Shale gas gambit pits N.Y. neighbor against neighbor

HANCOCK, New York (Reuters) - The race to exploit America's promising reserves of shale gas has triggered a clash between landowners in New York state, pitting those eager to earn royalties from drilling against farmers who fear gas companies will be able to drill without their consent.

"There are people that say: my land, my gas," said Marc Dunau, an organic farmer in Hancock, located 150 miles northwest of New York City, who refused to sign a lease to drill on his 50-acre (20-hectare) farm. "You know it is our land and it is your gas, but it's my water. And you can't get that gas unless my water and my air is protected."

Dunau was approached by multiple gas companies over the years, most recently in 2008 by XTO Energy, currently the subject of a $30 billion all-share takeover bid by Exxon Mobil.

The booming shale gas business accounts for 15 to 20 percent of U.S. natural gas production and is seen increasing fourfold over the next 15 years, providing a relatively clean energy source for a country sensitive to its dependence on foreign oil.

Natural gas from shale is trapped deep underground inside solid rock. It has been unlocked in recent years through technological advances.

Environmentalists and people living near drilling operations worry that the drilling process might contaminate ground water. Some landowners welcome the possible financial benefits of drilling in economic hard times.

The shale gas industry considers environmental opponents of drilling misguided, saying drilling is heavily regulated and that there has never been a documented case of ground water contamination because of hydraulic fracturing. More>>>