NATURAL GAS:

Obama gets another energy headache as agency delays drilling vote

The Obama administration controls the tie-breaking vote on a plan to begin drilling for natural gas in the Northeast, shining a spotlight on its efforts to find a middle ground on the use of hydraulic fracturing to tap deep shale rock formations for energy.

Some local environmental groups are comparing the proposal, and their efforts to block it, to the debate over the Keystone XL pipeline, which would bring crude to the United States from Canada's oil sands region. Green groups claimed a big victory earlier this month when the administration delayed a decision on that project.

The administration is holding its cards close to the vest on the drilling proposal before the Delaware River Basin Commission. The obscure but important agency has authority over development in a watershed that includes parts of four states and supplies drinking water to 5 percent of the country's population, including Philadelphia and New York City.

Late last week, the commission called off a vote that had been planned for today on whether to approve regulations and allow drilling to start.

The four governors who vote on the panel appear to be split, 2-2. The administration, represented on the panel by an Army Corps of Engineers commander, has the key fifth vote. That gives the White House a role in what is commonly a state decision.

As with the Keystone XL pipeline, the drilling dispute catches Obama between an industry that is promising jobs and development amid a stubborn economic downturn and an environmental constituency on the other side that has grown disenchanted with Obama's compromises on pollution and climate change issues.

Drilling has been on hold for more than a year in the basin, which includes parts of Pennsylvania, New York, Delaware and New Jersey, while the commission develops regulations. Once such regulations are approved, drilling would be allowed subject to the restrictions included in them.

Environmental groups and other opponents want the commission to conduct a full "cumulative impact statement" before approving the rules and allowing drilling. Such a study would delay drilling by at least a year.

The commission had scheduled a vote on those regulations for today. But the vote was abruptly postponed late last week after Delaware Gov. Jack Markell (D) announced that Delaware would vote "no." No new date has been set.

No official reason was given for the delay. But the postponement indicated that the regulations would not have gotten the needed three votes, or that one or more of the commissioners wanted more time.

New York Gov. Andrew Cuomo's environmental commissioner had already predicted that New York would vote no, while the Republican governors of New Jersey and Pennsylvania were considered "yes" votes.

The federal government's position is less clear. Last year, the federal representative, Army Corps Gen. Peter "Duke" DeLuca, had come out in favor of moving ahead with the regulations and drilling, while also supporting a study (E&ENews PM, Dec. 14, 2010). That was essentially a pro-drilling position. And Obama pointed to drilling as an area of common ground with Republicans after the GOP gained control of the House in the 2010 midterm elections.

But things have gotten more contentious since then. Environmental groups have heaped opposition on the use of the "hydraulic fracturing" process, which involves high-pressure underground injections of chemical-laced water to break open rock and release gas, though many of their stated objections have to do with above-ground problems, such as truck traffic and spills.

New York's Democratic attorney general, Eric Schneiderman, has sued the Army Corps, saying the National Environmental Policy Act requires a full review of the environmental impacts before drilling is allowed in the basin.

In March, President Obama stated his continued support for gas drilling in his energy "blueprint." But he added a promise to "make sure that we're extracting natural gas safely, without polluting our water supply." That led to a study by an administration panel that found that natural gas companies aren't doing enough to protect the environment and questioned the sufficiency of existing regulations.

The panel, a subcommittee of the Secretary of Energy Advisory Board, came out in support of shale drilling generally as an important supply of domestic energy (Greenwire, Aug. 11). But it also validated many of the complaints of critics about pollution and other problems. The report cast doubt about whether the current regulatory structure in the county is sufficient to protect the public from such risks.

And last week, the supervisor of the Wayne National Forest in Ohio pulled 3,000 acres from a lease sale scheduled for next year, saying more study needs to be done into the effects of the fracturing and deep horizontal drilling required to produce petroleum from shale. The supervisor determined that the effects of this kind of drilling are different than those anticipated in a 2006 plan that allowed drilling.

Army Corps consults with White House

Hydraulic fracturing is a narrow part of the entire drilling process. But, combined with deep horizontal drilling, it is essential to drilling from shale, which involves breaking apart rock deep underground to release gas, rather than tapping into a reservoir.

The rules before the commission, or DRBC, as some call it, would allow 300 natural gas wells in the 13,539-square-mile basin. The commission would review the regulations before allowing more.

To determine its vote, the Army Corps has hosted events to consult with staffers from other agencies in the "federal family." Documents show that corps officials have also consulted with the White House Council on Environmental Quality.

Filmmaker and anti-drilling activist Josh Fox recently met with White House officials. He was careful to say only what he told them, rather than characterizing their answer. But he also noted in an interview that he is making a sequel to "Gasland" that will include the DRBC decision, and he expects it to be on HBO next summer, ahead of the general election.

"This decision is not going to happen in the dark," Fox said.

The decision to delay the vote was praised by Rep. Maurice Hinchey (D-N.Y.), whose criticism of DeLuca's decision highlighted the administration's stance on drilling. He had called earlier for the commission to delay the vote.

But Pennsylvania Gov. Tom Corbett (R) expressed "disappointment" after the vote was put off. In a statement, he said the delay was "driven more by politics than sound science," but he did not assign blame.

New Jersey Chris Christie (R) conditionally vetoed a permanent ban on hydraulic fracturing in New Jersey earlier this year, but instead proposed a one-year ban.

In opposing the regulations, Markell agreed with the position that a comprehensive study must be completed before drilling begins.

"Instead of beginning the exploration in the Delaware River Basin and hoping we get a proper regulatory framework in place after-the-fact, it is Delaware's view the Commission has an obligation to ensure that critical issues regarding well construction and operation are finalized first and not subject to subsequent dilution," Markell wrote in a letter to the commission.

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