Norse Energy invokes controversial gas lease provision

NORWICH – Norse Energy, Inc. has invoked a standard provision in oil and gas leases that postpones the expiration date when an unforeseen event prevents the terms from being followed by either party.

Enacting the provision, called Force Majeure, is permissible, Norse Energy claims, because an executive order issued by outgoing Governor David Paterson in late December prevents the company from obtaining the required environmental permits needed to meet its lease terms.

The Norwegian energy company has 180,000 acres of mineral rights throughout Central New York, either leased or owned outright, to four subsurface formations, including the much publicized Marcellus Shale. It has offices in Buffalo and Norwich and is actively drilling and producing natural gas from wells in the Herkimer sandstone in Smyrna, Plymouth and Preston.

“This notice is designed to preserve our substantial investment in the future shale potential of New York state,” Norse CEO Mark Dice said in a statement.

Paterson’s executive order calls for further review of high-volume hydraulic fracturing combined with horizontal drilling and barred the issuance of new permits until May. Governor Cuomo’s office later extended that order to “on or about June 1” with at least a 30-day comment period to follow.

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