Tapping natural resources to address Maryland’s economic problems
We should develop previously unavailable energy resources to generate jobs, revenues. Using hydraulic fracturing to produce natural gas from the Marcellus shale formation will create jobs, improve lives and boost tax revenues in Maryland – while also protecting water and other environmental resources through proper, commonsense regulations.
Maryland’s 7.2% unemployment rate is below the national average, but still too high. Budget shortfalls next year could reach $700 million or more, the Maryland Budget and Tax Policy Institute warns. Many of our cities and counties likewise face mounting debt.
Families need temporary assistance to address unemployment, poverty and homelessness. Aging roads, sewer systems and other infrastructure need repair. Revenue projections for 2012 and beyond will not cover these programs, education, healthcare, and public employee pensions, the institute cautions.
Faced with unpalatable reductions in programs and growing opposition to tax increases, the Free State clearly needs reliable new revenue sources.
One source could be natural gas from the Marcellus shale formation that extends beneath western Maryland and four neighboring states. Of the four, only Pennsylvania is tapping it so far, but the results are impressive.
The Pennsylvania Department of Revenue reports that Marcellus gas production generated more than $1.4 billion in state tax revenues since 2006; by 2020 it could generate $20 billion more. Those activities created 72,000 Pennsylvania jobs between October 2009 and March 2011.
By 2020, gas production from the formation could support 256,000 jobs across the five states, at an average annual salary of $73,000 – well above the national average – energy experts say. Abundant new natural gas supplies from other US shale deposits have helped cut the price of natural gas in half, to below $4.00 a thousand cubic feet, making it more affordable for home heating, electricity generation, petrochemical feed stocks, and backing up unreliable wind and solar installations.
A recent analysis found that Pennsylvanians saved $633 million in utility bills since 2006, due to these expanded supplies.
Maryland too could be harnessing Marcellus gas to boost its economy, job growth, and state and county revenues. Thousands of able-bodied workers would prefer employment at good salaries over welfare, unemployment and food stamps.
Drilling and production could also help thousands of small businesses that would provide goods, equipment and services to drilling, pipeline and related companies. In Maryland, 19% of these businesses are owned by African Americans – still more by other minorities.
And yet there is strong opposition to harnessing these resources – primarily because doing so involves a new process called hydraulic fracturing (HF or “fracking”). Actually, fracking isn’t all that new.
It has been used in more than a million US wells during the past 60 years. It employs high pressure fluids to create tiny fissures in impermeable, hydrocarbon-rich rock formations, allowing companies to tap their energy. But over the past few years, HF has been combined with horizontal drilling and other techniques, so that many wells can be drilled from one site, reaching multiple formations up to several miles away and unlocking huge supplies of previously unavailable natural gas.
But certain groups are using fear tactics to delay or stop fracking. They claim it is not federally regulated. They say it “could” contaminate groundwater and drinking water. They suggest it is incompatible with efforts to improve the Chesapeake Bay’s health.
In reality, hydraulic fracturing is regulated under state and federal laws, as well as industry guidelines. A 2009 Ground Water Protection Council review concluded that enacting additional federal regulations “would be costly to the states, duplicative of state regulations, and ultimately ineffective because such regulations would be too far from the field of operations.” US Environmental Protection Agency Administrator Lisa Jackson has said there is no recorded incident in which fracking contaminated a drinking water well. This shouldn’t be surprising.
Shale gas formations are typically thousands of feet below groundwater supplies, with layers of shale, limestone and other impermeable rock in between. The first several hundred feet of each well has special steel “casing” cemented in place to protect water supplies; the actual drill hole and pipe goes through this casing. In addition, the fluids used in fracturing are 99.5% water and sand.
The other 0.5% is mostly weak salts and acids, vegetable or other oils, guar gum and other chemicals, many of which are found in foods and common household products. However, we still should know what is in specific fracking fluids, and must ensure that they are handled, recycled and disposed of properly.
Faced with environmentalist pressure and public concerns, Governor Martin O’Malley signed an executive order to study fracking. His decision is understandable.
However, he should ensure that the study is completed in a timely manner; is based on facts, not protests and unsubstantiated fears; and does not result in unnecessary over-regulation. A proper review would also take advantage of the studies, laws, regulatory frameworks and hands-on experience in Pennsylvania, North Dakota, Texas and other states that have used fracking for years.
It would also recognize that hydraulic fracturing is essential for producing most natural gas (and all these benefits), just as we need to mine the coal that generates over half of Maryland’s electricity. In fact, every energy option (including wind and solar) requires mining and fossil fuels – and affects wildlife habitats and environmental quality. We need to be wise stewards of the Earth God gave us, in everything we do.
Responsibly developing this vital God-given shale gas resource would put thousands of Marylanders back to work, improve people’s living standards, generate billions of dollars in government revenues, balance county and state budgets, and produce more American energy for all Americans.