great news in the northeast this week, as the Energy Information Administration (EIA) announced that Ohio and Pennsylvania increased their natural gas production in 2016 by about 1.2 billion cubic feet of natural gas per day (bcf/d) each above 2015 production levels. But not every state in the region with the potential for shale development is flourishing, as was evident by a letter recently sent out to President Trump from the Joint Landowners Coalition of New York (JLNCY).
The JLCNY represents 70,000 landowners with more than one million acres available for oil and gas development in New York. And New York, of course, has been under a de facto ban on high volume hydraulic fracturing, or fracking, for over a decade, with an official ban on the practice confirmed in late 2014. So it’s no wonder that JLCNY president Dan Fitzsimmons’ letter explained,
“We believe the Governor has illegally taken our private property rights for his political gain.
“Governor Cuomo’s decision was completely at odds with earlier findings from state and federal environmental regulators that hydraulic fracturing has been used safely for decades. In fact, Governor Cuomo’s decision overturned two earlier findings from New York state environmental regulators, in 2009 and 2011, that hydraulic fracturing in the Marcellus Shale could be conducted safely under stringent regulations.”
Representatives from Baker Hostetler, LLP wrote a guest post for EID in 2015 that explained the enormous economic growth that would have occurred in the Southern Tier if fracking were allowed, using incredibly conservative figures. In it, they explained,
“The US Energy information Administration conservatively estimates that 144 Bcf of technically recoverable reserves of natural gas exist in New York State. Even if only 10 percent of the technically recoverable gas were produced over the next 15 years, and even if the price at the wellhead is only $4/MMbtu, that would still represent a staggering $57 billion in gross value. Of that, even if the farmers’ and rural landowners share averaged only one-eighth, that’s still more than $7 billion in lost revenue pulled directly from the pockets of farmers and rural landowners in New York’s southern tier. The lost tax revenue from extraction taxes at the County and School tax level and income tax at the State level are equally significant lost revenues.” (emphasis added)
In Ohio, where there is a similar ad valorem tax to New York, a recent EID report found that six counties with shale development have already received $43.7 million from this one tax based on production through 2013. EID conservatively forecasts an additional $200-$250 million more revenue from this tax by 2026, based on the fact that production has increased significantly since 2013.
What’s more is in addition to this direct loss of revenue that landowners call a taking of property rights, the state is now delaying and denying needed pipeline infrastructure to move the abundance of gas in states like Ohio and Pennsylvania to markets in New York and New England. The U.S. Chamber’s Institute for 21st Energy released a report earlier this week that showed just how devastating decisions such as these could be on the region. Yet, as Fitzsimmons explains in the JLCNY’s letter, this is exactly what Governor Cuomo’s decisions are leading to. Thus far he has denied needed infrastructure to “supply natural gas to New York communities that currently rely on propane and oil” and “impeded interstate commerce by obstructing the transportation of natural gas from Pennsylvania to New England states.”
“New York State’s obstruction of FERC approved projects is in direct conflict with the federal government’s need to satisfy the public need for energy, both in our state and in neighboring states. Moreover, our Governor’s anti-fossil fuel campaign is creating an energy crisis in our region. We believe the federal government must assert its rights over federally approved pipeline projects.”
He goes on to urge President Trump to intervene in the state, explaining:
“We are home to the Marcellus and Utica shales, the largest natural gas deposits in the world. But, they remain untapped in New York because of the political aspirations of our Governor. The nation is on a path towards energy independence but our country’s progress is threatened by New York’s conflicting agenda.”
As more research comes out showing the benefits of shale development and the country’s use of natural gas continues to increase, it begs the question: How can states like New York continue to impede needed infrastructure and prevent landowners and consumers alike from having access to these resources?