American Oil and Gas Reporter - October 2015 - 109

stimulated more than 1,000 wells successfully. That is typical New York: They
want it studied more."
According to media sources, Calgarybased GasFrac Energy Services, which
completed those 1,000 projects, filed for
bankruptcy in January. Its technology
has been purchased by Step Energy Services, another Canadian company.
The Tioga County group is leasing 53
acres to Tioga Energy Partners, news reports indicate. The company says it plans
to drill horizontally into the Marcellus
Shale and complete the well with propane
gel. DEC is reviewing the permit.
The state regulations that prohibit
high-volume hydraulic fracturing don't
say anything about gelled propane, so
Gill says he doesn't see any legal reasons
the project would not receive a permit.
"The platform from which the opposition
groups launched their attacks always included how much water those frac jobs
needed and how much of an impact trucking
the water would cause," he says. "But
using propane instead will not appease
them. I cannot imagine why DEC would
not approve this project, but knowing New
York, doing so would not be a surprise."
Operating In New York
The New York Legislature's 2015
session ended without any major impacts
on oil and gas operators, Gill says. He
terms most of the proposals introduced
"one-house bills" that failed to advance
to the other chamber.

Assemblyman Steve Englebright, DEast Setauket, introduced two bills that
IOGA NY monitored until they stalled:
* AB 5895 would have established a
natural gas production contamination
damage recovery and remediation fund.
* AB 6859 sought to classify all oil
and gas wastes as hazardous, and require
them to be treated as such.
Gill says IOGA NY opposed the first
bill as unnecessary because New York
already requires operators to post bonds
to cover such liabilities, and submitted a
memo in opposition to the second.
Because the state's conventional oil
and gas output historically has been so
small, Gill says most legislators fail to
appreciate the economic opportunities
offered by developing the Marcellus and
Utica shale.
"Any downturn in New York's conventional industry is not even a blip on
the state's budget radar," he says. "What
legislators fail to see is the lost opportunities for unconventional revenues. That
is something the association has preached
for six years now, and it still doesn't
seem to matter to legislators. The mindset
should be that we could bring in a few
billion dollars in economic impacts, along
with hundreds of millions of dollars in
tax revenues. But that does not resonate."
According to media sources, New
York now produces 22 billion cubic feet
a year of natural gas, down by half from
2009. In contrast, Pennsylvania's gas
output went from 200 Bcf in 2008 to 3.8

trillion cubic feet six years later. Some
studies indicate New York could hold as
much as 100 trillion cubic feet of gas in
its Marcellus play alone.
New York accounts for 5 percent of
total U.S. gas consumption, but government statistics say it produces less than 1
percent. Natural gas is a key component
in the state's power sector, supplying
1,300 trillion Btu annually. Natural gasfired facilities provide 60 percent of the
state's total electric generation capacity,
up from 2008's 44 percent. In those six
years, New York's reliance on Pennsylvania gas has increased from 226 Bcf to
1.2 Tcf, media sources estimate.
The refusal to develop domestic energy
sources is hurting New York consumers,
one news article points out. The state's
residential electricity prices hit 20.05
cents a kilowatt hour in 2014, the highest
rate in the continental United States and
60 percent above the national average.
Gill says wind and solar facilities are
becoming more popular in New York,
and Governor Andrew Cuomo is showing
strong support for green energy.
"His Renewable Energy Vision program certainly puts the emphasis on renewables," Gill says. "Elon Musk's SolarCity is setting up a $400 million manufacturing plant in Buffalo. There is no
question this state is increasingly pushing
toward renewable power sources. Yet,
New York state utilizes a disproportionate
amount of energy and does not contribute
to the nation's supply."
r

N.Y. Regulatory Environment Improves
HAMBURG, N.Y.-Over the past few
years, the New York Department of Environmental Conservation has been less
willing to communicate with the state's
oil and natural gas operators. Bradley Gill,
executive director of the Independent Oil
& Gas Association of New York, says
that relationship has improved lately.
"Now, I think the industry has gotten
DEC's attention, and it is more willing
to talk with operators and the association,
and at least share with us what the regulations will mean to operators," Gill says,
speaking in advance of IOGA NY's
annual convention, to be held Oct. 21-22
at the Buffalo Marriott Niagara in Amherst,
N.Y. "I think in some ways, DEC will be
more reasonable in its regulations."
Gill says Theodore Loukides, chief of
DEC's compliance and enforcement section, will provide an update on the state's
regulatory environment at IOGA NY's
annual meeting. Loukides also is set to

talk about permitting and production
trends in the state, as well as future DEC
activities.
One industry issue Gill predicts will
be discussed is regulating petroleum bulk
storage tanks. "IOGA NY is interacting
with DEC, trying to better understand
what is expected of operators," he says.
In addition to offering a webinar on
the proposed regulations for western New
York operators, he reports DEC officials
and members of the association met at
the end of September.
According to DEC, it is proposing to
revise sections of state law regulating
major oil storage facilities. Under the
changes, DEC would share oversight responsibility with the Department of Transportation, change licensing procedures,
and strengthen monitoring, maintenance
and oil-leak equipment requirements.
"I am hoping to see some headway
regarding the cost of complying with

tank regulations," Gill says.
He adds, "Another issue is the definition of oil storage tanks. DEC is calling
them storage tanks, but industry contends
these are process or flow-through tanks.
That makes a big difference in regulations."
As one example of the possible impacts,
Gill says DEC would require storage tanks
to have mechanical protection to shut off
liquids in the event of an overflow.
"When IOGA NY asked, department
officials admitted there had not been a
widespread problem with spills and overflows," he says. "The association contends
that with $40 oil and some stripper wells
producing only a couple quarts a day,
the industry cannot afford to be installing
costly, or even reasonably priced, overflow
protection on these tank batteries."
Produce Or Plug
Another regulatory issue on IOGA

OCTOBER 2015 109

American Oil and Gas Reporter - October 2015

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