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Gas Drillers, Skeptics Clash As Md. Board Meets

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FLINTSTONE, Md. (AP) — Energy industry representatives and skeptics clashed Thursday over taxation issues and a three-year timeline for studying the risks and benefits of natural-gas drilling in Maryland’s section of the Marcellus Shale.

With lucrative production from Marcellus wells under way in Pennsylvania and West Virginia, Maryland should expedite its rule-making, said Drew Cobbs, executive director of the Maryland Petroleum Council.

“We don’t think it needs to be as drawn-out as laid out in the executive order,” Cobbs told The Associated Press.

He and a Chevron Corp. official spoke to a reporter outside the first meeting of a panel appointed by Gov. Martin O’Malley to recommend drilling regulations. The committee met at Rocky Gap State Park in Maryland’s mountainous western panhandle, where the shale gas reserves are concentrated. The group’s final report is due in August 2014.

Chevron government affairs adviser Jeffrey Kupfer, who sits on the panel, concurred with Cobbs: “I think we can answer a lot of these questions much earlier than that, especially in light of all the other work going on around the country.”

The gas-rich geological formation underlies parts of Maryland, New York, Pennsylvania, Ohio and West Virginia.

Cobbs said the industry would consider funding an environmental baseline study in return for an accelerated timeline.

Committee Chairman David Vanko, a Towson University geologist, said such a study is “imperative” to provide a benchmark against which any environmental consequences of drilling could be measured.

O’Malley’s executive order charges the advisory committee with helping state regulators determine whether and how the Marcellus Shale can be tapped without unacceptable risks to public health, safety, the environment and natural resources. Their main task is to minimize any adverse effects from hydraulic fracturing, or fracking, a drilling technique blamed for water pollution elsewhere.

Fracking is a horizontal drilling technique in which water, sand and chemicals are pumped into the mile-deep shale to crack the rock and free the gas.

Panel member state Delegate Heather Mizeur, D-Montgomery, who led a failed effort in this year’s General Assembly to restrict Marcellus drilling, proposed an extraction tax of up to 10 percent.

That would put Maryland second only to Alaska in taxes levied on gas production.

Kupfer asked what other taxes already in place would apply to natural gas extraction.

“I think we need to concentrate on what’s an appropriate extraction tax,” he told the committee.

Cobbs said later that too high an extraction tax could drive drilling companies to other states and deprive Maryland of the economic benefits of drilling. A University of Maryland study of Maryland’s natural gas reserves but their lifetime value at $5.9 billion to $49.1 billion.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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