New York City is officially on record opposing hydraulic gas drilling in the Catskills watershed that provides unfiltered water to its 9 million residents.

Since 1997, New York City has spent about $1.5 billion to protect the watershed. The city was granted a waiver by the U.S. Environmental Protection Agency (EPA), so the water it draws from the watershed doesn’t have to be filtered. But the city fears that could change if hydraulic fracturing is allowed in the state’s Marcellus Shale region, which encompasses the entire watershed. Building a filtration plant would cost New York City around $10 billion.

The major concerns with hydraulic fracturing are the chemicals used in the process, and the wastewater it produces. Hydraulic fracturing involves injecting water, sand, and a cocktail of chemicals at high pressure into rock formations thousands of feet below the surface to extract gas from the shale.

For the past year, the the New York State Department of Environmental Conservation has been drafting regulations for hydraulic fracturing, and was accepting public comments on its draft regulations through Dec. 31, 2009.

Earlier this week, we reported that the EPA had issued formal comments which questioned the state’s draft regulations. The agency said it has concerns that hydraulic drilling in New York’s Marcellus Shale region could affect public health and the environment. The EPA is urging the state to study the potential impact of the proposed drilling more extensively.

Late last month, acting Department of Environmental Protection (DEP) Commissioner Steven Lawitts also issued a statement on those draft regulations, echoing some of the EPA’s concerns. According to the Associated Press, consultants to the DEP noted several possible risks from hydraulic fracturing in the watershed. These include damage to the city’s water supply infrastructure, especially underground water tunnels, as well as the risk that chemicals used in the hydraulic fracturing process would seep into groundwater, and eventually make their way into the streams that feed reservoirs.

New York City wants hyrdraulic fracturing banned in the section of the Marcellus Shale region that holds the watershed. Chesapeake Energy Corporation, which owns the lease to drill in the watershed, said it won’t drill there. Other drilling companies have not made similar promises, and opponents of the plan fear that Chesapeake could go back on its promise.