Trump's view on fracturing bans unsettles industry

OREANDA-NEWS. August 02, 2016. Republican presidential nominee Donald Trump has threatened his already tepid support in the oil and gas sector after suggesting that local municipalities should be able to ban hydraulic fracturing.

Trump in an interview televised on 29 July said if voters in a state or municipality want to ban hydraulic fracturing, then it should be "up to them" to make that decision. That position puts him in conflict with oil and gas companies that oppose fracturing bans, while making him closer aligned with Democratic presidential candidate Hillary Clinton, who also backs local control over fracturing.

Trump's remarks on fracturing may add to the hesitancy the oil and gas industry already has shown toward his campaign. Trump has won some support from industry with his plans to open more federal land to drilling and relax regulations. But he also has raised eyebrows with his unconventional views on trade and foreign relations, along with his plan to approve the 830,000 b/d Keystone XL pipeline only if he got a "better deal" for the US.

Koch Industries chief executive Charles Koch, a major Republican donor, has said he will not support Trump. US independent Pioneer Natural Resources chief executive Scott Sheffield last month said that many in the industry "wish there were better candidates" for president.

Oil and gas sector-affiliated donors have only given \\$63,600 to Trump as of 21 July, according to the Center for Responsive Politics, a non-profit that tracks political donations. That compares to the \\$9.6mn that Republican candidate Jeb Bush raised and the nearly \\$500,000 that Clinton has received from from the industry, according to the group.

Hydraulic fracturing has contributed to the boom in oil and gas drilling in swing states like Pennsylvania, Ohio and Colorado, although the practice remains controversial among some voters who fear potential environmental risks.

To be clear, many in the sector still back Trump as a better alternative to Clinton, who has vowed to move ahead with regulations that industry opposes. Continental Resources chief executive Harold Hamm spoke at the Republican National Convention in Cleveland last month and has a been a vocal supporter on the campaign trail. Pro-drilling group the American Energy Alliance endorsed Trump last month. The group's president Tom Pyle said Trump, in his remarks, "rightly pointed out" that fracturing faces challenges without public support. Pyle said the public should be more focused on Clinton's remarks in March that if she is elected there will not be many places in the US where fracturing "will continue to take place."

Some industry officials remain hopeful Trump will adopt positions more closely aligned with industry. "Quite honestly, candidate Trump has work to do to better understand our industry," an oil industry official says.

Oil industry groups have fought all fracturing bans, but they have been particularly opposed to municipal bans on fracturing, because of their view that cities and towns are ill-equipped to regulate the industry. States are in the "best position to safely regulate oil and natural gas operation" because they have the resources to deal with the industry's siting, permitting, geology and legal issues, the Independent Petroleum Association of America said.

State courts recently have invalidated attempts by cities and towns to ban fracturing. The Ohio Supreme Court last year threw out local drilling regulations after finding they conflicted with state law. The Colorado Supreme Court this year threw out municipal fracturing bans in Fort Collins and Longmont on similar grounds.

But industry groups also have criticized state efforts to prohibit fracturing. After New York regulators imposed a statewide ban on the practice last year over environmental concerns, industry group the American Petroleum Institute said state governor Andrew Cuomo (D) had "acted irresponsibility" and put the state's economy on a "reckless path." Maryland's legislature last year approved a moratorium on fracturing that will expire in late 2017.