NY-DEC Not Up To The Job – Oil & Gas Industry Influences Regulators

Louis Allstadt – Former Mobil Executive

NOTE: There was an incredibly well-written article posted on the “DC-Bureau” on October 1st by Peter Mantius.  Excerpts are shown below: 

COOPERSTOWN, N.Y. – Former Mobil Oil Corp. executive Louis W. Allstadt did not start out as an anti-fracking activist. He had to analyze the issue and then switch sides. Initially, he bought into the natural gas industry’s gaudy promises that high-volume horizontal hydrofracturing could work economic miracles in rural upstate New York. He wrote in a 2009 newspaper opinion article that gas drilling “could provide enormous quantities of clean-burning natural gas with great economic benefits” to the state.

But after digging deeper, Allstadt veered away from the party line. Now he is convinced the economic prospects are largely hype and that the state’s environmental regulators are disturbingly unprepared to deal with the side effects of such an invasive industrial activity.

“It’s a bad idea for New York State,” Allstadt said in recent interview, echoing detailed letters he has written to Gov. Andrew Cuomo and other state officials.

The industry has tried to downplay the fact that he has switched sides, challenging his credentials. “Lou was a policy guy in refining,” said Scott Cline, an industry spokesman who holds a Ph.D in petroleum engineering. “He’s talking about things he doesn’t know anything about.”

Actually, Allstadt headed Mobil’s oil and natural gas drilling in the western hemisphere before he retired. He also supervised Mobil’s side of the company’s 1999 merger with Exxon that created the world’s largest corporation.

And when Cuomo indicated in June that he was close to allowing fracking in a few areas near the New York-Pennsylvania border, Cooperstown clearly fell outside his target area. Since then, the governor has extended a moratorium on all high-volume fracking in New York State, pending a new health impact study that will take months.

The state should have ordered the health study years ago, Allstadt argues, and its failure to do so is a symptom of a deeper problem. In his view, regulators at the state Department of Environmental Conservation are so steeped in the industry mindset that they continue to sidestep a host of costly challenges, such as disposing of toxic fracking wastewater and financing repairs on roads and bridges beaten up by fracking trucks.

James “Chip” Northrup’s, lives a few doors down Main Street. A confrontational energy investor with a Texas twang and an accounting MBA from Wharton, Northrup argues that the shale gas boom is an unsustainable bubble. “I still go out to make presentations in hostile groups,” Northrup said. “Lou has the good sense to avoid that.”

In June, Northrup ventured into a sharply divided audience in the Keuka Lake town of Pulteney to urge locals to pass a moratorium or ban on fracking. After Northrup jokingly introduced himself as the second smartest oil and gas guy in Cooperstown – after Allstadt – Cline, the petroleum engineer, suggested that neither man had much to offer.

The Marcellus Shale formation, which extends from upstate New York down through Pennsylvania, West Virginia and Ohio, is widely viewed as one of the world’s largest stores of natural gas. Most experts agree that high-volume fracking is the best way to tap it.

Allstadt appreciated the potential, but was attuned to the need to regulate it strictly. Over time he concluded that that was not likely, given the NY-DEC’s apparent pro-industry bias. If he had one wake-up call that turned him into a skeptic, he said, it was drilling setbacks – the minimum distances gas wells must be from homes, public buildings and public sources of drinking water.

He hunted for details in the DEC’s 1,000-plus-page, boiler-plated guide to fracking regulations known as the 2011 Supplemental Generic Environmental Impact Statement, or SGEIS. No luck.

“The distance from a person’s home to an invasive industrial activity is of utmost importance,” Allstadt wrote DEC Commissioner Joseph Martens in January. “The public had every reason to expect that this information would be prominent in the 2011 SGEIS. It is not.”

 ….. more on the NY-DEC SGEIS ….

Peter Mantius

Peter Mantius is a reporter in New York. He covered business, law and politics at The Atlanta Constitution from 1983-2000. He has also served as the editor of business weeklies in Hartford, CT, and Long Island.