Chairman's Message: Maryland's Energy Policies Missing Promising Natural Gas Opportunity
Earlier this past week Maryland's "Marcellus Shale Advisory Commission" held its first meeting at Rocky Gap State Park. Gov. Martin O'Malley appointed the panel last month to study short- and long-term effects of using hydraulic fracturing to extract gas from the Marcellus shale. The Commission's final report is not scheduled to be issued until August 1, 2014. As a result of the pending review, Maryland isn't issuing any shale-gas drilling permits and is unlikely to do so anytime soon.
The Marcellus shale geological formation has become a significant source of new natural gas discoveries and stretches through the subsurface from New York to eastern Tennessee. Marcellus shale in Maryland is found in Washington, Allegany and Garrett counties, which are attracting gas exploration interest. Lease payments, royalties, severance taxes and the economic activity associated with drilling-related jobs could bring significant benefits to these western counties. An industry representative has estimated that as many as 1,600 wells could be drilled in 128,000 acres in Garrett County and another 637 wells in 51,000 drillable acres in Allegany County.
Maryland began its own study even though Congress has already directed the United States Environmental Protection Agency to conduct one too. The EPA expects to publish its interim report by December 2012. So the only apparent purpose for Maryland's study appears to be to justify our exploration standstill.
The appointment of Takoma Park Delegate Heather Mizeur on O'Malley's Commission underscores its primarily political purpose, rather than technical nature. Mizeur lacks any energy or environmental professional expertise or relevant education. In fact her bio indicates that she attended, but never graduated college after majoring in English Literature. Nevertheless, her website indicates she has already made up her mind, referring to Marcellus shale exploration as "Giant Ponzi schemes leading to an Enron moment."
Ironically environmentalists have been among the strongest proponents of natural gas because it is the cleanest fossil fuel. Natural gas produces lower levels of NOx, CO2, and particulate emissions, and virtually no SO2 and mercury emissions. According to the Congressional Research Service's 2010 report, Displacing Coal with Generation from Existing Natural-gas-fired power Plants, " if natural-gas combined-cycle plants utilization were to be doubled from 42 percent capacity factor to 85 percent, then the amount of power generated would displace 19 percent of the CO2 emissions attributed to coal-fired electricity generation." Consequently Maryland's delay in natural gas production results in the environmental cost of more reliance on "dirtier" fuels.
While Maryland drags its feet with its redundant study, consider Pennsylvania.
According to a recent Penn State study, Marcellus producers in that state are generating more than $12.8 billion in value added in 2011 and another $14.5 billion during 2012. Their increased economic activity is generating almost $2.6 billion in additional state and local tax revenues during 2011 and 2012. New employment in the state has expanded to 156,000 jobs by 2011. The study notes that this dramatic increase in Marcellus drilling activity has occurred even during a recession and relatively low natural gas prices. Natural gas production from the Pennsylvania Marcellus will likely average 3.5 billion cubic feet per day during 2011 and could exceed 6 billion cubic feet per day during 2012.
Contrast Pennsylvania's energy policy with Maryland's latest example of "crony capitalism." Two weeks ago the state's Board of Board of Public Works approved to a 20 year lease on 250 acres of state land at $128 per acre annually for a wind farm. The wind farm company's principal is Michael Enright, who used to be Governor O'Malley's chief of staff. The project's viability depends on $24 million in federal subsidies. To his credit, State Comptroller Peter Franchot voted against the contract because he questioned whether the state had negotiated the best deal possible.
So compare Maryland's energy policies with that of other states. Instead of our moving ahead with the production of clean, economical natural gas, we are supporting a project which could never happen without significant tax-payer subsidies.
Mark Uncapher
Montgomery County Republican Chairman
MCGOP CONVENTION!