American Oil and Gas Reporter - October 2016 - 110

of Environmental Conservation's plans to
impose new requirements for well transfers, and the Public Service Commission's
changes to gas gathering line audit regulations.
"I had a private conversation with two
DEC people who concurred that its regulatory enforcement initiatives, including
well transfer rules, were top-down directives by the Cuomo administration," Gill
says. "I hear from both DEC and PSC that
they are being told to ensure that any and
all enforcement options are carried out regarding the oil and gas industry in New
York."
Gill emphasizes that while DEC has not
yet released these requirements in a formal rule making, he has seen e-mails from
agency officials citing them. He adds
that the governor's anti-industry attitude
comes from his seeking political support
from the state's left-leaning power players as well as the downstate populations
in and around New York City.
Well Transfers
According to Gill, one of IOGA NY's
members received a DEC e-mail regarding the company's plans to transfer a well
to a landowner. He says the e-mail laid out
regulatory requirements so outrageous
that it made plugging the well the more attractive option.
The DEC e-mail required the company to assess the well's status through a battery of tests and inspections, and to inform
the agency as to which protocols it proposed to use, subject to DEC review and
approval. The required well tests and inspections included:
* Gas leak detection for wellhead
and surface equipment;
* Mechanical integrity;
* Temperature log;
* Noise log; and
* Caliper log.
The DEC also demanded the company submit a report, including a narrative
analysis for each test and log, as well as
a remediation plan for the well site, Gill
says. If the company decided not to transfer the well, DEC required it to either return the well to commercial production or
submit a notice of intention to plug and
abandon it.
Gill lays out a scenario of a 40-year-old
Medina well that makes 1 Mcf of natural
gas a day that the landowner wants to use
to supply his house. Under DEC's new regulations, the well operator would have to
pay for that testing regime before transferring the well.
"Some operators have leases that require them to offer the landowner the well
for free at the end of its life. What happens
if DEC mandates an operator do those tests

and they ruin the well? Now the well is not
making anything. The landowner is likely to sue the operator because he damaged
the well, even though the operator did what
he had to do because of the DEC's mandate," Gill poses.
State Policy
New York's regulatory agencies are
supposed to protect correlative rights of
landowners and ensure no waste of natural resources, Gill describes. He contends
the DEC's actions are not following those
mandates, adding that the agency may believe it is working on behalf of the landowner by requiring operators to provide written quotes for plugging expenses before
transferring a well to the landowner.
Gill suggests that DEC's aim is to eliminate landowner-owned wells in New
York.
"DEC hates it when landowners own
wells, because it is harder for the agency
to deal with these nonindustry people," he
says. "Think about thousands of landowners owning thousands of wells. It is one
thing to have 1,000 wells when one company operates 900 of them, and the others
are split up among five operators. Can you
imagine regulating 1,000 individuals owning 1,000 wells?"
While it may be advantageous for a
landowner to own a well, Gill points out
that he becomes responsible for annual
production reports, regular maintenance,
and the ultimate plugging costs. With natural gas prices low and expected to remain
so for the foreseeable future, accepting a
well from an operator is not a money-saving proposition, he reasons.
DEC favors operator-to-operator well
transfers, at least when the receiving
company is solvent, Gill ventures. The
problem for New York, he says, is that the
number of solvent companies operating
there is decreasing.
"I have started a letter to Governor Cuomo, pointing out that his thinking is not
connecting two critical dots: The more the
state buries the industry and puts companies out of business, the more bankruptcies you will see. Operators are going to
start to walk," he predicts. "I understand
an operator is responsible for plugging his
wells, but if he files bankruptcy, everything
changes."
New York now has 3,800 wells on its
list of plugging candidates, Gill says. If
companies continue to get regulated out
of business, that list is likely to increase.
He adds that the situation was made
worse by the state sweeping more than $1
million from its plugging fund. And, because of restrictions limiting drilling activity in New York, while operators still are
paying $100 a permit into that fund, it is-

110 THE AMERICAN OIL & GAS REPORTER

n't growing quickly because of a lack of
drilling activity.
"Examples of companies going bankrupt include Norse Energy, New York Gas
& Oil, and Mesa Energy. These all were
operators of wells in New York," Gill says.
"In conversations at industry functions, I
hear people saying they operate 320 wells
in New York, and they just want to get rid
of them. They warn they are ready to walk
away from them. Some of these people
have their (personal) assets protected. If
they file bankruptcy, New York will be
holding the bag."
Gathering Lines
New York's operators also are confronted with PSC's sudden enthusiasm for enforcing regulations on gas gathering lines
it has long ignored, Gill goes on. He cites
a letter received by one operator that
lays out PSC's plans to review its pressuretest documents, patrolling and leakage survey records, and overpressure protection
equipment. PSC warned the operator that
gathering lines could meet criteria requiring them to be treated as transmission, distribution or service lines, meaning the
agency could impose additional inspection
requirements.
"I cannot say that PSC suddenly is
coming out with new regulations, but it is
dropping a heavy regulatory hammer on
operators who have not had to address
these issues in the past," he observes. "Now
is the worst time to force small operators
to comply with regulations they have not
had to comply with before."
Gill says he has heard reports that PSC
is requiring operators to:
* Provide detailed maps showing the
locations of underground pipelines;
* Meet odorization requirements; and
* Use steel when running pipelines
within 150 feet of an occupied dwelling.
"For a small operator to suddenly
have to generate detailed pipeline maps is
not a bad idea. I cannot argue it in theory, but those operators cannot afford to pay
someone to map their lines using geographic-information systems," Gill says.
"Utilities lay plastic pipes to a house, and
those pipes have the same pressure as (upstream gathering), but oil and gas operators have to use steel when within 150 feet
of an occupied dwelling, which means cathodic protection measures as well. All this
is just bad timing for the industry."
Fighting Back
Several New York state legislators are
likely to support IOGA NY's pushback
against the two agencies, and Gill says he
will be reaching out to them. The industry has received such legislative support in
the past, and he says he expects it will



Table of Contents for the Digital Edition of American Oil and Gas Reporter - October 2016

Contents
American Oil and Gas Reporter - October 2016 - Cover1
American Oil and Gas Reporter - October 2016 - Cover2
American Oil and Gas Reporter - October 2016 - Contents
American Oil and Gas Reporter - October 2016 - 4
American Oil and Gas Reporter - October 2016 - 5
American Oil and Gas Reporter - October 2016 - 6
American Oil and Gas Reporter - October 2016 - 7
American Oil and Gas Reporter - October 2016 - 8
American Oil and Gas Reporter - October 2016 - 9
American Oil and Gas Reporter - October 2016 - 10
American Oil and Gas Reporter - October 2016 - 11
American Oil and Gas Reporter - October 2016 - 12
American Oil and Gas Reporter - October 2016 - 13
American Oil and Gas Reporter - October 2016 - 14
American Oil and Gas Reporter - October 2016 - 15
American Oil and Gas Reporter - October 2016 - 16
American Oil and Gas Reporter - October 2016 - 17
American Oil and Gas Reporter - October 2016 - 18
American Oil and Gas Reporter - October 2016 - 19
American Oil and Gas Reporter - October 2016 - 20
American Oil and Gas Reporter - October 2016 - 21
American Oil and Gas Reporter - October 2016 - 22
American Oil and Gas Reporter - October 2016 - 23
American Oil and Gas Reporter - October 2016 - 24
American Oil and Gas Reporter - October 2016 - 25
American Oil and Gas Reporter - October 2016 - 26
American Oil and Gas Reporter - October 2016 - 27
American Oil and Gas Reporter - October 2016 - 28
American Oil and Gas Reporter - October 2016 - 29
American Oil and Gas Reporter - October 2016 - 30
American Oil and Gas Reporter - October 2016 - 31
American Oil and Gas Reporter - October 2016 - 32
American Oil and Gas Reporter - October 2016 - 33
American Oil and Gas Reporter - October 2016 - 34
American Oil and Gas Reporter - October 2016 - 35
American Oil and Gas Reporter - October 2016 - 36
American Oil and Gas Reporter - October 2016 - 37
American Oil and Gas Reporter - October 2016 - 38
American Oil and Gas Reporter - October 2016 - 39
American Oil and Gas Reporter - October 2016 - 40
American Oil and Gas Reporter - October 2016 - 41
American Oil and Gas Reporter - October 2016 - 42
American Oil and Gas Reporter - October 2016 - 43
American Oil and Gas Reporter - October 2016 - 44
American Oil and Gas Reporter - October 2016 - 45
American Oil and Gas Reporter - October 2016 - 46
American Oil and Gas Reporter - October 2016 - 47
American Oil and Gas Reporter - October 2016 - 48
American Oil and Gas Reporter - October 2016 - 49
American Oil and Gas Reporter - October 2016 - 50
American Oil and Gas Reporter - October 2016 - 51
American Oil and Gas Reporter - October 2016 - 52
American Oil and Gas Reporter - October 2016 - 53
American Oil and Gas Reporter - October 2016 - 54
American Oil and Gas Reporter - October 2016 - 55
American Oil and Gas Reporter - October 2016 - 56
American Oil and Gas Reporter - October 2016 - 57
American Oil and Gas Reporter - October 2016 - 58
American Oil and Gas Reporter - October 2016 - 59
American Oil and Gas Reporter - October 2016 - 60
American Oil and Gas Reporter - October 2016 - 61
American Oil and Gas Reporter - October 2016 - 62
American Oil and Gas Reporter - October 2016 - 63
American Oil and Gas Reporter - October 2016 - 64
American Oil and Gas Reporter - October 2016 - 65
American Oil and Gas Reporter - October 2016 - 66
American Oil and Gas Reporter - October 2016 - 67
American Oil and Gas Reporter - October 2016 - 68
American Oil and Gas Reporter - October 2016 - 69
American Oil and Gas Reporter - October 2016 - 70
American Oil and Gas Reporter - October 2016 - 71
American Oil and Gas Reporter - October 2016 - 72
American Oil and Gas Reporter - October 2016 - 73
American Oil and Gas Reporter - October 2016 - 74
American Oil and Gas Reporter - October 2016 - 75
American Oil and Gas Reporter - October 2016 - 76
American Oil and Gas Reporter - October 2016 - 77
American Oil and Gas Reporter - October 2016 - 78
American Oil and Gas Reporter - October 2016 - 79
American Oil and Gas Reporter - October 2016 - 80
American Oil and Gas Reporter - October 2016 - 81
American Oil and Gas Reporter - October 2016 - 82
American Oil and Gas Reporter - October 2016 - 83
American Oil and Gas Reporter - October 2016 - 84
American Oil and Gas Reporter - October 2016 - 85
American Oil and Gas Reporter - October 2016 - 86
American Oil and Gas Reporter - October 2016 - 87
American Oil and Gas Reporter - October 2016 - 88
American Oil and Gas Reporter - October 2016 - 89
American Oil and Gas Reporter - October 2016 - 90
American Oil and Gas Reporter - October 2016 - 91
American Oil and Gas Reporter - October 2016 - 92
American Oil and Gas Reporter - October 2016 - 93
American Oil and Gas Reporter - October 2016 - 94
American Oil and Gas Reporter - October 2016 - 95
American Oil and Gas Reporter - October 2016 - 96
American Oil and Gas Reporter - October 2016 - 97
American Oil and Gas Reporter - October 2016 - 98
American Oil and Gas Reporter - October 2016 - 99
American Oil and Gas Reporter - October 2016 - 100
American Oil and Gas Reporter - October 2016 - 101
American Oil and Gas Reporter - October 2016 - 102
American Oil and Gas Reporter - October 2016 - 103
American Oil and Gas Reporter - October 2016 - 104
American Oil and Gas Reporter - October 2016 - 105
American Oil and Gas Reporter - October 2016 - 106
American Oil and Gas Reporter - October 2016 - 107
American Oil and Gas Reporter - October 2016 - 108
American Oil and Gas Reporter - October 2016 - 109
American Oil and Gas Reporter - October 2016 - 110
American Oil and Gas Reporter - October 2016 - 111
American Oil and Gas Reporter - October 2016 - 112
American Oil and Gas Reporter - October 2016 - 113
American Oil and Gas Reporter - October 2016 - 114
American Oil and Gas Reporter - October 2016 - 115
American Oil and Gas Reporter - October 2016 - 116
American Oil and Gas Reporter - October 2016 - 117
American Oil and Gas Reporter - October 2016 - 118
American Oil and Gas Reporter - October 2016 - 119
American Oil and Gas Reporter - October 2016 - 120
American Oil and Gas Reporter - October 2016 - 121
American Oil and Gas Reporter - October 2016 - 122
American Oil and Gas Reporter - October 2016 - Cover3
American Oil and Gas Reporter - October 2016 - Cover4
http://www.nxtbook.com/nxtbooks/aogr/201909
http://www.nxtbook.com/nxtbooks/aogr/201908
http://www.nxtbook.com/nxtbooks/aogr/201907
http://www.nxtbook.com/nxtbooks/aogr/201906
http://www.nxtbook.com/nxtbooks/aogr/201905
http://www.nxtbook.com/nxtbooks/aogr/201904
http://www.nxtbook.com/nxtbooks/aogr/201903
http://www.nxtbook.com/nxtbooks/aogr/201902
http://www.nxtbook.com/nxtbooks/aogr/201901
http://www.nxtbook.com/nxtbooks/aogr/201812
http://www.nxtbook.com/nxtbooks/aogr/201811
http://www.nxtbook.com/nxtbooks/aogr/201810
http://www.nxtbook.com/nxtbooks/aogr/pbios_201810
http://www.nxtbook.com/nxtbooks/aogr/201809
http://www.nxtbook.com/nxtbooks/aogr/201808
http://www.nxtbook.com/nxtbooks/aogr/201807
http://www.nxtbook.com/nxtbooks/aogr/201806
http://www.nxtbook.com/nxtbooks/aogr/201805
http://www.nxtbook.com/nxtbooks/aogr/201804
http://www.nxtbook.com/nxtbooks/aogr/201803
http://www.nxtbook.com/nxtbooks/aogr/201802
http://www.nxtbook.com/nxtbooks/aogr/201801
http://www.nxtbook.com/nxtbooks/aogr/201712
http://www.nxtbook.com/nxtbooks/aogr/201711
http://www.nxtbook.com/nxtbooks/aogr/201710
http://www.nxtbook.com/nxtbooks/aogr/201709
http://www.nxtbook.com/nxtbooks/aogr/201708
http://www.nxtbook.com/nxtbooks/aogr/201707
http://www.nxtbook.com/nxtbooks/aogr/201706
http://www.nxtbook.com/nxtbooks/aogr/201705
http://www.nxtbook.com/nxtbooks/aogr/201704
http://www.nxtbook.com/nxtbooks/aogr/201703
http://www.nxtbook.com/nxtbooks/aogr/201702
http://www.nxtbook.com/nxtbooks/aogr/201701
http://www.nxtbook.com/nxtbooks/aogr/201612
http://www.nxtbook.com/nxtbooks/aogr/201611
http://www.nxtbook.com/nxtbooks/aogr/201610
http://www.nxtbook.com/nxtbooks/aogr/pbios2016_programguide
http://www.nxtbook.com/nxtbooks/aogr/201609
http://www.nxtbook.com/nxtbooks/aogr/201608
http://www.nxtbook.com/nxtbooks/aogr/201607
http://www.nxtbook.com/nxtbooks/aogr/201606
http://www.nxtbook.com/nxtbooks/aogr/201605
http://www.nxtbook.com/nxtbooks/aogr/201604
http://www.nxtbook.com/nxtbooks/aogr/201603
http://www.nxtbook.com/nxtbooks/aogr/201602
http://www.nxtbook.com/nxtbooks/aogr/201601
http://www.nxtbook.com/nxtbooks/aogr/201512
http://www.nxtbook.com/nxtbooks/aogr/201511
http://www.nxtbook.com/nxtbooks/aogr/201510
http://www.nxtbook.com/nxtbooks/aogr/201509
http://www.nxtbook.com/nxtbooks/aogr/201508
http://www.nxtbook.com/nxtbooks/aogr/201507
http://www.nxtbook.com/nxtbooks/aogr/201506
http://www.nxtbook.com/nxtbooks/aogr/201505
http://www.nxtbook.com/nxtbooks/aogr/201504
http://www.nxtbook.com/nxtbooks/aogr/201503
http://www.nxtbook.com/nxtbooks/aogr/201502
http://www.nxtbook.com/nxtbooks/aogr/201501
http://www.nxtbook.com/nxtbooks/aogr/201412
http://www.nxtbook.com/nxtbooks/aogr/201411
http://www.nxtbook.com/nxtbooks/aogr/201410
http://www.nxtbook.com/nxtbooks/aogr/201409
http://www.nxtbook.com/nxtbooks/aogr/pbios2014_programguide
http://www.nxtbook.com/nxtbooks/aogr/201408
http://www.nxtbook.com/nxtbooks/aogr/201407
http://www.nxtbook.com/nxtbooks/aogr/201406
http://www.nxtbook.com/nxtbooks/aogr/201405
http://www.nxtbook.com/nxtbooks/aogr/201404
http://www.nxtbook.com/nxtbooks/aogr/201403
http://www.nxtbook.com/nxtbooks/aogr/201402
http://www.nxtbook.com/nxtbooks/aogr/201401
http://www.nxtbook.com/nxtbooks/aogr/201312
http://www.nxtbook.com/nxtbooks/aogr/201311
http://www.nxtbook.com/nxtbooks/aogr/201310
http://www.nxtbook.com/nxtbooks/aogr/201309
http://www.nxtbook.com/nxtbooks/aogr/201308
http://www.nxtbook.com/nxtbooks/aogr/201307
http://www.nxtbook.com/nxtbooks/aogr/201306
http://www.nxtbook.com/nxtbooks/aogr/201305
http://www.nxtbook.com/nxtbooks/aogr/201304
http://www.nxtbook.com/nxtbooks/aogr/201303
http://www.nxtbook.com/nxtbooks/aogr/201302
http://www.nxtbook.com/nxtbooks/aogr/201301
http://www.nxtbook.com/nxtbooks/aogr/201212
http://www.nxtbook.com/nxtbooks/aogr/201211
http://www.nxtbook.com/nxtbooks/aogr/201210
http://www.nxtbook.com/nxtbooks/aogr/201209
http://www.nxtbook.com/nxtbooks/aogr/2012_pbios
http://www.nxtbook.com/nxtbooks/aogr/201208
http://www.nxtbook.com/nxtbooks/aogr/201207
http://www.nxtbook.com/nxtbooks/aogr/201206
http://www.nxtbook.com/nxtbooks/aogr/201205
http://www.nxtbook.com/nxtbooks/aogr/201204
http://www.nxtbook.com/nxtbooks/aogr/201203
http://www.nxtbook.com/nxtbooks/aogr/201202
http://www.nxtbook.com/nxtbooks/aogr/201201
http://www.nxtbook.com/nxtbooks/demo/aogr_clone
http://www.nxtbook.com/nxtbooks/aogr/201112
http://www.nxtbookMEDIA.com