Natural gas drilling using hydraulic fracturing in New York State may produce far less natural gas -- and thus provide fewer economic benefits than anticipated -- according to a comparison of a state-commissioned study and a recent federal report.
The state study, released last summer, estimated that over 60 years hydraulic fracturing could produce as much as 173 trillion cubic feet of natural gas in eight counties that are above the Marcellus and Utica shales. That level of drilling could generate up to $185 million in annual state income tax revenue when production would peak after 30 years, according to the study.
But a report by the U.S. Energy Information Agency last month projected that the Marcellus Shale formation contains 40.5 trillion cubic feet of gas that has not been discovered that could be produced in New York. The Utica shale -- which lies below eight states -- contains an estimated 15.7 trillion cubic feet of gas that can be recovered. The study did not isolate the amount of gas that could be produced from the Utica shale in New York.
Experts say the amount of gas in the shale can't be known until it has been extracted and the spent wells sealed decades from now. Meanwhile, policy makers are weighing the economic benefits of allowing fracking against the potential environmental costs.
"For a shale formation like the Marcellus, there's a lot more that we don't know than what we do know," said Philip Budzik, operations research engineer at the EIA in Washington, D.C.
The State Department of Environmental Conservation is expected to release regulations that will govern how and where fracking can take place later this summer.
Fracking is a process in which drillers inject millions of gallons of chemical-laced water deep into the earth to force out natural gas deposits.
DEC spokeswoman Emily DeSantis said the agency has reviewed recent estimates of the size of gas reserves, including the EIA's, but does not plan to revisit the results of its study.
"We will not revise the economic impact portion as the low and average scenarios remain feasible . . . ," DeSantis said.
The report commissioned by the state Department of Environmental Conservation was produced by an outside company, Ecology and Environment Inc., which relied on drilling estimates by the Independent Oil and Gas Association of New York, a trade group.
The most optimistic scenario estimated that 173 trillion cubic feet of natural gas could be extracted over 60 years in eight counties -- Broome, Chemung, Tioga, Delaware, Otsego, Sullivan, Cattaraugus and Chautauqua. An "average" scenario projected 116.1 trillion cubic feet, while a "low" estimate projected 29.1 trillion.
When drilling and production reach their peak after about 30 years, the state could collect an additional $31 million to $185 million in personal income taxes due to direct and indirect economic activity, the state study said.
David Kay, a researcher at Cornell University's Community & Regional Development Institute, noted that two of the study's scenarios were inconsistent with the most recent natural gas production estimates.
"We have to plan based on the best information we have and we don't have very good information about a lot of this stuff," said Kay, who focuses on land use and economic development issues.
"All of these impacts are dependent on the pace and scale of drilling and that depends on things like prices, which are very hard to predict, and how much gas there is, which is hard to predict until you start actually drilling it," Kay said.
But James Smith, spokesman for Independent Oil and Gas Association of New York, said it was not uncommon for estimates to vary.
"You're never going to have that estimate perfect," Smith said. "To suggest a complete revision at taxpayer expense would not be a responsible move."