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Homes on the Shales PUBLIC ACCESS

Deep Under the Heart of Texas Lies a Bonanza in Shale Oil and Gas Reserves. Getting at it has Created Opportunities and Challenges for People Living on the Surface.

[+] Author Notes

Bridget Mintz Testais a Houston-based writer and frequent contributor.

Mechanical Engineering 135(12), 30-35 (Dec 01, 2013) (6 pages) Paper No: ME-13-DEC2; doi: 10.1115/1.2013-DEC-2

This article focuses on different opportunities and challenges posed by shale oil and gas reserves in Texas. Texas has about as many drilling rigs as the rest of the country combined. There are places in which the shale boom feels more like a stampede. Texans have long accommodated themselves to the oil industry and sought its upside. Over the years, the combination of high oil prices and the new application of hydraulic fracturing techniques to unlock shale gas and oil have led to resurgence. Fort Worth’s ordinance, regulating gas drilling inside the city, is widely seen as a success. Oil and gas operators evidently see the ordinance as a cooperative effort, since they generally abide by it and keep working with the city and residents to update it. As per expert’s view, the State has not put adequate emphasis on the rights of landowners.

Changing the Landscape

The countryside west of Dish, Texas, is pocked with hundreds of bare, white drilling pads, each of which is one to two acres in area.

Image courtesy: Raye Levine

Grahic Jump LocationChanging the LandscapeThe countryside west of Dish, Texas, is pocked with hundreds of bare, white drilling pads, each of which is one to two acres in area.Image courtesy: Raye Levine

Greg Wortham is the Mayor of Sweetwater, Texas, and he can’t Talk Fast enough to explain how good the Cline Shale is for his rural community.

“We’ve got two hundred acres that went from 100 percent sagebrush to 100 percent sold as an industrial park to 100 percent jobs, and it’s already filled up and bulging at the seams,” Wortham said. “Every day a new business arrives, and hundreds of new people are coming here and spending money. We’re on the ‘about-to-explode’ stage of the curve. No one knows the number of jobs or businesses we have because it changes every day.”

The shale boom in Sweetwater is less than two years old. Before early 2012, no one living within miles of Sweetwater had even heard of the Cline Shale, a geological formation running about 9,000 feet below west-central Texas. Then oil companies, or “operators,” showed up in Nolan County, where Sweetwater is the government seat. The operators came to secure options to lease land above the shale, and they brought their checkbooks.

Drought-stricken farmers and ranchers saw their desiccated acres morph into a windfall of $2 billion. Since then, more money has fl owed into neighboring counties on the southwest side of the Cline. Royalties yet to come could dwarf lease payments.

Most rural towns with an official population of 11,000 would be overwhelmed. But the Cline Shale isn’t Sweetwater’s first energy rodeo. Sited on the edge of the famed Permian Basin, the town has seen plenty of conventional oil drilling and production. But in 2000, wind energy developers and financiers arrived as suddenly as the shale boom would in 2012. They built 1,371 wind turbines in Nolan County and pumped hundreds of millions of dollars into local economies.

“Because of wind, we understand how fast things can change,” Wortham said. “Lots of communities where nothing had happened in a century got everything in oil that Sweetwater got in wind, but ten times as much and all at once. Sweetwater was able to learn from wind and get ready. Other communities are overrun, but we’re prepared to grow.”

Texans have long accommodated themselves to the oil industry and sought its upside. “A few oil wells makes ranching a fine business,” goes the old cattleman’s saying. The state bristled with drilling rigs and was bound up with pipelines.

But when oil prices collapsed in the 1980s, so did the drilling activity. According to data from the Texas Railroad Commission, which regulates petroleum operations in the state, for most years between the mid-1980s and about ? 2000, fewer than 300 drilling rigs operated in Texas.

Over the past ten years, though, the combination of high oil prices and the new application of hydraulic fracturing techniques to unlock shale gas and oil has led to a resurgence. In 2012, for instance, there was an average of 899 drilling rigs in Texas—about as many as in the rest of the United States combined. In just about every corner of the state, there are places in which the shale boom feels more like a stampede.

Texas has about as many drilling rigs as the rest of the country combined. There are places in which the shale boom feels more like a stampede.

One of those overrun places is Karnes County, roughly 65 miles southeast of San Antonio, and sitting atop the Eagle Ford Shale. Only about 14,000 people live there, and without major highways through it, there was scarcely a reason to visit. So people didn’t: five years ago, an average of 25,000 cars drove through the county each day.

The shale boom changed that. “Now it’s 250,000,” said Barbara Najvar Shaw, Karnes County Judge. “But take the cars out of the equation and put 18-wheelers in there,” she said. “I can’t even begin to tell you how bad it is.”

Fatalities have risen, and pavement is another kind of casualty. “Our roads are like caliche—like baby powder,” Shaw said. “The powder fills in potholes, and you can lose your whole car in one.” Every road in the county, including US 181 and two state highways, is so pulverized by the continuous massive loads that state and federal authorities are “talking about letting them go back to gravel,” Shaw said. The county roads alone have suffered $300 million to $400 million in damage.

Karnes County’s road damage isn’t unique. Roads have been hammered wherever heavy “energy traffic” exists. In August, the Texas Department of Transportation announced it would be converting 83 miles of the state’s “farm-to-market” county roads to gravel. TXDOT told the Texas Legislature that it needs $1 billion per year just to keep the roads as they are now.

Despite the roads and traffic, the shale has benefited Karnes County financially. Sales tax revenue is $1 million more each quarter than before the shale boom. The property tax base leaped six and a half times—to $6.7 billion from just over $1 billion in 2011. The 20 percent of county residents who own their land’s mineral rights are doing well, Shaw said. “We have people pulling in $500,000 or $600,000 per month, and one person is making $800,000 per month.”

How do residents view the shale boom? “We’ve hit a plateau where the majority of people just wish it would all go away,” Shaw said. “We went from safe roads and driving past cows and life being great to some of our elderly saying they feel like shut-ins. Is the Eagle Ford a blessing or a curse? It just depends on who you are.”

Bristling with Activity

This drilling platform on the Eagle Ford Shales in southeast Texas drew workers and machinery to a rural area.

Photo: Marathon Oil

Not Their First Rodeo

Sweetwater had dealt with conventional oil and wind developers, so it was prepared for the shale gas boom.

Photo: Sweetwater E.E.D., Inc.

Grahic Jump LocationNot Their First RodeoSweetwater had dealt with conventional oil and wind developers, so it was prepared for the shale gas boom.Photo: Sweetwater E.E.D., Inc.

“This wasn’t your Daddy’s Oilfield.”

would probably say the Eagle Ford is a curse. Fitzsimons’ family has owned the 13,000-acre Shape Ranch in the county since 1933. In 1998, he began raising indigenous American bison and built a thriving business based on them. Each spring, the herd produced 70 to 100 new calves.

Then 2011 brought the worst drought in Texas history. It was so dry that Fitzsimons’ female bison couldn’t enter estrus. In spring 2012, only seven calves were born.

2011 also brought oil and gas companies, eager to drill the Eagle Ford under Dimmit County. Each drilled well, which may involve multiple hydraulic fracturing jobs, uses one million to six million gallons of water.

“Roughly one-third of our available groundwater is being consumed for fracking,” Fitzsimons said. “If we don’t get between 15 and 16 inches of rain a year, our groundwater doesn’t get recharged. Our last good rain year was 2010. Without rain, we’ll be out of water.”

In Texas, conservation districts manage local water supplies. Why don’t they simply forbid or limit fracking’s water consumption? “Oil and gas companies have exemptions,” said Jim Bradbury, a Fort Worth attorney specializing in oil and gas law. “They have the right to take the water.”

Operators also benefit from the “rule of capture.” It works like this: If a neighbor has gas or oil on his land, but isn’t producing it, “I can put a well down on my land and start pumping,” said Bradbury. “It creates a vacuum and drains the oil from my neighbor’s land. He gets nothing, and I get it all.” (In the 2007 movie, There Will Be Blood, the character Daniel Plainview called this “drinking your milkshake.”)

The rule applies to water, too. Fitzsimons has his own water sources, which are sufficient for now. But if an operator needs the water, he can take it. He may choose to pay for it, but money won’t help the ranch and the bison.

“If we run out of water, we will have to leave,” Fitzsimons said.

The shale boom did compel Calvin Tillman and his family to leave their home in tiny Dish, Texas. But it wasn’t for lack of water. It was because of air pollution from the operations.

Dish sits atop the Barnett Shale. When the shale boom hit there in 2005, the town of 201 people found 100 derricks had shot up, almost overnight, within a mile of their homes.

“I grew up in the middle of oilfields in Oklahoma, so I’m not unfamiliar with them,” Tillman said. “But it’s not high-density stuff like fracking.”

But it wasn’t the drilling that ultimately affected Tillman’s family; it was the gas purification equipment and a dozen pipelines and compression stations that followed. “It was a refinery,” Tillman said. “This wasn’t your daddy’s oilfield.”

Gas purification starts by boiling glycol, which absorbs water and impurities. Then the water evaporates, “taking the smell of glycol and all the impurities,” Tillman said. The smell, he said, is similar to sulfur. “It makes your eyes burn and your throat hurt.”

Mercaptan is added to natural gas so that people can smell it. “The mercaptan is so concentrated that if you poured a cupful in downtown Houston, you’d evacuate the whole city,” Tillman said. “At least once a year, the refinery would have a spill, and the smell was horrible. Most people would leave.”

Soon, Tillman’s pre-school sons started having frequent nosebleeds. Other children were having them, too. The parents in Dish wanted to find a way to get the operators to cut back on their pollution, but by federal law, cities can’t regulate air or water in connection with pipelines. So Tillman and the city tried to persuade the operators to do something.

They weren’t persuaded. Then a lab hired by the town found unsafe levels of 16 toxic chemicals, including benzene, in Dish’s air, and Tillman and his family appeared in the antifracking documentary, Gasland.

“Operators and state regulators were embarrassed, and the EPA got involved,” Tillman said. “The operators installed some controls. It’s still not good.”

If an operator needs a ranch’s water, he can take it. “If we run out of water,” said one rancher, “we will have to leave.”

In 2010, Tillman’s sons’ nosebleeds worsened. “They would wake up covered with blood,” he said. “We had enough.” Tillman sold his house in Dish and moved “about 15 miles off the shale,” he said. The boys’ nosebleeds stopped.

“My older son has asthma, and he had to have nebulizer treatments every day in Dish,” Tillman said. “Since we moved, he only needs them once or twice a year.” Back in Dish, “most everyone has tried to sell their houses,” he said. “Those who couldn’t are in litigation with the operators.”

But, unlike Dish, the city and most of its residents have a cordial relationship with the operators who are literally in their midst. “Fort Worth was the first major city to experience oil and gas drilling within its city limits,” said Sarah Fullenwider, the city’s attorney. Hydraulic fracturing operations on the Barnett Shale were just starting to get serious in 2001 when the city wrote its first ordinance regulating gas drilling inside the city. Although few residents were initially involved, the city, interested citizens and industry representatives worked together to develop the ordinance, Fullenwider said. “Many of the oil and gas companies’ employees lived in the city. They knew what was coming, although no one really appreciated the challenges of urban drilling.”

Uneasy Coexistence

Oil production and cattle ranching are iconic Texas industries. Both need access to scarce water supplies.

Photo: Marathon Oil

Grahic Jump LocationUneasy CoexistenceOil production and cattle ranching are iconic Texas industries. Both need access to scarce water supplies.Photo: Marathon Oil

“Fort Worth was the First Major City to Experience Oil and Gas Drilling Within its City Limits.”

Common Ground

Drilling is welcome in Fort Worth. Regulation limits potential nuisances.

Photo: Tom Edwards/City of Fort Worth

Grahic Jump LocationCommon GroundDrilling is welcome in Fort Worth. Regulation limits potential nuisances.Photo: Tom Edwards/City of Fort Worth

Fort Worth’s ordinance, regulating gas drilling inside the city, is widely seen as a success.

The ordinance has been revised three times since 2001, and it continues to evolve. The current version (No. 18449-02-2009) is 66 pages long and covers every imaginable aspect of gas drilling and production inside the city, including environmental protections.

The ordinance requires a “setback,” or distance, of 600 feet between a well and homes, churches, hospitals, schools, or public parks. It limits the noise level of gas drilling, production, and compression for pipeline transport, encouraging soundproofing where necessary. Activities such as hydraulic fracturing and construction are banned at night, and all activities are banned on Sundays except for emergencies. Bright lights can’t shine on streets, in windows, or toward any other place where they might bother or blind people—they should point down on the well or another point of interest on the operator’s site.

The ordinance is widely seen as successful, so much so that deputations from as far away as Japan and Great Britain have visited Fort Worth to learn how it works.

“The major benefit for industry is that it allowed drilling,” Fullenwider said. “It allowed the development of the Barnett Shale. It’s also allowed citizens with mineral rights to lease their property—if the citizens had not agreed to leasing for drilling, then there would not have been any drilling. It’s helped the city by generating additional tax revenue.”

Oil and gas operators evidently see the ordinance as a cooperative effort, since they generally abide by it and keep working with the city and residents to update it. “Fort Worth’s history is working together with the industry to find solutions, balance, and common ground,” Fullenwider said.

Deputations from as far away as Japan and Great Britain have visited the city to learn how it works.

Working together is ideal and benefits everyone, as Fort Worth and Sweetwater illustrate. When operators won’t cooperate, however, people and communities suffer.

“Texas is on the lead end in terms of favoring oil and gas interests,” Bradbury said. “Landowners’ and the industry’s power was in better balance up until about 10 years ago with hydraulic fracking. In my view, the state has not put adequate emphasis on the rights of landowners.”

Copyright © 2013 by ASME
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