Why Are Voters In Denton Texas Afraid Of Fracking?

Source: New York Daily News

Election Day 2014, voters in the City of Denton, Texas, a city within the Barnett Shale gas field with a population of 123,099 (2013), approved by a 59 percent majority a proposition essentially banning hydraulic fracturing within city limits. Denton, is strategically positioned within the Dallas/Fort Worth Metroplex, which forms the apex of the north central Texas' "Golden Triangle."

The proposition states "Shall an ordinance be enacted prohibiting, within the corporate limits of the city of Denton, Texas, hydraulic fracturing, a well stimulation process involving the use of water, sand and/or chemical additives pumped under high pressure to fracture subsurface non-porous rock formations such as shale to improve the flow of natural gas, oil, or other hydrocarbons into the well, with subsequent high rate, extended flowback to expel fracture fluids and solids."

Before discussing the rationale behind the proposition, let's take a look at the Barnett Shale play. The Barnett Shale reserve is an onshore geological formation of sedimentary rock made of clay and quartz with a rich source of natural gas about a mile and half below the surface and from 100 to 500 feet thick. Barnett, the nation's first big shale play, contains about 39 TCF of natural gas which spans 5,000 square miles stretching from the city of Dallas west and south. Barnett covers four core North Texas counties (Denton, Johnson, Tarrant and Wise) and 21 non-core North Texas counties, Figure 1. One aspect of Barnett is its proximity to densely populated areas such as Fort Worth, the 17th-largest city in the United States and the fifth-largest city in Texas (2013 Census).

Figure 1: Texas Counties in the Barnett Shale Play.  Source: Unconventional Oil & Gas Report

Historically, Barnett was the first unconventional shale formation to yield large quantities of natural gas, demonstrating that hydraulic fracturing and horizontal drilling could produce shale gas economically and profitably. The first well was drilled in Wise County in 1981. After almost 20 years of experimentation with hydraulic fracturing and new drilling techniques, production took off in 2003.

Related: Early Signs Of A Pullback In Drilling Activity

Since 2000, the Railroad Commission of Texas - the state agency with primary regulatory jurisdiction over the oil and natural gas industry - has issued over 24,000 drilling and reentering permits in Barnett, Figure 2.

Figure 2: Barnett Shale Drilling Permits Issues 2000 through 2014

As of Jan 2013, the Texas Commission on Environmental Quality estimates there were 17,361 producing gas wells and an additional 1,018 producing oil/condensate wells. Figure 3 shows the trend in Barnett gas, oil and condensate producing wells from 1982 to Jan 1, 2010. Figure 3 also gives a breakdown of gas and oil/condensate production as well as a physical count of horizontal and vertical wells.

Figure 3: Number of Producing Barnett Shale Wells Over Time as of Jan. 1, 2010 (All Counties/Fields in the Fort Worth Basin)

To round out the metrics, Figure 4 illustrates the production profile of natural gas production in the Barnett. In 2000, the shale produced 216 million cubic feet (MMcf) of natural gas per day and by 2012 production peaked at 5,748 MMcf per day. From 2000 to April 2014, the Barnett produced about 16.6 TCF of natural gas, 45 percent of the entire estimated reserve.

Figure 4: Texas Barnett Shale Total Natural Gas Production

The economic impact of the Barnett play is huge in terms of creating jobs, reducing consumer cost of natural gas and electricity, increasing federal, state and local tax revenue, and stimulating economic growth.

Despite fluctuating natural gas prices and a decline in the number of drilling rigs in the Barnett play, according to a new economic impact study by The Perryman Group:

• The Barnett Shale natural gas field still contributes $11.8 billion a year to the North Texas economy, $700 million higher than what was reported in the firm's last study in 2011.
• Barnett Shale-related business activity accounts for about 108,000 jobs.
• Local and state tax revenue from Barnett Shale activity totaled $1.1 billion: tax receipts of $480.6 million for local governments and $644.7 million for the state
• Banning fracking would cause potential losses of $251.4 million in economic activity in the city over 10 years and more than 2,000 jobs.

The concern over hydraulic fracturing in Denton began as a grass roots campaign by the advocacy group Frack Free Denton (FFD). FFD's website claims:

• "OUR AIR - Fracking is a major reason why Denton has the most unhealthy air and highest rates of childhood asthma in Texas.

• OUR WATER - Fracking a single well contaminates 4-8 million gallons of precious freshwater forever.

• OUR HEALTH AND SAFETY - Denton residents pay the costs of pollution, toxic spills, and blowouts.

• OUR ECONOMY - Fracking is a drag on economic development and accounts for only 0.2% of Denton's economy."

The statement "Fracking is a major reason why Denton has the most unhealthy air and highest rates of childhood asthma in Texas" is misleading and fails to address the impact of population growth and increase in traffic and road construction in Denton and the adjacent counties.

According to U.S. Census Bureau 2012 population estimates, the City of Denton population of 121,123 experienced a 6.8 percent increase in growth from 2010 to 2012. In 2011, Denton was ranked 7th among the fastest growing cities, with populations of 100,000 or greater. (http://www.dentonedp.com/business_location/demographics_data_population.asp)

Furthermore, The Texas Commission on Environmental Quality stated "….. point sources account for only about one-tenth of the total NOx (nitrogen oxide) emissions in the Dallas-Fort Worth (DFW) area. The majority of NOx emissions in the DFW area come from on-road mobile sources (cars and trucks) and non-road mobile sources (such as construction equipment, aircraft, and locomotives). NOx emissions lead to formation of ozone. (https://www.tceq.texas.gov/airquality/sip/dfw/dfw-ozone-history)

In "Hell Is I-35 This Weekend" The Dallas Observer advised on Aug. 1 2014, "If you had planned to drive anywhere near Interstate 35W in Fort Worth and Denton County this weekend, we and the Texas Department of Transportation have one request: Don't. Really. Please, just don't. If it seems like I-35W is perpetually under construction, the history of the road shows that it kind of has been. The 3.7-mile stretch north of Fort Worth is known to be the single most congested road in Texas, which is not news to any poor soul who has spent rush hour there."

The Denton Record-Chronicle reported, "The average number of ozone days in Denton County has dropped but remains well above the three days per year." Emissions from natural gas production equipment were cited as a possible contributing factor to the problem." (http://www.dentonrc.com/local-news/local-news-headlines/20120428-denton-county-fails-air-quality-exam.ece)

Whatever the cause or causes of the regions' nonattainment zone status by the U.S. United States Environmental Protection Agency (EPA), rather than taking the drastic measure to outlaw hydraulic fracturing, Denton's lawmakers could have taken a more pragmatic approach by mandating the use of natural gas or electric powered drilling and fracking equipment instead of commonly used diesel fueled machinery. A nonattainment area is considered to have air quality worse than the National Ambient Air Quality Standards as defined in the Clean Air Act Amendments of 1970),

Similarly, this and other less radical solutions could have been stipulated in conjunction with accompanying compressor stations, processing plants and trucks that also contribute to the pollution problem. In terms of methane emissions, many producers and suppliers have already deployed relatively inexpensive methane detection-capture technologies and are able to realize profits from the use of these techniques.

It is important to note that the Barnett Shale is on the decline in drilling and production. NASDAQ reported, "The current surge in Texas is the rapidly developing Eagle Ford and Permian Basin production areas, which lifted the state's output back above 3 million barrels per day (bpd) for the first time in more than three decades. That put the Lone Star state at more than a third of total U.S. oil production, vs. about 12 percent for No. 2 North Dakota. Texas is on track to outpace Iraq, which, at 3.2 million bpd in April, is the Organization of the Petroleum Exporting Countries' second-largest producer, behind Saudi Arabia." The point is, as of July 02, 2014, no counties in the Permian Basin are classified a nonattainment zone by the EPA.

"Contaminating 4-8 million gallons of precious water forever" is incorrect. Up to 50 percent of the contaminated frac water flows back to the surface within the first 30 days after hydraulic fracturing. This flowback water can be economically treated for reuse in another frac job or recycled into the environment to meet fresh water standards. The remaining 50 percent of the water either stays downhole or slowly returns to the surface with formation water during the life of a well. Here again, this produced water can be treated for reuse or recycling.

The point that "Denton residents pay the costs of pollution, toxic spills, and blowouts," is shortsighted. Texas is a strong home rule state that grants cities, municipalities, and/or counties the ability to pass laws to govern themselves as they see fit (so long as they obey the state and federal constitutions). This enables municipalities to adopt regulations and issue a final permit for each drilling project in order to protect public health, safety and welfare of the citizens of the community. The permitting process also ensures the activity conforms with the established codes and regulations while minimizing any adverse impact to the public.

This gives Denton the authority to:
• impose penalties for failure to comply or engage in activities not permitted;
• ensure oversight through inspection and reporting requirements;
• regulate technology including green compliance, operations, equipment, fire prevention, air and water testing, noise, dust, vibration, and odor restrictions; and
• require security instruments by the permit holder in the form of cash, bonds, letters of credit, and insurance: to recover any fines, penalties, defaults or violations.

Forty-two miles from Denton also in the Barnett shale gas play, The City of Arlington, Tarrant County Texas "Gas Drilling and Production" adopted an ordinance that states: "The exploration, development, and production of shale gas is an activity that necessitates reasonable regulations to ensure that all property owners and mineral rights owners, have the right to peaceably enjoy their property and its benefits and revenues. It is hereby declared that the purpose of this Ordinance is to establish equitable and uniform limitations, safeguards, and regulations for present and future operations on private and public property that will serve as a minimum standards for exploring, drilling, producing, transporting, and storing of gas, and other substances produced with gas within the City to protect the health, safety, and general welfare of the public; minimize the potential impact to private and public property and mineral rights owners; protect the quality of the environment, the water we drink and the air we breathe; and encourage the orderly production of available mineral resources."

Finally, it is unclear how FFD arrived at the statement, "Fracking is a drag on economic development and accounts for only 0.2% of Denton's economy." There are misleading articles such as the one from EcoWatch, which headlined "Study Finds More Costs Than Benefits From Fracking."

However, the study's executive summary is somewhat different from that implied by the headline. According to Policy Matters, the study's sponsor, "Shale industry development is shifting the economy, environment and culture of communities like Carroll County, Ohio. Drilling is supporting local businesses, gas stations, hotels and farms. It brings revenue to landowners and some jobs. The story, however, is complicated. Whether it ultimately helps or hurts will be determined by whether money stays in the community, who gets jobs, whether the gas is refined locally, whether local businesses provide services, and what the costs are."

Additionally, the American Enterprise Institute (AEI), a private, conservative, not-for-profit institution dedicated to research and education on issues of government, politics, economics and social welfare, points out "Along with its direct effects within the shale gas extraction industry, fracking has had a traceable effect on other industries as well. As natural gas production has increased over the past five years, so has its consumption within the USA - moving from a historical center at about 23 quadrillion BTU per year to 24.256 in 2010 and 24.757 in 2011."

Related: Will US Shale Oil Undermine Its Own Success?

Much of this increase is attributable to electricity generation, where plants have switched some input from coal to natural gas as natural gas prices have dropped in the wake of its increased supply. Natural gas-fired electricity generates half the carbon dioxide of coal-fired production. An estimate of the indirect benefit of fracking should include an estimate of the potential social gains from this reduction.

In closing: the ban is far from a done deal. Less than a day after Denton voters approved the proposition to ban hydraulic fracturing, the Texas Oil and Gas Association and the state's General Land Office filed separate lawsuits to block Denton officials from enforcing the new law that bans hydraulic fracturing in city limits.

The association and the land office called the ban unconstitutional. "By imposing a complete ban on hydraulic fracturing on oil and gas leases within its city limits, the city of Denton undermines this comprehensive state system of regulating oil and gas development," says the lawsuit, prepared by former Texas Supreme Court Chief Justice Tom Phillips. "The ordinance's complete ban second-guesses and impedes this state regulatory framework."

The battle lines are drawn, a long and expensive fight lies ahead.

By Dr. Barry Stevens

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