Norse’s Seven Permits Could Be First In Line If State Passes Regs
Published: March 12th, 2012

ALBANY (AP) – While New York regulators wrap up a four-year environmental impact study of shale-gas drilling that has driven most energy companies to other states, a Norwegian company hopes to be first in line if New York starts issuing permits.

Dozens of permit applications for wells in New York’s part of the lucrative Marcellus Shale were filed in 2008 and 2009 with the Department of Environmental Conservation. But then the DEC said no permits will be issued until the completion of its environmental review of gas production using horizontal drilling and high-volume hydraulic fracturing, or fracking.

Companies stopped applying.

The only exception is Norse Energy, which has submitted seven applications since November. The applications are for wells in central New York within 50 miles of the Pennsylvania border, the towns of Smithville, Coventry and Smyrna in Chenango County, and Sanford in Broome County.

That area is considered among the most gas-rich land in New York’s share of the Marcellus Shale, which lies under southern New York and parts of Ohio, Pennsylvania and West Virginia and is estimated to contain 84 trillion cubic feet of recoverable natural gas. That’s enough to supply the nation’s gas-burning electrical plants for 11 years, at current rates of use.

Thousands of gas wells have been drilled in the Marcellus in the last five years, the majority in Pennsylvania, bringing new wealth to economically depressed areas, a bonanza of cheap fuel to the energy-hungry Northeast, and a great deal of political conflict arising from environmental and health concerns.

Norse Energy has hundreds of producing natural gas wells in less-rich sandstone formations in central and western New York, but shale gas is the real prize.

“We’re incurable optimists,” said Dennis Holbrook, executive vice president of Norse Energy Holdings in Buffalo. “While the big guys vacated the state, we’ve remained the most active driller in New York state over the last few years, trying to find other formations to pursue while waiting on high volume with shale.”

In its fourth-quarter 2011 earnings report, Norse said it had received acknowledgement from DEC that all seven of its shale gas permits were accepted and await resolution of the environmental review.

“These wells are part of an aggressive development plan,” the report said. The company has 22 more permit applications in the works, it said, and expects to attract a partner to help fund its shale drilling.

Norse has about 130,000 acres under lease in New York. The company is one of several trying to extend hundreds of leases that reached their original expiration date during New York’s de facto moratorium. Many of the leases were signed for $2-$3 an acre; more recent leases have gone for $1,500 or more per acre.

DEC is reviewing more than 60,000 public comments submitted for its 1,500-plus page environmental study and proposed regulations. Gov. Andrew Cuomo and DEC Commissioner Joe Martens have said a decision on whether to allow fracking is likely within months, when the review is complete.

Michael Brownell, a Chesapeake Energy executive, wrote to Martens that the proposed requirements under consideration by DEC, coupled with low gas prices, will “effectively kill natural gas development from shale formations in New York state.”

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