ALBANY, N.Y. (AP) — A debt-laden natural gas drilling
company that had counted on tapping the riches of New York's part of the
Marcellus Shale filed for Chapter 11 bankruptcy protection Friday while
the state's 4-year-old moratorium on hydrofracking remains in place.
Norse
Energy Corp., based in Oslo, Norway, said its U.S. subsidiary had filed
a voluntary petition for Chapter 11 reorganization.
Norse has
130,000 acres under lease for gas drilling in New York state. But the
state Department of Environmental Conservation has had a moratorium on
drilling permits since it launched an environmental impact review in
2008.
The DEC is developing new regulations for fracking, or
high-volume hydraulic fracturing, a controversial technology used to
free gas from shale.
"It isn't just regulatory delays. We had
debts incurred outside of New York that we're paying back," said Dennis
Holbrook, Norse's Buffalo-based chief legal officer. "But clearly the
regulatory delays in New York have had a negative impact on this
company."
Norse has been selling off assets, primarily oil and gas
leases and some production properties, to pay debts and meet operating
expenses. "But over time, the valuations have consistently declined for
those assets because of a general perception that New York is not open
for business," Holbrook said.
The Chapter 11 filing may "likely constitute an event of default" on a $21 million bond, the company said in a statement.
Norse
has been operating in central New York since 1996 and has drilled
hundreds of vertical gas wells in sandstone formations. It had applied
for dozens of permits to drill in the Marcellus Shale, a gas-rich region
underlying southern New York, Pennsylvania, Ohio and West Virginia.
While Pennsylvania has seen soaring shale gas production over the past
five years, New York has had a moratorium on permits while DEC studies
environmental, health and safety concerns related to shale gas
development.
Norse's fortunes have been sinking rapidly over the
past couple of years. It has reduced its New York workforce from about
60 to six people and sold off some of its leasehold and pipeline
right-of-way in an attempt to reduce costs and raise cash. In May, Norse
announced it was moving its headquarters from Buffalo to Houston, where
it had offices. Holbrook and a handful of others remain in Buffalo.
In
November, the company said it had $1.5 million in cash, enough to fund
its obligations only into December. Then, a New York court ordered Norse
to place $7.6 million in an escrow account in a ruling in an ongoing
dispute with Buffalo-based Bradford Drilling Associates.
Holbrook
said the company ultimately would like to reorganize and attract a
qualified industry partner to develop its lease acreage in the Southern
Tier, assuming Gov. Andrew Cuomo decides to allow shale gas drilling. A
decision may come by the end of February, when new regulations are due
to be completed.
"I may be in the minority but I do believe
there's light at the end of the tunnel," Holbrook said. "I believe New
York is going to allow permitting to move forward."
All content © Copyright 2000 - 2013 WorldNow and WBOY. All Rights Reserved.
