29/10/2014 – Fracking: In the path of the ‘shale gale’

The oil company had hoped that by taking only written questions from the residents, it could keep a lid on their emotions. But it was only seconds after the chief executive of Great Western Oil & Gas began the Q&A with the people of Windsor, Colorado, that the lid blew off. Before Rich Frommer could read out the first submission, Connie Reifschneider rose from her fold-up chair to interrupt him. “I’m shaking because I’m angry,” she said.

The family-owned oil company’s plans would turn her neighbourhood of bike-riding kids, pastureland and wild deer into a health hazard scarred by drilling rigs, trucks, noise, dust and chemical pollutants, she said. “How can you and your family, with any conscience at all, disrupt and possibly ruin the lives of so many other families by drilling in such close proximity to so many homes?” Mr Frommer was already wealthy and his only concern, she said, was to enrich his family further. “Answer this please: when is enough money enough?”

Passions over fracking are on the rise in America. A boom in US production of oil and gas from shale rock formations – enabled by horizontal drilling and hydraulic fracturing that cracks open the dense rocks – has upturned energy markets. It has been cheered by both Democrats and Republicans for making the US the world’s largest natural gas producer, reducing its dependence on Middle Eastern energy and creating jobs. President Barack Obama, a champion of action on climate change, praises fracked natural gas for being “clean”, because it produces limited greenhouse gases when burnt for electricity.

But the rush to extract more shale energy is bringing industrialisation to picturesque rural towns and densely built city suburbs, where horrified residents say fracking is anything but clean. In places such as Windsor, the industry’s growth is causing political fractures as well as cracks in the rocks. That signals trouble for Democrats and Republicans in the state, as fracking joins the long list of issues stoking disillusionment with government among voters. Next Tuesday’s midterm elections will offer more evidence of the problem.

In the early years of the shale boom, production was largely restricted to remote areas that were out of sight and out of mind. But the hunger for new sources has made oil companies the unwelcome new neighbours of homes, schools and hospitals. The front line runs through Colorado and its experience is a warning to other shale frontiers, from Pennsylvania to California, trying to balance energy development and environmental concerns.

The state is the US’s sixth-biggest energy producer and home to 52,000 active oil and gas wells. The industry directly employs 31,900 people in Colorado, according to a study for the American Petroleum Institute, a big lobby group. But the state’s experience shows that the harder the “shale gale” blows, the more people will want to restrict it.

“My long-term prediction is that the US will look like a series of ‘go’ and ‘no-go’ zones because it’s very hard to get over some of this local opposition,” says Sarah Ladislaw, senior fellow at the Centre for Strategic & International Studies, a Washington think-tank. “But I don’t think it will ever be prolific enough to stop production of this resource in a big way.”
Windsor is part of Weld county, a zone of intense drilling north of Denver known as “frackland”. Mr Frommer began the meeting there last week by pledging to do everything he could to address residents’ concerns, but added a caveat. “I’ve got to be honest; this is not going to be without a nuisance factor.”

What I have found is that neither the Republicans nor the Democrats represent real people on this issue

He responded to Ms Reifschneider’s wealth question by saying he had an obligation to make “prudent investments” on behalf of his investors, employees and the owner of the minerals – a local man in his 80s who is leasing the rights. But little he said placated the audience, which heckled and impugned him for more than an hour.

Colorado is a “purple” battleground state with an even mixture of blue Democrats, red Republicans and independent voters – a home to ranchers, hikers, hipsters and legal pot smokers. One of its senators, Mark Udall, is a Democrat and a champion of wind and solar energy. But in his campaign against Cory Gardner, a member of the House of Representatives, he has sought to match the Republican’s support for exports of liquefied natural gas, which depends on fracking. Their race is one of six or seven that will determine whether Republicans take control of the Senate.

The angry residents of Windsor do not necessarily represent the Coloradan majority. But their opinions are coursing through state politics. In a Quinnipiac poll last November, 51 per cent of Coloradan voters said they supported fracking and 34 per cent were against it.

This year Jared Polis, a Democratic member of the House from Boulder, a city popular with liberal millionaires such as himself, tried to push two anti-fracking measures on to next Tuesday’s ballot. One would have required drilling rigs to be set back at least 610 metres from the nearest homes. The other would have allowed municipalities to override state regulators and make their own decisions on whether to allow fracking. The industry saw the “local control” initiative as a thinly veiled effort to cancel oil and gas projects.

That fear was not unfounded. The people of Boulder and Broomfield have imposed bans on fracking within city limits. Longmont, Fort Collins and Lafayette also voted for bans, but the courts struck them down. Voters were concerned not only about industrial blight and traffic, but also about water contamination, earthquakes and respiratory illnesses. Some have scientific studies to back up their fears; the industry says these are faulty or inconclusive.

The ballot initiatives were set to spark a multimillion-dollar political war as the oil and gas industry squared off against well-funded anti-fracking activists (who were reportedly described as “long-haired, maggot-infested hippie freaks” by one industry representative in a speech). But the initiatives were a toxic threat to two Democrats on next week’s ballot who opposed them – Governor John Hickenlooper and Mr Udall – because they split the party’s base. Its environmental wing is at odds with moderate, pro-business Democrats.

Mr Hickenlooper, a former oil geologist who once drank fracking fluid to prove it was not dangerous, brokered a deal to put a temporary end to the problem in August. Mr Polis would withdraw his initiatives, the industry would drop its attacks, the governor would set up a task force to find a compromise – and a Democratic civil war was averted.

Activists on both sides hated the deal. Bob Beauprez, the Republican candidate for governor, has vowed to disband the task force if he wins next week.

Energy Politics - Legislation and regulation on shale gas

Mr Hickenlooper says the fracking debate results from a conflict between the right of local residents to the “quiet enjoyment” of their homes, and the right of mineral owners to access oil and gas under the ground. Banning fracking, he says, would deprive mineral owners of their property, which government cannot do without providing compensation. “Both sides are going to have to compromise,” he says.

The conflict has arisen partly because mineral rights in the US are in the hands of private owners, whereas in Europe they mostly belong to the state. Colorado’s split-estate laws add an extra twist, because the surface rights and the mineral rights on the same plot often belong to two different people.

Compounding the situation is the state’s stance that local governments have no power to decide where oil and gas development can occur; effectively exempting the industry from requirements other businesses must satisfy to develop land. “When it comes to protecting citizens through local planning and zoning, Colorado is far behind New York, Pennsylvania, New Mexico and even Texas,” says Matt Sura, who was appointed to the governor’s task force as a lawyer representing homeowners.

In Greeley, a town next to Windsor, the results of the industry-friendly attitude are visible through the wooden blinds of the living room in Sara Barwinski’s bungalow. On the other side of a patch of sun-dried marshland sit 14 brown tanks receiving oil on a “frack pad”, which is 230 metres from her home. Greeley is dotted with similar sites. “We’ve had a couple of earthquakes, we’ve had tanker fires, we’ve had traffic fatalities,” says Ms Barwinski, another member of the task force.

The ‘drill baby drill’ mentality might be fine in Alaska where the minerals are remote, but to have the mentality in neighbourhoods with families – it doesn’t show thought
She is not against all fracking, but opposes it in residential areas. “I was disappointed that the Obama administration so uncritically endorsed fracking,” she says. A registered independent, she says the concerns about it cut across party lines. “What I have found is that neither the Republicans nor the Democrats represent real people on this issue. The economics involved make it difficult for either party to protect citizens as opposed to the industry that acts as their financial backer.”

One company that is praised by some activists for trying to minimise its impact is Anadarko. It has set up a fracking site near the town of Frederick for three months. What is different is that the fracking is “remote”: it uses long pipes and the full reach of horizontal drilling to put as much distance as possible between the machinery on the surface and the homes atop the minerals. “We’re doing this so we can pull ourselves away,” says Rebecca Johnson, an Anadarko engineering adviser.

Tisha Schuller, president of the Colorado Oil & Gas Association, an industry group, says Colorado has the US’s most stringent regulations on fracking – if not its industrial baggage – including the mandatory disclosure of fracking chemicals and checks for groundwater contamination. She says Mr Polis, the Democrat, is “irresponsible” for threatening to revive his anti-fracking ballot measures if the taskforce’s outcome is not satisfactory. The Republican candidates for the Senate seat and the governorship are firmly on the industry’s side.

The complexities of fracking politics are embodied by Shawndra Sanger, a Windsor dentist, who comes from five generations of Republican-voting cattle ranchers. She supports US energy independence, saying: “I don’t want my children to be fighting these wars for oil.” But one month ago she concluded that Great Western’s project and one other development were close enough to her home to threaten its value and her children’s safety.

The Republicans’ aggressive support for fracking, she says, will change the way she votes. “The ‘drill baby drill’ mentality might be fine in Alaska where the minerals are remote, but to have the mentality in neighbourhoods with families – it doesn’t show thought.”

She came to the Great Western public meeting with a question about the blast radius of its on-site oil tanks. She was not satisfied with the answer. Driving home afterwards on unlit roads, past a drilling rig whose blazing lights illuminated the darkness, she said: “Are we prepared for a catastrophic event at a wellhead? It’s a ticking time bomb in this country until something happens.”

Source – FT.com