The smart ones walk away.

Most oil companies have never made themselves any friends in the past through a desire to "drill, baby, drill" just about anywhere, polar bears, dolphins, indigenous tribes and every other sentient being be damned.

Aubrey McLendon, head of Chesapeake Energy is disrupting, along with most things, that part of the hydrocarbon matrix that  has never found a potential source they didn't like.  

Gas drillers have been exploring  the giant Marcellus Shale coming up from West Virginia and Pennsylvania for most of the past year, and were waiting for go ahead on drilling in upstate New York to unleash yet another gas land-rush. 

Although the southern section in the Catskills,is especially attractive for being in the New York City exurbs, this portion of the Marcellus was also close to the watershed for the NYC drinking water supply. There was the potential for a big battle between classic Manhattan limousine liberals and upstaters who wanted to take the money and move to Miami, an attractive prospect in a depressed area.  In short the old nimby v economy story, which usually ends up eating column inches and grand debate for years.

But not this time:

Bowing to intense public pressure, the Chesapeake Energy Corporation says it will not drill for natural gas within the upstate New York watershed, an environmentally sensitive region that supplies unfiltered water to nine million people.

The reversal seems to signal a more conciliatory tone from the gas industry, which is facing mounting opposition in New York to its drilling practices.

But before the New York Green Party uncorks the organic Champagne,  this isn't a victory for them, it's a victory for rational common sense:

“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,” Aubrey K. McLendon, the chief executive officer at Chesapeake Energy, said in an interview on Monday in Fort Worth. “Why go through the brain damage of that, when we have so many other opportunities?”

Over all, Mr. McClendon said, the company’s holdings in the watershed are “a drop in the bucket” compared with the Marcellus field’s potential. He suggested that Chesapeake had more to lose by drilling there than by forgoing it, even though he contended such drilling would do no harm.

“How could any one well be so profitable that it would be worth damaging the New York City water system?” he said.

The simple fact is that there is so much gas that contrary to reputation, drillers can be choosy.  Bad luck if you own land in the Catskills.  And Dorset.  There often will be  those among the  legions of UK nimbyists who secretly want to sell out and move to Marbella.  The lesson from New York is possibly don't protest too much. 

Comments

[Andy]

Honestly, I can't see the other shale gas drillers doing anything other than what Chesapeake did. To do otherwise would be to take on the 9 million voters (or thereabouts) who get their water from these reservoirs.

The only interesting question left is if NIMBYism will morph in the Marcellus shale region into a game of declaring everything is somebody's watershed and therefore unfit for drilling.

This being New York we are talking about, I wouldn't be surprised!