CALLICOON, New York (AFP) – After a lifetime struggling to make money from the land, New York farmer Bill Graby has discovered he's sitting on treasure – possibly the biggest natural gas deposit in America.

"It's like winning the lottery," says the 6.6-foot dairy farmer from the picturesque town of Callicoon in the Catskills hills.

The deposit, called the Marcellus shale, stretches all the way from New York to Tennessee, containing 168 to 500 trillion cubic feet of natural gas, according to New York State's Department of Environmental Conservation.

That dwarfs the previous big daddy, the Barnett shale in Texas, and by industry estimates could meet all US gas needs for years.

"The size is potentially tremendous for the nation as a whole," John Felmy, chief economist for the American Petroleum Institute, told a Pennsylvania College of Technology conference last month.

Environmentalists fear intense drilling could bring ecological disaster to the same pristine Catskills that also contain New York City's entire drinking water supply.

Many others, though, foresee an economic miracle that could turn an impoverished section of New York into "a Little Texas," as 56-year-old Graby puts it.

These are early days. Extraction is underway in Pennsylvania, but New York's authorities are still debating regulatory approval, with a decision expected in 2010.

Yet already energy companies are swarming across the countryside, offering to make millionaires of cash-strapped farmers like Graby in exchange for drilling rights on their land.

The economics are self-evident. There's not only gas, but a huge market nearby in New York and New Jersey, and a transport network that includes a big new pipeline opened a year ago to bring gas from Canada.

In a region blighted by bankrupt farms and a struggling tourist industry, the excitement is palpable.

"It's a once in a lifetime opportunity that can change this region," Graby said at Callicoon's old-fashioned cafe/petrol station by the snow-lined Delaware River.

Geologists long knew about the Marcellus Shale, which formed about 385 million years ago and extends more than 7,000 feet underground, mostly under New York, Pennsylvania, Ohio and West Virginia.