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Fracking in New York? Not for another year, if ever

By Edward McAllister

NEW YORK (Reuters) - The fracking debate in New York state is hitting new heights as regulators delay a final decision on the controversial natural gas production method, but it looks increasingly clear that it will be a year - if ever - before drilling begins again.

Governor Andrew Cuomo missed a Wednesday deadline for completing a report on the environmental impact of hydraulic fracturing, better known as fracking, that was to form the basis for new drilling rules.

As a result, a now-four year moratorium on shale gas drilling in the Empire State could extend into 2014 forcing companies such as Chesapeake Energy and a host of smaller independents to sit on their idle land leases and wait.

Over the last decade, U.S. energy companies have advanced hydraulic fracturing techniques, unlocking vast quantities of natural gas and oil trapped in shale rock. But drilling in New York's portion of the Marcellus shale deposit, one of the biggest in the country, has been halted since 2008 amid concerns that fracking, which involves pumping chemical-laced water and sand deep below the surface, can contaminate water supplies.

Fracking has become a hugely divisive issue in New York where communities are weighing the economic benefits of allowing energy development against the environmental concerns.

However, even if the drilling is allowed to proceed in the coming months, legal battles could hold up well permits, potentially delaying energy production for another year, according to lawyers representing both sides.

"I don't think we'll see a drill bit in the ground until early 2014," said Tom West, an attorney at the West Firm, which represents oil and gas companies in the state. "The outcome remains uncertain, as it has done for the last four and a half years, and we are very disappointed," he said of Wednesday's missed deadline.

The delay has pitched an increasingly vocal environmental lobby, many of whom want no more wells drilled in the New York, against energy companies invested in the state and frustrated by the pause. Both sides point to neighboring Pennsylvania, also home to the Marcellus, which has experienced a drilling boom and attracted huge investment over the past five years, but which has also experienced a number of drilling-related accidents.

New York's environmental impact statement was held back this week after the Department of Health requested more time to complete a parallel health impact study that the state wants completed before any decision on drilling is taken.

The decision to delay, announced by the Department of Environmental Conservation on Tuesday, prompted cheers from the celebrity-studded environmental lobby, including New York state resident and anti fracking activist Yoko Ono, who said "We love you, Governor," in a public email.

But behind the scenes, both sides are bracing for legal entanglements.

The Joint Landowners Coalition, a pro-fracking group, is planning to sue the New York Department of Environmental Conservation after Wednesday's deadline was missed, on the grounds that delaying drilling was a "de facto taking of property rights," according to the group's attorney Scott Kurkoski.

And if regulations are written up and drilling is allowed to go ahead, experts expect anti-fracking groups to also jump in.

"The courts will get a lot of lawsuits and people are going to want to intervene on each side," said Kate Sinding, an attorney with the Natural Resources Defense Council in New York.

In the meantime, stays on drilling permits are likely, some attorneys said. And even if the state passes the drilling permits, more than 150 New York cities and towns have their own fracking bans, a fact which is already prompting lawsuits.

"This could be tied up in the courts for well over a year. I think it is likely that it will be 2014 before we see any permits," Sinding said.

(Reporting By Edward McAllister; Editing by Martin Golan)

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