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Isn’t It Ironic? New York benefits from shale, but doesn’t allow drilling

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We all have had the infamous lyrics of Alanis Morissette’s “Ironic” stuck in our head at one point since its release in 1996. It’s like rain on your wedding day. It’s a free ride when you’ve already paid. It’s the good advice that you just didn’t take. Isn’t it ironic, don’t you think? How do these lyrics apply to shale gas, you ask? Oh, the irony. 

Shale is changing our country’s energy landscape. Shale formations such as Marcellus are producing so much natural gas that the nation's gas supply will exceed its demand by 2017, according to research released last Tuesday by Bentek Energy LLC. The consultant said its models show production in Pennsylvania and Ohio will be eight times larger than the growth in demand during the next 10 years. This year’s Pennsylvania and West Virginia production is up 50% compared to last year. When serious shale drilling started in Pennsylvania in 2008, output barely registered on a national level, and most of the Northeast relied on natural gas that was being pumped from the Gulf of Mexico or from Canada through a network of pipelines. Now, Marcellus gas is supplying the Pennsylvania and Northeast markets, and it has grown to be the nation's most productive gas field.  Bentek expects a surplus will soon start flowing to the South and Midwest.

Recent pipeline expansion projects in New York have made the availability of natural gas from the Marcellus shale play readily available. For example, the Millenium Pipeline, which went into service in 2008, extends across the southern tier of New York State, bringing up to 825 million cubic feet of gas/day (MMcf/d) to customers along its route. It also passes through the same areas in New York where the greatest amount of shale gas is located in that state.

Spectra Energy’s New Jersey – New York pipeline expansion project is expected to be completed in November of this year. This could bring up to another 800 MMcf/d of natural gas to the New Jersey and New York areas, including Manhattan.

What’s so ironic, you ask? New York is still under a moratorium on drilling for the Marcellus shale gas. The cheap gas that New Yorkers enjoy comes from outside the state - Pennsylvania, Ohio and West Virginia. Hydraulic fracturing, or “fracking”, remains controversial throughout the U.S., due to concerns over potential water contamination and pollution from wells, as well as fears that the new supplies of natural gas will bind the country more permanently to carbon-heavy fossil fuels. New York State has both a massive potential reserve of shale gas and a determined community of environmentalists and activists working to ensure that fracking never happens. For the past five years, The Empire State has had a de-facto moratorium on fracking. New York’s Department of Environmental Conservation has carried out an extended review of the impacts of hydraulic fracturing, and more recently, New York health commissioner, Nirav Shah, is reviewing the health effects of fracking. There’s no word of when that will end; Shah told reporters in May that a recommendation on fracking could be issued within weeks, but it remains to be seen. Meanwhile, drillers in Pennsylvania produced 1.5 trillion cubic feet of natural gas via fracking through the first half of 2013.

The end result of new pipelines delivering out-of-state shale gas to New York markets is lower energy prices. Both natural gas basis and wholesale electricity prices from Buffalo to New York City are down despite the lack of local drilling. So, end-users are paying lower retail rates due to shale while living in a state that does not permit the activity in its own borders.

We’ll never know, but would the anti-shale lobby be as strong if the benefits of shale were removed?

Posted: September 19, 2013