How the Gas Industry Writes New Yorks Shale Gas Regulations

On March 26, 2008, Tom West, his law partner and as many as seven Chesapeake Energy employees met with Jack Dahl of the DEC to present Chesapeakes proposal to increase the state well spacing for shale gas wells, and to reduce the set back of gas wells within that unit from the property lines. Simply put, it is better for the driller for the spacing unit to be as large as possible, since that enables them to hold more acreage with one well in what amounts to an acreage speculation. It is also better for the driller for the gas well setback to be as close as possible to the property line. Conversely, the landowner is generally worse off with a large spacing unit, since that enables the driller to hold more acreage with the least number of wells, which can equate to lower royalties for the landowner. And the neighbors are worse off if the gas well is closer to their property line. Shown below is what the law was before Chesapeake re-wrote it, what Chesapeake proposed to Jack Dahl and Allison Crocker of the DEC, and what the final proposed law was. See page 5 of this list of communiqus between West and DEC staff.1 In a nutshell, Chesapeake wrote New Yorks shale gas spacing and gas well setback law. There is no indication that the DEC staff did anything but take dictation. New York regulations prior to 2008 Less than 4,000 feet deep 4,000 6,000 feet 6,000 8,000 feet > 8,000 feet deep Chesapeakes Proposed Regulations New DEC proposed regulations 2 80 acres 160 acres 320 acres 640 acres 640 acres 640 acres 660 set back 660 1,000 1,500 330 330

After 2008, as gas prices fell, Chesapeake scrambled to hold acreage, arguing force majeure to extend its leases in New York3and attempting to get the well spacing
1

http://www.scribd.com/doc/98756217/Chesapeake-Writes-New-York-sFracking-Regulations 2 http://www.sourcewatch.org/index.php?title=Fracking_Regulations 3 http://www.bloomberg.com/article/2012-06-14/aO2B6uleXj2k.html

doubled, to 1,280 acres, or two square miles. IOGA pushed for such a doubling in a September 11, 2011 letter to the DEC : Because New York law limits the size of spacing units for shale wells up to 640 acres, it will be the practice of industry to layout back-to-back units with a common well pad for both units thereby draining areas up to 1280 acres (two square miles). 4 The drillers subsequently persuaded State Senator Mark Grisanti to attempt to increase the spacing unit for one well up to 2 square miles. 5 Perversely, such large well spacings on horizontal wells exacerbate the abuse of compulsory integration to coerce non-consenting landowners into participating in wells. New Yorks compulsory integration law was for all intents and purposes written by Chesapeakes lobbyist, Tom West, as evidenced by his correspondence with DEC staff attorney Allison Crocker in 2005, pages 58 103. 6 Consequently, as amended by West and Crocker, New York now has the worst compulsory integration law in the United States, as practiced by the DEC.7 New Yorks DEC, in league with West as Anschutzs lawyer, is one of the few state agencies that has compelled a homeowner into participating in a gas well. 8 If the West/DEC compulsory integration law is applied to horizontal wells, it will be tantamount to private eminent domain at Chesapeakes behest, since horizontal laterals only drain the area theyre under, not adjacent property. 9 Invoking compulsory integration is unprecedented elsewhere, but is not beyond the brief for Chesapeakes stenographers at the DEC. Mercifully, the courts are less impressed with Mr. West, as a close reading of the Middlefield decision indicates.10 Not only were they not persuaded, its not clear that they believed a word he said on home rule. In contrast, his collaborators at the DEC bought Chesapeakes line on the matter in whole cloth, even though home rule applies to gas wells in both Oklahoma and New York. 11 As the DEC goes through the motions of reviewing non-industry comments on the proposed SGEIS, they have sent out their final drafts to the gas industry, in order to
4 5

http://static.ewg.org/reports/2012/insidettrack/2012SEP02_Gill.pdf http://artvoice.com/issues/v11n25/week_in_review/grisanti_and_fracking 6 http://www.scribd.com/doc/98756217/Chesapeake-Writes-New-York-sFracking-Regulations 7 http://www.scribd.com/doc/74790533/Compulsory-Integration-in-New-York 8 http://www.propublica.org/article/forced-pooling-when-landowners-cant-say-noto-drilling 9 http://my.brainshark.com/Compulsory-Pooling-of-Horizontal-Wells-134334393 10 http://www.scribd.com/doc/82729750/Middlefield-Decision 11 http://www.scribd.com/doc/63141534/New-York-Gas-Well-Zoning

get their approval on the final wording. 12 After that, theDEC scriveners may soon have to learn Chinese in order to understand what theyre being told to do.13

James L. Northrup Cooperstown http://www.scribd.com/northrup49

12

http://www.ewg.org/report/inside-track-cuomo-team-gave-drillers-edgeinfluence-fracking-rules 13 http://english.peopledaily.com.cn/90778/7854914.html