The Regulation of the Oil and Gas Industry

When the Town of DISH adopted its drilling ordinance several years ago I was told by many that we would never be able to enforce it. In response to us adopting the ordinance, the local Devon Energy Landman, said he would see us in court before he complied with our ordinance. However, after five years the ordinance has not been modified, nor has it been challenged, and Devon has drilled several wells in complete compliance with the ordinance. Therefore, drilling can be accomplished responsibly if these companies are forced, and they can still make money in doing it. As for the Devon Landman, he does not come around anymore, and has not been allowed to speak with me directly for quite some time now. However, the town now has a decent relationship with Devon now, and they have actually sponsored some community events here.

Having said that, Devon also has drilled multiple diagonal wells just outside of our corporate limits where they would not have to comply with our ordinance. They only drilled in the town when they could not get to the gas any other way. So if they have options, they will not do any more than they absolutely have too. Therefore, it is not that they can not comply with reasonable regulation; it is that they won’t unless they are forced too. This is not limited to Devon, most all of the companies I have dealt with in this industry will do only what is required, and usually they will only do this after some threats and public disgrace.

As I have stated in previous messages, some companies would rather hire expensive attorneys and try to bully their way through, but in the end if they are forced too, they will comply. Devon started going down this path with the Town of DISH, and had their high priced attorney calling up, making threats and allegations. These allegations included statements that we somehow missed a step in adopting our ordinance and therefore, the ordinance wasn’t valid, so it did not apply to them. I spoke of these tactics when I wrote “The Bluff” a few weeks ago. Fortunately, our Town Attorney is incredible, and eats these guys for lunch, so we stood our ground, and Devon changed the tune of the relationship and has been pretty decent to work with ever since.

As they mayor of a small town in the Barnett Shale, I must think about preserving the rights of the surface owners, while still allowing those who own the minerals to be able to access them. The State of Texas does not show any sympathy or protection for those who own the surface, while all of their efforts go into protecting the minerals. This would be due to the fact that the minerals are actually owned by the gas companies, such as Devon, Chesapeake, and XTO. They are not protecting the little guy, just big corporations who make campaign contributions, etc. In a future message, I would like to discuss the economics of the industry, and you will see that the little guy typically gets very little money for his mineral rights, and therefore, the big corporations are the ones who really make the profits, and it is their interest that the State of Texas will protect, not yours and mine.

There have been several bills proposed this legislative session in Texas that attempts to take away the municipal authority over the oil and gas industry, and give it to the state. This could be extremely disastrous for the average person who lives in this area, whether they own minerals or not. Some of these bills have been fought back, while others, no matter how much opposition; will pass through the legislature. You see when the control is at the state level it is harder to hold someone accountable for their actions. A state representative in Houston, or San Antonio, has no accountability to those who live in the Barnett Shale, but they vote on things that affect us. However, at the local level, the elected officials are more accountable to the people they represent. In DISH, the citizens are not my constituents, they are my friends and extended family. These are the people who watch and teach my children, helped me build my barn, and are there when I need them. Most of them have discussed their concerns sitting across from me at my kitchen table. Therefore, I fight to protect them and their property as I would my own.

Unfortunately, to this point there has virtually been no regulation in the State of Texas of the oil and gas industry. If further regulation is proposed, the same threats that I have found here in DISH start coming out. The industry will threaten to take their ball and go elsewhere. However, just like in DISH at the end of the day, they will do their drilling and get their minerals, in compliance with the reasonable requirements, and still profit in doing it. So when they threaten to stop drilling here and move their operations to Arkansas or Pennsylvania, I think they are lying…not bluffing…lying. Most of the minerals in this area have been secured by some company, and therefore, they have already made a major investment in this area. It would be foolish to think that they would simply walk away from that investment, due to a little regulation.

One of the unfortunate things I have seen here in Texas is that there is no consistency with the regulation. As a municipality we are able to take reasonable steps to protect the rights of our citizens. However, just outside our corporate limits, they are virtually free to do what they want to, when they want to, with no recourse. Just like the compressor and other noise and toxin producing facilities. If they are not inside the corporate limits of a municipality, they do not have a standard that they have to meet. They are virtually free to do as they choose with little recourse. Those who are near these facilities in rural areas are forced to follow the civil suit path, which costs tens of thousands of dollars, and will take several years to settle. Although, the companies have been lobbying to take the municipalities and their steps to protect property owner’s rights out of the picture, at least currently, we have some authority.

In my last message I brought up the story of Enterprise Texas Pipeline, who has chosen to move their pipeline a couple of hundred feet up the road, just outside of our limits to get around signing a right of way agreement with the town. We have only tried to get them to agree to the things that representatives from the company have promised in open meetings, and the agreement has been signed by other companies. However, as previously mentioned, it does not appear that anyone in this industry likes to be held accountable for their promises or actions. Before the pipeline gets to DISH, they will be forced to go through several other cities, which they will not be able to go around, and will likely sign a very similar agreement that we have proposed here. Why? Because, they will not have the option to move the pipeline a hundred feet up the road, to get around reasonable requirements. They, will not move the pipeline to Arkansas or New York to get around the requirement, it will stay here in Texas.

Having said that, I think that we must keep our regulation of this industry reasonable, and the term reasonable leaves some room for interpretation. For example the State of California has made the regulation of the hog industry so stringent that it is impossible for anyone to raise a hog in the state. Therefore, most of the farms there have shut down and we are now unable to meet the demands of the American consumer for pork. Therefore, the US is now importing large quantities of pork from other countries, where we have no idea of the conditions the pork is subject too, or what the quality of the meat is. By the way, this illustration has nothing to do with the swine flu, just a coincidence.

The point I make is that I am not some environmentalist wacko, nor am I opposed to reasonable drilling, and I have pointed out on multiple occasions, the positive impact of the Barnett Shale. However, with the oil and gas industry we are definitely not doing enough regulating. Typically those who take this position are labeled as the above mentioned term. I, like many of you, am a hard working honest American, who has seen the obvious flaws of this industry. Some of those who post my thoughts on various blogs have been labeled as left wing extremist and other ridiculous terms. They have taken photos of the irresponsible things this industry has done, and I hate to break to those who label them…the photos and stories are real. This is not some figment of a creative mind or fancy photo shop work…it is real. The horrible and unmentionable things that have been pointed out…are real. The industry certainly doesn’t want the stories to get out there…but they are real. And it is not good enough for us to continue to go down this path, and let this industry sacrifice those in their way, as the State of Texas has been allowing big energy to do.

This industry has somehow managed to get exempted from the clean water act. How on earth did we let that happen? Now the subject has come up to reverse this and make them subject to the act that all other industries are subject too. Of course, the industry is lobbying to prevent this, and that tells me one very important thing…they are not meeting the requirements, and they are not concerned about our water quality. Why else would they lobby to keep this exemption? I often wonder if by allowing them to things they are doing, are we are trading one natural resource for another. And, what would the average person think about that if they knew? The Town of DISH has passed a resolution supporting the reversal of the exemption, and suggest that everyone consider doing the same. Please contact myself or the Oil and Gas Accountability Project for a copy of the resolution.

In Texas everyone has their head in the sand, including the regulatory authorities. It is time to take away the option to move a hundred feet up the road and not meet minimum standards, or move just outside the corporate limits of a city and put a huge well pad site, and ruin that property to get out of complying with a reasonable ordinance. The standards adopted by many cities, should apply everywhere, so the industry can no longer sacrifice those who do not live in a municipality. This was done to Ms. Doris Samples, who lives just outside the Town of DISH’s corporate limits. She had forty acres for sale and Devon put a massive five acre pad site in the center of the property. She tried to get them to move it to one side of the property, to prevent them from completely destroying the property’s value, and they refused. I will include a photo to further illustrate the destructiveness of Devon’s action. She, like many others, have been forced to sue the company in civil courts.

In closing, it is very apparent to anyone who has pulled their head out of the sand, (or big energy’s backside) that more restrictive regulation must occur. Here, in DISH, I fully expect this area to someday be declared a toxic waste site. When that happens, none of those responsible for destroying our lives and property will be around to clean up the mess. It will likely be the taxpayers, who are again left to clean up the mess made by greedy corporations. To make matters worse, we are only a small town; there are many stories out there that are much worse than ours, with a much bigger mess. If this mess has not gotten to you yet, it is imperative to get ahead of the game and protect yourselves. They are not going to leave the profits in the ground, even if they are forced to be the good neighbor they claim to be. You will get your royalties, and maybe you won’t have to let them destroy your property and lives to get it.

Calvin Tillman
Mayor, DISH, TX(940) 453-3640

“Those who say it can not be done, should get out of the way of those that are doing it”