Associated Press - October 28, 2009 1:45 PM ET

ALBANY, N.Y. (AP) - Chesapeake Energy, 1 of the nation's largest natural gas producers, says it won't drill in the New York City watershed because of intense opposition from politicians and environmental groups.

Oklahoma City-based Chesapeake's announcement Wednesday comes hours before the first of 4 public hearings on the state's new gas-drilling regulations, which critics call insufficient to protect the city's upstate water supply from the risk of contamination.

Earthjustice, an environmental group, welcomed the news but said it needs to be backed up by a ban on drilling in the watershed to ensure permanent protection.

Chesapeake is the only leaseholder in the 1 million-acre watershed, which includes a corner of the gas-rich Marcellus Shale formation.

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