Cooperstown Brewer Fights N.Y. Fracking Sought by EOG Resources

Brewery Ommegang says Belgian ale and natural gas don’t mix.

That statement of the obvious matters, the maker of Aphrodite Ale and Hennepin Farmhouse Saison says, because the water it draws from aquifers beneath Cooperstown, New York, is at risk of pollution from hydraulic fracturing.

“Even our strongest beer is 90 percent water, and all of our water comes off the property,” Larry Bennett, a spokesman for the brewery about 170 miles (274 kilometers) northwest of Times Square, said in an interview. “If you contaminate an aquifer, it’s done. There’s nothing you can do about it.”

Ommegang, an Otsego County tourist attraction along with the National Baseball Hall of Fame and Museum, has joined a growing grass-roots campaign in New York state to ban the technology that has transformed U.S. gas production, Bloomberg Government reported. The brewery, a unit of Belgium-based Duvel Moortgat NV, (DUV) says it would face a “material threat” from a leak of fluid used in hydraulic fracturing, or fracking, to free natural gas from shale.

The state is poised to issue final drilling rules and permits to tap into the Marcellus Shale formation sometime next year, after a three-year review. In anticipation, drilling bans have been put in place in 13 towns and are being debated in 19 more, according to Karen Edelstein, a geographic information- systems consultant in Ithaca. Ommegang has chipped in $40,000 to support the towns in Otsego County.

Larry Bennett, a Brewery Ommegang spokesman, holds a flask of water. “Even our strongest beer is 90 percent water, and all of our water comes off the property,” said Bennett. Photo: Michael Okoniewski/Bloomberg Close

Larry Bennett, a Brewery Ommegang spokesman, holds a flask of water. “Even our... Read More

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Larry Bennett, a Brewery Ommegang spokesman, holds a flask of water. “Even our strongest beer is 90 percent water, and all of our water comes off the property,” said Bennett. Photo: Michael Okoniewski/Bloomberg

Cuomo’s Role

“Governor Andrew Cuomo is pressuring regulators to finish their review and to start issuing permits,” Helen Slottje, an attorney with the Community Environmental Defense Council, Inc. in Ithaca who has helped towns opposed to drilling, said in an interview. Towns are “increasingly aware of the great burden gas drilling imposes on communities and are unwilling to bear those costs,” she said.

Cuomo, a Democrat, said during his campaign last year that fracking would create jobs, “but only if it is safe.” Since taking office in January, he has pushed regulators to complete their environmental review.

Companies such as EOG Resources Inc. (EOG), a Houston-based gas and oil explorer, have leased property in towns that banned drilling or are working to block it, according to documents on file with the Otsego County clerk. EOG doesn’t provide a breakdown of its lease holdings by state or by county, company spokeswoman K Leonard said in an e-mail.

Millions of gallons of chemically treated water are forced underground in fracking to break up rock and let gas flow. Technological advances led the Energy Department to more than double its estimate of U.S. shale-gas reserves to 827 trillion cubic feet and to project that the nation now has enough natural gas to heat homes and run power stations for 110 years.

Schneiderman Subpoenas

Last week, Range Resources Corp., Cabot Oil & Gas Corp. (COG) and Goodrich Petroleum Corp. were subpoenaed by New York Attorney General Eric Schneiderman over whether they accurately represented the profitability of their natural-gas wells, according to a person familiar with the matter. The subpoenas, sent Aug. 8, requested documents on formulas used to project how long the wells can produce gas without new fracking.

In Pennsylvania’s portion of the Marcellus Shale, which stretches from Tennessee to New York, drilling has created overnight millionaires from lease payments and gas royalties paid by companies such as Chesapeake Energy Corp. (CHK) and Talisman Energy Inc. (TLM)

“I have landowners already under lease,” Scott Kurkoski, a Binghamton, New York-based lawyer who represents property owners across the state who favor drilling, said in an interview. “They have a contract with a company prepared to market their minerals, and now towns are taking it away.”

‘Plenty of Places’

No local initiatives to ban fracking have been offered in Tioga, Broome and Chemung counties, which border Pennsylvania and are potentially gas-rich areas, according to Kurkoski.

“My instinct is that there’s still plenty of places that are receptive to drilling and that they’ll go to those places first,” Joe Martens, commissioner of New York’s state Department of Environmental Conservation, which is drafting drilling rules, said in an interview. “That’s kind of the responsible approach.”

The U.S. Environmental Protection Agency is studying the effects of fracking on drinking water. A committee advising U.S. Energy Secretary Steven Chu said Aug. 11 that gas companies risk causing serious environmental damage unless they commit to best practices in engineering.

Produced Safely

Industry groups such as the Hamburg-based Independent Oil & Gas Association of New York, say shale gas can be produced safely while generating jobs and tax revenue.

Environmental groups are succeeding in some towns by raising fears over the technology, according to Richard Downey of Otego, 76, a retired official with New York City’s schools. Downey leads an Otsego County landowner’s group that supports fracking in the towns of Unadilla, Butternuts and Otego.

“They have the environmental religion,” Downey said in an interview. “They are protecting Gaea -- Mother Earth -- and we’re just protecting property rights, and some money to a certain extent, and you don’t get the same passion for that.”

The Marcellus Shale may contain 490 trillion cubic feet of gas, making it the world’s second-largest gas field after the South Pars formation in Iran and Qatar, according to Terry Engelder, a professor of geosciences at Pennsylvania State University in State College. New York banned fracking until it completes its environmental rules sometime next year, according to Emily DeSantis, a spokeswoman with the Department of Environmental Conservation.

Court Challenge

Landowners that have leased property for drilling will challenge local drilling bans in court on grounds that only the state can regulate oil and gas production, Kurkoski said.

Slottje said the bans will hold up because zoning rules aren’t considered regulation under New York law.

Both sides expect the issue to be decided in the New York Court of Appeals, the state’s highest court. Legal maneuvers may delay drilling in parts of the state for at least a year, said Eduardo Penalver, who teaches land-use law at Cornell Law School in Ithaca.

“If a town draws up a generally worded zoning law that restricts or prohibits categories of activities, and that encompasses hydrofracking, there’s a strong argument that that is not prohibited under state law,” Penalver said in an interview. “The power of municipalities to control what you can do on your land is now pretty deeply entrenched.”

In December, Montreal-based Gastem Inc. (GMR) used low-volume fracking, which is permitted in New York, to test a well in Otsego County where the company has 22,000 acres under lease. The results “quite satisfied” the company, spokesman David Vincent said.

“There’s always opposition,” Vincent, who predicted the local drilling bans won’t succeed, said in an interview. “If we do it right, people will accept that.”

‘Three Philosophers’

That hasn’t won over Ommegang, which says it uses about 1 million gallons of water a year to make ales such as “Three Philosophers Quadrupel,” described on its website as a blend of cherries, roasted malts, and dark chocolate that will “only achieve more wisdom and coherence as it broods in the dark recesses of your cellar.”

Ommegang employs 82 people and receives about 40,000 visitors a year for beer tastings and tours, Bennett said. He said it is named for a festival held in Brussels in 1549 to commemorate a visit by Charles the Fifth, the Holy Roman Emperor, and his son Philip II.

The brewery adds prestige to the fight against fracking, Slottje said.

“Ommegang is one of the largest employers in the area,” Slottje said. “They’re a tourist draw. They sort of exemplify everything that the Cooperstown area is trying to do.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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