Hydraulic fracturing will come to Western New York when the state moratorium on it is lifted, according to lawyer Mary Hajdu of Burgett & Robbins of Jamestown.
Hajdu spoke at the Chautauqua County Chamber of Commerce's annual meeting at Shorewood Country Club in Dunkirk about hydraulic fracturing, a method of extracting natural gas which has become controversial due to reports of contaminated water, gas explosions and seismic activity in other states where the method is allowed. The state Department of Environmental Conservation, along with Gov. Andrew Cuomo and others, are working on regulations to allow fracking in the state with regulations Hajdu described as "possibly the toughest in the nation."
She began her talk, titled "Opportunities in the Marcellus/Utica Shale," explaining her role as a lawyer representing landowners.
"We level the playing field between the landowners and the (gas drilling) companies," she said, by putting landowners together in a coalition to negotiate terms of leases favorable to landowners. Among negotiated terms in lease contracts, she said, "The burden is on the (gas drilling) company. If there is a change in the water, it's assumed it's the driller('s fault), and it's their responsibility to provide a permanent source of clean water to the landowner."
She also said landowners would have the right to audit a company's books to know if royalties paid were consistent with extracted amounts of gas.
Hajdu said her firm has also partnered with Morascyzk & Polochak of Pittsburgh, which she explains works strictly with landowners engaging in gas leases.
"That gives you an idea of how big this is," she said.
Hajdu said a single drilling pad requires 160 acres of land, so landowners coalitions are important, but not essential for all to agree to enter into leases with a drilling company. Hajdu explained a bill developed by former Assemblyman Bill Parment, D-North Harmony, only requires 60 percent of landowners in a potential lease to agree to allow drilling, which she called "compulsory integration" for all landowners.
"Holdouts cannot stop it," she said.
She said if 60 percent of landowners in a given potential lease site of 160 acres or more agree, drilling will move forward. Willing lease owners will receive 18.5 percent of gross royalties in addition to upfront money, but holdouts will receive no money up front and only 12 percent of net royalties.
The leases, she explained, are not like old natural gas drilling leases common to the area. Older vertical wells, she said, were leased to companies in a manner that included all land under the landowner's property "extending all the way to the center of the Earth." New leases for the Marcellus and Utica shales would give rights to the company only for the named layer of interest. She explained old vertical drilling lease contracts which extend through all layers limit landowners from allowing another company to begin fracking on the same leased land.
The Utica Shale, Hajdu said, is likely a more lucrative shale layer in this area than the Marcellus Shale, which is only about 50 feet thick in the region.
Hajdu said the regulations New York is developing may prevent problems found in other states. She explained the state will require 10 different layers of casing around each well bore, fracking chemicals must be disclosed, surface ponds for fracking fluid will not be allowed, and wastewater must be reused or treated, and cannot be disposed in rivers or lakes as has happened in other states without regulations. She also said certain minimum drilling distances will be required away from surface water bodies as well as underground aquifers.
Hajdu said fracking sites will also differ significantly from older vertical wells in that gas is under tremendous pressure.
"You won't be able to hook into the well," for home use, she explained. "The pressure will be too great."
High pressure delivery lines for the gas will also be required, and Hajdu said area landowners are also being approached to lease land for the pressurized pipelines.