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Times Herald-Record, Jeff Goulding, Associated Press
A plume of smoke rises out of the shaft after nearly 400 pounds of explosives were set off on Thursday, Oct. 24, 2013, in Newburgh, N.Y.

ALBANY, N.Y. — Crews trying to stop a critical underground aqueduct from leaking millions of gallons of water a day as it flows from the Catskills region to New York City are blasting 900 feet down through bedrock to build a bypass tunnel under the Hudson River.

The vertical shaft in Newburgh is part of an eight-year repair project on the Delaware Aqueduct, an 85-mile tunnel that transports more than half the city's upstate reservoir water. The aqueduct leaks 15 million to 35 million gallons of water a day and has been blamed for chronically flooded basements in one upstate neighborhood where homes are being demolished under a buyout program.

The multiphase project will cost $1.5 billion and eventually require the city to shut down the crucial artery for eight months or more, though city officials say the system's users shouldn't notice any disruptions.

"If everything goes as planned, we expect that this will be seamless to New Yorkers," said Paul Rush, deputy commissioner of the city Department of Environmental Protection.

The massive project begins as New York City takes a series of costly steps to maintain its sprawling, aging water supply system. This month, the city activated an 8.5-mile Manhattan section of its new water tunnel, which is designed to provide backup to two existing water tubes built in 1917 and 1936.

The aqueduct is a gravity-fed engineering marvel completed during World War II, but two sections hundreds of feet underground have been leaking for years.

The most expensive phase of the work involves digging a 2.5-mile bypass tunnel running parallel to the leaky segment under the Hudson River about 60 miles north of New York City. Blasting began Thursday on the first of two shafts on opposite sides of the river that will be used to transport equipment underground to dig the tunnel.

Work on a second shaft in the Town of Wappinger will begin before the end of the year.

The aqueduct will be shut down just before the bypass tunnel is connected to the aqueduct, probably in 2021, if conditions are right.

Crews at that time will patch up another leaky section northwest in Wawarsing. While less water is leaking in Wawarsing, dozens of residents have long blamed the aqueduct running beneath their neighborhood for chronic flooding in their basements and squishy lawns. A novel buyout program funded by the state and city has resulted in 21 flooded homes being demolished so far.

"I look around the neighborhood and all these houses are torn down," said Andrea Smith, a resident who decided to stay in the neighborhood with her 83-year-husband. "It's heartbreaking."

The aqueduct will be offline for the first time since 1958 for eight months or more, meaning the city will have to make up the loss of about 500 million gallons a day.

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The city hopes to reduce demand in the coming years through the installation of low-flow toilets in schools and other programs.

Rush said they also plan to increase capacity from other sources in the 19-reservoir system and beyond. For instance, the separate Catskill Aqueduct will be cleaned and repaired to boost its capacity, a new filtration plant for the Croton system will allow more water to be drawn there and they will tap into groundwater wells in Queens, among other moves.

"We're blessed with a lot of different sources to choose from, a lot of reservoirs," he said.