February 14, 2013 3:25 pm

New York turns into hub for shale boom

A gas pipeline in North Dakota©Bloomberg

New York state, a hotbed of activism against hydraulic fracturing by US energy drillers, is becoming an important corridor for oil drilled elsewhere using the same technique.

Railway tank cars have begun unloading crude in Albany, the capital city where state officials are reviewing whether to end New York’s four-year moratorium on “fracking” – pumping hundreds of thousands of gallons of water, sand and chemicals underground to crack open reservoirs. The trains originate in North Dakota, a fracking pioneer.

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The emergence of New York as a critical oil logistics hub shows how the US shale revolution is transforming places far from the clatter of drilling rigs. The state has become a battleground between residents concerned about the groundwater and emissions impacts of fracking and others who argue it will bring jobs.

In Albany, the oil is loaded on vessels that travel the Hudson river, past Manhattan island, to refineries on the US and Canadian east coasts. Buckeye Partners, an oil logistics company, has converted part of its 1.8m barrel Albany storage facility to handle crude for shipment to Canada’s biggest refinery.

The maiden tanker bearing 279,000 barrels of light crude from Buckeye ran aground in the Hudson December 20, the US Coast Guard said. The outer hull of the Stena Primorsk was breached but no crude spilled.

The midstream logistics company Global Partners is hauling crude by train from North Dakota’s Bakken region to Albany and putting it on barges in what executives call a 160,000 barrel per day “virtual pipeline”. Phillips 66, whose refinery on New York harbour is nicknamed the “gasoline machine”, began receiving cargoes last month.

The Hudson has for decades been plied by barges ferrying refined fuels inland. Crude oil had not flowed through Albany since the closure of a refinery years ago, said Richard Hendrick, Port of Albany general manager.

“This is the easiest and most direct way to go from point A to point B and get it to point C,” Mr Hendrick said. “We’ve got the rail infrastructure and the water for ease of movement.”

Opponents of hydraulic fracturing inside New York state are displeased with the Hudson’s use as a tanker route.

“It’s cause for great alarm,” said John Armstrong of advocacy group Frack Action. “We’ve dealt with so many different problems in New York state. The last thing we need is another environmental and public health disaster, particularly right up and down the Hudson.”

Gas exploration and production companies see New York state’s shale as the next big opportunity after drilling took off in neighbouring Pennsylvania. New York has 40.5tn cu ft of unproved technically recoverable shale gas resources, 8 per cent of the national total, the Energy Information Administration estimates.

The administration of Andrew Cuomo, New York governor, planned to issue fracking regulations by the month end, but faced a new delay on Tuesday when the state’s top health official sought a few more weeks to complete his review of potential impacts.

Joseph Martens, state commissioner of environmental conservation, said he would not issue an environmental impact study until the health review was complete.

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