February 26, 2011

"Tompkins County is the last place gas companies want to drill"

I've heard this said by people inside and outside of Tompkins County, by people who support and oppose hydrofracking. While I do think it's true, I also think it doesn't mean much.

Yes, if I was running a natural gas drilling outfit, I would try to avoid Tompkins County. Getting any needed local permits seems likely to be more of a hassle and likely more expensive, and a substantial portion of the population is firmly opposed. I'd want very careful planning and a lot more security on infrastructure, which gets expensive quickly.

For those kinds of reasons (plus the fact that Pennsylvania is already actively drilling) Schlumberger was smart to put their main facility in Horseheads rather than Ithaca. It also seems clear that drillers will be eager to get started as quickly as they can if New York State opens the permitting process this summer. Odds are good that they'd prefer to start in friendly territory.

The big question, though, is that even if Tompkins County seems like a riskier place to develop, what does being "the last place" get you?

Not very much. "Last place" in this context means something different from "last place on earth." Being the last place in the New York State section of the Marcellus Shale to get drilled probably means only a few years at best.



Gas drilling isn't just a matter of putting holes in the ground, grabbing gas, and driving it away. It requires some massive infrastructure, and not just at the sites - pipelines in particular support large areas of drilling. The more gas that goes through that infrastructure, the better the return on investment. That doesn't encourage leaving a big gap in the middle of the drilling area. (Even the most mobile parts shouldn't be driving any more than necessary if profits are important.)

Shale gas well lifetimes

Shale gas wells don't seem to last as long as traditional gas wells. As analyst Arthur Berman noted about the Barnett Shale: "25-35% of wells drilled during 2004-2006-wells drilled during the early rush and that are on average 5 years old-are already sub-commercial." Combined with the large infrastructure costs, this could encourage drillers to keep drilling as many wells as they can to keep that infrastructure as busy as possible.

Salt mines

The Finger Lakes have plenty of salt mines, both operational and not. There's a proposal to use an old salt mine in Watkins Glen to store LPG gas, and salt caverns have long been used to store natural gas, though no mines "are commercially operational as natural gas storage sites at the present time." This doesn't mean gas will come here tomorrow, but it does mean we're closer to some potentially useful infrastructure for gas companies.

Utica Shale, not just Marcellus

This one could go both ways. The Utica Shale covers a much larger area than the Marcellus, so it's possible to say that drillers would have more places to go before reaching the "last" place in Tompkins County. However, once the infrastructure for the Marcellus is installed, it's likely to make a lot more sense to start there and move outward than to wander elsewhere and come back. Maintenance costs over time pretty much ensure that concentrated production is going to be more lucrative.

Growing gas consumption

The price of natural gas is still low by historic standards, but its use is growing rapidly. What was once a home heating, industrial, and chemical business has expanded into electrical generation. Replacing coal plants with gas plants reduces the amount of soot, and creates much larger demand for gas.

Where does this leave us? In a world where "the last place" might be true, but where "the last" isn't necessarily that far away. Oil and gas companies are rightly famous for their lack of interest in local opinion and their willingness to blast through whatever barriers, physical or legal, stand in their way.

To paraphrase a conversation I had a few months ago, "You can't really hide behind a wall of hippies. A wall of lawyers isn't perfect, but it's stronger." Maybe Tompkins County's reputation will keep drillers away for a while, but it's not going to last very long unless reinforced with laws and a willingness to defend them.

Posted by simon at February 26, 2011 10:46 AM in
Note on photos


KAZ said:

How about a wall of windmills? Oh, yeah, we didn't want those in Dryden, either.

The Town, perhaps encouraged by its lawyer, did vote against Cornell's proposed wind farm on Mount Pleasant, yes.

However, it's not clear that that particular vote had any real effect. The bigger problem sounds (through after the fact rumors) to have been the Federal Aviation Administration, which had a serious NIMFP (Not-In-My-Flight-Path) problem. Well, not "in" the primary flight path, as that's bit further west, but close enough.

I'll admit to being skeptical that giant windmills, in Dryden or elsewhere, are really the free energy they sound like, but at least they don't seem to ruin the water supply.