Culture clash (3/5)

By Lowell Brown and Peggy Heinkel-Wolfe
Denton Record-Chronicle
December 30, 2008

EDITOR’S NOTE: Behind the Shale is a five-part series exploring urban gas drilling and one Argyle-area neighborhood’s struggle against it.

Texas in tug-of-war between valuable resources underground and the people who live above

Gene and Jennifer Cole stood in the backyard of their Argyle-area home, staring up at the mountain of rocks behind their fence, and then turned to a stranger in a black pickup.

“What’s the problem?” the stranger asked.

It was not a simple question. For months, the Coles and their next-door neighbors, Jana and Darrin DeGrand, had fought a gas company’s plan to dig a gas well from the dirt-and-rock plateau where the stranger stood. They had a problem with how the pad site, more than 6 feet tall, could change the flow of rainwater in their flood-sensitive neighborhood. They had a problem with the recent explosions at other North Texas rigs. They had other problems, too, but the man’s tone on that day in 2006 made them think he wasn’t interested in hearing them.

The stranger was Tom McMurray, a Denton County lawyer working with an energy company to get a rig in the ground. Because of the Coles and DeGrands, McMurray’s work had been a headache. The city of Denton cited the energy company with code violations, and the neighbors’ griping attracted media attention. When McMurray drove up, the Coles and Jana DeGrand were talking with a company engineer about how to ease their flooding concerns. The tension rose as their gaze fixed on McMurray.

“Well,” Gene Cole answered, “you’re moving so much dirt that I’m afraid that it’s going to push over into my pool.” McMurray tried talking about mineral rights with the neighbors, but the tension was so thick, he gave up.

“Welcome to Texas, Mr. Cole,” McMurray said.

For more than 100 years, the relationship between Texas landowners and the energy companies had been cordial. Even though both pay the same taxes, Texas laws have always favored the mineral interest over the surface, particularly when the property rights are severed. But the Barnett Shale’s urban drilling paradigm has wrought a Texas-sized culture clash over the rights of property owners, their neighbors and corporations.

“Where do you draw the line?” McMurray said in an interview. “That’s being debated around kitchen tables all around the Barnett Shale.”

Shari Skaggs, left, Jana DeGrand and Jennifer Cole, pictured in July 2006, helped organize their neighbors to urge the city of Denton to enforce its gas drilling rules in their neighborhood, which lies between Denton and Argyle. One proposed gas well is within 300 feet of the homes of DeGrand and Cole. (DRC file photo/Gary Payne)

And all around its government board rooms. For want of better regulation, cities have been drawing lots of lines, in part because the Texas Railroad Commission persists in saying it satisfies its duty to the public interest by conserving the state’s oil and gas resources.

After well explosions in Brad in 2005 and Forest Hill in 2006, some cities increased their “setback rules.” Many required somewhere between 300 and 600 feet between wells and homes or other buildings. Some city councils, otherwise poised to require longer distances, buckled as mineral owners threatened to sue for taking their property rights. But several cities upped the requirement to 1,000 feet between a well and a home or building — 250 feet more than the width of the burning crater in Brad.

As other issues emerged — crushed roads and collapsed bridges; roaring compressors and obnoxious fumes; multiple, redundant pipelines that rendered prime, developable property useless — cities sought more rules to protect the health, safety and welfare of their residents.

After workers began moving dirt behind their homes on Britt Drive between Denton and Argyle, Jana DeGrand and Jennifer Cole quickly learned that the railroad commission would offer them little help. The commission has no setback requirement (I).

City setback rules don’t apply in unincorporated areas like Briarcreek Estates, the subdivision where the two families call home. In fact, the well pad site, now known as Whitespot for landowners Steve and Vanessa White, would be illegal in both Denton and Argyle without affected landowners’ permission because the Coles’ home is within 250 feet. Outside city limits, people are generally at the drillers’ mercy — a discovery that incensed the Briarcreek neighbors.

“Our lives and our safety are not any less valuable because we don’t live in a corporate limit,” Jana DeGrand said.

State law offered one glimmer of hope. Jana DeGrand learned that cities are charged — in limited cases — with protecting the safety of residents in their “extraterritorial jurisdiction,” areas just outside city limits. After several phone calls, she and Jennifer Cole learned their neighborhood fell under Denton’s jurisdiction. Better yet, Denton’s gas well inspector agreed to investigate their concerns.

“It was like the heavens opened,” Jennifer Cole said.

Quentin Hix joined the city of Denton staff in 2002, ready to help with the city’s new gas drilling rules. As a former 13-year employee of Lone Star Gas Co., now Atmos Energy, with a degree in city management, Hix was uniquely suited for the job of gas well inspector. City rules required all drillers, even those in the extraterritorial jurisdiction, to turn in their plans for review. Some drillers skipped this step — whether out of ignorance or arrogance, Hix wasn’t sure — but he’d never seen one refuse to comply after he sent out a violation notice.

In December 2005, at Jennifer Cole’s request, Hix inspected the Whitespot well site and found violations. Reichmann Petroleum of Grapevine hadn’t filed any plans, and Hix ordered the work stopped until they were turned over and approved. By month’s end, Hix discovered the company had drilled five other gas wells, bypassing city rules for erosion control, drainage, security and well maintenance. Reichmann had also failed to get the required development permits from Denton County for the same sites. The city had no idea where pipelines were being installed, meaning anyone with a backhoe, including city utility workers, might rupture them and spark an explosion.

In a Dec. 28 letter to Reichmann, Hix threatened “further enforcement action” if the company didn’t comply.

It wasn’t Hix’s first run-in with Reichmann. In early 2005, the company took over a well north of Country Club Road. Hix inspected the site and found violations. Reichmann then started on another well before it abruptly abandoned the platting process.

As Hix learned, Reichmann had a pattern of perplexing government regulators.

Reichmann started as Richman Petroleum Corp. in 1994, a creation of Dyke R. Ferrell and F. Erik Doughty. By 2006, as the company’s fight with Denton and the Britt Drive neighbors escalated, the railroad commission had fined the company twice for state drilling violations, and had five more enforcement cases pending in various counties.

“A good operator shouldn’t have any [cases] go to enforcement,” railroad commission spokeswoman Stacie Fowler said, “because we do try to give an operator an opportunity to come into compliance with our rules.”

In 2006, as spring gave way to summer, Denton leaders faced a crossroads. Reichmann questioned their power to enforce drilling rules outside the city limits, but city leaders believed state law was on their side. Sensing an impasse, the city sued Reichmann in state district court, saying the company’s refusal to follow city rules at seven pad sites was threatening public safety. “If they’re not willing to voluntarily comply, we have no choice but to take action to force them to comply,” City Attorney Ed Snyder said of the unprecedented lawsuit.

Reichmann executives wouldn’t say much publicly, but they denied the city’s claims.

Meanwhile, Whitespot sat silent. A wood fence, roughly 8 feet tall, now separated it from Jennifer Cole’s backyard. In mid-July 2006, she told a visitor she hadn’t seen a worker there in weeks. The pressure, she said, was starting to pay off. Besides contacting the gas well inspector, she and her neighbors also sent a petition with nearly three dozen signatures to the City Council warning that failure to crack down on Reichmann’s code violations would embolden other drillers.

The neighbors scored another concession when Hix said he would require a water-flow study for Whitespot. His inspections convinced him that the dirt work had changed the runoff. Not long after the pad site went up, a 2-inch rainfall left a stream of ankle-deep water between the Cole and DeGrand homes, Jana DeGrand recalled. The volume was unusual for that amount of rain, she said.

In late September 2006, the neighbors heard that Reichmann planned to settle the lawsuit out of court. On Sept. 25, the company filed maps for most of its sites, but not for Whitespot. Company officials told the city they weren’t sure what was required. “That leaves us flapping in the wind on the one that’s the biggest issue right now,” Hix vented.

The move also left city leaders unsure of how to handle the pending lawsuit. Snyder, the city attorney, said he still wanted to send a message to other drillers to ignore the rules at their peril.

Still, the neighbors sensed that Reichmann was slowly slipping off the hook.

Since construction on the pad site started in late 2005, landowners Steve and Vanessa White had experienced their own frustrations. Steve White told a dirt mover to preserve an ancient oak tree; the man bulldozed it before his eyes, he recalled. The pad site was only supposed to cover 3 acres; workers used 4. And then there was Reichmann. The code violations embarrassed them greatly. It was sloppy, inexcusable, Vanessa White said. But a deal was a deal. “The day you sign your name to that lease is the day you don’t really have any control either,” she said.

At the same time, the Whites believed their neighbors were harassing them. More than once they said they found trash dumped into their yard. Early on, someone apparently cut through the barbed-wire fence on the north end of their land and hauled off dirt in a wheelbarrow. One neighbor kept whacking golf balls into their yard, even after Steve White asked him to stop. Others threw things at their horses, they said.

The Whites believed they hadn’t done anything wrong and sometimes resented the neighbors’ meddling. Neighbors recalled some of the alleged occurrences but doubted the Whites were the targets of concerted harassment.

Any chance to settle the feud vanished on Sept. 26, 2006, when the Britt Drive neighbors went before the Denton City Council to urge the city not to ease pressure on the newly repentant Reichmann. Waiting in their seats to address the council, some of the neighbors blithely suggested suing the Whites, who were seated nearby and overheard the remark. The neighbors later claimed they didn’t know the Whites were there, but the damage was lasting. After the meeting, several neighbors offered to sit down, to talk things out, but the Whites refused. Everyone was too agitated, they thought.

Just before Christmas, Denton city leaders discovered Reichmann had filed for Chapter 11 bankruptcy, throwing the lawsuit into limbo. They’d have to wait until an automatic stay was removed before pressing on, the city attorney said.

Hearing the news, Jennifer Cole worried the bankruptcy would keep the neighbors from resolving their flooding concerns. “I just hope that … they are ultimately held responsible,” she said.

The following spring, the neighborhood’s fears were realized. On April 24, 2007, the heavens opened and relentless rain turned Briar Creek into a churning, rushing torrent, cutting off the neighborhood from Hickory Hill Road for hours. Uphill, the dirt-and-rock plateau for Whitespot helped push the runoff helter-skelter over Britt Drive.

When Renae Lorentz finally got home that night, after the water receded, her Suburban was gone.

Runoff washed the vehicle off her driveway and left it nose down in the creek bed, a jagged tree branch lodged through the windshield where a passenger’s head would be.

LOWELL BROWN can be reached at 940-566-6882. His e-mail address is lmbrown@dentonrc.com.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com.

FOR REFERENCE

I. Despite a common perception that the Texas Railroad Commission has a 200-foot setback rule, the commission has no setback requirements. However, the misperception may come from a long-standing law in the Texas Government Code, Section 253.005(c), “A well may not be drilled in the thickly settled part of the municipality or within 200 feet of a private residence.”

Chapter 1: Neighbors along Britt Drive are approached by land men eager to drill in the Barnett Shale. Some are wary of the impact on their quality of life and question whether the amount of money offered is worth it.

Chapter 2: Urban drilling means these rough-and-tumble workplaces are closer to homes than ever. But its boom-or-bust nature creates a psychosocial environment for the Britt Drive neighborhood that fosters distrust of both sides.

Chapter 3: Cities are trying to preserve their authority to make rules for health, safety and welfare, but the industry is pushing back. Britt Drive neighbors watch one such battle unfold in their backyard.

Chapter 4: A doctrine of exemption allows the industry to develop oil and gas resources without having to study the environmental or health impacts of their work. Britt Drive neighbors worry about how drilling would affect their environment.

Chapter 5: Industry insiders sometimes marginalize gas drilling opponents, but the conversation about where to draw the line in urban drilling persists. The Britt Drive neighbors’ quest to keep drillers away grows increasingly desperate.