Fracking study funds called inadequate

ANNAPOLIS — There may not be enough money in the governor’s budget to answer all of the questions regulators and lawmakers have about the safety of hydraulic fracturing, or fracking.

Gov. Martin O’Malley’s budget includes $1.5 million to study the issue. Del. Heather R. Mizeur, a Montgomery County Democrat and member of Marcellus Shale Safe Drilling Initiative Advisory Commission, called that “a significant development.” But Mizeur said on Thursday that only about “two-thirds” of the questions the commission was asked to answer in a 2011 executive order issued by O’Malley could be studied with that amount of money.

Fracking is used to extract natural gas from a mile-deep, rock-encased gas formation called Marcellus Shale. The shale runs below much of Garrett County and a sliver of Allegany County in Western Maryland. Its supporters see it as an extraordinary economic opportunity for the state, its opponents as an environmental disaster waiting to happen.

Robert M. Summers, secretary of the Maryland Department of the Environment, acknowledged Thursday that the budgeted amount may only be enough to get studies started.

While the $1.5 million could be used to address the 18 points in the governor’s executive order, including examining fracking’s impact on water, air quality, transportation infrastructure and the economy, those studies might raise more questions.

“We may identify other things,” Summers said.

Still, there was some bipartisan agreement that having money in the budget for studies was a good thing. Sen. George C. Edwards, a Western Maryland Republican who supports fracking and sits on the governor’s commission, said the money would “help the process along.”

“I think he did the appropriate thing, that he probably should have done when he started the commission,” Edwards said. “I appreciate the governor doing it. I think it’s the right thing to do.”

Edwards said he hoped the study money would cause Mizeur and others to back away from a moratorium bill. But, when told Mizeur intended to move forward with the legislation anyway, he said he was “not surprised.” The proposed bill would install a legislative moratorium that would stay in effect until studies were completed and the legislature decided whether to allow drilling. O’Malley’s executive order, which has created a de facto moratorium, expires in 2014.

“The reason for a moratorium is to remove the notion of a deadline,” Mizeur said. “The moratorium will help give us that clarity of knowing the General Assembly expects there to be no permits issued.”

Mizeur said the bill would also let state agencies charge natural gas companies a fee to pay for further studies, if needed.

Edwards and industry advocates seemed to think that the study money in O’Malley’s budget might hurt the bill’s chances. Drew P. Cobbs, a lobbyist for the American Petroleum Institute, said that was part of why he was pleased with the governor’s choice to fund safety studies.

“It takes a lot of steam out of [moratorium supporters],” Cobbs said. Even without the moratorium, Cobbs said natural gas companies probably could not start fracking in Maryland before 2014 or 2015.

Natural gas companies that signed land leases with Western Maryland property owners going back to 2006 have let some leases expire rather than renewing them. Many were signed at lowball rates before the real economic value of Marcellus Shale was understood.

Gas companies have since shifted much of their focus to points west, where “wet gas,” which has more possible uses than “dry gas,” is available. In Maryland, only “dry gas” exists, and the price of natural gas is at a record low.

Del. A. Shane Robinson, D-Montgomery, said the uncertainty of the economics and a limited amount of state resources made it impractical to spend money on fracking studies. Robinson, who is sponsoring legislation that would ban fracking, would rather see state money spent on renewable energy resources.

“We should take a pass and work really hard moving the ball down the field on renewable energy,” Robinson said. “I’m trying to tie it into the larger issue.”

Going with the wind

A new poll says almost three-quarters of Marylanders would support the state’s investing in the development of offshore wind energy.

The poll, conducted by Annapolis-based OpinionWorks and paid for by the Maryland Offshore Wind Coalition, says 72 percent of those contacted support a plan to build wind turbines off the coast of Ocean City.

Support is strongest for offshore wind in Baltimore (79 percent) and Montgomery County (76 percent), both Democratic strongholds. But a majority of those contacted in Western Maryland (69 percent) and the Eastern Shore (70 percent) also said they supported offshore wind development.

O’Malley is expected to again push legislation this year that would guarantee developers of an offshore wind farm a market, while also capping the potential energy rate increase consumers would face. Both presiding officers in the General Assembly see passing such a bill as a priority.

Pollsters interviewed 800 randomly selected Maryland voters to collect their data.

Investing in tech

Two more venture capital firms have been selected to invest $13 million of state money in early-stage technology companies based in Maryland.

New Atlantic Ventures, a Reston, Va.-based firm, will receive $8 million through the state Department of Business and Economic Development’s InvestMaryland program. Kinetic Ventures, which has offices in Chevy Chase and Atlanta, will receive $5 million.

DBED officials revealed the firms’ selection Thursday at a briefing before the Senate Budget and Taxation Committee.

Three firms have now been selected to invest a slice of the state’s $84 million venture capital fund. Grotech Ventures, which has offices in Hunt Valley and Vienna, Va., in December became was the first firm selected.

The $84 million was raised through an online auction of insurance premium tax credits in March. Ten companies with operations in Maryland bid on the credits, which will become available in 2015.

The state is planning to invest all but $56 million of the venture fund, while trusting firms like Grotech, New Atlantic and Kinetic to invest the rest of the money in early-stage companies in the life sciences, biotechnology, cyber-security and green technology industries. Among the three venture capital firms, $25 million of state money has been invested.

InvestMaryland was O’Malley’s signature jobs legislation during the 2011 session of the General Assembly, and his administration expects the plan to create thousands of jobs in various high-tech industries.

DBED estimates that investments will be made in 40 to 80 companies a year. State investments will be made in start-up firms where there is more risk, while the private venture capitalists will target more mature, early and growth-stage companies.

The agency is asking the legislature to make some changes to the program that could lure more companies to seek InvestMaryland money. Legislation to that — SB 70 — is scheduled for a hearing in the Budget and Taxation Committee on Jan. 30.