P. O. Box 25 Springfield Center, New York 13468

September 24, 2011 Economic Assessment Report by Ecology and Environment Inc. Overstates Total Recoverable Reserves The Ecology and Environment Inc. socio-economic study was prepared for DEC to be included in the revised draft SGEIS for natural gas horizontal drilling. The study bases all its observations on an estimate of the total number of wells to be drilled and the annual production rate of the average well. These estimates are used to determine production volumes which are then translated into estimates of jobs, income taxes, ad valorem taxes, and other economic benefits to be derived from this industrial activity. At no place in the study is there a reference to the gross recovery of natural gas for NYS. However, it is fairly easy to reconstruct the total picture from the details provided in the study. All necessary information appears in the study’s tables and charts (excepting only an estimate of vertical well production in Region C and the number of days/year that gas is produced from an average well). By assuming that Region C vertical wells produce at 20 MM cf/year (compared to 90 MM cf/year for the other regions) and that wells all produce for a full 365 days per year, the resulting gross recovery of natural gas in NYS is Low estimate Medium estimate High Estimate 40 Trillion cf 159 Trillion cf 237 Trillion cf

In August, 2011, the USGS released an estimate of undiscovered technically recoverable reserves for Marcellus Shale extending from West Virginia to New York. The revised estimate was 84 trillion cf. “These new estimates are for technically recoverable oil and gas resources, which are those quantities of oil and gas producible using currently available technology and industry practices, regardless of economic or accessibility considerations. As such, these estimates include resources beneath both onshore and offshore areas (such as Lake Erie) and beneath areas where accessibility may be limited by policy and regulations imposed by land managers and regulatory agencies. “The Marcellus Shale assessment covered areas in Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia.” USGS, August 23, 2011 Query: If we take the “medium estimate” from the DEC study, how can NYS extract twice the total technically (not necessarily economically) recoverable reserves for the entire Marcellus formation in the country? Even using the “low estimate,” how likely is it that NYS can account for 50% of the total reserves of the country?

Materials taken from the study and used to calculate the gross estimate:

These development scenarios are designed to provide order-of-magnitude estimates for the following socioeconomic analysis and are in no way meant to forecast actual well development levels in the Marcellus Shale or Utica Shale reserves in New York State. The high development scenario should be viewed as the upper boundary of possible development, while the low development scenario should be viewed as the likely lower boundary of possible development. These scenarios should be viewed as a “bestestimate” of the range of possible amounts of development that could occur in New York State. 23% in Region B (including Otsego County) 50% in Region A 5% in Region C

Summary Results Gross Production of Gas from NYS wells over 60 year time horizon: Low estimate 40 Trillion MM cf Medium estimate 159 Trillion MM cf High Estimate 237 Trillion MM cf

Another way to verify these totals is to add up the study’s 60 year production estimates for Region A (see Table 4-3) and then multiply these totals by 2 X (reflecting the study’s estimate that Region A will account for 50% of the total NYS production.)

The results confirm the gross overstatement of production that is the foundation of the socio-economic study. The results also point to possible mathematical errors in the study.

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