Fracking debate intensifies in Western Maryland

As Maryland moves to allow natural gas extraction in its western mountains, the debate intensifies.

With natural gas drilling on the horizon in Western Maryland, dairy farmer Billy Bishoff welcomes the chance to supplement his income by collecting lease or royalty payments on the natural gas that lies beneath his family's 330 acres a few miles northwest of Deep Creek Lake. The gas, locked far beneath the surface, is a "tremendous resource," he said, that could bring jobs and prosperity to Garrett County, which many residents now leave to find work.

Not far away, Elliott Perfetti worries that drilling for gas could foul the region's air and water, crippling the tourism and outdoor recreation industries, which have become linchpins of the local economy. "I think it could quickly erode the reasons that people come to Garrett County," said Perfetti, operations manager at Blue Moon Rising, an eco-friendly resort overlooking the lake.

Bishoff and Perfetti symbolize a broader debate in this mountainous county over the potential impacts of hydraulic fracturing — or "fracking" as the drilling technique is commonly known. Now that Maryland has proposed sweeping new rules for oil and gas exploration and production, residents are debating how — or whether — fracking can be done safely.

Much of the debate has focused on the environmental, health and economic issues in the largely rural county. The population has slipped below 30,000 since 2010, and more than a fifth of the workforce commutes out of the county. The unemployment rate, 6.9 percent in 2014, remains stubbornly high and well above the statewide average.

Virtually all of Garrett's elected leaders and many residents generally favor allowing fracking, arguing it's not so different from logging, coal mining and similar industries that have long operated in the county.

But others are leery of the industry.

Some residents of Mountain Lake Park recall the last gas boom in the 1950s, when there was little regulation and some wells were drilled inside the town limits. Ponds that the drilling outfits dug to hold wastewater overflowed, causing "muddy messes," says longtime Mayor Leo Martin, 73. After most of the wells came up dry, the crews vanished, leaving equipment and debris that property owners and the town eventually had to clean up.

Martin led a move three years ago to ban drilling in the town of about 2,000 people. Still, noting how municipalities that banned fracking have been sued by the industry, he acknowledges the town ordinance might not hold up if challenged.

"It's worrisome," he said. "There's no way a little town like Mountain Lake can go up against these huge energy companies."

Martin's worries might be misplaced. Maryland's proposed regulations, which include a prohibition on drilling within 1,000 feet of occupied homes, likely would prevent any new wells in Mountain Lake Park. But with a new governor in Annapolis, it's unclear what restrictions will be adopted.

Fracking can involve drilling thousands of feet underground and then a mile or more horizontally. Large quantities of water, sand and chemicals are then pumped in to crack rock layers holding oil or natural gas so they can be brought to the surface. The technique has enabled the industry to boost domestic energy production from reserves previously thought too hard or too costly to extract. But the process also has sparked a debate over complaints about fouled water wells, air pollution and leaks of climate-warming methane into the atmosphere.

New York recently concluded the risks of fracking were too great and banned it. Pennsylvania and West Virginia are among the states that allow it, with wells drilled not far from the Maryland border.

As one of its last acts, Gov. Martin O'Malley's administration proposed new regulations that would end a four-year freeze on drilling. He has called the rules the "gold standard" for safeguarding residents and natural resources. Gov.-elect Larry Hogan has said he believes Western Maryland's economy should have the opportunity to benefit from the gas beneath its mountains, and he believes it can be extracted safely.

Now that Maryland seems poised to allow fracking, though, there might not be a rush to drill. Natural gas production in the United States has far outstripped demand, and prices have dropped to the lowest level in more than two years. With analysts predicting the gas glut could last all year, the industry is focusing on existing wells rather than prospecting for new sources. One West Virginia-based company recently announced it was laying off 250 "land men," the employees who negotiate leases with landowners to drill wells on their property.

"If Maryland opens up, I kind of wonder how quickly people will be rushing to develop that," said research analyst Matt Woodson of Wood Mackenzie, a consulting firm specializing in energy, mining and metals.

Even so, Marty Durbin, CEO of the American Natural Gas Association, called Maryland "a long-term play" and noted that production grew by a third last year from the Marcellus shale formation, which stretches from the Carolinas to New York. The need for more gas is bound to grow in the next few years, he said, as more power plants and factories adopt it as a fuel, and as exports begin via Cove Point in Southern Maryland and elsewhere.

The industry was poised to rush into Maryland nearly a decade ago, as companies secured hundreds of leases to drill on roughly a third of Garrett County. Applications were submitted to drill five wells, but those were withdrawn after the O'Malley administration launched its study. Due to the delay and uncertainty, companies have terminated leases on more than 30,000 acres, according to Kim Durst, who tracks the data for the county planning office.

As of last fall, there were still 121 clearly active leases covering 7,400 acres, she said. But leases covering some 94,000 acres have slipped into a kind of limbo — they appear to have ended but contain clauses allowing them to be renewed. Durst has not been able to get the companies to explain their status.

Only a few working wells remain from the 1950s gas rush, though the ones drilled around the town of Accident led to development of a sprawling 84-well gas storage field. Gas brought from out of state by pipeline is pumped 7,500 feet underground every summer and held in a porous Oriskany sand formation until winter, when it helps meet demand for heating fuel.

Those wells are evidence to Shawn Bender that the gas industry is a good neighbor.

"I grew up farming around those wellheads," says Bender, 32, pointing out a storage well in a snow-covered field on his father's dairy farm. The 120 cows need ample clean water, he says, and there've been no problems associated with the well.

Bender, 32, is manager of oil and gas services for Beitzel Corp., whose 175 employees help to prepare drilling sites and support gas extraction. But nearly all the work is out of state, he said. If gas production resumes in Maryland, the company might get some contracts that don't require workers to leave home for a week at a time.

Bender, a member of O'Malley's commission, is confident that the risks of drilling are manageable under Maryland's proposed regulations.

Proponents argue that gas extraction will bring new jobs and revenue to a county that's struggling to fund schools and other services. The state's study projects that Garrett could gain as many as 2,425 jobs at the peak of drilling and collect nearly $10 million a year in severance taxes. Neighboring Allegany County, where gas is not as widely accessible, could see up to 908 new jobs during drilling and $4.1 million in tax revenues of all types, the state estimates.

Western Maryland's gas reserves are limited. The state figures that fewer than 500 wells are likely to be drilled here — far less than the thousands drilled in Pennsylvania and West Virginia. As a result, the state study suggested, the jobs generated by drilling and extraction might only last a few years.

The O'Malley-ordered fracking study warns that Garrett's tourism and outdoor recreation industries could suffer from drilling, even if no accidents or incidents occur. But it found those impacts too difficult to quantify — something fracking critics contend should be a major concern.

A recent study by a Philadelphia-based tourism industry consultant estimated that Garrett drew more than 850,000 visitors in 2013, supporting nearly 1,900 jobs and generating nearly $300 milllion in sales on lodging, food, recreation and second-home sales.

Some research suggests that home sales could be hurt by fracking. A study a few years ago by the National Bureau of Economic Research found property values could decline by up to 24 percent for homes near drilling sites.

Concerned by that and a similar study, the local Board of Realtors has urged the county to keep drilling rigs away from Deep Creek Lake. The state's largest freshwater lake, it's the heart of the county's tourism industry, with thousands of vacation homes worth an average of $440,000 each. Those homes make up 60 percent of the county property tax base and generate more than $24 million in tax revenue, the Realtors group has noted.

Bob Hoffman, president of the Deep Creek Lake Property Owners Association, said any spill or leak of fracking chemicals or wastes into the lake would be "catastrophic," not just for fish but also for the attractiveness of the lake for swimming and boating. "There is a balance here. You don't want to do something here that's going to really negatively impact a large source of revenue for the county."

An analysis by the county planning department warns that if Deep Creek property values drop as a result of fracking, Garrett could lose more in real estate tax revenues than it gains in severance taxes on the gas that might be produced.

Supporters of gas extraction argue that drilling would never occur near the lake, given the state's proposed requirements that wells be kept back from homes. But gas development is now permitted under county zoning around the lake and on the creeks that feed it — and that's the only part of Garrett where there is even any zoning to regulate land use.

While the county's chamber of commerce supports gas exploration and development, some businesses that rely on tourism and outdoor recreation are speaking out in dissent.

Mike Evans, owner of Savage River Outfitters, said Deep Creek Lake isn't all that's at risk. He fears drilling could ruin his guide service, which draws 1,000 to 1,500 anglers and guests annually. The Savage River and North Branch of the Potomac River in Garrett are popular spots to fly-fish for trout, he pointed out, and "people come up here to have a nice pristine place to stay and fish."

He's convinced that the woodsy peace and quiet would be lost amid convoys of heavy trucks carrying water and equipment to and from remote drilling sites, not to mention the risk of spills fouling the trout streams. Evans, 69, said if fracking is allowed in Garrett, he'd "close up shop and move my business out to Wyoming," where he already spends part of the year.

Bishoff believes fears of fracking disrupting tourism are overblown. And he notes that as more land goes into vacation homes, it's becoming harder to afford leasing land to raise crops. Allowing gas development, he said, could help preserve the farms that tourists like to look at.

"I don't think, if we're careful about it, that it will impact tourism or any other industry," he said.

Paul Edwards, newly elected president of Garrett County's three-member board of commissioners, acknowledged that "a lot of unknowns and a lot of concerns" remain about the impacts of fracking. He said the board is scrambling to get up to speed and deal with the issues, but is "cautiously optimistic" that gas extraction will benefit Garrett and its residents.

"There's a lot of people that would like to see full utilization of our natural resources," Edwards said, "and quite frankly, [there are] people that don't want to see that, for a variety of reasons. We have to be sensitive to all of those concerns."

tim.wheeler@baltsun.com

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