By Edward McAllister

NEW YORK, Feb 12 (Reuters) - New York State's decision to lift a four-year ban on natural gas drilling faced further delay on Tuesday after officials conducting a key health impact study asked for more time to form their conclusions on the divisive issue.

The New York Department of Health, which has been commissioned to study how the drilling process known as fracking affects public health, said the review is ongoing but that a few more weeks are needed due to the "complexity of the issues".

"As we have been reviewing the scope of these studies, I have determined that the DOH Public Health Review will require additional time to complete based on the complexity of the issues," said health commissioner Nirav Shah in a letter to Joe Martens, commissioner of the Department of Environmental Conservation (DEC).

The health review, and a parallel environmental impact study being conducted by the DEC, will form the basis of new regulations that could open New York's borders to drilling once again.

Proponents say New York communities that allow drilling in the Marcellus shale, one of the country's largest gas deposits, will produce jobs and revenues for local economies. Opponents warn that the process of fracking, needed to extract gas from shale, can contaminate water supplies and increase harmful emissions.

The health study delay will push back the publication of the DEC's environmental report, known as the SGEIS, the deadline for which is Wednesday, which in turn will delay the drafting of Governor Andrew Cuomo's drilling regulations, the deadline for which lands on Feb. 27.

If the Feb. 27 deadline is missed it could force the administration to restart the regulatory process, which would include another period for public comments, potentially holding up the process for months.

In response, Martens said he may issue drilling permits before the final regulations are issued if the DOH concludes that fracking does not pose a health risk.

"If the DOH Public Health Review finds that the SGEIS has adequately addressed health concerns, and I adopt the SGEIS on that basis, DEC can accept and process high-volume hydraulic fracturing permit applications 10 days after issuance of the SGEIS."

Fracking has ballooned into a major political issue in New York, where the stakes are high for landowners and energy producers alike. Town hall meetings on the subject draw large partisan crowds, some townships have banned drilling and lawsuits on both sides are emerging.

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