A small college town near the birthplace of the U.S. fracking boom voted yesterday to ban the practice in a day of mixed results across the country for an industry already grappling with falling oil prices.
The 59 percent of voters in Denton, Texas, who rejected the controversial drilling technique yesterday sent a message to the energy world every bit as powerful as the Republican takeover of the U.S. Senate: when it comes to the U.S. energy boom, all politics is local. And so far at the ballot box, the industry has lost more than it’s won.
While the Denton vote may serve as a bellwether for the potential of activism to slow fracking, the picture nationally was more measured. Two California counties approved bans and one in the state rejected any restrictions. One Ohio ban proposal was approved and three were voted down.
As the shale boom encroaches on urban areas, residents in communities near drilling operations are growing more resentful of the heavy truck traffic, noise and pollution associated with the work.
“There’s no question that it’s a threat,” Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in Dallas, said of the backlash. Activists opposed to oil and gas development who failed to beat back fracking at the state and federal level “have largely turned their efforts to local communities.”
Oil Price
U.S. oil prices have fallen 27 percent since a June high, falling below $80 this week for the first time in more than two years and spooking energy investors who worry that U.S. producers won’t be able to make money if crude declines further. Executives so far have vowed not to curb drilling even as some companies including ConocoPhillips have announced spending cuts.
Local fracking bans add to investor concerns that shale producers confront challenges that will slow drilling.
The Texas Oil and Gas Association sued to overturn the Denton vote, asserting the new ordinance violates state law and that voters don’t have the authority to end the practice.
More than 400 communities around the country have weighed local bans on drilling or hydraulic fracturing, the technique of cracking subterranean rocks to release oil and gas, according to a running list kept by Food & Water Watch, a Washington-based environmental advocacy group.
Local Control
Many of the measures, which are part of what activists are calling the “local control” movement, have been passed in areas that haven’t seen much drilling. Colorado, where oil production grew at a faster pace than in any other state last year, is one of the exceptions as five municipalities now have voted to ban fracking. Three of the five local bans in Colorado have been overturned by industry legal action.
Denton makes another. Home to the University of North Texas, Denton sits atop the Barnett Shale, where producers first demonstrated the commercial use of drilling thousands of feet through gas-bearing rock and liberating the fuel by fracturing it with blasts of water, sand and chemicals. About 275 wells already have been drilled within the city. Most, if not all, were fracked.
Unofficial results in the local election showed those opposed to fracking bringing home a solid victory, with 59 percent of voters, or 14,881, approving the prohibition. The results “will stand up” to legal challenges from industry, Cathy McMullen, president of Frack Free Denton, said in an e-mailed statement.
Educational Opportunity
“The vote shows the need for more educational efforts in communities, and more proactive outreach with local residents to make sure their concerns are addressed,” said Steve Everley, a spokesman with Energy in Depth, an industry-backed group that promotes fracking. “There’s nothing inherently unsafe about oil and gas development, but there are always opportunities to convey that fact better.”
Everley said the strongest support for the ban came from precincts on campus, while a majority of homeowners in residential neighborhoods opposed it.
“If this place in the heart of the oil and gas industry can’t live with fracking, then who can?” said Bruce Baizel, director of energy programs at Earthworks, a group that has advocated for the bans. “Perhaps banning fracking in Denton, Texas will finally force the oil and gas industry to clean up its act.”
In California, Mendocino and San Benito counties approved anti-fracking laws, while Santa Barbara rejected one. In Ohio, Athens voted for a ban and the cities of Gates Mill, Kent and Youngstown cast ballots to continue fracking.
Production Tax
Other elections were also of note around the country for the industry. In Pennsylvania, home to the Marcellus Shale natural gas formation, Democrat Tom Wolf defeated Tom Corbett, raising the chances for implementing a gas production tax in one of the largest producing states, according to an analysis today by Wells Fargo & Co.
If anti-fracking initiatives “continue to proliferate, then companies lose access to those resources,” David B. Spence, professor of law, politics and regulation at the University of Texas School of Law, who researches fracking and drilling rules, said in an interview earlier this year.
The fracking battle could eventually be extended to the Texas legislature as the industry seeks to overturn the ban through litigation or new laws that would pre-empt local efforts to regulate drilling practices, said Paul Betzer, an attorney with Snell & Wilmer in Colorado who worked on local zoning and other laws for ConocoPhillips and Phillips 66.
Landowners and drillers overturned local bans in New York until their cases reached the state’s highest court, which ruled June 30 that regardless of fracking’s merits, New York towns have the power to ban it. That presents at best a patchwork of regulation should re-elected Governor Andrew Cuomo decide to lift a statewide moratorium imposed in 2008 in the absence of state fracking rules.
To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net
To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Carlos Caminada
