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For Release: Monday, July 6, 2009

DEC Reports: Natural Gas Production Dips Slightly in 2008

Landowners Net Nearly $61M in Royalties, $15M for Local Governments

Natural gas production from New York wells in 2008 continued at a high rate but declined slightly from recent record levels, State Environmental Conservation Commissioner Pete Grannis announced today.

For 2008, 50.32 billion cubic feet (bcf) of natural gas was produced in the state, representing the fourth-highest total ever. But that represented an 8 percent decline from the 2007 total of 54.916 bcf and 9 percent below the all-time high, 55.157 bcf, set in 2006. The 2007 production, which was enough to supply the natural gas needs of approximately 728,000 homes for a year, was driven by prolific wells in the Trenton-Black River formation in the Finger Lakes region and by increases in production from traditional New York formations.

Oil production increased 3 percent in 2008, with a total of 397,060 barrels, a rise corresponding with high oil prices during part of the year. Total market value of the oil and gas produced in New York in 2008 is estimated at $486 million. Landowners received an estimated $60.9 million in oil and gas royalties and local government taxes on the market value of production are estimated at $14.6 million.

Statewide, 13,684 wells reported as active in 2008. In addition to oil and gas wells, this included 952 underground natural gas storage wells, 142 brine production wells and 96 geothermal wells. Since the late 1800s, more than 75,000 oil, gas and salt mining wells have been drilled in New York.

"Oil and gas drilling in New York has been around since the 19th century and is an important industry, with hundreds of drilling permits issued every year. Because wells in New York are so tightly regulated, with a full complement of environmental protections, many people don't even realize that there are so many active wells in the state," Commissioner Grannis said. "The Department of Environmental Conservation's Mineral Resources professional staff - with more than 20 years of experience per person - reviews each drilling application for environmental compliance before any drilling is permitted, inspects actual drilling operations, and enforces strict restoration rules when drilling is completed. As a result of New York's rigorous regulatory process, the types of problems that have occurred in states without such strong environmental laws largely haven't happened here."

The Trenton-Black River formation remains New York's dominant gas production zone, accounting for 69 percent of total production in 2008. One hundred wells were productive in the formation, supplying 34.8 bcf. One well, the "Gross D1" well in the town of Corning, Steuben County, produced 2.11 bcf - enough to heat more than 30,000 homes for a year. Still, because some of the wells operated only part of the year, Trenton-Black River production was down from 2007, when it produced 41.3 bcf. That 16 percent decline was offset by a 13 percent gain in other producing formations.

DEC issued 737 drilling permits in 2008, up from 577 in 2007. Permits issued included 429 for natural gas wells, 250 for oil wells, 22 for geothermal wells, 14 for brine production wells, 12 for stratigraphic wells, 7 for underground gas storage wells and 3 for monitoring wells.

While natural gas production from the Trenton-Black River formation has dominated the state's overall gas production for the past decade, there is significant interest in development of the Marcellus Shale and other unconventional gas reservoirs in New York. DEC is in the process of assessing the potential environmental impacts from the high-volume hydraulic fracturing process; DEC's analysis will be published in a draft Supplemental Generic Environmental Impact Statement, expected to be released before the end of this summer.

Additional information on New York's oil and gas resources is available on the DEC website. A new on-line searchable database provides information on individual well production, drilling operations, locations and depths, along with information on well owners and operators, registered drillers, pluggers and companies that provide financial security instruments. Individual well production from 1985 through 2008 is available on the DEC website.

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