Thursday, September 11, 2014

The Costs of Fracking

The industry keeps trying to pretend that fracking is a big economic benefit to Denton. I used their own numbers to show how that just isn't so. In fact, the benefits are so puny that they are easily outweighed by all the costs associated with fracking. I spoke to some of those costs in an earlier post.

We can now get a peek at some more costs as outlined by the City of Denton in the draft of its new comprehensive plan. Not all of the costs identified in the comprehensive plan relate directly to hydraulic fracturing, but then again the industry's report about benefits rolled in so many economic multipliers that it strayed way far afield from direct economic impacts of hydraulic fracturing.

What we see in the comprehensive plan is just how much frack sites are going to be a drag on our future - they are going to increase the costs of Denton's development significantly. And they are going to significantly reduce the revenues that could otherwise be provided from more productive and sustainable land uses.

If you want tot do a real cost-benefit assessment (and not a cartoon, biased industry sham with a foregone conclusion), then here are just a few of the things you'd need to think about (from the comprehensive plan draft, pp. 46-48):

"• Future development costs for structures, new roadways, and utility extensions near gas wells, oil wells, and pipelines may incur unforeseen expenses due to the potential need to develop around Drilling and Production Sites or pipelines, relocate or bore utilities around existing pipelines, perform environmental testing if the property is identified as a prior Drilling and Production Site, or clean up and mitigate contaminated, inactive sites.

• There are a significant number of gas wells in Denton and its ETJ, mainly west of I-35. Structures cannot be built over a plugged well and building siting must follow Fire Code requirements to locate in the vicinity of an active well



• Since vertical construction cannot occur in a pipeline easement, future development potential is severely limited near pipelines...



• The operations performed at Drilling and Production Sites require heavy vehicle traffic to support the various activities. The increase in vehicle traffic can adversely impact associated roadways and traffic patterns around the Drilling and Production Sites. Dirt, dust, and debris associated with drilling and production activities can produce localized adverse effects which could make new development near them undesirable and unlikely.


While…setbacks serve to reduce risks to public safety, they also impact development and compromise land use efficiency. [This is exacerbated by] the wide scattering of isolated well sites throughout much of the western portion of Denton…

While regulations were enacted in 2010 to limit gas well development plats to a maximum of five (5) acres, a number of pre-existing platted production sites exceed one hundred (100) acres and even include residential and other protected uses within drilling and production site boundaries. Thus, development of adjacent properties for residential and other protected uses is restricted by the application of setbacks to these non-drilling sites, regardless of proximity to well locations."



Thursday, September 4, 2014

Denton Chamber Should Support the Ban

The Denton Chamber of Commerce's decision to oppose the proposed ban on hydraulic fracturing contradicts its vision of promoting “the general welfare and prosperity” of Denton. I respect the Chamber and admire all the good they do for Denton. But they have made a mistake here and I urge them to reconsider their position.

Had they taken an objective look at fracking, they would find that it is a drag on our economy and an obstacle to future development. Fracking poses severe safety and health risks to the Denton community in order to extract mineral wealth that is primarily exported to non-local businesses and absentee mineral owners. Only 2% of the appraised mineral value is owned by Denton residents. Gas wells rapidly deplete in value – 90% in five years. Denton will be stuck for the long haul stewarding hundreds of blighted industrial sites of diminished value.

Shockingly, the Chamber based its decision solely on an industry-funded report by a group with a known record of extreme hyperbole when it comes to estimating the economic impacts of the oil and gas industry. Yet even if we accept the industry’s numbers, they actually confirm the economic case against fracking. They show that it is a miniscule part of our economy: it accounts for 0.2% of our gross revenue, 0.25% of our labor force, and 0.5% of our tax revenues. Fracking accounts for 0.17% of DISD’s budget, while dozens of gas wells right next to our schools emit thousands of pounds of toxic chemicals.

How is any of this good for our welfare and prosperity?

City Council member Kevin Roden rightly notes that a ban on fracking will have “no perceivable impact on our local economy.” Indeed, the ban will bring about an economic boom. It will add value to properties that would otherwise be devalued by nearby fracking operations. It will bring the economic benefits of cleaner air and water and safer neighborhoods. Most importantly, the ban will make Denton more attractive to the skilled workforce we need to support higher-paying jobs and drive our economy forward. A city that allows a poisonous industry less than 200 feet from homes is not an attractive place to move. Without the ban, the workforce we need will find jobs, and spend their money, elsewhere.

It’s disappointing that the Chamber failed to consider the full picture. Like the industry they only thought about the costs of a ban and didn’t see how that flea is dwarfed by the elephant of economic benefits that a ban will bring.

The Chamber advocates “reasonable regulations,” but this too is just a restatement of an industry talking-point. The fact is that the City of Denton worked for three years attempting to craft regulations that would both permit fracking and protect the health, safety, and welfare of her citizens. Yet at every turn, the industry failed to compromise. They insist on fracking as many wells as they want closer than 200 feet from homes and schools on the 30% of our city’s land area already permitted for fracking. We actually have a reasonable ordinance on the books. The problem is that it doesn’t apply to anything, because fracking is vested under older laws. We were just closing the barn doors after the cows got out. Further calls for working on regulations can only shut the door tighter but not corral the herd.
Finally, the Chamber incorrectly claims that state law “guarantees” that property owners can access their minerals. Like most rights, mineral ownership is qualified, not absolute. Besides, the proposed ban is actually less restrictive than other valid ordinances in Texas, because it is only a ban on hydraulic fracturing, not drilling. An independent law firm has concluded that the proposed ban is legal.

The ban is the only reasonable option available to us. Without it, we will see the wholesale industrialization of Denton’s neighborhoods by an activity that pumps all the benefits out of town and dumps all the costs on us. On November 4th, we need to pass the ban on fracking in the name of promoting Denton’s welfare and prosperity.  

Sunday, August 17, 2014

They are still trying to fool us

At the City Council public hearing on July 15th, the industry representatives chose the following rhetorical strategy: “We recognize that fracking is a problem in Denton. But we don’t need to ban it. We promise to work with you to draft better regulations.” They are now saying the same thing in their national op-eds about the Denton fracking ban.
City Council members reminded them that we have worked for years on local policy to no avail – there is still fracking less than 200 feet from homes. Then City Council asked the industry representatives what ideas they had for improving our bad situation. They were silent. They just promised to help us come up with…something.
Now it is over a month later, and I’ve just heard from several city leaders that no one from the industry has lifted a finger to follow through on their promise. I know…it came as a shock to me too. You mean they were only blowing smoke?! They don’t care about us?! But they said…wow.
Actually, they are not just passively neglecting their promise; they are actively undermining it. The city has a moratorium in effect on new drilling permits while they revise the gas well ordinance. But that puts a crimp in the plans of Vantage Energy to get frackin’ now. So, rather than work with us (as they promised to do), they are going to work around us: on August 25th, Vantage is going to the Zoning Board of Adjustment to get an exemption from the moratorium.
So, they say they recognize the problem; they respect us and want to help us to revise our regulations. But when the rubber hits the road (and actual money is at stake), they have no patience for our processes and no respect for our rules.
That’s the story of fracking in Denton. It’s an old story. I don’t know who they think they are fooling anymore.

Saturday, July 19, 2014

Fracked on their own Petard: Depantsing the Perryman Report about Denton’s Fracking Ban

On November 4th, Denton could ban fracking, forever ridding its neighborhoods of a poisonous specter. Ever since we got the signatures to put the ban on the ballot, support has been growing like a tidal wave.

This has the oil and gas industry scared. They are getting desperate.  

They’ve taken out full page color ads in the local paper accusing us of being unpatriotic. The head of the Texas Railroad Commission, a man whose campaigns are 80% funded by the very industry he supposedly oversees, insinuated that Russia is behind the ban (I’m still waiting for my check from the Kremlin, but when it arrives, the first round of vodka is on me).

The industry even spent an estimated $50,000 on a counter-petition campaign in support of fracking. For two weeks, out-of-state petitioners, being paid $4/signature (plus hotel and travel expenses), flooded the city. It was a shamelessly dishonest stunt. I was stopped by one petitioner (from St. Louis) in the Kroger parking lot who actually told me that his petition was for a fracking ban. Texas Sharon Wilson caught another petitioner lying on video and several others attested to their annoying and mendacious tactics.

The industry also did what they do best: fund a report about how great they are. They hired the Perryman Group to write a report about how much the proposed fracking ban would cost Denton. Of course, what they ‘found’ were some big scary numbers. A ban would cripple the city!

They timed the release of the report to coincide with last week’s epic City Council meeting about the ban that brought in 600 people (sitting in three overflow rooms) and stretched on until 3 a.m. To parrot the findings of the report at that meeting, several industry representatives drove in to Denton, including the former Chief Justice of the Texas Supreme Court (surprisingly, he now works for the oil and gas industry).

Their strategy worked. Media coverage cited the report’s figures, making it sound like the people of Denton would be committing economic suicide if they adopted the fracking ban. And the industry trolls keep shouting the report’s conclusions into their echo chambers.
Now, usually, I find it best to ignore this kind of overt bias. But the stakes are too high. Someone has to call bulls**t. So, here goes:
1. The report is completely one-sided. It is not a cost-benefit analysis of the fracking ban. It is only a cost analysis. The benefits of taking the oh-so-radical move to ban a toxic industry from neighborhoods are not even considered. Yet City Councilmember Kevin Roden is right that a fracking ban will create a local economic boom. More on this later.
2. It is a black box that does not include the data or the model used. Their model relies heavily on economic multipliers, which are easy to abuse to get the findings you want.

3. The Perryman Group is notorious for exaggerating figures to fit their clients’ preferred reality. When TransCanada hired them, the Perryman Group said that the Keystone XL Pipeline would create as many as 550,000 jobs. Even analysts who support the pipeline called their figures “dead wrong” and ‘meaningless.’ An independent analysis by Cornell University found that the pipeline would create only 500 to 1,400 jobs (gosh, Perryman was only off by three orders of magnitude).

4. Don’t forget the rule of the one percent (or less). We know that fracking is a miniscule part of Denton’s economy. Mineral values are just 1.1% of total property values in the city. Minerals contribute just 1% of total property tax revenues, meaning fracking accounts for 0.5% of the city’s General Fund. The mining sector accounts for just 0.27% of the local workforce. The only exception to this rule is that Denton families actually rake in a whole 2% of the total mineral wealth generated in Denton (companies and absentee mineral owners claim roughly 90%). 

5. OK, set aside the report’s one-sidedness and hidden assumptions. Set aside the Perryman Group’s track record of hyperbolic industry cheerleading. Let’s take the giant leap to assume the report is not a gross exaggeration. Even then, the report actually confirms the rule of the one percent (or less). To start, it concludes that the ban will cost the city about $501,000 in tax revenues annually. The total annual resources of the City are $826 million, so that's 0.06%.  If we compare their figure just to the City's General Fund (representing the bulk of tax revenues) it's still just 0.5%. 

But this is letting them off the hook, because the Perryman Report's numbers ar projections over the next ten years. Everything about Denton's economy is projected to grow over the next ten years, which means annual tax revenues will grow. Indeed, in just the two years from 2011-2013, Denton's General Fund increased by 12% from $87 million to $99 million.

So let's conservatively estimate a 5% annual growth rate in the General Fund, which in ten years would mean it will be at $155 million. Now let's take the halfway point at five years as a conservative average total General Fund level over the projected time frame. That's about $121 million, so we'd need to adjust their estimated cost in terms of tax revenues down to 0.4%.

6. The report confirms the rule of the one percent (or less) again. It claims that the ban will cost 2,077 person years of employment over ten years. Yet ‘person-years’ is a flow that accumulates over the ten year period, so the figure actually amounts to 207 jobs. The total workforce for Denton is 67,316, so the impact of the ban is 0.3%. Surprise! That’s about the same number posted by the city, which we have been using, of 0.27%.

But again this is letting them off the hook, because they are projecting over ten years and Denton's work force is projected to grow significantly in that time frame. Indeed, Denton County's employment grew by over 5% in just one fear from 2012-2013. If we project that into the future and do the same conservative estimates as above (for tax revenues but this time for the work force), then we'd need to revise their figure down to just 0.25%.

7. And again… The report estimates a loss of roughly $25 million per year in the city’s gross product. Now, as far as I know, no one bothers to count the total gross product for cities – only nations and states. So, we will have to use a proxy to estimate Denton’s gross product. One way to do this is to divide Texas’ $1.5 trillion gross product by 215 (as Denton’s population is 1/215th of the state’s population). That yields a gross product for Denton of $6.98 billion, which means Perryman’s estimated cost of the ban is a whopping 0.36% of Denton’s gross product.

Again, though, Denton's gross product will grow over the next decade. If we peg this to population growth, we can get a decent estimate in how Denton's economy will balloon. The expected population of Denton in 2020 is 147,825, an incredible 24% increase from the present population. The same growth in our gross product would mean we revise Perryman's figure down to 0.2%.

In case the pattern isn't obvious yet, we can say the exact same things about their own figures for impacts of a ban on the Denton Independent School District. Even using today's annual operating revenues for DISD, their figure is just 0.2%. But DISD's budget is growing at a rate of 6%. If we project that and do the same conservative calculations as above with taxes and employment, then their figure drops to 0.17%.

8. To conclude, let’s return to the benefits of a fracking ban (the costs of not banning fracking). Many of these benefits are hard to measure, but very real. Indeed, they may not be easy to count but in the end they are what really counts: health, quality of life, and your right to feel safe in your home and peacefully enjoy your property:
A ban will reduce health care costs (and lost worker productivity) by cutting fracking’s outsized contribution to smog-forming ozone in an area with alarmingly high rates of childhood asthma.
A ban will eliminate the waste of hundreds of millions of gallons of city water, in a drought-prone area, and the risks posed to our groundwater resources.
A ban will reduce the costs of development. A fracking ban means dozens or hundreds fewer gas well pad sites, thus fewer impediments to development and lower taxes to finance it.
A ban will open up more land for more profitable land uses. Gas well sites (often more than an acre in size) chew into residential and commercial development, which produce larger and more sustained revenues.
 A ban will protect home values. Fracking reduces nearby residential property values, thus depleting tax revenues.
A ban will protect quality of life. Fracking brings with it: overwhelming truck traffic (it takes more than 1,000 diesel trucks to bring a single well into production), noise and light pollution, and fumes and odors. It takes away your right and ability to enjoy your home.
A ban will attract the workforce of the future. Fracking is a deterrent for the people Denton needs to recruit to fill the high-tech, high-paying jobs that can propel its economy forward. The millenials who are hitting the workforce now want cities with a high quality of life. Poisonous fracking 200 feet from homes doesn’t quite fit that bill. They’ll find jobs, and take their dollars, elsewhere.  
A ban will provide peace of mind. Parents won’t have to worry – like Denton resident Maile Bush worries – about the health of their children. How much of a benefit is it to not have a carcinogen-emitting industrial site outside your child’s or your grandchild’s bedroom window?
The industry wants to frame the vote on the ban in terms of a cost-benefit calculation. But they just shot themselves in the foot with this report. When we really look at the numbers (which they doubtlessly exaggerated in their black box) in the context of the local economy, we find that they are miniscule. They are far outweighed by the benefits of safeguarding property rights, water, air, home values, and the health, livability, and safety of our community.  

Thursday, June 26, 2014

Yes, We Can Say No

The industry-sponsored North Texans for Natural Gasthinks that because we use natural gas we should not be concerned about the negative impacts of fracking in Denton.
Here’s their logic: if you use plastics and electricity or grill steaks, then you must accept the cancer-causing air emissions, waste of clean water, and noise of fracking in your neighborhood.
Frack Free Denton is not a movement against natural gas. Rather, it is against the permitting of toxic industrial activities near homes, schools, and parks. It is a movement for safe and healthy communities and people’s rights to peacefully enjoy their property.
With the ban on fracking, the citizens of Denton are taking a stand for safe and healthy neighborhoods. And the frackers’ response is to tell us that we have to accept their poisonous activities because natural gas is used to make lacrosse sticks!?
That’s how out of touch they are. They just want us to be meek and compliant consumers, not active citizens protecting our children, our property, and the future of our town.
According to their absurd logic, as long as we use natural gas we cannot reject any part of its development (even one process in one town) no matter how dangerous it is. If that was the way we did things, we’d still be insulating our schools with asbestos.
Frack Free Denton is all about local self-determination: the people bearing the negative impacts of hydraulic fracturing should be the ones to decide. We get to choose what Denton will be. And we’ve chosen to cultivate the nation’s largest community garden and to get a nation-leading 40% of our energy portfolio from renewable, wind-generated electricity.
Denton has long been shaped by thoughtful citizens. Thanks to their leadership, we are already walking down a path toward independence from the industry’s unsustainable and harmful products.

Tuesday, June 3, 2014

Mineral Ownership

Folks should know that only 2% of profits from fracking belongs to Denton families, while they get 100% of the pollution.


Friday, May 2, 2014

Why do Denton residents have to spend thousands to detect benzene in their backyards?

There are two things I want to address in this blog.

First, I have asked Dalton Gregory to remove my endorsement statement for his election from his blog and he will do so on Sunday when he returns from a trip. It was inappropriate for me to issue political endorsements like that when I am working as a member of a non-profit educational group.

Second, air quality tests that Denton DAG recently released show benzene at dangerous levels in a Denton neighborhood near gas wells.

Air monitoring is so important because in the backwards Texas regulatory system, fracking is treated as innocent until proven guilty. Even though we know the industry is using carcinogenic and toxic chemicals, the burden of proof falls on the residents to establish that those chemicals are trespassing into their neighborhoods and their bloodstreams.

Who can monitor our air to keep it safe and healthy? State agencies don’t have the funding, personnel, or equipment to even come close to an adequate monitoring program. There are 18,000 gas wells on the Barnett Shale and TCEQ has six air monitors! And when TCEQ responds to complaints, they are going to be taking measurements long after the emissions event and after the industry knows they are coming.

That means it is up to local communities to monitor the industry. Southlake, Grand Prairie, and Hurst all have monitoring programs as part of their drilling ordinances.

For two years, DAG repeatedly recommended a program be built into Denton’s ordinance.

When it came time for the final vote in January, 2013, Denton City Council, including Councilman Gregory, did not include a monitoring program in the ordinance. BUT they promised to make an air monitoring program as a stand-alone requirement. This, they said, would be even better, because it would avoid the vested rights issue so that monitoring would apply to all gas well sites – old and new.

I expected City Council would get to work on this right away. But they didn’t. In fact, in the fifteen months since they made that promise, they have had one meeting about air monitoring. Our elected officials have done nothing to monitor the air and not enough to protect the health and safety of the people who elected them.

I know lots of people pushed the issue, but I’ll just speak for myself. I wrote e-mails and made phone calls. I met with city officials to see how we could start a program. I wrote blogs trying to spur action. DAG brought Jay Olaguer, one of Texas’ leading air quality scientists, to Denton to give a presentation on monitoring. Jay and I tried to work with Denton and other cities to build a regional consortium for monitoring.

There was little cooperation and no action.

The city could have required in the ordinance that operators pay the expense of monitoring. Instead, citizens have to pass the hat to collect the thousands of dollars it takes to get Summa canister samples. They have to wait for months on end to get a few hours with one of the only FLIR cameras in the region (these cameras can cost $40,000 or more).

And when citizen test results confirm the presence of toxic chemicals, industry spouts lies about how the cameras are only seeing heat waves when in fact those cameras are designed to detect and make visible only toxic chemicals, not heat waves. This is the same old stuff out of the tobacco industry’s playbook.

The city’s failure to implement its own monitoring system has given industry the ability to say there is no danger, placing the time and expense and responsibility of proving that there is danger on the backs of the citizens instead of the city.

This is exactly why the citizens have taken the job of writing an adequate fracking ordinance into their own hands.

All of this once again goes to show why we need to ban fracking in Denton. We really, really tried to make it compatible with our city. We tried to internalize costs. We tried to provide safety and monitoring assurances. But at every turn, we met with obstacles.

We need to flip this backwards system. Ban fracking until we have proof that it can be done safely – that it can be done without sending benzene into the homes where our kids are sleeping, into the schools that they attend and playgrounds and parks where they play.