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This Week in Energy: ‘Russian Conspiracy’ Could Help Denton Frack Vote

All eyes are on a small college town just outside of Dallas, Texas, whose claim to fame is three-fold: It is the home to the Barnett Shale; it is where hydraulic fracturing debuted; and now some fear it could be where fracking meets one of its greatest enemies, while conspiracy theories of Russian infiltration abound.

On 4 November, the residents of Denton will vote in a local ballot on whether or not to ban fracking within the city limits, and there is a flurry of activity on this battleground that is not likely to end with the vote itself, but will be dragged through the courts in the aftermath.  

While Denton is but a small college town, this small-town referendum has much larger implications. If Texas bans fracking—even on this small scale—it could snowball and empower other anti-fracking movements and efforts.

The local government has the right to invoke home rule, which empowers a local municipality to control zoning ordinances and override state rules. This is what has the oil and gas industry worried, as it threatens to reshape the fracking debate country-wide.  

The campaign for a referendum on banning fracking was initiated by the Denton Drilling Awareness Group, whose petition for a ban turned up enough support to force the city council to hold a Council vote in July, which ended up being 5 to 2 against the ban. The ban failed to pass, but was put on a November ballot as a public referendum.

In July, when things started heating up, the Russian conspiracy theory entered the equation, first spread by the Railroad Commissioner. The fight has become dirty, as it is wont to do in the oil and gas business, and now takes on geopolitical proportions, catapulting this small Texan town into a new sort of fame from which it will not recover for some time.

Pro-fracking groups quickly latched on to the Russian conspiracy, recognizing the convenience in this during a time of high-tensions with and sanctions against Russian oil and gas interests, who have in the past been accused of supporting Western anti-fracking groups in order to slow down the American shale boom.

Anti-fracking supporters are referring to these tactics as “McCarthy-era”, as the pro-fracking campaign is now suggesting that anyone who thwarts fracking is supporting Russian President Vladimir Putin, turning anti-fracking sentiments into treason.

A report by the Perryman Group argues that a ban on fracking within the Denton city limits will cost the city millions of dollars, while supporters of the ban argue that fracking’s benefits are outside the city limits, noting that only 0.2% of city jobs are related to the industry. They also claim that elected officials and industry leaders, not Denton, are benefiting from the fracking, with Texans for Public Justice stating that lawmakers had received nearly $12.2 million in contributions from oil and gas interests between January 2011 and June 2014.

There have been other tense votes on fracking in the US. North Carolina had a moratorium on fracking for two years, but then reversed that earlier this year. New Jersey—which isn’t home to any shale in the first place—is facing pressure to ban fracking waste disposal coming from shale-rich Pennsylvania, but so far nothing has come of this. Culver City, California, is considering a ban on fracking, but movement towards this has been slow. Colorado only narrowly averted an anti-fracking vote in September.

The only truly successful bans on fracking have been in New York, which has a moratorium on the process in place since 2010, Pittsburgh, which was the first US city to bank fracking in 2010, and Mora County, New Mexico. In Texas, the Dallas city council banned fracking in December 2013, but a lawsuit filed by Trinity East Energy LLC has placed this in jeopardy.

The Denton vote is by far the most dangerous for the industry, laden as it is with politics and geopolitics, and due to its location at the heart of the start of the shale revolution.

When oil-friendly Texans stand up and take an interest in something that works against the oil and gas industry, the rest of the country listens—and that’s what has the industry concerned.

What the industry is banking on is that even if the Denton referendum turns up a ‘yes’ vote to ban fracking, the state of Texas will sue to stop it.

Quick Note: We have another must read Premium letter out this week where Dan Dicker looks at how profession traders are playing these markets, Martin Tillier takes a detailed look at Marathon Oil, we look at the huge opportunities in the Levant Basin and Jim Hyerczyk forecasts the coming week’s action. Read this letter and receive the next 3 weeks research completely freeclick here to receive the reports.

By. James Stafford of Oilprice.com




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Leave a comment
  • MrMister on October 30 2014 said:
    What is interesting is the Government is not building enough support to sue Denton if a "Yes" is returned. Representatives are skittish around a "Big Government" usurping the City's policies.

    I am curious about how the vote will turn out.

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