Industry should heed NY moves against shale boom technology

New York state is making inroads against hydraulic fracturing, the process that has enabled the big natural gas boom in the US in recent years. This is something environmentalists have been pushing for, and gaining traction with. They worry about what the fracturing of rock underground is doing to groundwater and what the entire process does to air pollution.

This week, the New York state Senate voted by a wide margin – 48 to 9 – in favour of a temporary suspension through May 15, 2011, on new drilling permits for the fracturing of shale rock deep under the ground. The fracturing process involves pumping underground, at high pressure, millions of gallons of water laced with chemicals and fine sands. The water breaks apart the rock and the fine sands prop it open so the gas can escape and be pumped out of the formation.

The government has been responding on several levels. In March, the US Environmental Protection Agency said it would carry out a comprehensive examination of the safety of hydraulic fracturing. Congress requested the study last year. And the issue has been getting more attention since ExxonMobil announced it was buying XTO Energy to boost its presence in the onshore gas boom. Indeed, Exxon was even wary enough to put an exit clause into the acquisition plan, allowing it to walk away if hydraulic fracturing became uncommercial. That deal closed in July, but the move against hydraulic fracturing has not stopped.

The New York Senate effort must be approved by the entire State Assembly to become law. The body is not expected to consider the matter until September. If it is not pushed through quickly, a new governor will be elected in November, and it is unclear if he or she will be more in favour of developing the resources or protecting the environment. There are a lot of uncertainties there. But it is certainly an issue the industry must keep its eye on.

Even though there has been a growing recognition in Congress of the importance of gas – as individual Congressmen see production cropping up in their backyards - that support has yet to result in big incentives to build up the use of the fuel in the US. If New York does pass a bill against hydraulic fracturing, it might get others to rethink the process. After all, few Americans think about where there energy is coming from, as long as it is cheap and plentiful.

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