Fracking Foes Force Some Oil Drillers to Tread Lightly: Energy

Aug 28, 2014 12:24 am ET

August 28 (Bloomberg) -- A fight over fracking is looming in Texas. Another stand-off is shaping up in Colorado. Yet drillers’ reactions couldn’t be more different.

In Texas, drillers are doing their noisy in-your-face fracking as usual. Meanwhile, on a small farm about an hour from the Colorado Rocky Mountains, the oil industry is giving fracking a makeover, cutting back on rumbling trucks and tamping down on pollution.

Oil companies in Colorado are responding to a rising tide of resentment as local communities and environmental activists vie to impose measures to ban fracking or restrict drilling. A series of ballot initiatives and other grass roots opposition around the country is seen as threatening the booming shale industry, even in oil-friendly Texas, where the U.S. energy renaissance began.

If those initiatives “continue to proliferate then companies lose access to those resources,” said David B. Spence, professor of law, politics and regulation at the University of Texas School of Law, who researches fracking and drilling rules.

Cities and counties nationwide have so far passed 430 measures to control or ban fracking, the controversial technique of cracking subterranean rocks to release oil and natural gas, according to a running list kept by Food & Water Watch, a Washington-based environmental advocacy group.

The industry’s newfound concern and sensitivity in some states represents a shift in tactics as companies seek to avoid taking the issue to the voting booth, where success for activists holds the potential of slowing the U.S. drilling bonanza.

Hay Bales

At an Anadarko Petroleum Corp. drilling site near Dacono, Colorado, swarms of trucks and flood lights are hidden behind a wall of hay bales, which soften the roar of diesel engines. Giant pits of murky wastewater have been eliminated using recycling and pipelines. The number of trucks and tanks needed in some locations has plunged to 50 from 400 in 2011.

Thanks in part to these measures, a last-minute deal by state officials with environmental activists helped Colorado avert an anti-fracking vote earlier this month.

No such compromise was reached about 800 miles away in Denton, Texas, near the birthplace of the U.S. energy boom. Some residents there say they are exasperated with the unwillingness of producers to listen to their pleas to avoid late-night drilling and put wells far away from where children play. They’re aiming to ban all fracking in a vote this November.

‘Too Bad’

Companies have alienated some voters with an attitude of, “this is just the way that it is in Texas and if you don’t like it, that’s just too bad,” said Cathy McMullen, a Denton resident who started pushing for more regulations after wells were drilled by a park near her home. “As far as the industry goes in Texas, there is no give and take. There is just we give, and they take.”

The latest two fracking battles -- one in the heart of Texas oil country where support for drilling is generally assumed -- underscore the progress fracking opponents are making at the local level after striking out to gain more state or federal control over the industry.

Denton, built around two universities within a 40-minute drive of Dallas and Fort Worth, has played host to towering rigs since the 1960s. The home stadium of the University of North Texas Mean Green football team is flanked by both wind turbines and natural gas wells.

2009 Well

The current uproar began in 2009 with a well site staked out across the street from a park, hospital complex and hillside neighborhood. Despite local opposition, Fort Worth-based Range Resources Corp. selected the site along a busy Denton thoroughfare out of four locations it was considering to drill into the gas-rich Barnett Shale, the original shale play, City Councilman Kevin Roden said.

Range Resources spokesman Matt Pitzarella declined to comment on the company’s former wells in Denton, which are now operated by Legend Natural Gas. Legend did not return calls seeking comment.

Early last year, Denton changed its regulations, requiring new wells be located at least 1,200 feet from homes. A loophole still allowed producers to drill more wells at an existing site regardless of the setback rule.

In one Denton subdivision of brick homes and two-car driveways, privately held EagleRidge Energy LLC, didn’t inform residents when it began working with heavy equipment and oilfield machinery as close as 187 feet to backyards and windows in October 2013, according to Lindsey Baker, a spokeswoman for the city of Denton. Some homeowners felt their houses tremble during drilling, jarring pictures from the wall, while others struggled to sleep as powerful lights atop a rig blazed through their windows at night.

Drilling Sandwich

EagleRidge started another well three blocks to the south, sandwiching the community between drilling sites. Traffic bogged down and roads deteriorated as hundreds of trucks brought fracking materials to the sites, Baker said.

Oil industry supporters argue that the city is partly to blame for allowing developers to build new residential communities in areas that were previously permitted for drilling.

“It’s a conflict that was actually created by the administration in the city of Denton,” said Ed Ireland, executive director of the Barnett Shale Energy Education Council who was appointed to a Denton task force formed to address the controversy.

Little Response

Still, residents’ requests for relief have drawn little response, said Maile Bush, 41, a stay-at-home mom.

“You kind of just put up with it because you don’t feel like you have a say,” said Denise Diaz, 41, an orthodontist’s assistant whose backyard faces an EagleRidge well. EagleRidge chief operating officer Mark Grawe didn’t return calls seeking comment.

Fed up residents launched a campaign to draft a fracking ban in February and gathered enough votes on a petition to take the question to voters on Nov. 4.

A similar vote that would have severely curtailed drilling in Colorado, where oil output grew by 30 percent last year, was canceled after Governor John Hickenlooper created a task force to study the industry’s impact on local communities. The deal earlier this month was also a nod to companies including Noble Energy Inc. and Anadarko that have begun taking steps to appease concerns.

Drilling Diplomat

Last December, Anadarko named Alex Hohmann, an engineer who previously helped complete wells, to lead a new team dealing with community relations. Now, Hohmann, 31, spends his time visiting potential sites and neighborhoods, sometimes going door-to-door, acting as a kind of oil-drilling diplomat.

“When your oilfield is intermingled with 250,000 people, it’s increasingly important to take into account the neighborhood, the church and the school,” Hohmann said on a recent tour of several Anadarko drilling sites. “We have to demystify it, to help people see it as compatible with their lives. That’s our industry’s challenge.”

He and his three-person team answer a hotline, send notices to homes and neighborhood associations and organize community meetings. Hohmann even hired security guards to monitor a well site near a playground 24 hours a day for more than a week while work was done, ensuring that no children came to harm, he said.

Digging In

Still, some communities and anti-fracking groups have dug in their heels, and not all producers show equal sensitivity to local complaints. Five communities in the state have voted to ban or put a moratorium on drilling activity, and some rigs can be seen abutting neighborhoods from Interstate 25 north of Denver.

“In the past, the oil companies did a lot of things that weren’t really kosher,” said Don Wickstrom, a royalty owner and rancher who’s interacted with companies as several wells have been drilled on his family’s land about 40 miles east of Greeley. “But now they seem a lot more concerned and a lot of improvements have been made. They’re trying to be better neighbors.”