Mineral owners call Denton's drilling moratorium a ban, sue for $1M

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Jake Dean

A producing well near homes in Denton.

Nicholas Sakelaris

Staff Writer- Dallas Business Journal

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A group of Denton mineral owners is suing the city for $1 million, saying the ongoing drilling moratorium prevents them from harvesting their minerals and violates the state constitution.

The moratoriums “function as a complete drilling and completion ban on over 500 licensed producing properties and gas well developments,” according to the lawsuit filed in Denton County. “We are witnessing a political subdivision of the State of Texas denying already permitted development to vest rights holders, including property owners, in the guise of a temporary moratorium.”

Denton lawyer Charles Chandler Davis filed the lawsuit on behalf of the plaintiffs, Arsenal Minerals and Royalty, The Chandler Davis Trust, Leslee Ann Gassaway Davis and other vested mineral owners.

The city of Denton imposed the moratorium earlier this year so it could make changes to its drilling ordinance. It was recently extended to January.

Davis said it amounts to a "taking" of the oil and gas minerals owned by his clients.

The lawsuit also requests that Denton cancel the election to ban fracking that’s coming up on Nov. 4, saying the city doesn’t have the authority to prohibit the process used to complete wells in the Barnett Shale.

The lawsuit calls the frack ban a “governmental fiat.”

"We believe the election will be invalid," said Davis, speaking on behalf of the plaintiffs. "You can't have the voters vote on an issue that in the final analysis is unconstitutional even if they pass it."

Denton residents submitted a petition earlier this year to place the fracking ban on the ballot. The driving force behind the effort to ban fracking came from residents who were fed up with drilling and fracking in close proximity to homes, in some cases less than 200 feet away.

In 2012, Eagle Ridge Energy redrilled old grandfathered oil wells, converting them to horizontal Barnett Shale wells. The city’s own ordinances, which call for a 1,200-foot buffer from well sites to homes, didn’t apply.

That’s also what drove the city of Denton to extend the moratorium so it could close the loophole in the ordinance.

Residents, including Denton City Councilman Kevin Roden, saw the fracking ban as the only way to solve the problem since they aren’t getting any help from state regulators or the industry.

For his part, Chris Faulkner, CEO of Breitling Energy (OTC: BECC) agreed that drilling in close proximity to homes shouldn’t be done. Faulkner, whose company has no operations in Denton, says this issue could be resolved through regulations, not through a moratorium or a ban.

He views the election as “vitally important” because it could set a precedent because it would be the first Texas city to ban fracking.

Nicholas covers the energy, manufacturing, aviation and transportation beats for the Dallas Business Journal. Subscribe the Energy Inc. newsletter