Daily Record Staff//September 27, 2012
//September 27, 2012
Storm warnings have been posted for two possible sources of energy and jobs for the Maryland economy.
As The Daily Record’s Alexander Pyles reported last week, energy companies that had leased more than 120,000 acres in Garrett and Allegany counties more than five years ago to put themselves in position to drill into Maryland’s slice of the Marcellus Shale are letting those leases expire because of changing market conditions and slim prospects that the state will allow drilling anytime soon.
The wells would be drilled into the mile-deep storehouse of natural gas using the controversial method known as hydraulic fracturing, aka fracking, and therein lies the rub.
The O’Malley administration — rightfully so, in our opinion — has charted a deliberate course on fracking, which has been questioned for possible harmful environmental side effects. By executive order last year, the governor required a best practices study and a scientific safety study be completed by 2014 before the state makes a final decision on fracking.
Now with last week’s news, many Western Maryland residents and elected officials are despairing over the potential loss of a new economic engine for their economically challenged region.
Also last week came conflicting reports about the economic potential for wind energy.
A report by the National Wildlife Federation predicted that offshore wind energy would be an “economic powerhouse” in the U.S. The study said 75,000 people already work in the country’s off-shore wind industry and that number could burgeon to 300,000, generating $200 billion in new economic activity.
Enough energy could be generated in Maryland alone to meet 67 percent of the state’s energy needs, the report said.
Maybe so, but The New York Times reported last week that the American wind energy industry, buffeted by weak demand for electricity and tough price competition from relatively inexpensive natural gas, is cutting back production and laying off employees.
The price of natural gas is also a key factor in the energy companies’ stepping away from their leases in Western Maryland. Prices are at a 10-year low. Also, Maryland has only 1 percent of the Marcellus Shale, and if the state does allow fracking, it is likely to have some of the toughest regulations and perhaps the highest severance tax in the nation.
The wind energy industry finds itself in a national political crossfire over whether a federal tax credit designed to make wind power more competitive with other energy sources should be allowed to expire at the end of the year. That uncertainty is making wind energy companies skittish about expansion and long-term investments.
Gov. Martin O’Malley has twice failed to persuade the General Assembly to establish an incentive for energy companies to operate wind turbines off the coast of Ocean City. He is expected to try again next session, but the prospects for success appear mixed at best.
Meanwhile, Virginia is forging ahead with plans to survey 27 miles off Virginia Beach, encompassing 113,000 acres or 133 square miles where eight companies have expressed interest in building turbines.
Yet, despite all of this interest, no commercial wind power is now being produced in U.S. offshore waters, and it is likely that none will be before 2014.
There are no easy answers here. States trying to chart their own energy courses in a market beset by changing conditions and government policies do so at their own peril. Yet no policy is no option, because that would leave states unprepared to make the critical decisions when they need to be made.
And so, frustrating as it is at times, caution and prudence must remain the watchwords for state regulators and policy makers as they balance the potential positive and negative impacts of these energy sources on the economy, the environment and the taxpayers.