Gas leasing in Western Maryland spurs calls for reform

Landowners, Realtors seek more disclosure, protections

  • Dana Shimrock holds the lease for mineral rights she and her husband signed.
Dana Shimrock holds the lease for mineral rights she and her… (Timothy B. Wheeler, BALTIMORE…)
December 31, 2011|By Timothy B. Wheeler, The Baltimore Sun

OAKLAND — — The first natural gas well has yet to be drilled into the Marcellus shale deposits underlying Western Maryland, but ripples already are being felt here from an industry that has brought wealth — and controversy — in neighboring states where drilling has proceeded apace.

Complaints from landowners about misleading pressure tactics by drilling company agents and concern that widespread leasing for mineral rights could hurt home sales are prompting calls for legislation to change the state's laws on leasing of land for gas and possibly other energy development.

"Basically, these leases should be protecting both the landowners and the community, and they're just not," said Natalie Atherton, acting director of CitizenShale, a group recently formed to see that the residents in this economically depressed mountain region are not short-changed if gas is found, and in any case aren't left with contaminated streams and wells and other harm.

Years ago, amid geologists' predictions that they were sitting atop a vast, untapped wealth of natural gas, hundreds of landowners in Garrett and Allegany counties eagerly signed leases to allow wells to be drilled on their land and to receive royalties on any gas found there. But some who were among the last to sign say they felt pressured to do so and misled about the risks of the hydraulic fracturing technique that would be used to extract gas from rock formations thousands of feet below their homes.

Others who agreed to lease payments of as little as $5 per acre per year feel cheated after finding that neighbors got far more. Those having second thoughts say they feel trapped, unable to get out or renegotiate, because many of the leases renew automatically without their approval if the company exercises its option.

Industry officials predict that as many as 1,600 wells could be drilled on 128,000 acres already leased in Garrett County, and 637 wells could be sunk on 51,000 drillable acres in Allegany County, according to the Maryland Department of the Environment, which regulates drilling.

The O'Malley administration is holding up requests to drill into the state's Marcellus deposits as it conducts a three-year study of the health, safety, environmental and resource issues surrounding shale gas development. In particular, officials are weighing the risks of hydraulic fracturing, or "fracking," in which a mixture of water, sand and chemicals is pumped thousands of feet below ground to break the gas loose from the layers of rock.

The jobs, royalty payments and tax revenue the gas production could bring are welcomed by elected officials and many leaseholders in the mostly rural region, which lags behind the rest of Maryland in employment and income. Some of the area's representatives are eager for drilling to begin and reluctant to add regulations that would slow the process.

Others have grown increasingly wary amid reports of streams and wells contaminated with methane or chemicals involved in the drilling process, of spills, fires, explosions and other problems.

"We really didn't realize the impact five years ago of the hydrofracking process," said Dana Shimrock, 62, who lives in northern Garrett. She said she and her husband, Tom, 61, a retired art teacher and woodworker, signed a lease paying $5 an acre in 2006 on their 50 acres but only after they were repeatedly told by leasing agents that all of their neighbors had signed and they were going to miss out if they didn't get on board. The Shimrocks, like many residents, made agreements without consulting a lawyer.

Dana Shimrock, library director at Garrett College, rues the bottom-dollar lease they signed without dickering, but says she feels especially upset and misled about what was involved in the drilling. While many of the chemicals used are harmless, some are carcinogens or otherwise harmful, such as benzene or lead, according to a congressional report this year.

"I specifically asked them what was in this water that they injected, the high-pressure water," Shimrock said. The agent "told me it was water and sand. They never disclosed there were any chemicals in that solution at all."

The Shimrocks signed a lease with the Keeton Group, a company based in Lexington, Ky. Keeton sold its leases to Chief Oil and Gas LLC of Dallas, and Chief is transferring the leases to Chevron Corp., a major multinational oil and gas company based in California.

Shimrock said she and her husband have "put a lot of blood and guts" into fixing up the 74-year-old house in which they've lived for 35 years. "We do organic farming here; we've planted trees. We really developed our land, and we just really regret we have this lease that could devalue the land and destroy the property."

Under their lease, the couple would get an industry standard 12.5 percent of the proceeds from any gas extracted from their property.

"Maybe we would make money on it," Shimrock said, "but for us it's not worth the risk."

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