Drilling ban at Joe Pool Lake sets up showdown between Texas, Army Corps

A move by the U.S. Army Corps of Engineers to protect its dam at Joe Pool Lake is leading to a showdown with state regulators over who controls drilling near the reservoir.

Last week, the corps said it is banning drilling, including hydraulic fracturing, within 4,000 feet of the dam. The federal agency also said it would limit injection wells to at least five miles from the dam out of fears of “induced seismicity,” or tremors triggered by human activities.

Corps officials said the tougher restrictions — which grew out of a study about whether drilling could damage the structural integrity of the dam — went into effect immediately. One corps official said the agency is willing to go to court to enforce them, if necessary.

But in a letter sent to the corps on Thursday, Texas Railroad Commission Executive Director Kimberly Corley questioned the federal agency’s actions, stating that the Railroad Commission has the authority to oversee the oil and gas industry in Texas, including hydraulic fracturing and injection wells.

Corley took issue with the corps for taking steps without consulting the commission or other appropriate state agencies and without going through a formal rule-making process. The letter also asked pointed questions about information used by the corps in establishing its restrictions.

“We would like to understand how USACE made these decisions and how it intends to implement its actions,” Corley wrote. “In discharging its responsibilities, the Railroad Commission’s highest priority is protection of public safety and our natural resources.”

State Rep. Drew Darby, R-San Angelo, who championed House Bill 40 in the last legislative session that reaffirmed the commission’s authority over oil and gas drilling, said he thought the corps may have gone too far but hoped the agencies can come together to discuss any concerns about drilling at Joe Pool Lake.

“It sounds like another example, if you will, of federal overreach and usurpation of local authority and state government entities,” Darby said. “I would encourage all of the parties to come up with what makes sense from an operational and a safety standpoint.”

Clay Church, a spokesman for the corps, said Thursday that the agency received the letter and was reviewing it. Earlier he said the agency, if faced with a request by a company to drill within 4,000 feet of the dam, would be willing to work with the producer but would also do its due diligence to protect the safety of the structure.

“If we had to resort to a court of law, that is what we would do,” Church said.

Corps officials have said they welcome environmentally sound oil and gas exploration and mineral extraction, but that their primary focus is to make sure nothing threatens their facilities or public safety. “Our job is to ensure that any and all activities around the structure do not create adverse impacts,” said Tim MacAllister, chief of operations for the corps’ Fort Worth District.

Ed Ireland, executive director of the Barnett Shale Energy Education Council, an industry information group, simply thinks the corps went too far.

“In the state of Texas, the Railroad Commission is the governing body as far as oil and gas activity,” Ireland said. “They decide where wells get drilled or if they get drilled. ... I don’t think they have the authority to do what they have stated.”

Jim Bradbury, a Fort Worth environmental attorney who helped write the city’s drilling ordinance, said the two agencies are on a collision course.

“It is going to be a showdown. I will say the Railroad Commission is raising some valid questions,” Bradbury said. But he quickly added the corps knows what it is doing. “No one understands this better than them. I’d be disinclined to ignore what they are trying to tell us.”

Setting a high standard

This month, the corps announced that it was expanding the no-drilling zone from 3,000 feet to 4,000 feet. The agency said its original exclusion area did not meet the minimum tolerable risk guidelines and posed a risk to the structure, the lake and public. It also restricted the location of injection wells.

The tougher regulations followed a 2015 study initiated after an inquiry by someone living near the dam about possible detrimental effects from nearby drilling activity. A 2011 letter from the corps to the city of Grand Prairie raised concerns about natural gas drilling near the dam by Chesapeake Energy that could “contribute to a catastrophic dam failure.”

The study’s goal was to evaluate the effect of fracking in the Barnett Shale formation, which lies underneath Joe Pool Lake and its dam. The study used data and site-specific information obtained by drilling companies to evaluate possible effects of drilling, injection wells and extraction on rock formations. It acknowledged the study had drawbacks since the data being provided was limited.

But the lengthy study still raised a number of concerns about drilling and, in particular, hydraulic fracturing, or “fracking,” the most commonly used process for drilling wells in the Barnett Shale. Fracking is a process where drillers inject water and chemicals at high pressure deep into rock formations to free oil and natural gas.

One fear was the possibility of underground blowouts near the dam. The study said this scenario is based on the fact that part of the well casing design is not cased in cement, exposing the immediate area to high pressure. If the gas or fluid is exposed to a near-surface fault in the vicinity of the dam, it could reach the surface under the dam’s embankment or outlet works.

Sarwenaj Ashraf, dam safety program manager for corps’ Fort Worth District, said that kind of pressure “could create a crack or depression similar to a sinkhole and have all the material settling in and degrading the structure.”

Another fear raised was induced seismicity, or man-made tremors created by the oil and gas process. The study notes that there are no documented cases of felt earthquakes in Texas caused by fluid extraction, but that there are examples in the Barnett Shale where fluid injection was suspected as the cause of felt earthquakes near Dallas/Fort Worth Airport and in Cleburne.

A study by Southern Methodist University also linked a rash of earthquakes northwest of Fort Worth in 2013 and 2014 to injection wells in the Reno and Azle areas. The Railroad Commission, however, eventually concluded there was insufficient evidence to make that connection.

Still, the possibility that injection wells and tremors were linked was enough for the Army Corps to order that an injection well can’t be any closer than 5 miles from the dam. Currently, the nearest injection well is 9 miles away.

“We feel there is a potential for things to occur,” said the corps’ MacAllister. “We haven’t said anything one way or the other, [but] there is enough information that we think there is a potential, and it is our job to make sure that nothing occurs to the embankment.”

After the study was completed, and because of its findings, it underwent a stringent independent and external peer review, the corps said. The review eventually endorsed the key findings in the study as well as the new regulations imposed by the risk management assessment, Church said.

“That showed that we had to adopt the [expanded] zone and that the 5-mile zone for injection wells was the right way to go to limit damage to the structure,” Church said.

Col. Calvin Hudson, commander of the corps’ Fort Worth District, in his memorandum of record, states that “these recommendations are more conservative than what the study recommends; however, they are considered necessary to ensure that public safety is not reduced ...” because of drilling.

Confusion and consternation

But in her letter, Corley of the commission, asked for specifics of the peer review and what protocols were used.

She also wants to know how the corps plans to implement the new exclusion zones and over what time frame, and why there wasn’t public notice and an opportunity to comment on the regulations. Typically, federal regulations are published and a period is set side for public comment.

“What is the impact upon wells currently situated within the expanded zone, and what are your plans for working with state regulators and oil and gas operators concerning the siting and operation of existing and future wells in the vicinity of Joe Pool Dam?” Corley wrote.

The new guidelines have caused some consternation.

Currently there is no drilling underway near the dam, but XTO Energy has three existing wells that went into production in 2010 and holds state permits to drill four more. XTO said its three wells actually are more than 17,000 feet from the dam, but its pad site is within 3,000 feet.

The wells have produced without incident and operate in full compliance with all state and local regulatory requirements, said Suann Guthrie, a spokeswoman for XTO.

But she added that the Army Corps’ study identified information gaps and uncertainties that “constrained” its analysis, and that the report makes no recommendation to extend the exclusion zone. In fact, with respect to surface events, the report states that a 3,000-foot zone seems reasonable for protecting the dam, she said.

The study also concluded that with respect to production, a 5,000-foot standoff distance — which is slightly larger than the one set by the Army Corps — had little effect on subsidence, or caving and settling, at the dam, Guthrie said.

Ireland, of the Barnett Shale education council, also finds the corps’ new regulations puzzling.

“Over and over they go through evaluating their exclusion zone of 3,000 feet,” Ireland said. “I didn’t see any conclusion or statement that says it should be replaced. ... I think the corps has made a leap here to their own conclusion.”

In Grand Prairie, where a major portion of the dam sits, there has also been some confusion, with city officials repeatedly saying that they thought the new regulations were just a proposal. They also said that the corps has not handed them a map showing the location of the 4,000-foot line.

Grand Prairie City Attorney Don Postell recommended to the City Council last week that it let the city’s moratorium prohibiting drilling within 3,000 feet expire in October. He said the passage of HB 40 granted that kind of regulatory power to the state.

“We don’t control where you can drill. The state made it abundantly clear that from the ground down is under their control. We have no authority,” Postell said.

“It wouldn’t surprise me to see it end up in court,” Postell said. “I know the corps feels strongly about the threat to the structure. ... They are doing what they think is right. Talk to the Railroad Commission, and they are doing what they think is right.”

This story was originally published March 27, 2016 at 2:14 PM with the headline "Drilling ban at Joe Pool Lake sets up showdown between Texas, Army Corps."