ANNAPOLIS — The Senate on Wednesday passed legislation that would force the natural gas industry’s middlemen to register with the state before negotiating land leases with property owners.
Senate Bill 766 was given final approval in a 47-0 vote, one year after similar legislation failed to receive a vote from the Education, Health and Environmental Affairs Committee.
The middlemen, called land men by the natural gas industry, negotiate lease deals between property owners and natural gas companies seeking the right to drill for gas. In Maryland, those deals have often been for well below market value.
A companion land man registration bill, House Bill 828, received a hearing last week in the House of Delegates’ Environmental Matters Committee. That panel voted against allowing the full House to consider a similar bill last year.
But a task force convened by Gov. Martin O’Malley, after researching the issue, recommended the legislation late last year. Two Western Maryland Republicans, Sen. George C. Edwards and Del. Wendell R. Beitzel, are sponsoring this year’s version of the bill. They also sponsored the versions that failed last year.
With the support of O’Malley’s Marcellus Shale Safe Drilling Initiative Advisory Commission, Beitzel said success was more likely in 2013.
“This may be model legislation for the country,” Beitzel said.
In Western Maryland, hundreds of property owners have signed multi-year leases with gas companies interested in tapping into the Marcellus Shale, a rock-encased gas formation that runs a mile below much of Garrett County and part of Allegany County, using hydraulic fracturing and horizontal drilling. Marcellus Shale also runs beneath much of the eastern United States.
But the lease agreements, going back to at least 2006, were signed for well below market value — often $5 an acre, when leases in Pennsylvania were being signed for thousands of dollars per acre — leading some Western Maryland residents to form a coalition of landowners to negotiate better deals.
Companies are letting many of those leases lapse, however, while the state mulls the safety of hydraulic fracturing, or fracking, a drilling technique during which a water, sand and chemical mixture is blasted down a well to fracture the Marcellus Shale, releasing the gas and allowing it to seep back up to the surface.
If fracking is eventually allowed and regulated in Maryland, Beitzel said, forcing land men to register will create more accountability and lend some credibility to good actors in the profession.
“They’re making certain representations and we want to make sure there’s some accountability and some standards,” Beitzel said. “I think it will protect the land men and the people.”