IOGA of NY Supports Restoration of DEC Staff for Natural Gas Operations

Revenue from drilling permits alone will more than adequately cover the costs for additional staff, including inspectors.

ALBANY, NY (10/18/2010)(readMedia)-- The Independent Oil & Gas Association of New York (IOGA of NY) is opposed to further staff reductions at the New York State Department of Environmental Conservation (DEC). The group says that DEC needs additional staff to adequately administer natural gas and oil well permitting and enforcement, and calls for permit fee revenue to be dedicated to staffing at the agency.

Governor Paterson recently announced potential layoffs across state agencies that could include the elimination of more than 200 DEC positions. IOGA of NY believes that the state could generate enough in permit fee revenue to immediately retain existing field inspectors and employ dozens of new inspectors if permitting and drilling is expedited and allowed in the Marcellus Shale formation.

Based on a DEC permit fee calculator, permit fees from 300 wells alone would generate $1.284 million and support the salary and benefits for at least 12 new employees (based on $100,000 per employee) for one year. This calculation is based (conservatively) on a well with an average length of 8,000 feet.

New York's portion of the Marcellus is believed to hold more than 500 trillion cubic feet of natural gas (tcf). New York uses 1.1 tcf annually, 95 percent of which is imported.

"It's an unfortunate and ironic twist that the same agency that should benefit greatly from increased drilling activity in New York is currently facing major layoffs, partly because the state is not yet allowing this activity," said Brad Gill, IOGA of NY executive director. "A major solution to the economic despair of New York state and its residents is a mile below our feet, yet science and history has been trumped by politics and a campaign of misinformation and exaggeration."

If each of those 300 wells had four additional horizontal runs of 3,000 feet each from the same well pad, which is plausible, the state would collect another $1.488 million in permit fees – enough for 14 additional employees at the DEC. And many of these well pads support six or eight horizontal legs, further increasing the revenues to the state.

If New York can duplicate Pennsylvania's drilling activity – where nearly 2,000 wells were permitted in 2009 and 2,500 could be permitted by the end of this year – it would generate a minimum of $6.28 million in permit fees for 2,000 boreholes of 8,000 feet, and upwards of $10.7 million if 2,500 boreholes were drilled to 10,800 feet.

"While this would be enough money to fund these employees for one year, revenue from increased taxes resulting from overall economic impact would easily be more than enough to sustain the retention of DEC staff," Gill said. "New York must move expeditiously to tap this natural resource in a safe, efficient and environmentally sound way."

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IOGA of NY was founded in 1980 to protect, foster and advance the common interests of oil and gas producers, as well as professionals and related industries in the State of New York. To send a message to Albany in support of natural gas exploration, visit marcellusfacts.com.

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