Thursday, December 18, 2014

Cuomo Finally Decides to Ban Fracking in NY

The administration of New York governor Andrew Cuomo announced yesterday that the state's temporary moratorium on hydraulic fracturing implemented in 2008 would become permanent.  This decision makes the Marcellus Shale that underlies New York inaccessible to exploration and production.

The state Department of Environmental Conservation issued its legally binding recommendation based on the recommendation of the state's acting state health commissioner, a medical doctor.  The decision was made on the grounds that the health impacts of fracking are unknown, but in reality, it was a calculated political decision by Cuomo who has been conspicuously absent from the debate.

It also ended up being an economic decision.  Given the length of time the temporary moratorium was in place, a number of municipalities across the state outlawed fracking within their jurisdictions making approximately 63% of the area prospective for the Marcellus off limits.  This period of inaction on the topic essentially sealed its economic fate.

While I'm pro-gas, I'm also pro-Haynesville Shale.  From that perspective, I'm not shedding a lot of tears that New York has taken a chunk of productive land off the table.  Drilling in the Marcellus Shale has boosted natural gas production to new high levels and has been flooding the gas market.  The Marcellus formation is generally cheaper to drill than the Haynesville because it is shallower, among other advantages.  So, selfishly, I'm OK with the decision not to open up additional Marcellus acreage.  Also, the decision was an administrative action and not a law or constitutional amendment that is carved in stone, and as we all know politics shift as time passes, and if sentiments change over time, so will the regulations.

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