Pete Diehl (L), his son Adam (R) and their dog Boney on the family dairy farm December 14, 2009 in Callicoon, New York, about 120 miles (193 Km) northwest of New York City. The Diehls have refused to sign an agreement with energy companies to allow drilling rights on their land for access to part of the largest natural gas reserve in the US. AFP PHOTO
After a lifetime struggling to make money from the land, New York farmer Bill Graby has discovered he's sitting on treasure -- possibly the biggest natural gas deposit in America.
Sunday, December 20, 2009
By: Sebastian Smith
CALLICOON, December 20, 2009 (AFP) - After a lifetime struggling to make money from the land, New York farmer Bill Graby has discovered he's sitting on treasure -- possibly the biggest natural gas deposit in America.
"It's like winning the lottery," says the 6.6-foot (two-meter) dairy farmer from the picturesque town of Callicoon in the Catskills hills.
The deposit, called the Marcellus shale, stretches all the way from New York to Tennessee, containing 168 to 500 trillion cubic feet of natural gas, according to New York State's Department of Environmental Conservation.
That dwarfs the previous big daddy, the Barnett shale in Texas, and by industry estimates could meet all US gas needs for years.
"The size is potentially tremendous for the nation as a whole," John Felmy, chief economist for the American Petroleum Institute, told a Pennsylvania College of Technology conference last month.
Environmentalists fear intense drilling could bring ecological disaster to the same pristine Catskills that also contain New York City's entire drinking water supply.
Many others, though, foresee an economic miracle that could turn an impoverished section of New York into "a Little Texas," as 56-year-old Graby puts it.
These are early days. Extraction is underway in Pennsylvania, but New York's authorities are still debating regulatory approval, with a decision expected in 2010.
Yet already energy companies are swarming across the countryside, offering to make millionaires of cash-strapped farmers like Graby in exchange for drilling rights on their land.
The economics are self-evident. There's not only gas, but a huge market nearby in New York and New Jersey, and a transport network that includes a big new pipeline opened a year ago to bring gas from Canada.
In a region blighted by bankrupt farms and a struggling tourist industry, the excitement is palpable.
"It's a once in a lifetime opportunity that can change this region," Graby said at Callicoon's old-fashioned cafe/petrol station by the snow-lined Delaware River.
Geologists long knew about the Marcellus Shale, which formed about 385 million years ago and extends more than 7,000 feet (2,133 meters) underground, mostly under New York, Pennsylvania, Ohio and West Virginia.
But development was unprofitable until recent improvements in horizontal, rather than ordinary vertical drills, and in an extraction process called hydraulic fracturing, or fracking.
"Nobody cared much about shales. They were all around us, but then the price of gas rose and there were some techniques that were quite useful... that made shales much more attractive," said Gary Lash, a geosciences professor at SUNY Fredonia university and an expert on the Marcellus.
In southern New York, the result is what the state's Department of Environmental Conservation likens to a "modern-day gold rush."
Graby and former teacher Noel van Swol have formed a landowners' association to bargain collectively with the gas companies.
A couple years ago, drilling rights were being sold to fast-talking company reps, or landmen, for a pittance. Now, they trade for small fortunes: about 5,000 dollars an acre for a five-year drilling lease and a whopping 20 percent of royalties on gas extracted, van Swol said.
That means a farmer leasing 200 acres would collect a million dollars upfront -- and the same again for an extension -- plus potentially astronomical royalties.
"It's the big play. This changes lives," says van Swol, sporting a solid gold ring decorated with an American Indian chief that he says brings him gambler's luck.
"This is game changing."
-- Gas or water? --
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Natural gas is a relatively clean-burning fuel, but the extraction process needed in the Marcellus is not pretty.
Fracking involves shooting enormous quantities of water, mixed with chemicals and sand, at extreme pressure into the subterranean rock, smashing shale and forcing out gas.
The process is often likened to an earthquake.
Ramsay Adams, executive director at Catskill Mountainkeeper environmental group, says the biggest worry is what happens next, when the poisonous mix is locked underground in the same hills as New York's drinking water aquifers.
"Thirty percent of these millions of millions of gallons of water are left down there," Adams said.
"Ultimately it will migrate up and go downstream. You could find the contamination downstream. No one knows. The gas companies don't know."
The gas industry says fracking is safe because gas wells are sealed from the water table, which is closer to the Earth's surface.
"Environmental extremists have poisoned the natural gas debate by implying that drilling operators will pollute our water and air," said Brad Gill, director of the Independent Oil and Gas Association of New York.
"They have used bad science and twisted facts to oppose natural gas exploration."
New York's environmental body also says that "no known instances of groundwater contamination have occurred from previous horizontal drilling or hydraulic fracturing projects" during previous projects in the state.
But Adams and other environmentalists are lobbying for swaths of countryside to be off-limits, especially anywhere near to what Adams considers New York's true treasure -- water.
"They think they have found the Saudi Arabia of natural gas," Adams said, "but we are the Saudi Arabia of fresh water."
Many opposing the gas rush are second home owners from New York aghast at the idea of drilling rigs scarring the landscape.
Yet holdouts also include the Diehl family, which has been farming the same river valley outside Callicoon for six generations.
"It's all about the water. It's what we drink, it's what our animals drink. And once the aquifers are breached, you can't fix them," Alice Diehl, 58, said in the cozy kitchen of her hilltop house.
To compensate for a collapse in milk prices, the Diehls are working overtime on everything from making maple syrup and honey to selling Christmas trees.
They say nothing can persuade them to risk contaminating their beloved land, where Diehl ancestors lie buried among a copse of trees in a broad field.
"Money isn't everything," said Alice's husband Peter, a wiry, bearded man of 65. He looked out over the snow-covered valley. "They can pay you a lot, but if they ruin the land, you have nothing."
Alice Diehl smiled as she recalled a gas company landman coming to the house last summer and promising to make them "multi-millionaires."
"Pete just ran him off," she said.
As New York's authorities get closer to ruling, tensions are running high.
Van Swol compares environmentalists to Soviet dictators and Adams acknowledges that people like van Swol "probably see me as the devil. I'm standing between them and that money."
Peter Diehl even finds himself arguing with his own brothers, who farm other parts of the family's valley. All their signatures would be needed to deal with a gas company.
"It makes things a little tense at Christmas," as Alice Diehl said.
In the Callicoon cafe, the air was full of expectation.
"I want to see those drilling rigs coming into town!" exclaimed one local as he greeted van Swol and Graby.
"You and me both," van Swol answered.
Later, van Swol said: "When those permits get approved here, all hell's going to break loose."
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Research in the Adirondack and Shawangunk Mountains shows that public lands are clearly beneficial to the economic health of local communities. Learn how we in the Catskills can adopt the lessons of important studies from the experts who conducted them. Catskill Cornucopia invites you to join us for "Economic Benefits of Parkland," a presentation and group discussion held at the Ashokan Center in Olivebridge, at 1:30 pm on Friday, February 18. The presentation is free and open to the public. Refreshments will be served.
