The fate of the North American natural gas industry pretty much hinges on one thing: the legality of hydraulic fracturing. For an oil and gas company, “fracking” is currently the most effective and efficient way to get at the tremendous resource reserves that lay beneath parts of the United States, like the Marcellus shale.
But as with any resource extraction, the process is environmentally risky. The water and sand mixture that is used in fracking also contains chemicals that environmentalists say pollute ground water and could be toxic to humans and animals. Many reports have been published studying the environmental impact of fracking, and many of them have found that the practice is unsafe.
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However, a few reports, such as one compiled by the New York Health Department and obtained by The New York Times, suggest that fracking could be conducted safely. This is significant because New York’s governor, Andrew Cuomo, and the state legislature have been debating whether or not to allow fracking for nearly four years. A delay made heavier by the fact that New York state sits on the northern region of the Marcellus Shale.
Estimates suggest that the Marcellus contains up to 250 trillion cubic feet of gas, 10 percent of which would be recoverable. The positive economic impact of the shale gas industry could be tremendous if it is allowed to grow in New York, which has suffered high unemployment recently and an exodus of business.
Oil and gas supergiants like Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), and BP (NYSE:BP) have all made grabs for Marcellus gas territory or contracts to drill or develop projects, and Royal Dutch Shell (NYSE:RDSA)(NYSE:RDSB) is building an ethane cracker specifically for Marcellus gas. The opportunity for some long-awaited job openings and economic revitalization is understandably tempting for leaders and lawmakers.
But environmental concerns are currently prevailing in New York. Cuomo, a Democrat, may be willing to sacrifice a chance to capitalize on the oil and gas boom in favor of preserving a public good. The right choice is by no means clear. The governor is unlikely to take any definitive, regulatory action until more rigorous research is done.