Dryden Safe Energy Coalition
Safe energy development for jobs and prosperity
Dryden Safe Energy Coaltion (DSEC) Mission Statement
To offer balanced, data driven information on safe energy development,
to logically and numerically evaluate benefit-to-risk ratios, free of emotional bias or ideology,
and to bring together people interested in an analytical approach to energy issues.
Facts That All Dryden Residents Should Know
Town of Dryden = 94.2 square miles, 1 square mile = 640 acres, Town contains 60,288 acres.
1 Drilling Spacing Unit = 640 acres, or one square mile, maximum 94 spacing units in Dryden. Every land or home owner in a spacing unit can gain economically from development, even if they do not grant a lease and do not participate in a well. A spacing unit is one square mile, so many Dryden residents will end up within a spacing unit. A well within a spacing unit could be located as much as one mile away from a resident. Owners in spacing units may participate in the well, even without investing any capital and without granting a lease.
Dryden Town Population (2000 census) = 13,532 in 5,455 households, average household contains 2.5 people, 10,081 are age 18 or over (74.5%)
People with listed residential acreage: 5,711 landowners (families may reside in a house but it may be titled to only one of them).
The latest gas offers in New York State are $3000/acre with 20% royalties. Source: cnylandcoalition.org/drupal/ This amount may continue to rise as energy development moves ahead.
Total Dryden listed acreage on 2011 Tentative Assessment Roll : 58,236.27 acres. If leases are offered at $3,000 an acre, potential total value = $175M, all of which is wiped out by a ban. This is an average of $31K per landowner. 10,081 adults sharing in $175M = $17,359 average per adult. These figures do not include potential royalty income whether people lease or are in a spacing block, or additional business or taxes from energy development.
A person holding 100 acres has mineral rights now worth an average $300,000 on a lease, at today's rates. A ban simply confiscates that value.
Landholding in Dryden by acreage:
At least 500 or more = 1 parcel
At least 200 but less than 500 acres = 21 parcels
At least 100 but less than 200 acres = 95 parcels
At least 50 but less than 100 acres = 181 parcels
At least 25 but less than 50 acres = 271 parcels
At least 10 but less than 25 acres = 471 parcels
At least 5 but less than 10 acres = 476 parcels
At least 2.5 but less than 5 acres = 682 parcels
Included in above 2,198 parcels out of 5,711 parcels held in the Town (38%). So, drilling might benefit a substantial number of residents, not just a tiny few as often alleged.
If we assume that parcels of less than 2.5 acres would not be big enough to lease, there are still 2,198 parcels in Dryden that could lease.
Dryden residents have considered energy development. 41% of Dryden landowners have leased their land. Similar numbers prevail in the other Tompkins towns. The City of Ithaca is urban and unsuitable for drilling and there are no leases in the City. Opposition to energy development is often most vocal from those who have no option to lease.
An oil and gas separation tax is levied by many states that have energy resources. Energy companies pay that tax and include it in their prices. We pay that tax when we buy energy. NY will probably enact a similar tax and most of it will be passed through to other states. The money raised can support our schools and lower our total tax burden, another economic benefit for our residents.
Energy Development Law
Submitted by admin on Sun, 07/24/2011 - 03:38
Source documents on energy development
US Constitution, Articles V, VI, 14th Amendment
Relevant sections of the New York State Constitution
Amendments to Town of Dryden zoning ordinance
Excerpts from the Udell case on zoning
U.S. Supreme Court cases related to home rule
DEC local laws preempted
What is Heavy Industry Legally?
NY Key Preemption Case
A government of laws and not of men
réglementation thermique RT2012
Anschutz v. Dryden (complaint and supporting documents)
Middlefield zoning suit, complaint
Compulsory Integration v. the Law of Capture
U.S. Third Circuit Minard decision favors landowners
Morgantown case: WV state law preempts home rule
Town of Caroline Alerted to Ban Risks
Town says drilling ban is consistent with land-use authority
Drilling rights issue goes to court
Pennsylvania statute ending home rule
Dryden and Middlefield appeal documents
Landowners have rights after all? Who knew?
Earth Justice MIA in Middlefield
Economics of Development
Submitted by admin on Wed, 09/28/2011 - 18:57
A Tale of Two States: PA booms while NY suffers
How fracking works: fears are based on ignorance
New York Issues Proposed Fracking Rules, Schedules Hearings
Want Jobs? Drill Shale, Statistics Indicate
GM to Introduce CNG-Powered Pickup Trucks
Raucous New York Hearing Drills Down on Proposed Shale Rules
Natural Gas Will Repower America
That boom you hear is coming from Bradford
Business Week: Could Shale Gas Reignite the U.S. Economy?
NY Post editorial: Beacon, Energy, Solyndra, and the Northeast power outages
The Buffalo News: Fracking boom could go bust in N.Y.
Why natural gas beats wind power and other “green” experimental energy technologies
Author: Anti-Fracking Din Drowns Out Good News
Left-wing activists are blocking a budding U.S. energy resource
With Gas Drilling Next Door, County in New York Gets an Economic Lift
Unprecedented Boom Has Jobs Looking for People in North Dakota
Video: New York Energy Citizens stand up for jobs
Trying to make economic that which is not
Meaning changed thanks to four-letter word
The $110 Effect: What Higher Gas Prices Could Really Do to the Economy
How Much Natural Gas Does the Marcellus Really Hold?
"Facts are sorely needed."
Packed House for First-Ever NY NatGas Career Expo
Farmers as "collateral damage"
Public support slips for steps to curb climate change
Gas drillers wrangle over NY limitations, bans
Escape from New York?
Water and technical issues
Submitted by admin on Wed, 10/05/2011 - 22:38
Fracking Has Become a 'Bumper Sticker' Cause, Geophysics Professor Testifies
Study rebuts CU scientists' claim on climate impact of shale gas
Not All Cornell Scientists Agree
The Impact of Marcellus Gas Drilling on Rural Drinking Water Supplies
Errors in Myers’ Marcellus Shale Groundwater Paper from Start to Finish
Submitted by admin on Tue, 10/18/2011 - 14:55
SMRs--small modular reactors as an alternative to natural gas
Obama Administration Pushes for Small ‘Modular’ Reactors
Wind turbines--from the Congressional Research Service
Hanger: Shale Gas Faces 'Intense Competition'
A Competitor Emerges for Solar Panels
New source of climate warming: Wind farms
The irony: "Solyndra Not Dealing With Toxic Waste At Milpitas Facility"
Another tale of two states
Submitted by admin on Wed, 02/27/2013 - 17:47
This time it's not NYS and PA. It's NYS...
Once again, a group of lawmakers in Albany is pushing for a moratorium on the issuance of permits to allow for natural gas drilling in parts of New York.
Democratic lawmakers in the state assembly, including Ithaca-area Assemblywoman Barbara Lifton, have introduced legislation to suspend permits from being issued until May 15th, 2014.
Wednesday was a day marked on the calendars of many as the day the state would release its regulations on the drilling industry, but earlier this month, state Department of Health officials said they had not completed their review of the process of hydraulic fracturing.
Secretary for the Independent Oil and Gas Association of New York John Holko believes Assembly democrats are pandering to downstate constituents and don’t fully understand what and where they’re limiting.
The state Department of Environmental Conservation is waiting for that report before issuing its final regulations.
...and—wait for it—IL:
Environmentalists and business groups have reached an agreement that paves the way for "fracking" in Illinois...
...Governor Pat Quinn released the following statement on the proposed legislation:
“Today’s proposal is good news for Southern Illinois and our entire state’s economy. This legislation has the potential to bring thousands of jobs to Southern Illinois, while also ensuring that Illinois has the nation’s strongest environmental protections.
“I am committed to creating jobs and economic growth in every part of Illinois, and always making sure our water and natural resources are protected for future generations.
“I want to thank everyone who’s been working hard in good faith on this issue. While there is more work to be done, this proposal moves us forward.”
Read the whole thing.
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Submitted by admin on Tue, 02/26/2013 - 17:45
Painting of Dryden, NY:
Well, some people consider Dryden the Garden of Eden. This guest viewpoint appeared in the Ithaca Journal recently:
On a cold and sunny day, I enjoy the peace winter seems to bring. The glistening of sunlight on the new-fallen snow is a welcome sight. As I walk out to feed the goats, I chuckle at the cat as she backtracks to the barn in the same prints she left as she trotted out to meet me. I gaze around at the blue sky, breathe the clean air and exhale a sigh of relief.
My town is abundantly blessed and ever thankful for our ban on fracking. A ban means I will be able to keep good health, finish the home I began building and resume investing in my community. Without a ban, the effects of fracking would have forced me to move. My American dream will remain intact. I won’t be forced to give up my gas rights by compulsory integration, or forced out by eminent domain.
I conducted thousands of hours of independent study and traveled the country to investigate the far-reaching effects of fracking. A process of extreme extractive mining is eating up rural America’s food producing farmlands like Pac-Man. In New York, enormous scale is planned, conquering entire regions of peaceful rural neighborhoods filled with unsuspecting residents, unaware of industrial takeover. Knowing neighboring wells will likely ruin the farm I was raised on leaves me sleepless.
Each phase of extreme extraction brings a certainty of pollution, damage and a measure of high-risk chemical exposure.
I grew up in Greene, in the so-called “sacrifice zone.” Industry cannot restrain toxic air nor confine the damages to only the drill pad. Neighboring dairies and croplands will be exposed to lethal venting causing air pollution. My hometown remains a target without a protective ban and can suffer from drilling upstream, beyond its borders. My friend, biologist Sandra Steingraber, teaches that the known effects of environmental illnesses and cancers produced by fracking pads are unacceptable.
Cornell engineer Tony Ingraffea states that 6 percent of all horizontal gas wells leak initially; all eventually fail. Fracking produces billions of gallons of chemical and radioactive waste stored in injection wells. No monetary fine can cover the incalculable collective toll to health, air, water and farming that fracking produces.
The Marcellus shale is not a viable source of fuel according to the evidence provided by scientists to New York’s Department of Environmental Conservation detailing costs. The DEC’s mission is to ensure a healthy environment and also to exploit natural resources, an inherent conflict.
Americans from Wyoming, Texas, Colorado and Pennsylvania are sharing their experiences; New Yorkers are acting. A tenacious Ron Gulla shouted at EPA, “Is Pennsylvania worth fighting for? Yes! Worth dying for? Hell, yes! But not from a glass of water!”
The Community Environmental Defense Counsel of Ithaca helps towns protect their schools, parks and cemeteries from fracking. The people of Greene are unprotected. Coming together can save a town; silence results industry takeover. Action by a small group of residents to proclaim their community be protected by law from industrial takeover is now critical to keep Greene clean. The Trojans should mount up.
But not everyone wants another's world view imposed on them in the guise of protection from threat, real or imagined. For Henry Kramer, freedom trumps "protection":
In her February 15 guest column, DRAC member Joanne Cipolla-Dennis recites the most extreme claims made by energy development opponents as facts, rather than opinions. This is the “big lie technique,” if you repeat allegations often enough as fact people believe them.
Regarding the “big lie” see Mein Kampf, “In the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily …. They would not believe that others could have the impudence to distort the truth so infamously.”
Cipolla-Dennis lauds the Town of Dryden for “protecting Dryden” and enforcing the type of town and life style Cipolla-Dennis loves. But not all of us want or need to be “protected,” nor do we share Cipolla-Dennis’ pessimistic view of development and change. We prefer to have freedom of choice of action on what we do and how we live, without being “protected” and stripped of our freedoms via Dryden enacting Cipolla-Dennis’ world view into law.
Cipolla-Dennis overlooks individual freedom and individual rights to choose how to live and how to husband one’s own property. Anti-frackers say they favor “home rule,” yet stop the principle of home rule at the town board level. Why should a town board make decisions for all residents and landowners? What special expertise do town boards have? Why shouldn’t each home owner be free to make individual decisions on issues on which the public in our state is about evenly divided?
Sadly, many of the people who would ban energy development, keep it out of their own back yard, and deplore everything about it, still use its products. Until they abandon the use of all fossil fuels, including gasoline, and live off the grid, they are morally bound to bear their share of the risks of production.
The Dryden Safe Energy Coalition supports energy development with careful safeguards. Development is not risk free. But, development offers a chance for high paying jobs, capital for land rich but cash poor farmers, new tax base to support and improve our schools, and perhaps most critically energy independence for our nation, freeing us from potential wars and being beholden to other countries. Why is it that anti-frackers rarely consider or admit there can be any positives from development? We at DSEC thinks risks can be safely managed, but DRAC seems to admit no positive values in development. A sense of balance is needed.
It should not take five years to determine the safety of fracking. Fracking at vertical wells has been done in NY for decades and at horizontal wells in other states for years. It is not for more information we delay, but to kill development. Meanwhile NY residents, among the highest taxed in the nation, lack new sources of revenue to pay for our safety nets.
Freedom is precious. “Protecting Dryden” is a code phrase covering another transfer of power to government. Choose freedom over “protection.”
Cross-posted at One Piece At A Time.
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Tilting at windmills?
Submitted by admin on Tue, 02/26/2013 - 10:48
EVERY energy source has its drawbacks:
Two wind turbines towering above the Cape Cod community of Falmouth, Mass., were intended to produce green energy and savings -- but they've created angst and division, and may now be removed at a high cost as neighbors complain of noise and illness....
...The first turbine went up in 2010 and by the time both were in place on the industrial site of the town's water treatment facility, the price was $10 million. Town officials say taking them down will cost an estimated $5 million to $15 million, but that is just what Falmouth's five selectmen have decided to move toward doing...
...The dispute has been a bitter three-year battle in the seaside town where officials argue the project was thoroughly vetted, researched and put to public vote multiple times.
"To say 'let's let the voters decide' -- it sort of flies in the face of what we went through all these years," said Megan Amsler of the Falmouth Energy Committee.
"We never tell somebody 'hey, you're going to have to take that coal plant down or you're going to have to stop mining the mountain tops.'...
Really? You NEVER tell ANYBODY that?
Read the whole thing.
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UK lifts ban on fracking...and mark your calendar, get out the popcorn
Submitted by admin on Wed, 12/19/2012 - 20:54
At CNN. Last week,
Britain's government lifted its ban on a controversial mining process known as hydraulic fracturing, or fracking, Thursday, allowing companies to continue their exploration of shale gas reserves...
...The new controls imposed by the UK Department of Energy and Climate Change include a requirement to carry out a seismic survey before work starts.
Firms involved must also draw up a plan showing how the seismic risks will be limited, and monitor seismic activity before, during and after the exploration.
Cuadrilla Resources said Thursday's decision to allow fracking to resume marked a significant step for Britain's future onshore gas industry.
"Today's news is a turning point for the country's energy future. Shale gas has the potential to create jobs, generate tax revenues, reduce our reliance on imported gas, and improve our balance of payments," chief executive Francis Egan said in a statement.
In an interview with CNN, Egan insisted that fracking could be done "safely and sensibly" in Britain and that there are huge reserves to be exploited.
The company believes there is about 200 trillion cubic feet of gas under the ground just within its license area in Lancashire. To put that figure into context, the United Kingdom uses about 3 trillion cubic feet of gas a year, Egan said...
Interestingly, Newsbusters just reported this:
Less than a week after Great Britain lifted its ban on hydraulic fracturing, there is more news that will make fracking opponents unhappy. AXS television, formerly HDNet, has agreed to air the film “FrackNation” next month.
“FrackNation,” a film by investigative journalist Phelim McAleer, will be broadcast on Jan. 22, 2012 at 9 p.m. ET according to The Hollywood Reporter. AXS TV is a cable network owned by Mark Cuban, Ryan Seacrest and entertainment companies AEG and CAA.
In a press release, McAleer said of the film, “FrackNation has been described as the first 'pro-fracking film.' I would describe it as pro-journalism and pro-truth. It asks hard questions of the environmental movement and its campaigns. And they seem to not like difficult questions”...
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It's not nice to fool Mother Nature
Submitted by admin on Mon, 08/20/2012 - 10:57
Here's a blast from the past:
Fooling with nature is what appears to be happening at Montezuma National Wildlife Refuge at the north end of Cayuga Lake. Pools had filled in over time and it had gotten hard to see much from Wildlife Drive in places where vegetation had gotten the upper hand. So pools are being dredged and muck being piled up in an effort to improve habitat and enhance eco-tourism:
Better for the birds, better for the tourists...what could be bad?
And yet, according to letter-writer Don Barber in the Ithaca Journal, humans—at least certain humans—shouldn't mess with nature because, it's implied, that never ends well:
Somewhere over the past century, the ruling plutocracy and many of its minions have lost their reverence and respect [for] Mother Nature and have come to believe that man and technology can solve any problem...
Perhaps humans shouldn't be trying to improve bird habitat, thereby shoring up the NYS economy by enhancing eco-tourism.
And they certainly shouldn't have a diesel tank on that "pristine" land for the purpose of pumping fossil fuels into the huge earth-moving equipment required to dredge the pools and pile up the muck:
Would the same people who object to energy development—when it comes to fossil fuels anyway—on the grounds that "Mother Nature doesn't care what you think" object to habitat and tourism improvement on the same grounds?
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Submitted by admin on Tue, 07/31/2012 - 11:06
At Via Meadia:
Over a series of recent posts, I’ve been looking at the energy revolution that is changing the look of the 21st centuries. Some countries are losers, but the US in particular stands to make big gains at home and in its foreign policy.
On the whole, this news is about as good as it gets: trillions of dollars of valuable resources are now available to power the US economy, cut our trade deficit and reduce our vulnerability to Middle East instability. Hundreds of thousands of well paid blue collar jobs are going to reduce income inequality and help rebuild a stable middle class. Many of the resources are exactly where we would want them: in hard hit Rust Belt states.
World peace is also looking more possible: the great powers aren’t going to be elbowing each other as they fight to control the last few dribs and drabs of oil. Nasty dictatorships and backward-facing petro-states aren’t going to be able blackmail the world as easily.
But there is one group (other than the Russians and the Gulf Arabs and the Iranians) that isn’t sharing in the general joy: the greens. For them, the spectacle of a looming world energy crisis was good news. It justified huge subsidies for solar and wind power (and thereby guaranteed huge fortunes for clever green-oriented investors). Greens outdid themselves year after year with gloom and doom forecasts about the coming oil crunch. They hoped that public dislike of the Middle East and the costs of our involvement there could be converted into public support for expensive green energy policies here at home: “energy independence” was one of the few arguments they had that resonated widely among average voters.
Back in those salad days of green arrogance, there was plenty of scoffing at the ‘peak oil deniers’ and shortage skeptics who disagreed with what greens told us all was settled, Malthusian science. “Reality based” green thinkers sighed and rolled their eyes at the illusions of those benighted techno-enthusiasts who said that unconventional sources like shale oil and gas and the oil sands of Canada would one day become available.
Environmentalists, you see, are science based, unlike those clueless, Gaia-defying technophiles with their infantile faith in the power of human creativity. Greens, with their awesome powers of Gaia-assisted intuition, know what the future holds.
But those glory days are over now, and the smarter environmentalists are bowing to the inevitable...
Read the rest.
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A visit to Josh's Inferno...
Submitted by admin on Sat, 07/21/2012 - 18:43
...Hell, otherwise known as Susquehanna County.
Ummm, maybe not so much:
...All told, we saw about 20 pads in various stages of activity including completion. Truck traffic was sporadic and unobtrusive on well-maintained/repaired roads. We saw no residential “for sale” signs, but many had new buildings, additions, and improvements. Cows, horses and humans were alive and well...
Read the whole thing.
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The strange world of green energy politics
Submitted by admin on Wed, 07/18/2012 - 18:33
At FoxNews, a reminder that TANSTAAFL:
The United States is leading the world in reducing its emissions of carbon dioxide. And it’s doing so by a wide margin.
Yes, you read that right. The United States – the country that is routinely vilified by the Green/Left for refusing to sign the Kyoto Protocol or impose carbon taxes or institute a cap-and-trade system – is dramatically cutting its production of carbon dioxide. Proof of that has come from both the International Energy Agency in Paris and the Energy Information Administration in Washington.
But you won’t hear about America’s success at cutting carbon dioxide emissions from groups like the Sierra Club, Greenpeace, or the leftist Center for American Progress. That’s because those very same groups are opposing production of the fuel that’s making those reductions possible: natural gas.
Welcome to the strange world of “green” energy politics where fossil fuels – all of them – are vilified because, well, they aren’t wind, and they aren’t solar. Nevertheless, the facts are readily available for anyone who cares to look at them...
...During many of those years [2007-2010], the Sierra Club supported natural gas because, as the group’s executive director, Michael Brune, put it earlier this year, the fuel could “play a necessary role in helping us reach the clean energy future our children deserve.”
But now the Sierra Club has launched a “beyond natural gas” campaign and the group’s president, Robin Mann is saying that the emergence of natural gas “is particularly frightening.”
A similar stance is evident at Greenpeace, which says that natural gas is “a fossil fuel, with some of the same damning negatives as coal and oil…The extraction of natural gas – especially via fracking – is incredibly harmful to the environment and people's health.” The group says it is opposed to hydraulic fracturing (aka “fracking”) because the process is “wreaking havoc on communities all over the country, as well as on our climate.”
Or consider the statements from Joe Romm, a blogger for the Center for American Progress, who regularly attacks anyone who dares stray from his view that the only answer for the global energy future is wind and solar. On March 1, Romm wrote that natural gas was a “bridge fuel to nowhere.” In January, he was even clearer about his antipathy toward the fuel, writing “We don’t want new gas plants to displace new renewables, like solar and wind.”
To be sure, solar and wind energy are growing fast. Over the first four months of the year, generation of electricity from wind grew by 21 percent and solar production was up by 85 percent. Together, solar and wind generated about 52 terawatt-hours of electricity. That’s a lot of juice. But over that same period, natural gas-fired generators produced 371 terawatt-hours, about seven times as much as solar and wind combined.
Of course, it’s true that natural gas drilling takes a toll. Increased drilling activity has led to a backlash against the industry as more drill rigs are deployed in suburban and exurban regions that have never had drilling before.
But the exact same type of backlash can be seen by looking at the wind industry. Rural communities all over the world are fighting large-scale wind projects and the “energy sprawl” that comes with it. The simple truth is that there’s no such thing as a free lunch, particularly when it comes to energy production. Furthermore, given the global backlash against the wind business, it’s becoming abundantly clear that the wind industry isn’t so “green” after all...
Read the whole thing.
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Larry Cathles on natural gas...
Submitted by admin on Sun, 07/15/2012 - 18:20
...in the Cornell Chronicle:
Natural gas as an energy source is a smart move in the battle against global climate change and a good transition step on the road toward low-carbon energy from wind, solar and nuclear power.
That is the conclusion of a new study by Lawrence M. Cathles, Cornell professor of earth and atmospheric sciences, published in the most recent edition of the peer-reviewed journal Geochemistry, Geophysics and Geosystems. Cathles reviewed the most recent government and industry data on natural gas "leakage rates" during extraction, as well as recently developed climate models....
...Cathles' study includes additional findings about expanding the use of natural gas as an energy source, as well as the climate impact of "unconventional" gas drilling methods, including hydraulic fracturing in shale formations. They include the following:
▪ Although a more rapid transition to natural gas from coal and some oil produces a greater overall benefit for climate change, the 40 percent of low-carbon energy benefit remains no matter how quickly the transition is made, and no matter the effect of ocean modulation or other climate regulating forces.
▪ Although some critics of natural gas as a transition fuel have cited leakage rates as high as 8 percent or more of total production during drilling -- particularly hydraulic fracturing extraction -- more recent industry data and a critical examination of Environmental Protection Agency data supports leakage rates closer to 1.5 percent for both conventional and hydrofractured wells.
▪ Even at higher leakage rates, using natural gas as a transition to low-carbon energy sources is still a better policy than "business as usual" with coal and oil, due to the different rates of decay (and hence long-term global warming effect) of carbon dioxide released in greater amounts by burning coal and oil and any methane released during natural gas extraction.
▪ Using natural gas as a transition fuel supports the push to low-carbon sources by providing the "surge capacity" when needed, or a buffer when solar and wind production wanes.
"The most important message of the calculations reported here is that substituting natural gas for coal and oil is a significant way to reduce greenhouse forcing, regardless of how long the substitution takes," Cathles wrote. "A faster transition to low-carbon energy sources would decrease greenhouse warming further, but the substitution of natural gas for other fossil fuels is equally beneficial in percentage terms no matter how fast the transition."
The study can be downloaded at: http://bit.ly/NiAsaG.
Geochemistry, Geophysics and Geosystems is an online journal published by the nonprofit American Geophysical Union. Cathles' research received no outside funding.
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Submitted by admin on Sat, 07/14/2012 - 18:10
In the July 14th Ithaca Journal:
ALBANY, N.Y. -- Nationwide Mutual Insurance Co. has become the first major insurance company to say it won't cover damage related to a gas drilling process that blasts chemical-laden water deep into the ground.
The Columbus, Ohio-based company's personal and commercial policies "were not designed to cover" risk from the drilling process, called hydraulic fracturing, or fracking, Nationwide spokeswoman Nancy Smeltzer said Thursday....
Read the rest.
But for the actual rest of the story, see EID Marcellus ( we apologize to EID for putting this up in its entirety rather than excerpting, but it's too good not to fully share):
Energy insurance expert David Stein wrote this guest column only hours before Nationwide Insurance issued a new statement that backtracks on the company’s prior comments about hydraulic fracturing. According to this statement, the company “has not changed our policies or guidelines, nor are we cancelling policies.” The new statement closely tracks what David surmised to be the truth and may be found immediately following his remarks.
The AP broke some apparently groundbreaking news – Nationwide Insurance had made a decision not to underwrite risks associated with hydraulic fracturing. Immediately, press outlets picked up the story. Clearly this was news – except it wasn’t.
The United States is home to thousands of insurance companies. Insurance companies make decisions about their individual appetite for risk. The overwhelming majority of insurers restrict their underwriting guidelines to “plain vanilla” risks – personal auto, homeowners and small “main street” type business. Others choose to work with more risk intensive portfolios – coastal property, aviation, medical malpractice.
Consumer-oriented companies (i.e. Nationwide, State Farm, Allstate) have not been active participants in the oil and gas industry. Energy companies have traditionally attracted a very narrow group of very large insurance companies. These insurers usually have entire energy divisions within their companies. Staffed by specialty underwriters with specific knowledge of the demands and risks of industry, these larger insurers are equipped to approach risk with the requisite knowledge to be successful.
With natural gas development moving into new areas, local insurance agents are eager to become part of this exciting industry. Nationwide has never been a significant player in the energy industry. The memo appears intended to offer clarification to their underwriting staff. While Nationwide entertains small contracting and transportation risks, agents will likely be declined if they approach the company with businesses more immediately involved in oil and natural gas development.
Likewise, Nationwide has not traditionally expressed an appetite for aviation or medical malpractice risks. This does not imply that flying is too dangerous, or that the practice of medicine should cease.
Businesses in the United States are generally entitled to select opportunities that align with their interests and abilities. When did it become newsworthy for a business to exercise this choice? For whom is this news?
LJ Stein is the leading oil and natural gas specialty insurance broker in the Northern Appalachian region.
(Latest) Nationwide statement regarding concerns about hydraulic fracturing
FOR IMMEDIATE RELEASE
July 13, 2012
Media Relations Hotline
Columbus, OH - Nationwide issued the following statement today regarding insurance coverage concerns related to hydraulic fracturing, better known as “fracking”.
Gas and oil drilling has been going on in this country for many years in the west and southwest. Fracking is another variation of the gas and oil business. In recent years, oil and gas exploration has come to New York, Pennsylvania and Ohio.
Nationwide has not changed our policies or guidelines, nor are we cancelling policies. Fracking-related losses have never been a covered loss under personal or commercial lines policies.
Nationwide’s personal and commercial lines insurance policies were not designed to provide coverage for any fracking-related risks.
Insurance works when a carrier can accurately price the coverage to match the risks. When information and claims experience are not available to fully understand the scope of a given risk, carriers aren’t able to price protection that would be fair to both the customer and the company.
However, Nationwide will investigate all claims submitted by our customers that they believe are the result of damage from fracking. Every Nationwide claim is reviewed on a case-by-case basis.
From an underwriting standpoint, we do not have a comfort level with the unique risks associated with the fracking process to provide coverage at a reasonable price.
Insurance is a contract and it is designed to cover certain risks. Risks like natural gas and oil drilling are not part of our contracts, and this is common across the industry.
Our longstanding underwriting guideline is that we do not insure the oil and gas business.
We encourage consumers to be knowledgeable about any risks to their property and assets. For advice, seek the help of financial and legal specialists who can discuss the unique nature of the risks associated with oil and gas exploration. We also advise consumers to talk to their insurance agent to understand what coverage is provided in their personal or commercial lines policies.