While natural gas drilling is well under way throughout the state, including prolific production in Susquehanna County, a large swath of Northeast Pennsylvania still remains mostly off-limits because of an obscure federal regulatory agency charged with protecting the Delaware River Watershed.

And Wayne County appears to be ground zero of a battle among environmentalists and local landowners who are eagerly awaiting draft natural gas regulations expected to be released this month by the Delaware River Basin Commission.

"We're on the front lines," said Pat Carullo, who heads the Wayne/Pike-based environmental group Damascus Citizens for Sustainability. "We are the Gettysburg."

The 13,539-square-mile watershed - home of the Delaware Water Gap National Recreation Area and its namesake Delaware River that is part of the U.S. National Wild and Scenic Rivers System - presents a unique challenge for natural gas companies wanting to sink wells because it is regulated by both state environmental regulatory agencies and the West Trenton, N.J.-based river commission.

The commission, a five-member board composed of representatives from states surrounding the Delaware River including Pennsylvania and New York, enacted this summer a blanket moratorium on all exploratory and production natural gas wells, except a few grandfathered in, throughout the watershed as it develops its regulations.

The watershed includes most of Wayne, Pike and Monroe counties, and small portions of Luzerne and Lackawanna counties. The commission oversees water quantity and quality issues here and is unique in that some of its responsibilities, which were developed during the Kennedy administration, overlap the state Department of Environmental Protection, including regulation of the gas drilling industry.

The moratorium hits Wayne County hard in particular. Landowners have leased approximately 240,000 acres for natural gas development - about 49 percent of the county's 488,265 total acres, according to a Times-Tribune analysis of all lease records conducted this summer.

Of that, New York City-based Hess Corp. and Houston, Texas-based Newfield Exploration Co. hold the lion's share as part of an approximate 100,000-acre and more than $100 million investment partnership with the Northern Wayne Property Owners Alliance, a landowner group with thousands of linked acres mostly north of Honesdale. The companies are operating in a joint partnership.

Other natural gas companies have also acquired land in Wayne County for potential energy development including Cabot Oil & Gas and Chesapeake Appalachia, among others with smaller leaseholds.

Despite all the speculation, there is not a single, producing natural gas well in the county even though a large natural gas transmission pipeline to the New York metro market slices through its center.

All eyes are on the river commission, which could unleash strict rules that would stymie the industry, as well as the results from a handful of recently drilled exploratory wells that were allowed to slip past the moratorium.

Commission spokesman Clarke Rupert said staff members are continuing "to work diligently on getting the draft regulations 'out on the street' in December."

Mr. Rupert, however, declined to give an indication as to what direction the regulations will take and if they will supersede or mirror rules enforced by the state Department of Environmental Protection.

Tracy Carluccio, deputy director of the environmental watchdog group Delaware Riverkeeper, said the commission has expansive powers to regulate the industry and is required to do so because of its federal mandate to protect the watershed.

The commission "does not really have a choice," she said.

Like many other environmentalists and others with grievances about drilling here, Ms. Carluccio wants the commission to conduct a cumulative impact study of its potential effect on the watershed.

But for those who welcome natural gas drilling in Wayne County, it's been a wait-and-see game some fear will lead the gas companies to pull out.

Peter Wynne, spokesman for the property owners alliance, said the moratorium and the nearly two-year wait for the commission's regulations has indefinitely put on hold the question of whether Wayne County even has potential as a Marcellus Shale gas producer.

Hess and Newfield officials also informed landowners that all future payments to landowners, amounting to about $1,000 an acre, after January will be frozen until the moratorium is lifted, putting millions of dollars in jeopardy.

"We don't really know what they are going to do," Mr. Wynne said of the commission.

This summer the commission allowed a few exploratory wells to move forward in Wayne County because Newfield and Hess received permits from the state Department of Environmental Protection prior to the June 14 moratorium deadline. The companies, however, cannot develop any production wells.

Exploratory wells do not produce gas for market, nor generally involve the complicated and controversial hydraulic fracturing process that involves using millions of gallons of water mixed with chemicals to bust open the shale located more than a mile beneath the surface.

The companies recently drilled four vertical exploratory wells in Buckingham, Damascus and Manchester townships and Hess is currently drilling an exploratory well in Scott Twp., according to alliance figures and company officials.

Newfield spokesman Keith Schmidt said the company is evaluating core samples taken from the wells to determine if there is viable Marcellus Shale gas for production purposes.

It "is highly technical and takes time," Mr. Schmidt said.

Terry Engelder, a geosciences professor at Penn State University and an authority on shale gas, said "the jury is still out" as to whether Wayne County will show the production potential of its northern tier neighbors, but it shows promise.

Complicating matters further in Wayne County, a small sliver of its western edge is under the jurisdiction of the Susquehanna River Basin Commission, another water resources regulatory agency that has taken a more lenient approach to the gas industry. Producing gas wells in the Susquehanna River watershed have flourished including in Susquehanna and Bradford counties.

Draft rules, if published this month, are no guarantee gas drilling will be under way any time soon in the watershed.

Several public comment and public hearings will follow along with an expectation of legal challenges.

Contact the writer: smcconnell@timesshamrock.com