State Regulators Discount Role of Small-Business Community in Natural Gas Debate

Proposed regulations would limit market competition

HAMBURG, NY (11/15/2011)(readMedia)-- The Independent Oil & Gas Association of New York (IOGA of NY) today charged that state regulators are failing to consider the impact proposed regulations and permitting guidelines associated with the exploration of natural gas reserves will have on the small business community, in particular privately owned and operated energy exploration companies based in New York State.

IOGA of New York specifically cited the following New York State Register entry (September 28, 2011: Page 15: referencing the proposed Department of Environmental Conservation (DEC) rules associated with natural gas exploration. It reads: ... the regulated community which is the focus of the proposed rules related to HVHF (High Volume Hydraulic Fracturing) are typically large national and international corporations. It is not expected that small businesses or local government will be engaged in HVHF.

IOGA members currently possess millions of acres in leases across upstate New York and many of its members have been issued permits by the New York State Department of Environmental Conservation for vertical oil and natural gas drilling using hydraulic fracturing. The association represents more than 400 individuals and businesses employing nearly 5,000 people. Many of these companies provide valuable goods and services to the industry. All will be harmed if excessive regulations and burdensome permit guidelines force business from the state.

"Large, publicly traded multinational corporations may be able to compete in this environment, but smaller, New York-based companies are struggling to see the 'open for business' sign on the marquee," said Brad Gill, IOGA of NY's executive director. "As currently written, the Supplemental Generic Environmental Impact Statement (SGEIS) and associated regulations are too restrictive. They will inhibit competition."

John Holko, president of Lenape Resources, based in Alexander, Genesee County, employs six professionals directly involved in the drilling, finishing and production of wells in New York. He said delays have resulted in lost revenue and business.

"Despite a long-term history of competence and regulatory compliance, many small energy companies may simply be driven from the opportunities within their own state due to extraordinary costs," Holko said. "The SGEIS and proposed regulations will be the knock-out punch to many small businesses."

IOGA of NY estimates that operators will be required to spend up to an additional $1 million per well to comply with the SGEIS and its companion regulations.

"The impact of these regulations will ripple across Upstate communities," Gill said. "If a local energy company is priced out of the opportunity to explore vast natural gas reserves, its local suppliers, vendors and members of the small-business community are shut out."

Gill, who also operates Earth Energy Consultants – a small business in Hamburg, Erie County, will represent IOGA of NY later this week at the state DEC's hearings, which are being held in Livingston, Broome and Sullivan counties; as well as in New York City. He will be joined by various independent energy voices. IOGA will submit final, comprehensive formal comments prior to the DEC's Dec. 12 deadline.

"We are simply looking for a balanced regulatory solution," Gill said. "Protecting the state's natural resources and seizing economic opportunity are two objectives that meet the needs of all New Yorkers. Energy companies across the state have been safely operating, with prudent environmental oversight for decades. Today, there are thousands of natural gas wells stretching across the Southern Tier and into Western New York.

IOGA of NY, representing more than 400 individuals and companies engaged in the oil and natural gas industry, promotes the common interests of its members who represent all industry sectors. IOGA of NY members are committed to operating safely, efficiently and with great care and stewardship on behalf of the state's natural resources. IOGA of NY and its members strive to educate the public about the positive impacts the oil and gas industry has had – and will continue to have – on New York's economy and quality of life.