Tonight in a unanimous vote, the Lewisville City Council passed changes to its Oil and Gas ordinance to establish a formal Oil and Gas Advisory Board, and to give the City Manager authority to withhold water sales for fracture stimulation of gas wells at certain times.
The creation of the Oil and Gas Advisory Board comes from recommendations given at the Council retreat in February, where staff discussed the structure of the former Oil and Gas Stakeholders Committee*. That committee, which was ad hoc, and purely advisory in nature, but its membership was directed by city staff, and was composed of three citizens, and an unlimited number of oil and gas industry participants, but primarily representatives of three gas companies and a permitting/engineering company doing business in the area.
The new board will have seven members, serving staggered two-year terms, and whose membership comprises three industry representatives and four citizens. The board will be advisory in nature, and will meet as needed.
The City Manager was granted authority to restrict water supply for hydraulic fracturing operations for gas wells during periods of Stage 3 Water Crisis restrictions (when other water users are also facing restrictions) and when providing the water would expose the city to an increase in its water supply demand charges from Dallas Water Utilities, which supplies up to 9 million gallons per day of treated water to the Lewisville system.
Earlier this month, the Electric Reliability Council of Texas (ERCOT), the operator of the electric grid for most of Texas released a report detailing the energy used by Texas in 2012. The report showed that the total energy usage for Texas in 2012 was about 324.8 Gigawatt-hours, down 2.7% over 2011 usage.
Various factors contribute to changes in electricity usage, but in Texas, weather plays the biggest part. The number of cooling degree days for a given service area indicates the how much that consumers need to run their air conditioners to cool the air to a constant level. According to statistical service Wolfram Alpha, Texas as a whole had 3,030 cooling degree days in 2012, a big decrease from 3,820 in 2011, when Texas had a record hot summer.
Heating figures into the total electric usage to a lesser extent since many Texans use natural gas to heat their homes. In 2011, there were 2,430 heating degree days, but in 2012, there were only 1,880 - a milder winter that saved us all on our electric bills, but did not do North Texans any favors during the summer mosquito season.
Did you know? Consumers in most Texas electricity service areas, including Lewisville, have the right to choose their own retail electricity providers. Direct Energy is one such provider that serves Lewisville residents in both the TNMP and Oncor service areas. By choosing their own provider, consumers can select the prices, terms, and renewable energy content they prefer.
The report also details the fuel types used for generation in 2012. Natural gas tops the list, contributing 44.6% of generation, with coal following at 33.8%, and nuclear at 11.8%. Renewable sources include wind at 9.2%, and hydro-electric at 0.1%. Other sources totaled 0.5%. Compared to 2011, natural gas and wind usage both increased by about 10%, with coal dropping.
Not only did wind power increase as a part of the mix, but it set several new records throughout the year. On December 25th, 2012, at 3:11 p.m., Texas wind power hit a new all-time generation record of 8,638 megawatts, or roughly 26% of the system load at the time.
On May 17th, Titan Operating, LLC, which holds numerous gas leases in Lewisville and Flower Mound, as well as two operating well sites, was acquired by Atlas Resource Partners, Limited Parnership. Titan has several units operating in Northern Lewisville, but had walked away from its Ingram project in Southern Lewisville, letting those leases expire.
Natural gas operator Titan Operating has said it is abandoning plans to drill wells in Southern Lewisville, where it had leased several hundred acres from 2008 - 2009. In a statement Friday, Titan's V.P. of Operations, Chris Hammack explained:
Titan was successful in leasing several hundred acres of Lewisville resident's minerals and had filed for multiple Ingram gas well permits. Initial development was planned from two urban drill sites. The initial drill site did not receive council approval and Titan withdrew its request for the letter of consent needed from the City of Lewisville for the second drill site. Titan was in negotiations on a third drill site when the company decided to suspend development efforts due primarily to low natural gas prices.
In 2008, the neighborhoods in Lewisville, South of Bellaire, and bounded by Old Orchard on the West, S.H. 121 on the East, and F.M. 3040 on the South began to be leased by Cherokee Horn, which was working with Titan to secure the mineral rights needed. The leases that Cherokee Horn secured were three-year leases with the option of a two-year extension. Many of those leases are expiring now, and many more will expire in June, three years from the date that Central Park Area Neighbors Association's almost 800 members had agreed to leases. Titan will not be renewing those leases.
Titan had planned two drill sites, one (The Ingram site) being on the Southeast corner of Corporate Dr. and Valley Pkwy, and the other (The B&H site) just South of Southwest Parkway, West of S.H. 121. The B&H site went before the Lewisville City Council for a permit, and was denied after record turnout by residents of the local neighborhoods. The Ingram site, even smaller, and more residential, was withdrawn by Titan after seeing the reaction to the B&H permit.
Titan had been looking at locating its wells South of F.M. 3040 on land adjacent to WPX's Cobb pad. That site was acceptable to most who had opposed the B&H and Ingram sites because it was not in close proximity to residential neighborhoods. WPX, (formerly Williams) had not received any opposition to the Cobb, Chen, and ACE sites South of F.M. 3040.
I just wanted to give a quick update on a couple of things related to gas drilling and production in Lewisville:
Stakeholders Committee Recommending No Gas Ordinance Change The Lewisville Oil and Gas Stakeholders Committee met today. As I've mentioned, the citizen members of that committee were myself, TJ Gilmore, and Neil Ferguson. Now that TJ and Neil are both City Council members who have actual voting power with regards to our gas drilling ordinance, they're off the committee for now, leaving just me, city staff, and a whole gaggle of industry folks.
We've met a couple of times in recent months to talk about a possible next round of changes based on recommendations from the Fort Worth air quality study. After talking things through in excruciating detail, taking into account current regulations and the limited powers of city government, our unanimous recommendation right now is not to recommend any changes to our city ordinance.
This of course doesn't mean I'm entirely satisfied that gas drilling is as clean and safe as it could be. It's just that we're at a point where we've just about done all we can legally and prudently do to ensure from the city's perspective that things are safe. Ironically, because of the area's federal ozone standards non-attainment status, additional regulations are in effect that help us out.
Still, the permit-by-rule that these gas pad sites operate under allows 25 tons per year of VOC pollution, with no more than 10 tons per year of any single hazardous air pollutant. I think 25 tons per year is too much VOC, and 10 tons per year is way too much HAP. But we're not allowed to specify lower limits than the state and federal government. If it's any comfort, most of the industry folks think the actual values turned in for their periodic calculations of emissions would come in lower. The gas under Lewisville is about as far East as it goes in the Barnett, and is very dry, so it doesn't come with the condensate or even much natural gas liquid that could make the pollution possible. The tools we have in our tool box for keeping people safe from emissions are the monitoring that will begin next year, our city well site inspections, and our setbacks.
I'm also still not happy about the long-term safety of the water table after fracking. I know there are multiple layers of precaution in place, but failures do happen, and there are cracks and faults in the Earth where migration between the Barnett shale and our aquifers could happen over time. Again though, it's really not an issue we can tackle locally. We need the science and regulatory power that the federal and state governments can bring to bear on the situation.
Water could be an issue next year Due to the drought conditions, we may have water shortages next year. Drillers could be affected if the city implements any kind of water usage curtailment plan. Any action on that will come from the City Council with input from city staff studying the options. I expect they'll probably discuss that at the February retreat.
Titan's Plans in Southern Lewisville Titan will be filing for a permit probably next week on their wells in Southern Lewisville. They'll drill just North of the Cobb pad that Williams has off of Spinks Ln. From there, they'll be able to reach all of the land they leased in Southern Lewisville ranging from FM 3040 on the South, and Bellaire Ave. on the North. Titan is letting leases expire for properties north of Bellaire. All other leases will be renewed. I expect that Titan would get a speedy approval from the City on their permit app, as long as everything submitted right.
Titan Operating, LLC. has filed an application for an exception from the state's Rule 37 to allow it to extract natural gas within 47 feet of the property line for Lewisville High School's Killough 9th and 10th grade campus in Northern Lewisville. Lewisville ISD had not been aware of the application, which was mailed to the district's P.O. Box in Lewisville, until today when Lewisville Planning and Zoning Commissioner Neil Ferguson spotted the letter while reviewing Railroad Commission documents on Lewisville gas wells.
Titan's Prologis SE 1H well has already been drilled, but Titan is waiting for the exception so they can frack the well and begin producing. Titan's initial permit from the Railroad Commission was for a bore path that was not within the 330 feet distance the state requires for unleased properties. But that path took the well bore within 3,000 feet of the Lewisville Lake dam, and the U.S. Army Corps of Engineers objected, based on worries that underground activity could affect the dam's integrity.
The bore path of the well, shown in the attached plat, puts the well at its closest point 47 feet from LISD property, and would drain natural gas from underneath the property.
In the Fall of 2010, the Central Park Area Neighbors Association (CPANA) Board of Directors responded to citizen concerns about the air quality effects of proposed gas drilling in Southern Lewisville by approving a study that would undertake some baseline readings of volatile organic compounds (VOCs) over the course of a full year. The study, which would hopefully (at the time) be concluded prior to the commencement of gas drilling activity would give an estimate of the amount of VOCs in the air before gas activity, in order to provide a basis for comparison after gas activity.
Results Summary Most of the volatile organic compounds detected in this study were picked up in quantities less than 0.1 parts per billion (ppb). The highest maximum concentration of any substance was only 0.49 ppb. The highest concentration for benzene in any given month was 0.27 ppb,well below the 1.4 ppb long-term effects screening level (LTESL) established by the Texas Commission on Environmental Quality (TCEQ). The highest monthly VOC load for any given sample was 1.81 ppb for all substances detected, and averaged only 0.82 ppb. Although the levels detected were very low, the data suggest a difference between the two general areasbeing surveyed, with one area showing about twice the VOC load. In any case, no compounds came close to any air monitoring comparison values (AMCVs).
We shot some video of Halliburton fracturing the Chen wells in Southern Lewisville over the weekend. A lot of people are curious what's going on, so we thought we'd film it and post it so you could have a look without having to walk over there:
I recently spoke at an event with a representative from the Railroad Commission of Texas (RRC), which regulates and promotes the Oil and Gas Industry in Texas. After dealing with the organization for several years, I have little respect for them as a tax payer funded organization, as do most of the people that have been forced to deal with them. When I was mayor of DISH, I tried for years to get the RRC involved in our situation, and they did nothing. They would not respond to our complaints, and if they did return calls, they certainly would not show up on site. When you call after hours or on weekends, the person who responds will likely not be from your area, because they only have one person on call for the entire state. I bring this up, because the RRC representative stated that they respond to every complaint, and that is simply inaccurate. I am not saying the RRC representative was lying, but he was inaccurate. It is possible that the suits in Austin are quoting some general written procedure that no one follows, or perhaps they really could be lying about the situation.
It is further disappointing that the Texas State Legislature failed to take action to help improve this situation during the 2011 legislative session. Texas has a wonderful idea, and that is the Sunset Advisory Commission, which was created to eliminate waste and inefficiency in government agencies. The Sunset Advisory Commission agreed with me and most of the people who know anything about the RRC. You can read the entire report here. The RRC is led by three elected commissioners, which are kindly referred to by some as the Moe, Larry, and Curly. The only type of oil and gas experience required for the commissioners is to pay close attention to what the industry lobbyist tell them, and properly accept the envelope of cash slid across the table to them. The Texas Legislature failed to do their job and get rid of this sacred cow.
I suspect the organization has been given a reprieve to the next legislative session to clean up their act. However, it is clear that they are not going to clean up their act, but rather send their PR folks out to tell lies and mislead the public. One thing that shocked is that the RRC employees are paid very well to do very little, and in the case of the employee who was on the speaking panel, he is paid almost $100,000.00 per year. Now remember that the Texas education budget was cut by four billion dollars but the RRC was fully funded.
Multiple sources with the City of Lewisville confirm that Titan Operating, LLC has withdrawn its request for permission from the City of Lewisville to drill closer than 500 feet to a city park for the Ingram site at the corner of Valley Parkway and Corporate Drive.
The item was removed from Monday's Lewisville City Council agenda and no discussion took place. Titan still has a permit application pending, and could come back to ask for the consideration again if they later felt that they had a better chance of it passing. We suspect Titan will look at other options for drilling under the Ingram and B&H tracts from alternate locations, though we've not gotten definite confirmation of that.
I'm trying to get a comment from Titan on their plans going forward. I'll update with more information when I get it.