Your  Name

Your  Address

Today’s Date

 

Mr. David W. Whedbee
Supervisor, Acquisition Land
Fortuna Energy Inc.
337 Daniel Zenker Drive
Horseheads , New York 14845

 

Re: Oil & Gas Lease to Fortuna Energy Inc.
 Dated: _________________________
 Town: _________________________
 County: Tioga
 Tax Map Parcel ID #(s): ___________________

 

Dear Mr..  Whedbee:

 

Thank you for your letter of June 8, 2009.(please insert correct date from the letter you received here)

 

As you are aware the formations which you have leased from us in the lease are not confined to the Marcellus Shale.  There are many formations underlying our property to which you could drill, including the Trenton Black River, the Oriskany, the Herkimer, and various other formations. The fact that you are having difficulty obtaining a horizontal well drilling permit in the Marcellus Formation until the supplemental Generic Environmental Impact Statement is generated by the State is irrelevant to your ability to drill in any other formation.

 

You have also erred in your representation that there is a current ban on the issuance of Marcellus Shale drilling permits under Article 23 of the New York State Environmental Conservation Law.  A brief call to the Department of Environmental Conservation has revealed that there is no ban on such drilling, but that if you wish a horizontal drilling permit in either of the black shales, the Marcellus or the Utica, you must perform a site specific Environmental Impact Statement as required under the New York State Environmental Quality Review Act.  This requirement has always been in place in New York .  The Generic Environmental Impact Statement only shortens the procedures necessary for the approval of the Environmental Impact Statement required for each well.  That is because the Generic Environmental Impact Statement covers most drilling techniques.  

 

As you are aware, the horizontal drilling technique with its hydrofracing and the use of undisclosed chemicals and biocides was not covered in the original generic Environmental Impact Statement.  As a consequence, New York State , to make your job easier, has entered into the process of formulating a supplemental generic Environmental Impact Statement to include those concerns.

 

The important point to remember is that no ban exists on permits.  What exists is that no driller or operator can shortcut the SEQRA review process by piggy-backing on the generic Environmental Impact Statement when it comes to the black shales of Marcellus and Utica .  The capacity to obtain a permit is well within your control, as you have the right and ability at any time to perform a site specific Environmental Impact Statement.

 

As a consequence, your Force Majeure letter is not Force Majeure at all, but amounts to an attempt to extend artificially a lease which will otherwise expire by its terms.

 

Lastly, you have threatened to file some sort of document in the County Clerk ’s Office putting the world on notice that you are attempting to extend our lease.  Please be aware that we would regard such improper and illegal filing to be a defamation of our title, among other legal wrongs.  This letter is to advise you not to record any documents in the County Clerk ’s Office, and if you do we will regard it as not only negligent but a possible intentional attempt to damage our title and our ability to market our land.  As a consequence, you could be subject to punitive damages.

 

We presume that you will act prudently and not damage our title in any way and that if you wish to drill a well you will follow the required procedures of the New York State Department of Environmental Conservation and perform such site specific Environmental Impact Statements as are required under the State Environmental Quality Review Act.  None of these are beyond your control, but are required by statute for all drillers.

 

I hope this has adequately responded to your letter of June 8, 2009 (please insert correct date from letter you received here) .

 

We wish you the best of success in complying with New York State Department of Environmental Conservation Regulations, the SEQRA process, and in your drilling efforts.

Very truly yours,