NATURAL GAS:

Chesapeake will not drill in N.Y. watershed

Facing increasing public pressure, Chesapeake Energy Corp. said it will not drill for natural gas in an upstate New York watershed that provides unfiltered water to 9 million people.

"We are not going to develop those leases, and we are not taking any more leases, and I don't think anybody else in the industry would dare to acquire leases in the New York City watershed," said Chesapeake CEO Aubrey McClendon. "Why go through the brain damage of that, when we have so many other opportunities?"

The decision comes amid rising concerns over the safety of drilling in the Marcellus Shale, which stretches from New York to Tennessee and is believed to contain substantial natural gas reserves. A technique known as hydraulic fracturing injects chemical-laced water to loosen natural gas from shale deposits, spurring fears of leaks into groundwater.

McClendon spoke in Fort Worth, Texas, a day before the first scheduled hearing on proposed rules in New York that would regulate drilling in Loch Sheldrake in Sullivan County. A 2005 energy bill exempted the industry from the federal Safe Drinking Water Act.

Chesapeake, with some 5,000 acres, is currently the only lease holder in the area, and is the largest leaseholder in the Marcellus Shale (Mouawad/Krauss, New York Times, Oct. 28). -- PT

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