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Interview: Former NY Environmental Commissioner Pete Grannis on Gas Drilling

Recently ousted New York environmental commissioner Pete Grannis talks to ProPublica about hydraulic fracturing, his time as a regulator and the future of natural gas drilling in America.

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Mary Sweeney

Nov. 20, 2010, 7:24 p.m.

Dean,

You didn’t state what assumptions you made to arrive at your $60,000-per-acre figure. It is surely a highly speculative figure which would not be realized unless the very highest estimates of recoverable shale gas are correct and/or bonuses become extremely high and/or gas prices soar and/or multiple extremely profitable formations are accessed. Even if this extremely optimistic figure were correct, probably about half of the money would come in over a decade or so and the rest would trickle in over subsequent decades. Moreover, all of the money would be subject to taxation. So I certainly hope you have not been dangling that $60,000-per-acre figure in front of any landowner, because doing so would be extremely misleading, to say the least. I imagine that most landowners would be sharp enough to ask you a some very relevant questions rather than just accepting your assertion, but some might not be too sharp and I hope you would agree that it certainly would not be fair to take advantage of them by quoting a per-acre-income figure that, in fact, might never materialize.

Also, all too often in this and other shale extraction discussions, farmers are being used like poster children for drilling. But in fact, not all farmers favor drilling (some of them are very much opposed) and many of the landowners who do favor drilling are neither farmers nor impoverished.

To make generalizations about who is likely to benefit from drilling and by how much without stating any of the assumptions or data used to reach those conclusions is misleading at best.

Dean Lowry

Nov. 20, 2010, 8:01 p.m.

Actually, I used proven estimates on production just to the south of Broome County, New York in Bradford and Susquehanna Counties, Pa. Based on initial production figures and sustained production on existing wells. Limited by today’s technology of 30% Ultimately Recoverable Reserves of the 150 BCF Gas in Place per square mile would come to just over 70,312 mcf per acre recoverable. At today’s prices of around $4 per mcf (we kinda expect that to go up) that comes to $281,250 per acre in revenues over the life of the well. 20% royalties are common in the area now so that’s $56,250 per acre in royalties. Bonuses were around $5-6,000 per acre when the moratorium was last extended. So let’s see ($56,250 + $5,000) = $61,250. Most of the production from these wells comes in the first 5-10 years. Of course I am talking about the best of the Marcellus Shale lying in the very southern portion of the state. You know ten years ago, we would only expect to get about 20% of the gas in place. The technology is improving with time and who knows, 40-50% someday. And then there’s the Utica Shale lying a little further down…........ and yes it’ll all be taxable income. I think they used to use tax money for roads and schools and such things but mostly now it just goes to bail-out bankers and insurance companies.

Respectfully,

Dean Lowry

Mary Sweeney

Nov. 20, 2010, 8:25 p.m.

Dean,

Thank you for clarifying that in quoting the $60,000/acre figure, you were talking only about a limited section of the Marcellus Shale. You did not state where your 150-BCF-gas-in-place-per-square-mile figure came from. You also did not state that production can vary wildly from one well to the next even within a limited geographic area (we can all see this for ourselves in the recently released PA production figures). You are assuming that wells will remain economically viable for decades even after their production levels have declined significantly (an assumption that some experts, like Art Berman, have questioned). Further, just a couple of years ago a figure of 10% recoverable gas was typically quoted: then it suddenly jumped to 30%, even though very little drilling in the Marcellus has taken place to date. It would seem that at this point the 30% recovery figure is speculative. In fact, most of these figures are speculative at this point—something that all landowners should be aware of. Is it within the realm of possibility for some landowners to make $60,000 per acre? Yes. Should any landowner count on making that kind of money? No. Should $60,000 per acre, at this early stage of drilling in the Marcellus, be represented as being typical, even in the supposed sweet spots? No.

But you and I do seem to agree that even in the best case, the $60,000 per acre would be stretched out over multiple years and would be subject to taxation.

I think that everyone needs to understand that leasing land for drilling is a complicated business deal, subject to many unforeseeable parameters, and that there are no guarantees at all. Unfortunately, all too often, unsupported assumptions and generalizations are made and the money is represented as a sure thing when it is not.

Mary

Dean Lowry

Nov. 20, 2010, 10:02 p.m.

Mary,

I must admit, you have really made me laugh out loud. Is there anything I can say that you would agree with? I guess we just have to agree to disagree. In reality, those that oppose allowing landowners to make their own choice are as usual writing checks that they can’t cover. Getting what they think is their right at the expense of others. I certainly hope your efforts to stop America’s independence fail, but should it succeed, I hope you’ve thought out the other possible outcomes. I guess my having grown up in Oklahoma and living many years in Texas, with my experience, I just haven’t seen what there is to be so scared of. You’d think I would have been long dead by now with all my exposure to this Oil & Gas Exploration.

Respects,

Dean Lowry

Rebecca DeWitt

Nov. 21, 2010, 2:03 a.m.

Dean,
  Again, I suspect your sources. Before proceeding, I confess that I looked up your name on the web. Could you possibly be the Dean Lowry connected with the gas industry in Texas? Specifically LLAMA? If so, I suspect you may be using this forum to put forth gas industry data, which simply does not match up with what other scientists know to have happened across this country and specifically in our neighboring state of Pennsylvania.
  Why has the state of Wyoming instructed its citizens to not drink the water? Why has methane been found in the Susquehanna River? Why have gas companies been cited for dumping toxic waste on roads and in streams where pets and wildlife has been found dead? What about the recent study out of the University of Buffalo which concludes that significant amounts of uranium is released with Slick Water High Volume Hydrofracturing? What about the massive amounts of data from TEDX and other public health researchers that link the known chemicals used in HVHF to endocrine disruption, which in turn is causing autism, diabetes, obesity, among other lifelong illnesses. What about the neurotoxins released? And what about higher rates of certain types of cancer when exposed to the tiniest traces of these highly potent toxins.
  You can try to throw around your industry figures but they’ve been refuted. Just because your company wants to make money at the expense of New York citizenry health and our lovely environment, does not make it right. And further, the seismic movement in the geology of this area is far different than Texas, which makes for a greater likelihood of casing damage and leakage into the soil and groundwater.  If you’d prefer to talk about Texas, what about the air researchers in the Dallas Fort Worth area that have documented the gas industry air pollution that doubles the load normally caused just by cars and trucks in an urban area?  The World Health Organization has recently met in Japan to discuss these kinds of air pollution problems in urban areas. There’s more data than I could ever get into hereSo let me ask…. Why doesn’t your company put its resources into R&D rather than trying to dig the last drop of fossil fuel out of the ground? There are so many advances that the gas companies could be out in front of rather than trying to drag us back into the 20th century.Exxon (and Chevron to a lesser degree) may be covering all their bases but at least their investing in some ingenious biofuels that do not compete with our food sources and are brilliantly engineered so as to be completely sustainable and remove CO2 from the atmosphere in the process, and having the potential to abate climate change in the process.
  I’m quite familiar with close-loop systems, but there are so many other places the system can fail; if the casement fails, or if there’s an explosion on the well-pad, as we’ve all seen on the national news…many times…We’ve heard first hand about the lies Chesapeake is spreading around poor Dimock, because they don’t want to pay for a clean-water pipeline. . Closed-loop systems may help with one problem…but there are so many other places the system can fail that it’s hardly worth mentioning. And in the end, we’re still left with large quantities of frack waste.
  We like our fresh, relatively clean water up here in New York. Maybe they don’t care so much in the south-west, I don’t know. If they choose fracking for their area, I guess they’ll live with the consequences, whatever they may be.
  I’m sure you’ll want to have the last word, but now that I understand who you represent, I’m instructing Pro Publica NOT to email me with comments that may come in. I’d much rather put my energies into fighting off HVHF in New York State. I’m really not interested in continuing this discussion because I know your data is tainted and vastly incomplete.
I feel you should have been more transparent from the beginning and so it’s hard for me to end my part of this conversation with a respectful salutation. Good bye. I wish you good health.
p.s. I hardly think George Carlin is in the same category as a scholar who’s made fracture mechanics his life-work. You embarrass yourself, I’m afraid.
.

Dean Lowry

Nov. 21, 2010, 11:46 a.m.

Mary,

I hardly think I’ve embarrassed myself as I speak from a position of experience and knowledge. You see, to speak the truth, you must first know the truth. Anyone can take a little information about any topic and pollute it with words and innuendo with the purpose of adding fear. You comments, while at first, simply stating your opinion, quickly became manipulating and then escalated to controlling. My name should be well known in the area as I have spoken with many Landowner Coalitions as well as addressed several hundred practicing Attorneys in the Southern Tier in regards to lease negotiations. I entered this forum to comment on what the ex-DEC Chief had to say. The State of Pennsylvania’s Agency in charge of it’s Environment, after having over 2,000 wells drilled in the last 4 years has determined the process does not pose a threat to groundwater. Pete Grannis has said New York has the most stringent regulations in place than any state in our nation. Drilling will take place in New York as it is a part of the United States and consumes more Natural Gas than any other. AS for the migration of surface methane, where ever it occurs, there are many scientific publications spanning decades on the topic. No one really ever points out that a lot of this controversy started because a couple of “Landowners” drilled water wells that exposed methane deposits and were later able to light their faucet water. No Natural Gas drilling had taken place in the area, but this little bit of footage sparked “the flame” if you will, for the fight against horizontal hydraulic fracturing. Investigator’s are now finding methane (proven each and every time to be from surface areas, not the Marcellus Shale) leaking everywhere. Could it be, just maybe, it’s because they are now looking for it? I do so applaud, however, the fact that all this controversy has caused the industry to tighten up it’s act and become more aggressive in preventing minor mishaps which do in fact add up, and we should all be more aware of our impact on the planet.

Respectfully,

Dean Lowry

Mary Sweeney

Nov. 21, 2010, 6:16 p.m.

Dean,

You have evidently confused me with Rebecca DeWitt, as she is the one who said that you “embarrass” yourself.

Re the rights of landowners, I can assure you that there are many, many landowners in NY and PA who believe that their rights have been absolutely ignored in this gas rush. Some have already seen the value of their property severely diminished by nearby gas drilling; others are no longer able to enjoy their property or to make plans for the future because of the gas drilling. Some of those who have leased act as if they are the only ones who pay property taxes, but they are not.

Re agreeing to disagree, I have no particular interest in continuing to converse with you, but I do wish to point out that we are not arguing over some trivial point. This is an argument that is about safety and public health and the need to preserve our water and air and other natural resources: if shale gas extraction continues to use unsafe technology and to be inadequately regulated, then our nation as a whole will be impoverished by the results. Over and over and over again, the shale gas industry refuses to even recognize its own shortcomings, a necessary first step in any attempt to improve. With all due respect, I think you have provided for us here a perfect illustration of the industry’s unwillingness to even acknowledge its own very serious problems.

Mary

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