Very critical legal battle shaping up this past week. In one of the most historic petroleum plays in North America.
That's the Barnett Shale of north Texas. Where opponents of unconventional drilling won a major political victory last week--one that could have ramifications for oil and gas development across this key state.
The move came in the city of Denton, a hamlet just northwest of Dallas. Where municipal voters approved a ballot banning the use of hydraulic fracturing within city limits.
This is the first such ban to be implemented in Texas--following similar measures in other shale-producing states like Ohio and Pennsylvania.
It also comes in a key location. With the city of Denton being located in the heart of prime acreage for gas production in the Barnett--the first unconventional play to see large-scale development in the U.S.
Of course, the actual area affected by the ban is small--being confined to Denton city limits. But the voting down of fracking here could set a precedent to be followed by other local governments in the state.
The petroleum industry appears to be concerned about such knock-on effects. Prompting the Texas Oil and Gas Association to file suit last week in Denton courts to overturn the ballot measure.
The Association is arguing that Denton's frack ban violates state law. Which gives holders of mineral titles in Texas the right to develop these resources.
The outcome of this court battle will be an important data point for Texas oil and gas going forward. Although the Barnett itself is not a major source of production growth, other Texas plays like the Permian and the Eagle Ford have been major hubs for drilling activity of late.
If Denton's ban ends up standing, it could set the stage for similar challenges in these plays. Watch for the next rulings in the challenge from the Oil and Gas Association.
Here's to constructive discussions,
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