New York Natural Gas Driller Files for Chapter 11 Bankruptcy
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New York Natural Gas Driller Files for Chapter 11 Bankruptcy

December 19, 2012


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A natural gas drilling company in New York is filing for bankruptcy after the state placed a temporary ban on the controversial practice of hydrofracking, according to a report from the Shreveport Times.

Sources say the U.S. branch of Norse Energy Corp., an energy conglomerate based in Oslo, Norway, filed a petition for Chapter 11 bankruptcy this month after heightened regulations crippled the company’s operations in New York.

The New York portion of the Marcellus Shale, which contains a seemingly infinite supply of natural gas, had been the company’s cash cow for several years. But the state, in contrast to its more aggressive neighbor, Pennsylvania, placed a moratorium on hydrofracking, also known as fracking, four years ago and shows no signs of relenting on the ban, according to sources.

So for the last four years, Norse has leased 130,000 acres intended for natural gas drilling but, in reality, used for little practical purpose. According to Dennis Holbrook, the company’s chief legal officer in the United States, "regulatory delays in New York have had a negative impact on this company."

The regulatory delays to which Holbrook refers have been caused by the New York Department of Environmental Conservation, which put a temporary halt to fracking after it started an environmental impact review in 2008.

Sources say the state agency is developing comprehensive regulations for fracking, a practice that has concerned environmentalists because it involves the use of high-pressure hydraulic drilling, as well as a long list of potentially dangerous chemicals.

The state, quite naturally, has plenty of incentives to be cautious in their review, particularly because fracking could have a profoundly negative impact on drinking water, but the delay crippled companies like Norse looking to make money from New York's abundant natural gas resources.

Before starting the bankruptcy process, Norse had already sold off many of its assets, including physical properties and natural gas leases, in order to continue its operations.

Over time, however, the value of Norse’s assets in the state has "consistently declined" because of a "general perception that New York is not open for business," according to Holbrook.

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