Trump says he Understands if a Municipality or State wants to Ban Fracing
On the campaign trail, Donald J. Trump has referenced fracing in a number of speeches, always on the favorable side.
Trump made a strong endorsement for shale energy development in his North Dakota energy policy speech in May. And rumors have come out in the media that he’s looking at Continental Resources (ticker: CLR) CEO Harold Hamm as a possible Energy secretary in a Donald Trump administration. The Wall Street Journal called Hamm “the oil mogul behind Trump’s energy speech.”
But Does Trump Favor a Job-Killing Frac Policy?
Trump’s fracing views were a little differently phrased in an interview he gave a TV reporter in Denver last weekend. Donald Trump may have climbed up on the fence regarding the idea of fracing.
In an interview with Denver’s 9News on Friday, the candidate responded to a reporter’s question about local municipalities banning fracing:
TRUMP: I’m in favor of fracing, but I think that voters should have a big say in it; there are some areas maybe they don’t want to have fracing and I think that if the voters are voting for it, that’s up to them.
9NEWS: Should they be able to ban it in their town, if they vote for it?
TRUMP: It could very well be; I’d have to see the specific instance, but it could very well be. But fracing is something that we need; fracing is something that’s here whether we like it or not. But if a municipality or a state wants to ban fracing I could understand that.
Trump’s comments are not exactly an endorsement of municipal and state frac bans that would leave the oil and gas industry battling a leasing map made up of holes and gaps from a patchwork of bans and varying municipal, state and county regulations. But they do raise serious questions about creeping political risk for the oil and gas industry in the U.S.
In recent years outright frac bans and moratoria in various municipalities have been kicked out by judges in states like Colorado and Texas. But if a proposed limitation on where companies can drill is approved by voters and becomes a constitutional amendment in Colorado this November, the only way to overturn it and allow the industry to resume development would be to appeal the amendment on the next ballot.
Its June 2016 investor presentation shows Continental’s position in the Bakken at more than a million acres with another 970,000 acres in Oklahoma’s SCOOP and STACK plays—all of which are fracing-focused resource plays. Continental puts the CapEx budget to develop its assets in the Bakken and Oklahoma at $920 million just in 2016.
With Hamm’s obvious deep experience developing shale plays, it would seem logical that a President Trump’s “let the people vote on fracing” comment would never become the ‘to frac or not to frac’ decision-making tool under a Harold Hamm-led Department of Energy.
If it did encourage states to hold a referendum on whether or not to allow fracing, the continued development of plays like the Wattenberg field in northern Colorado, where two or three city councils have already voted in favor of frac bans that were later tossed out by judges, would further suffer—along with the oil and gas tax revenue base for the cities, counties and the state; the oil and gas related job prospects for the citizens in those municipalities; and the legal rights of mineral owners to extract and sell their hydrocarbons.
Gold line: state with shale production, tax revenue, jobs: Penn. Blue line: state with a ban on hydraulic fracturing: NY
