New northeast US natgas drilling rules proposed

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Thursday, 9 December 2010 22:25 GMT

* Protection of drinking water supplies for major cities

* New York says commission acted too soon, study needed

By Jon Hurdle

PHILADELPHIA, Dec 9 (Reuters) - Natural gas drillers would be subject to new regulations designed to protect water quality in an area that provides water to 15 million people in the U.S. northeast under proposals published on Thursday.

The Delaware River Basin Commission, an interstate regulator, released plans that would ensure energy companies preserve the quality of rivers and streams used to supply millions of gallons of water to shale gas drilling operations. For an index of shale gas drilling companies, double-click on <TRSHALEGAS>.

The draft regulations, subject to a public comment period ending March 16, would also ban open-air impoundments used to hold water before and after drilling, and replace them with tanks.

The proposals would ensure that waste-water treatment plants are capable of properly treating the output from shale-drilling operations before returning it to waterways.

As energy companies invest billions of dollars to develop the gas-rich Marcellus Shale in Pennsylvania and surrounding states, critics say the technology enabling the boom contaminates ground and surface water with chemicals that can cause serious illness.

The industry says its extraction process, known as hydraulic fracturing, or "fracking", has never caused water contamination.

The commission, consisting of representatives from Pennsylvania, New York, New Jersey and the federal government, covers an area that could contain some 10,000 natural gas wells when the Marcellus industry is mature, said commission Executive Director Carol Collier.

With the exception of five exploratory wells, the commission has not permitted drilling in its watershed, which stretches 330 miles (530 km) from the river's headwaters in New York state to the Delaware Bay, and provides water to cities including New York and Philadelphia.

The industry, which has drilled hundreds of Marcellus wells in northeastern Pennsylvania and other areas of the state, said it will evaluate the proposals.

"Our industry is committed to working in tandem with state regulators and other agencies, including the DRBC, to develop these job-creating resources safely, efficiently, and in a way that is environmentally sound," said Kathryn Klaber, president of the Marcellus Shale Coalition, an industry group.

The draft regulations were attacked by Cas Holloway, the Environmental Protection Commissioner of New York City, whose administration has opposed gas drilling in the upstate New York watershed that supplies the city.

"We are disappointed that the DRBC has decided to issue draft regulations without first conducting a study of the potential impacts of hydrofracking in a watershed that supplies drinking water for 15 million people," Holloway said in a statement.

But John Hanger, secretary of Pennsylvania's Department of Environmental Protection, welcomed the measures as "a good first step to move this process forward." (Reporting by Jon Hurdle, editing by Daniel Trotta and David Gregorio)

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