Gas drilling companies willing to pay top dollar for potable water could put a cramp in the Lycoming County Water and Sewer Authority's bid to expand its water system to accommodate potential commercial growth in the undeveloped area around the Lycoming Mall.

On Wednesday, Christine Maggi-Weigle, authority executive director, said she was concerned that competition with gas companies in need of water for drilling operations could make buying water from nearby boroughs unaffordable.

The authority recently completed the Halls Station Water System - its very first public water system - and now wants to expand the system north of Interstate 180 at the Lycoming Mall interchange, and east into the undeveloped portion of the Muncy Industrial Park and surrounding areas.

The authority is studying which of three options is best suited to bring water to the area: Digging a high-yield well or tying into an existing system in either Hughesville or Muncy.

The authority has been in discussions with the boroughs regarding options to buy their water, but those discussions have not yet reached the negotiation phase, Maggi-Weigle said.

"The dynamic has changed since we began discussions ... and that dynamic is gas drilling companies who will pay whatever it takes," she said. "We are competing now with gas drillers."

Gas drilling companies use water for hydrofracturing, a technique by which millions of gallons of presssurized water mixed with sand and chemicals are pumped into the ground to pulverize shale rock and release natural gas trapped in it.

The state Department of Environmental Protection and Susquehanna River Basin Commission require permits for removing water from streams and wells, which has caused the companies to buy water from municipalities that already have the permits in place.

Municipalities may see the companies as "a cash cow" - albeit a temporary one - that will be hard to pass up, she said.

But the situation may make what was previously thought to be the least appealing option - digging a well - the most feasible.

Maggi-Weigle urged the authority to approve an agreement that provides $500,000 in county funds to pay for the engineering design of system.

"The big gorilla is in the room, and it has the potential to negatively impact all of our economic analysis on our design options," she said. "We need to find out where we stand with these options."

Final design will begin this month and is expected to be completed by the end of 2009, according to the agreement.