Gas company backs off drilling: Chesapeake Energy cites New York City watershed issue as it drops 5,000 acres

ALBANY, Oct 29, 2009 (Albany Times Union - McClatchy-Tribune Information Services via COMTEX) -- CHK | Quote | Chart | News | PowerRating -- A natural gas company's pledge not to drill in the Catskills source of the New York City drinking water reservoir system did little Wednesday to placate critics.

Chesapeake Energy said while concern over the city's drinking water was "a needless distraction," the company decided not to drill on the 5,000 acres it controls in the watershed, said Chesapeake CEO Aubrey McClendon.

The Oklahoma-based company owns mineral rights on about 1.5 million acres in southern New York, Pennsylvania and West Virginia that are part of the Marcellus Shale, an ancient underground rock formation that contains vast amounts of natural gas reachable by a technique called hydrofracking, in which a mix of water and drilling chemicals are injected under pressure to fracture rock to release trapped gas.

McClendon said his is the only gas company with mineral rights in the city watershed, which covers a 1,700 square-mile region of the Catkills that feeds four massive reservoirs. He called the leases "immaterial" and unlikely to yield significant gas.

New York City officials, who appeared earlier this month at a state Assembly committee hearing to raise potential risks to the water supply for nine million people, did not appear moved by Chesapeake's announcement.

"One company's voluntary moratorium on drilling at this point is no substitute for a thorough analysis by the Department of Environmental Conservation and Department of Health to determine the catastrophic potential of drilling into the watershed and in adjacent communities," said Michael Saucier, a spokesman for the city Department of Environmental Protection.

Critics point to potential problems with treating the water used in drilling and the risks that chemicals could migrate from rock fractures and gas wells into ground water.

"We're calling on Chesapeake Energy to back up this promise by transferring its leases to the city of New York for the price of $1. After the transfer, the state should ban drilling in the New York City watershed," said Deborah Goldberg, a managing attorney with EarthJustice, an environmental lobbying group. "That way, we can make sure this protection is permanent."

After Chesapeake's leases expire in five years, "there is no telling who may take them up or what their intentions will be. Chesapeake's pledge is not legally enforceable and provides no guarantees," said Katherine Nadeau, a program associate for Environmental Advocates of New York.

"When the gas drilling industry says it won't drill within the source of drinking water for nine million people, it sends a strong message to state regulators that this activity is inappropriate," said James L. Simpson, Staff Attorney with Riverkeeper.

Brian Nearing can be reached at 454-5094 or by e-mail at bnearing@timesunion.com.

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