New York City urged the state to ban drilling for natural gas in the city's 2000 square mile watershed. NYC claims the practice of hydraulic fracturing is dangerous to unfiltered drinking water.
The city's top environmental official, Steven Lawitts, called current hydraulic fracturing techniques unacceptable threats to the unfiltered water supply for 9 million New Yorkers. Hydraulic fracturing involves blasting through shale rock with a combination of sand, water and a proprietary list of chemicals used to slpit shale formations and free trapped gas.
Recently residents and cities where shale drilling has occurred claim the fracturing poisoned drinking water and made residents sick. Shale drillers consider the procedure safe since it does not occur in the water table but in the dry shale formations.
The Marcellus Shale extends beneath New York State, Pennsylvania, Ohio and West Virginia. Proponents claim the shale could supply U.S. demand for nearly a decade although that has not been proven.
A spokesman for Mayor Michael Bloomberg said, "based on all the facts, the risks are too great and drilling simply cannot be permitted in the watershed."
Because of the population of New York City this sudden outburst of opposition against fracking pretty much assures it won't happen in the New York area and possibly other areas, which will use the New York opposition as a model for their cities.
The governor of New York State is facing a $3.2 billion budget deficit and shale gas drilling in New York would help erase that deficit. The governor claims he is still listening to all sides of the debate. Obviously we know which side of the debate he will be listening to the hardest.
Most people don't realize the size of the debate surrounding the new hydraulic fracturing technologies. The Exxon (XOM) acquisition of (XTO) has a clause that will allow Exxon to walk if the U.S. Congress bans of severely regulates the process used to extract gas from shale rock.
Chesapeake (CHK) has already announced it will not seek to drill in the New York watershed. That watershed lies about 90 miles north of New York City.
Federal lawmakers are already considering a "Frack Act" that would require gas companies to disclose the chemicals they use in the fracturing. Gas drillers do not want to disclose their proprietary list of chemicals because it is a secret mix that causes the rocks to fracture. Each fracture company uses their own blend that works best for them. With New York's entry into the fray on the side of the anti-frac crowd that is an 800 pound gorilla guaranteeing the bill will not be buried in committee. We can expect a long list of residents and cities testifying that their water was ruined and they became sick because of the chemicals.
I can't predict how this battle will turn out because it involves both the proverbial irresistible force of billions in tax revenues from drilling and production and the immovable object in the form of the U.S. Congress. If a Fract Act is passed that prevents or places severe restrictions on shale gas fracture methods you can expect gas prices to soar and stock prices of gas companies to plummet.