High-volume horizontal hydraulic fracturing has not taken place in New York because estimates of the natural gas reserves in the state’s Marcellus and Utica Shale have been greatly exaggerated.
That was the takeaway from a talk given at SUNY Cobleskill by James “Chip” Northrup, a veteran oil and gas investor on Thursday, Oct. 17.
“Whether it’s good or bad, in New York State it’s moot,” said Northup, in the question and answer period following his presentation.
The talk was part of the college’s environmentally themed 7th Generation Lecture Series, which is part of the school’s honors program.
Northrup, who splits his time between Dallas Texas and Cooperstown, said that very little of the Utica and Marcellus Shale in New York State was suitable for natural gas development from a business and economics perspective.
Northrup said that if New York had as big a shale gas reserve as has been claimed, gas drilling would be in progress.
“If there’s a lot of shale gas……it tends to get developed.”\
Northrup also said that the major oil and gas companies had either not come into New York, or had pulled out.
“The major oil companies…..are not really interested in New York state.”
The reason he gave for this is that that the productivity of shale plays tend to be overestimated, in part due to a 2008 U.S. Securities and Exchange Commission rules change. According to Northrup, this rules change liberalized how companies could report on their undeveloped oil and gas reserves.
“It made it a lot easier to overstate oil and gas reserves,” said Northrup. “They could be overly optimistic.”
He also said that there was no third party oversight of these estimates, and that the nature of shale formations lent themselves to speculation.
Northrup said that one doesn't have a good idea about how productive different parts of a shale formation will be until they have been tested.