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Barnett Shale Blog
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XTO Energy Wants to Drill in
a Highland Street Pasture but Must Secure Homeowners' Approval
June 1, 2010 By Nicholas Sakelaris,
Staff Writer Southlake Journal Southlake's second proposed gas well site will likely test the city's drilling ordinance as XTO Energy plans to drill within 1,000 feet of more than 40 homes. Affected
homeowners on Summerplace Lane and Dove Creek Trail must sign waivers because the proposed site violates the city's drilling
ordinance. XTO Energy plans two gas wells initially on a Highland Street pasture owned by Jim
Milner just east of White Chapel Boulevard. Ultimately, the "Milner site" site could have 20 wells, according to
the site plan. All the wells will be within 600 to 700 feet of several houses. Summerplace Lane resident Joni Lehman said she and her neighbors signed waivers to allow XTO Energy to drill in the
field behind their houses. She supports the proposed well site, saying that will ensure that
the beautiful pasture behind her house doesn't develop into a neighborhood. Milner has assured her that XTO Energy will go
"above and beyond" to maintain the land. "We wanted it to be nice, so we all still
have our view," she said. Southlake residents can learn more about the proposed drill site
at a pair of public meetings 7:30 p.m. on June 21 and 28 at Town Hall. XTO Energy will make a presentation and then field
questions from the public. The Southlake Program for the Involvement of Neighborhoods (SPIN) will host the meeting. In a letter to the city, XTO Energy's Walter Dueease asks for seven variances to the city's drilling ordinance, including
the ban on drilling within 1,000 feet of protected structures like school and homes. Truck traffic would enter the drill site
using Texas 114, Highland Street and White Chapel Boulevard, according to the site plan. Southlake
has now received applications to drill at two locations in the city. The first, submitted in February, proposes to drill up
to 27 wells on Southlake's border with Grapevine on Texas 26. Some Grapevine residents expressed
concerns because that drill site is about 840 feet from Grapevine High School. Grapevine and Colleyville also require 1,000-foot
buffers between gas wells and protected uses like schools and houses. No date has been set for
either Southlake gas well application to go before the Planning and Zoning Commission or City Council. Meanwhile, Colleyville's proposed first gas well site on Pleasant Run Road near Southlake's southern border is set
to go before Colleyville's Planning and Zoning Commission on June 14. Titan Operating's proposal to drill 14 gas wells on
the Quenichet property has been tabled multiple times. The nearby Hills of Monticello homeowners association, which includes
Southlake and Colleyville homes, has filed a lawsuit against Titan because the initial drill site was too close to association
property. The drill site has since been relocated. XTO Site Brings Controversy Drilling gas wells in populated areas comes with
controversy. A proposal in Colleyville during the winter, and now a proposal in Southlake this spring, have both been complicated
by the proximity of the proposed site to neighboring houses, parks and schools in adjacent communities. In Colleyville, Titan Energy has moved its proposed pad site because it was closer than
1,000 feet to several Southlake homes across Bear Creek. The plan will still require variances. In
Southlake, which also requires a 1,000-foot buffer from homes, schools, public buildings and parks, the site proposed by XTO
Energy is 1,082 feet from the closest Southlake home, but 841 feet from the science classrooms at Grapevine High School, across
the road in Grapevine. Residents have raised concerns about toxic air emissions and contaminated
water at gas well sites, where carcinogens and neurotoxins have been identified in some air testing. Other issues include
noise, heavy truck traffic and lights. Drilling, once begun, goes 24-hours a day. Wells, which have to be drilled one at a
time, can take months to complete. In Colleyville, where 13 wells are proposed on one pad site, Titan estimates the drilling
will go one for five to seven years. In Southlake, 27 wells are proposed for a 3-acre site on
private property just south of the Southlake tank farm. The tank farm already emits as much as 90 tons of volatile organic
compounds into the air near GHS each year, including carcinogens. That 81-acre facility, owned by several oil companies, is
regulated by the Texas Commission on Environmental Quality (TCEQ), which relies on tank farm operators to measure emissions.
TCEQ is tasked to monitor emissions nearby gas drilling sites. A
gas transmission pipeline is proposed to run from the site, crossing Brumlow and then generally following Big Bear Creek north
and west through Timarron Golf Course to Pleasant Run Road in Colleyville, near the proposed Titan site. XTO has proposed six variances to Southlake's drilling ordinance. These include building a chain link fence with
landscaping instead of a masonry wall and not installing remotely monitored gates, interior fencing with barbwire or security
cameras. The company cites "unnecessary cost" as the reason for the exceptions, though
the company does not mention the proximity of the high school. "XTO Energy expects to comply
with all portions of the current gas well ordinance but suggests that these exceptions are safe and reasonable considering
the location of this drill site adjacent to the existing fuel storage facility, State Highway 26 and DART rail line,"
Walter Dueease with XTO Energy wrote in a letter to the city. "Few improvements, if any, have been added to these industrial
uses and we believe our proposals do not conflict with the prevailing conditions." With
spring break last week, Grapevine-Colleyville school district officials have not yet had a chance to study the XTO proposal,
said GCISD spokeswoman Megan Overman. The public can ask questions and voice their opinions
at public meetings March 30, April 1 and April 5 in the City Council chambers at Town Hall, 1400 Main St., in Southlake. The
meetings start at 6:30 p.m. with an open house display of maps in the Town Hall lobby.. A formal presentation begins at 7
p.m. followed by question and answer sessions.
The proposed drilling site, near
Pleasant Run and Big Bear Creek on the Quenichet property, if approved, will be closer to seven homes than the 1,000-foot
limit specified by city ordinance. All the affected homes are in Southlake: six in Timarron and one in the Hills of Monticello.
Titan Operating, LLC, which has filed an application for the drilling permit, asked the Colleyville
Planning and Zoning Commission for "more flexibility" in air quality testing and noise abatement than the city’s
ordinance provides. The company made a presentation at the P&Z meeting Monday, which included a public hearing. Chris Hammack, Titan vice president of operations, said the company plans to drill 13 wells from the pad site. He
added that drilling operations could last as long as "five to seven years." P&Z
commissioners asked if the site noise could be reduced during nighttime hours, but Hammack said that drilling operations,
when begun, "will run 24-hours per day." Large amounts of water are required for the drilling process, and drilling
operations will be scheduled to correspond to water availability, spokesmen said. The company
has asked for permission to erect a 150-foot drilling tower, and said they will build a 28-foot wall to abate pad site noise,
which they project at about 85 decibels during drilling. Most speakers at the hearing were from
Southlake, and opposed the application for the Quenichet site. See the full story in next week’s Journal.
Three Dallas law firms that have formed the
North Texas Lease Litigation Group are contending that energy companies are trying to renege on drilling agreements
with homeowners' association alliances in North Texas' Barnett Shale. Those agreements are binding leases, the law firms
say, even if individual property owners did not sign formal lease contracts. The law firms have sued on behalf of an Arlington
couple, Willie and Carmen Booth, who claim they are due a lease bonus of nearly $5,000. Read the complete story in the Star-Telegram. Jack Z. Smith
Devon Energy Corp. CEO Larry Nichols said Wednesday the company
is reducing its natural gas drilling in the short-term until gas prices start to rebound. “We see absolutely no reason
to continue to drill at this time and bring natural gas production on at this time, any more than we need to,” Nichols
said at the company’s annual shareholders meeting. “It’s better to leave that gas in the ground and sell
it next year, or in future years, when we can generate a greater profit for our shareholders.”
Devon
has reduced its exploration and development capital budget to between $3.5 billion and $4.1 billion this year from $8.5 billion
in 2008. Nichols said that 2009 continues to be a challenging year for the industry but that the largest U.S. independent
oil and natural gas producer is well-placed to weather the economic downturn. “While last year was a great year,
this year is a tough year,” Nichols said, citing a steep decline in oil and natural gas prices during the second half
of 2008.
Oil prices have doubled since March with some signs that the worst of the recession
may be over and were hovering around $66 a barrel Wednesday afternoon on the New York Mercantile Exchange. Natural gas for
June delivery tumbled 36.2 cents to $3.758 per 1,000 cubic feet after peaking last summer at $13.69 per 1,000 cubic feet.
Nichols said that natural gas prices will take longer to recover than will oil prices because of the current oversupply of
natural gas.
-- Associated Press By AMAN BATHEJA - Fort Worth Star Telegram - May 3, 2009
Gas drilling screeched to a halt in Southlake months ago, but
it’s emerged as an issue in the mayoral race all the same. Mayor Pro Tem John Terrell is vying with former Mayor
Rick Stacy to be the city’s new leader. Stacy argues that Southlake has been run ineffectually since he stepped
down in 2003. As one example, he has repeatedly said the city missed out on a multimillion-dollar payday by not leasing its
mineral rights before the natural gas market collapsed. "It didn’t take 18 months to write the U.S. Constitution.
Why would it take 18 months to write the ordinance?" Stacy said. "To miss that window of opportunity for the taxpayers,
that cost us probably $12 [million] or $13 million." The city spent well over a year holding public meetings
on drilling before finally adopting a revised drilling ordinance last May. Before that, Southlake allowed drilling only in
industrial areas. By last fall, the decline in natural gas prices had prompted most drilling companies to stop signing new
leases. Worth Star TelegramOn his campaign website, Terrell describes himself as "a prime architect" of the new ordinance. He said the
city needed to make sure that residents had time to have their say. The city needed to have the revisions in place before
leasing its minerals rights to ensure that a drilling company followed the stricter rules. The city will lease its mineral
rights when natural gas prices rebound, he said. "There’s always a way to spin any story," Terrell
said. "To me, our safety and our property values were far more important than the city retaining and extracting our minerals
early." City Attorney Allen Taylor echoed Terrell’s argument. He noted that a drilling company that signed
a contract before the new ordinance was approved would not have had to honor the revised ordinance’s required 1,000-foot
setback for wells. In October, the city issued a request for proposals to lease the mineral rights on its property,
520 acres on 46 sites scattered around the city. The request specified that a proposal must include a bonus of at least $20,000
per acre and a royalty of 25 percent or more of all revenue from oil and gas produced from the land. The city received
no responses, city spokeswoman Pilar Schank said. City staff spent time working with the council to create the request and
issued it once "it met expectations," she said. Karen Whitaker helped organize the White Chapel Corridor
group in Southlake, whose members received signing bonuses of over $20,000 an acre for its mineral rights last summer. She
questions why the city didn’t sell its mineral rights last summer as well, soon after the new ordinance was approved. "We hit it at the perfect time, and I think at that point, if you were hitting your ear to the ground, you would
have known the time was right," Whitaker said. Whitaker said the bonus money would have been put to good use and
agrees with Stacy that the city dragged its feet. "We need a rec center for our teens. There’s infrastructure that
needs to be completed to handle our growth," Whitaker said. "We don’t have that, and that was free money." Southlake resident Tommy Pennington said he is comfortable with how the city handled the drilling issue. "I’d
love to see the city get the money, but at the same time I think we have to have our plan be solid instead of asking for forgiveness
later when the damage is done," Pennington said. Gene Powell, publisher of the Barnett Shale Newsletter, said
the intense competition by drilling companies to sign up property owners is probably gone for good. I don’t think
we’ll ever see bonus money anywhere near the range it was," Powell said. Despite the worry about missed opportunities,
Powell said, the focus on bonus payments was shortsighted. "The publicity has really been over the bonus money, which
is wrong," Powell said. "The real money is in the royalties." Whenever drilling companies did start signing
up people again, Powell said, he expected royalty offers would be around the same levels they were last year. |
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Biding Their Time The Fort Worth City Council is likely to toss out the bids
for natural gas leases on three tracts of city property because the bonuses that the city was offered were too low. The
bids were for a water pump station on Alta Mesa Boulevard, a police station on Nashville and Rosedale Plaza park. The city
only got an offer from one company -- Chesapeake Energy -- on each tract. Chesapeake offered a bonus of 2,500 an acre for
the park and the pump station, which total about 35 acres, and $10,000 an acre for the 2.4-acre police station.
Chesapeake offered 25 percent royalties on all three tracts. "We will selectively
lease property when it makes sense and we believe we can get a fair offer," Planning and Development Director Susan Alanis
said via e-mail. "In some cases we will wait to lease when the market recovers." This is going to be
an important issue to watch. Fort Worth has about 12,000 acres of parks, airports, water plants and other city buildings.
The city expects to earn a little more than $1 billion over 20 years from bonuses and royalties. But a lot of observers say
the city will have to be disciplined and avoid leasing during downturns in the oil and gas business. -- Mike Lee Glade Road Neighborhood Alliance, representing about 1,500 landowners in northern Hurst, reports that XTO Energy and its land agent, Holland
Acquisitions, has returned hundreds of leases that its members signed at formal meetings with the only explanation that they
were "not accepted" and no bonus will be paid. Organizer Jim Whelan said his group estimates that between 40 percent
and 50 percent of its members signed leases before XTO rescinded its offer on Oct. 16. XTO was offering a $24,000/acre bonus
and 25 percent royalty. "Our view is they invited us to a signing party and the terms were negotiated," Whelan said.
Alliance leaders are examining options, he said. XTO declined to comment. In the wake of the sudden
halt in Barnett Shale leasing that hit in October amid plunging natural gas prices, producers typically stated that anyone
who had returned a signed lease or had been issued a bank draft would be paid a signing bonus. Neighborhood leaders in
Southwest Fort Worth, Colleyville, Bedford, Arlington and elsewhere have all reported that producers dealing with their
groups have honored that commitment. And according to the Alliance, XTO sent this email to organizers on Oct.
16: XTO Energy regretfully rescinds the offer to GRNA immediately. Holland Acquisitions signed 80 leases last night on behalf of XTO. The signing event last night was for the Wintergreen
II neighborhood, and the only folks who were turned away were those from other neighborhoods, for whom Holland did not have
paperwork prepared. Again, no one from Wintergreen II was turned away, and Holland closed up shop when no one showed up for
45 minutes. Anyone who has signed a lease that Holland has in its possession as of last night will be paid. The volatile market conditions we are all living through have caused corporations around the globe to refocus corporate
strategy. Regards, Ryan M. Skelly
XTO ENERGY
INC.
810 Houston St.
Fort Worth, Texas 76102 Instead, "anybody
who went to the signings and signed with Holland - all those leases were returned by XTO," Whelan said. "There's
a lot of people who are not too happy about it." -- Jim Fuquay October 24, 2008 At the 360Northwest affair,
a raffle and silent auction, boosted by a $10,000 grant from Chesapeake Energy, resulted in $25,000 in contributions that
will be split between GRACE and FBC Euless Freestone Housing Revitalization Project. GRACE provides food, clothing and other
assistance to residents facing financial challenges. FBC Euless Freestone is a collaboration of the city of Euless, First
Baptist Church of Euless, Restoration Church and Life Connection Church that repairs and updates homes for needy residents.
Dan Delph, lead organizer of the charity event, said the turnout "exceeded our greatest expectations." Chesapeake’s
Leah King said it was the first time the company is aware of that a neighborhood leasing group came together to share part
of lease bonuses with a not-for-profit organization. 360Northwest Coalition, representing more than 3,400 property owners and 1,500 acres in Euless and Grapevine, endorsed a mineral-rights
lease from Chesapeake in July that paid a bonus of $23,500 an acre and a 25 percent royalty. In Burleson, the all-volunteer Holdouts group, headed by Bill Mahanay and his wife, Pat, collected fees of $25 to $100 to cover expenses such as advertising,
legal and accounting fees. And from the beginning, Mahanay stated that any funds left over would be given away to charity.
The major portion of the remaining funds were given Thursday night to Harvest House at the City Council meeting at the Burleson
City Hall. Smaller amounts will be distributed to the five churches who helped the group achieve their goal of a fair market
price for leases in the area. The resulting lease bonus of $27,200 per mineral acre was more than 18 times the amount originally
offered when the group began in the fall 2007. Chesapeake
also pledged $500,000 to Benbrook on Saturday toward expansion of the Benbrook Community Center and YMCA. The company gave
the first $100,000 of that commitment to the city at the second annual Heritage Fest, which celebrates the city’s incorporation
in 1947. Chesapeake’s Julie Wilson said the company’s
contribution recognizes "the importance to expand the often-cramped quarters of the Community Center/YMCA, a popular
workout facility and meeting place that is also used as a needed shelter in times of emergencies." -- Jim Fuquay
October 20, 2008Titan Operating today
informed Bedford-Colleyville Mineral Rights Coalition that it plans to re-examine its leasing strategy given the recent turmoil in world economic markets, the homeowner
group reports. "Therefore, effective immediately, all signing sessions previously scheduled by BC-MRC have been suspended,"
BC- MRC said in an email to members. According to the email, "Titan has indicated that it will honor all executed lease
agreements for which a bank draft has already been issued, including those signed Saturday, Oct. 18th, at a scheduled signing
session in Euless. According to Titan, it plans to suspend leasing on a temporary basis pending an executive management meeting
and possible discussions with its financial partner(s). Titan has indicated they will communicate the results of their
discussions to BC-MRC at the conclusion of its review process." Titan follows similar
moves by Chesapeake Energy, Vantage Energy and XTO Energy in the past week as producers struggle with both falling natural
gas prices and a tight credit market. Titan is backed by Riverstone Holdings, a private equity group that also has a stake
in Vantage Energy.
October 15, 2008 Vantage Energy, which
just weeks ago agreed to one of the largest single leasing deals of the urban leasing boom, says it is not signing new leases
with the big Southwest Fort Worth Alliance group because of the drop in natural gas prices and turmoil in financial markets.
The Denver-based firm, privately funded by three investment firms, said it will honor any drafts it previously issued, which
some observers estimate at about half the landowners in the Alliance, which covers more than 20 neighborhoods north and south
of Interstate 20. Vantage issued an apology and explanation of its actions this morning, which is available at the Alliance web site or which can be downloaded here: Download vantagealliance_letter.pdf "We are trying to make the best of a bad situation," said Vantage
executive John Wehrle. He said the company has "tens of millions of dollars" invested so far in the Alliance area.
He said the company intends to remain active in the Barnett Shale, but probably at lesser financial terms. "We still
have our original commitments lined up" from private equity firm Riverstone and two other investors, Wehrle said. "But
we're being told, 'Hey guys, it's a new market and new environment. We can't spend that anymore.' " Wehrle declined to
discuss other Vantage deals in the Barnett Shale, such as its recent agreement with Titan Operating and two big Grand Prairie negotiating groups. Vantage and Titan share Riverstone as a
common investor but otherwise are separate companies, both firms have said. -- Jim Fuquay
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