Drilling, again, for gas in Garrett

The Baltimore Sun

BITTINGER - Henry Bowser has seen it before: outsiders converging on Garrett County eager to dig deep beneath its mineral-rich soil and promising local residents a bounty of fossil fuel fortunes.

While waiting last week to sign a lucrative lease allowing a natural gas company to drill on his 120-plus acres, Bowser recalled that his late father, George, had leased the land 40 years ago - for annual payments of $1 per acre - to a company convinced it would find gas underneath. Nothing turned up, and the lease was dropped after 20 years.

But this time, it's different.

This time, geologists insist that the county is perched atop an untapped wealth of natural gas - part of a 34 million-acre reservoir stretching from the Appalachian Mountains in East Tennessee to upstate New York. Because drilling technology has improved in recent years, gas companies say they can tap into large deposits of Marcellus shale, a black rock that is a major source of natural gas.

This time, with the nation eager to reduce foreign-oil dependency through home-grown alternatives, companies are willing to invest millions of dollars up front in the county for the right to drill.

That's why, though skeptical at first, Bowser joined a group of more than 500 Garrett County landowners who signed leasing contracts giving Lodge Energy, a Texas-based oil and gas company, the right to drill on their more than 36,000 combined acres.

Landowners will receive $1,150 per acre up front on a five-year lease, an optional three-year extension at $1,235 per acre up front, a 16 percent royalty on any natural gas found on their property, and free gas to heat homes on the property.

The upfront payments mean that regardless of what the ground yields, Garrett will experience a virtually unprecedented boost to its economy, one that could have statewide ripples from significant spending and contributions to the tax base.

Those payments should begin about 90 days after the signing of leases and background checks to verify property ownership rights.

"My dad wouldn't believe it," said Bowser, who now lives in Harrisburg, Pa., but still owns the acreage that he signed over to lease. "This wouldn't have been in his wildest dreams."

The windfall has spurred excitement in this pastoral county where maple syrup stands dot the main roads and Bowser's mother, Kathryn, prepares family dinners at the Bittinger Fire Hall. Some anticipate an influx of jobs; others ponder how drilling will affect terrain that is cultivated by farmers and coveted by outdoorsmen.

Bowser said many landowners will likely spend the payout on property taxes and land upkeep - to ward off economic hardships that force some to sell to companies developing property around tourist-popular Deep Creek Lake.

"For farmers and people like us who have fairly large tracts of acreage, it's a way to keep the property from being sold and broken up," Bowser said.

"There is so much selling and splitting up of property in this area, with the development around the lake. For the people still trying to keep Garrett County as a rural area, it makes it a lot easier for them to hold on to their property."

Not everyone has collected a windfall, particularly those who early on signed leases for as little as $5 per acre.

"These companies came around and were giving these leases for little or nothing," said Delmer Yoder, a semiretired school bus operator from Accident who took it upon himself to form the bloc of landowners in January after hearing about the paltry leases being offered.

"I thought the residents of Garrett County should benefit, too."

After Yoder contacted many landowners, including his former next-door neighbor, Bowser, the group steadily grew. They held meetings at such venues as Garrett College and hired as a consultant geologist William Capouillez of the McVeytown, Pa.-based company Geological Assessment & Leasing.

Capouillez conducted seminars that drew up to 200 county landowners at a time, and he implored them to bid their leases together.

"Having 100 acres and trying to lease it by yourself, you can't demand as much as being part of a group with 30,000 acres," said Capouillez. "Across the road you have people with 400 acres, and here's this group with a guy who has 10 acres, and he gets more money and a far better lease. The other guy's mad, and he has a right to be."

Lodge Energy, which promised to paint any protruding property wells to blend in with the landscape, placed the highest bid. Days before the lease signing, more landowners joined and added 6,000 acres.

"People are still trying to join," Yoder said Friday afternoon.

Estimates vary on how much gas is actually underneath the Appalachians, but Penn State geoscience professor Terry Engelder says that the area could produce 50 trillion cubic feet of natural gas.

The Energy Information Administration lists the most recent wellhead price of gas (the price of gas before it is treated, processed or distributed) at $10.82 per thousand cubic feet, which means the area could generate hundreds of billions of dollars.

"The U.S. is experiencing a paradigm shift," said Engelder. "When you see those commercials where [billionaire oilman] T. Boone Pickens is talking about the nation building more natural gas vehicles; that is the excitement that comes as a result of the role natural gas could play."

Bob Milici, research geologist for the Reston, Va.-based U.S. Geological Survey, said that natural gas output in the region should run a minimum of 10 years and could last as long as 30 years.

Yoder, who is already energy-conscious (he's driving his third Toyota Prius hybrid car), had never envisioned his land being used to offset the nation's energy crunch. He's leasing his 85 acres, having used it primarily for farming.

Bowser's anticipating a windfall on top of the good deal he got from recently selling timber off his property.

Some in their group own as little as 1 acre, others more than 600 acres.

Landowners who attended Capouillez's seminars wondered how the drilling would affect their land and their use of the property. Environmental concerns have also been raised.

Ed Larrimore, mining program manager for the Maryland Department of the Environment, said he does not anticipate any wildlife concerns from the drilling but added:

"We will be concerned with the containment of drilling fluids and cuttings and the disposal of both during and after the process. We will have concerns with protection of fresh water and any impacts to that.

"That does not imply that we believe that they will be problematic, only that we will consider these and other issues."

But Maryland state Sen. George C. Edwards said environmental issues will be addressed if the drilling process is done appropriately.

He added, "Do you want to be energy independent in this country or don't you? Why not use our own resources and make the companies abide by the rules and regulations?"

Western Land Services, a Michigan-based oil and gas service company that is leasing on behalf of Lodge Energy, says it is too early to determine when drilling will begin.

"We still have many questions that need to be answered regarding oil and gas development in the state of Maryland that will influence the timeline for development," said Todd Stowe, Western's vice president of land and business development.

But if those wells can tap a vast reservoir of gas, Garrett County could play a huge role in the country's aim for energy independence. Yoder said the block-leasing venture illustrates how a community can capitalize on a windfall if it bands together.

"I feel good about it," he said, "but when all that money rolls into Garrett County, I'll feel better."

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