Has Maryland Missed The Gas Bonanza Boat?
CUMBERLAND, Md. (AP) — The natural gas bonanza that has enriched some Appalachian states has so far eluded western Maryland as market forces and a drawn-out state review of the drilling technique called hydraulic fracturing have weakened the region's appeal to the energy industry.
While Maryland officials painstakingly develop safe drilling rules, heavy production elsewhere, including neighboring Pennsylvania and West Virginia, has pushed wholesale natural gas prices to about a third of what they were in July 2008. Industry officials say that's one reason drilling companies have allowed many of their leases on at least 89,000 acres in Allegany and Garrett counties in Maryland to lapse.
Meanwhile, the industry's experience in neighboring states has produced assumptions that Maryland's relatively tiny piece of the massive Marcellus Shale contains natural gas but few of the liquid compounds — ethane, butane, and even oil — that most favor production.
"There's been a sort of reorientation to, 'Where is the most productive place to drill?'" said Drew Cobbs, executive director of the Maryland Petroleum Council, part of the American Petroleum Institute trade group. "It's much more where there's wet gas or oil. So, obviously, these companies are looking for return on investment."
Any return on investment in western Maryland is probably years away. A state panel's recommendations for safe drilling are due in August, but the commission is behind schedule. Its interim report on "best practices" is expected in February, 18 months past the date specified in Democratic Gov. Martin O'Malley's 2011 executive order.
The commission is considering a proposal from the state Department of Natural Resources to require two years of pre-development water monitoring, which would delay any drilling to 2016 or beyond. The DNR says hydraulic fracturing — which uses a pressurized mixture of water, sand and chemicals to crack the rock and release the gas — can cause surface water pollution if liquid waste from the well isn't handled properly.
The panel's coordinator, Brigid Kenney of the Maryland Department of the Environment, said at a November meeting in Cumberland that all four companies that had filed drilling permit applications since 2009 have withdrawn them.
Chevron Corp. Senior Policy Advisor Jeffrey F. Kupfer, who sits on the 14-member panel, said regulatory delays discourage companies such as his from holding onto gas development leases in Maryland.
"Companies, like individuals, don't like to invest money and not get any return on it for a significant period of time," Kupfer said.
Projections for well numbers in Maryland have also dwindled. Two years ago, the state safe-drilling commission publicized an industry estimate of more than 2,200 gas wells across Garrett and western Allegany counties. In October, the panel received two scenarios from the Towson University's Regional Economic Studies Institute projecting only 150 to 450 wells by 2026.
State Sen. George Edwards, R-Garrett, who favors drilling, said the projections are little more than guesses.
"Nobody knows what's here until you can drill some of these exploratory wells and get an idea what's here," he said.
Edwards said western Maryland, with few good-paying industrial jobs, is missing out on the drilling money that has boosted neighboring state economies. Pennsylvania's impact fee generates about $200 million a year for state programs and drilling communities; an October report from West Virginia's Workforce West Virginia Investment Council showed statewide oil and gas industry employment jumped 20 percent from 2011 to 2012.
"The big factor is the royalties that are paid to property owners," Edwards said. "Most of these are local, generational people, and they're going to spend money here. It's going to stay here. They're going to build a new house, they're going to buy a new car or truck, be able to keep their farm in farming."
But gubernatorial candidate Heather Mizeur, a Montgomery County Democrat who opposes gas drilling in western Maryland, said a cautious approach is best.
"A state that requires this to be done responsibly — if at all — will always do a better job of rooting out the bad actors," she said in an emailed response to questions from The Associated Press.
Delmer Yoder, 77, is eager lease his 85-acre farm near Accident for gas drilling.
"I look forward to down the road, but how soon? I'm not sure that we'll be able to drill," he said. "I sure hope so, because we need it. It's a good asset to the county and the state and all."
But Dana Shimrock, a retired Garrett College library director, said she regrets signing a lease in 2006 that Chevron still holds on a 50-acre property that she and her husband, Thomas, own near Grantsville. Shimrock said she didn't know then how big, bright and noisy a drilling operation can be; a visit to a drill site in Pennsylvania opened her eyes.
"They drill night and day. They have huge lights going, noise 24 hours a day," she said.
The couple is making contingency plans to move to another part of the county, a parcel surrounded by protected land, Shimrock said.
Just because the gas companies say they're down now doesn't mean they won't drill later, she said.
"I'm preparing myself for the worst, and I've accepted that that may happen," Shimrock said.