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GAS DRILLING 101 STRAIGHT TALK FROM COMMUNITY LEADERS ON HEALTH, SAFETY & PROPERTY RIGHTS North Central Texas Communities Alliance.

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Presentation on theme: "GAS DRILLING 101 STRAIGHT TALK FROM COMMUNITY LEADERS ON HEALTH, SAFETY & PROPERTY RIGHTS North Central Texas Communities Alliance."— Presentation transcript:

1 GAS DRILLING 101 STRAIGHT TALK FROM COMMUNITY LEADERS ON HEALTH, SAFETY & PROPERTY RIGHTS North Central Texas Communities Alliance

2 LEASING DANGERS & FORCED POOLING FACTS : WHAT YOU THOUGHT YOU KNEW MATERIAL BY: TOLLI THOMAS North Central Texas Communities Alliance

3 Tolli Thomas Involved in Civic Volunteering in Fort Worth for 20 years. Established and serves as President of Wedgwood Square Neighborhood Association (SW Fort Worth) since Assisted to establish and serves as Spokesperson for The Southwest Fort Worth Alliance in 2008; a group of more than 25 neighborhoods, across two Fort Worth Council Districts, encompassing more than 8,000 acres and 25,000+ properties. Volunteer presenter of natural gas information and educational material to thousands of mineral owners, in cities facing development of the Barnett Shale and the Marcellus Shale Natural Gas Plays, in Texas and Louisiana.

4 Whats the Point? $$$ The Barnett Shale $$$ is a 5,000 mile, geological, hard, sedimentary rock formation, said to stretch across 17 counties from Dallas to West of Fort Worth, sheltering vast pools of natural gas or gaseous fossil fuel, comprised mostly of methane, ethane, & propane, holding an estimated THIRTY TRILLION cubic feet of natural ga$, worth trillion$ to the industry. Some predict that the Barnett Shale in the Fort Worth Basin has a commercial life of 80 to 100 years. It has been suggested that it will produce 94 trillion cubic feet of natural gas. The cost of energy, despite national reserves and imports from overseas, continues to increase. Developing the minerals that you own and sell to these companies profits the industry exponentially.

5 Money DOES NOT Change Everything! In 2008, Bonus monies or upfront money paid In full to mineral owners at the the time a gas lease is signed/executed reached as high as $30,000 per/acre. Many were blinded by this money to the hazardous contractual terms they were agreeing to as they signed away their mineral rights likely forever. Bonuses now have been industry capped at $1, to $6, per acre. Companies were/are miscalculating lot sizes and not including center of the street (including adjoining streets, alley, creek, highway or other common property) calculations in mineral owners leases, lowering not only bonuses paid but royalties paid for the life of the well. Whatever is noted in the lease is all you are entitled to. Many mineral owners did not realize that they would be paying income tax on their bonus and royalty payments, some incomes were altered just enough by these monies to interfere with some other financial benefits received from other sources (SS, SSI, College Grants, other Fed. Income).

6 Only the Industry is Getting Rich! The standard royalty (income received from production and sell of a mineral owners pro-rata share of the gas produced from wells only in which the mineral owner is included) in 2008, was 25%. Now royalties in many lease agreements have dropped to 20%. The industry norm is to ensure you receive the lowest valuation, based on the lower value of at the head or at market, whichever suits their profit margin. You SHOULD get paid how and what the industry gets paid. The industry lease allows heavy deductions from your share of revenue of their operating costs. These costs can include transportation, fuel, and market enhancement or other costs and can equate to as much as half of your deserved royalty. The Industry determines its costs without your approval and should bare their own costs, which they can expense.

7 Only the Industry is Getting Rich! The industry contracts out many of the services, of which your royalty will be deducted, to their own subsidiaries; the operating expenses they deduct from you, goes straight back into the their pocket. The industry contracts, with its own subsidiaries, are usually fixed and you will be deducted charges even if the service is not goes unused, including services claimed to increase the sale price of the gas to benefit you. The mineral owner will have to pay both a Severance Tax and Federal Income Tax on their royalty and soon will also owe an additional Tarrant County Tax.

8 Contractual Term or Life Sentence? The Term refers to the length of time in which the gas company is contractually allowed to drill and produce within. If the gas company does not begin production within this period of time, the contract is nullified. Primary Terms have been negotiated to as low as 12 or 18 months but in 2008, the usual Primary Term was 3 years. Now the industry is simply giving themselves extended Primary Terms in excess of 5 years. These longer Primary Terms typically negate the industrys requirement to pay a second Optional Term Bonus or need to renegotiate the lease, when the gas market may be sensationally more valuable.

9 Contractual Term or Life Sentence? The Contractual Term of the lease is tied to the definition of production, the Shut In term and the Force Majeure Clause. Production should be defined in the lease agreement as producing natural gas in paying quantities. Otherwise, bulldozing dirt on drill site land may be all that is needed to meet contractual terms and hold your lease indefinitely. Shut In Wells: A well that is drilled and capped and not producing is usually defined as a shut in well. If not limited (12 to 24 months at most is advised) a shut in well that never produces or pays can hold your lease indefinitely. Force Majeure gives the industry sanction to continue to enforce the lease under terms stated within the clause; suspends the industrys obligations temporarily. Force Majeure should only provide sanction and enforce the lease despite not meeting requirements of the Primary Term, if federal, state, or other governmental law, rule, or regulation prolongs permitting, provided application was timely filed at least 6 months in advance of expiration of the active term; OR if production is delayed due to an act of God. Force Majeure should NEVER be provided due to financial issues such as market failure, produced gas prices, or FAILURE to comply with legislation or ordinances. Force Majeure should also be limited to one year or less per occurrence and require industry lease adherence again within 30 days of cessation of the cause for invoking Force Majeure.

10 Other Contractual Failures: Most leases do not limit the industrys drilling to the Barnett Shale, to prevent deeper long-term exploration or to protect our aquifers. ~We wholesale thousands of gallons of clean water, at a discounted rate to the industry yearly, that becomes toxic and unfit for consumption after their use.~ We must protect our water. Most leases sell 100% of all minerals to the industry; some may be more valuable. Chesapeake has publicly stated it WILL begin seeking OIL from its Barnett Shale natural gas leaseholds. ~Natural Gas Leases should exclude lignite, coal, sulfur, other like minerals, geothermal, potable water, sand, gravel, uranium, fissionable materials or any hard minerals or substances of any type.

11 Other Contractual Failures: Most leases requires that you to warranty your deed, making you liable to return monies received if the industry determines that you do not own your minerals. The Industry should warranty the deed. Most leases do not protect you against mortgage company costs, which can range from $ to $2, if your mortgage agreement contains a subordination clause. The industry should cover these costs. Most leases do not limit loud, heavy, diesel, industry truck traffic on your residential streets.

12 Other Contractual Failures: Most leases not discuss or define security, fencing, aesthetics, or maintenance of the drill site. City Ordinance is not enough. Most leases do not determine the location of the industrys drill sites or their proximity to homes and schools. Reliance on City Government is not enough. High Impact Drill sites are frequently approved, usually despite surrounding neighborhood residents objections. Most leases contain no language regulating nuisance, health, and environmental impacts and only rely on government oversight and penalty, which contains many loopholes; the industry can ask for exception to civic ordinances as they wish.

13 Other Contractual Failures: Most leases allow the industry to use standard diesel generators and compressors on site. Most leases do not promise any odorizing the gas, to warn and protect from leakage. Most leases do not determine compensation for those who are more heavily impacted by drill site locations, who are closest to drill sites, lowering property values, raising homeowners insurance costs, and impacting quality of life, health and safety.

14 Other Contractual Failures: Most leases do not limit or dictate terms of compression stations and equipment and do not require compressor stations and equipment to be housed in solid, standing structures to reduce fumes, sound, and unsightly aesthetics or allow for compressions stations too near to homes and schools. Most leases contain direct or contradictory language that allows surface rights use even when the lease might say No Surface Use sometimes by allowing the company permanent easement rights, which the industry may use to conduct seismic or to place pipelines.

15 Other Contractual Failures: Most leases will allow the industry to pool or include your mineral interest, or to release or refuse to develop, or to sell or assign or trade your lease subsurface partially, which limits not only the income you might be able to receive, but your ability to ever completely exit your lease agreement or contract. A lease should commit to do all of the above in full. Many leases do not hold the industry accountable with full or total one-way indemnity in case of accident, injury, death, or property destruction. Many leases do not give you financial auditing rights.

16 Other Contractual Failures: Most leases do not require that the industry use lower impact, more environmentally safe equipment such as natural gas powered or electrical equipment rather than diesel equipment. What is the use of producing clean burning gas if we destroy our air and water obtaining it? Many leases do not hold the industry accountable with full or total one-way indemnity in case of accident, injury, death, or property destruction.

17 Other Contractual Failures: MOST LEASES, AGAIN AND AGAIN, FAIL TO DO ANYTHING TO PROTECT YOU. THERE IS NO SUCH THING AS FREE MONEY AND THERE IS NO SUCH THING, TODAY, AS SAFE DRILLING. THERE IS ALWAYS A COST AND A RISK TO SIGNING A NATURAL GAS LEASE. ALL YOU HAVE TO PROTECT YOU IS WHAT YOU SIGNED ~ THINK TWICE!

18 Why should I WAIT and NEGOTIATE? Though the County may consider your property more valuable due to mineral production, market value reflects lower home valuations. Do everything you can to protect your property values, your quality of life, your safety, health and future even if it means NEVER signing a lease. We have to live with the many long-term consequences of this decision, the gas companies do not. Your home is the largest and most important financial investment of your lifetime, why would you essentially sign it away for a few thousand dollars, unless you are sure that you are protected first. Diminished safety and health are not worth the nominal money you may make from signing a gas lease. Safe children and healthy children for generations to come are PRICELESS.

19 High Impact Waivers: If a well is within 600 feet of a Fort Worth Ordinance defined Protected Use Property, including a residence, religious institution, public building, hospital, school, or public park, the well is classified as a high impact permit. All high impact permits, without a waiver from the protected use property owners, must be approved by the city council after a public hearing. You are NOT required to sign this document and should be very careful not to sign such a document by misrepresentation or error.

20 2008 Fort Worth Waiver & Info.

21 FORCED POOLING FACTS: NOT ALL FORCED POOLING IS EQUAL! The Texas Railroad Commissions August 2008 Finley Decision VS. Applications for Exception to the Texas Administrative Codes 330 Foot Rule

22 FORCED POOLING FACTS: You may be hearing a lot about "Forced Pooling". More thank likely, you are going to hear this term more often. Many un-leased mineral owners have reported that land brokers have threatened You can either sign this lease or be forced into a pool, never get a royalty, and get a bill for the cost of drilling". This simply is NOT accurate or true. Dont be scared into signing a lease that doesnt protect you.

23 FORCED POOLING FACTS: Forced Pooling, which is also referred to as Rule 37 of the Mineral Interest Pooling Act (MIPA) of the Texas Natural Resources Code; Chapter 102, of the Texas Administrative Code, was established by the Texas Railroad Commission in 1965 for reservoirs discovered after 1961, giving severely limited parameters for forced pooling (there is NO compulsory unitization in Texas). Rule 37 was established as a protective tool to "prevent waste", and protect "correlative rights" of owners in a common reservoir. If an operator lacked the necessary acreage to comply with the rules established by the Texas Railroad Commission (1930's), which dictated well spacing and density, the operator had to voluntarily pool additional tracts or leases to form a single unit in compliance with the applicable spacing regulations. This rule has served as a protective measure for mineral owners refused from participation in encroaching pooled units; the owners of un-pooled property who wished to be voluntarily pooled, have been historically successful by filing an application under this rule to be included in an operator's pooled unit. There are additional regulations and mandates associated with this Rule that further enforce it as well.

24 FORCED POOLING FACTS: FINLEY: 2007: Finley Resources, Chesapeake Exploration, Dale Properties and Dale Resources had leased acres of acres that expanded over 300 separate properties. The Texas Railroad Commission's review process took more than one year. Mineral owners in this case did not receive a bonus, however, when the TXRRC made its decision to favor the industry lease in August 2008, they were granted not only a 20% royalty (like that being offered by brokers now) but additionally a full 100% Working Interest Ownership of the remaining 80% of their mineral interests production after their proportionate shares of drilling expenses were deducted from their 80% Working Interest profits. It was estimated these owners, forced into a pool, may see as much as 60-65% of the value of production for their properties. Once expenses are covered, these Working Interest Partners could see a full 100% of their mineral interest. Mineral owners forced into a pool have another advantage, they have not signed away any property or other rights through a lease that is written to favor the operator and greater oversight and control over what takes place on and to their own properties and over review of financial records. Perhaps you have been told by a broker, that so many costs and deductions will be taken from your Working Interest return that you won't see more than a few dollars. As a Working Interest Partner in Texas, you would have greater financial auditing oversight than persons signing most leases; any unlawful or excessive deductions could be located and mitigated as a result of an audit.

25 FORCED POOLING FACTS: APPLICATION FOR EXCEPTION TO THE 330 FOOT RULE : Since the August 2008 Finley Decision, companies have been looking for a way around the cost & inconvenience of dealing with Working Interest Partnerships. Now, industry is applying to take some minerals, but under a different section of the Texas Administrative Code, that prevents them from compensating and paying mineral owners for the minerals they take. Recently, companies have applied in some areas, for an exception to the 330 Rule that dictates to the industry that they cannot drill within 330 of an un-leased property's property line. If the Texas Railroad Commission allows this and find in favor of the industry, they will be able to legally violate the 330 rule, drain your minerals by "Rule of Capture, regardless of your being un-leased, and not compensate you. This is nothing more than legal property theft! BUT in can be fought. If you receive a letter indicating that a company has applied to "Force Pool" you or applied for exception to the 330 rule, you must protest by letter before the deadline stated in your notice ; you'll also have the right to appear or have someone appear for you in front of the Texas Railroad Commission in Austin to protest the application in person.

26 Expiring & Renewing Leases: If you are leased and your lease is expiring and you've been contacted regarding renewing your lease or have received information by mail, proceed with caution. If you receive a check and renewable lease by mail and choose to cash that check, you may be committing yourself to the lease that came with the check or that is referenced by an accompanying letter, without realizing it. One story relayed, a woman received a letter and a standard, unfavorable lease agreement, along with a check for $1.00; obviously an unfair offer for minerals. If she had deposited or cashed that check, even if she simply didn't understand the situation, she may have found herself bound to a poor agreement for the low price of $1.00. Please use caution and ask questions. If your mineral lease is expiring and you aren't happy with the offer you are receiving, you have the right to simply not lease again until a fair offer comes around.

27 HOW WE GOT HERE… NATURAL GAS DRILLING THE BARNETT SHALE MATERIAL BY: GARY HOGAN North Central Texas Communities Alliance

28 Gary Hogan President of Chapel Creek NA (10 years) Activist on Gas Drilling Issues (since 2005) when drilling came to my neighborhood. No mitigation or evident controls. Fort Worth Gas Ordinance Task Force Drilling (2006/ 2008). Volunteer presenter to over 50 HOAs, NAs and Civic Groups across the North Texas Barnett Shale region. Consultant to other activist organizations throughout USA. WHY ? Because now we are all fighting the same issues Urban & Rural all over this country. My Pleasure to be serving with the NCTCA

29 How It All Began: A Brief Barnett Shale History Barnett Shale discovered over 50 years ago Unattainable until mid 1990s Mitchell Energy Horizontal Drilling & water based Fracing Began in rural Wise and Denton Counties Urban Encroachment Land Development collides with Drilling Activities Public Concerns and Complaints Noise, Dust, Truck Traffic Gas Industry Learns Barnett Shale Gets Better as they move toward closer to Fort Worth.

30 Texas Split Mineral Estate / Rights Texas: Allows a split mineral estate in that a surface land ownership may be separated from any mineral interest, whatever it be, beneath the surface. Under Texas law long established, the mineral interest is superior to the surface land owner. It is well settled in Texas law that the mineral interest is the dominate estate in land and as such, carries with it as a necessary appurtenance there to, the right to go in and upon the surface of land in order to produce the mineral interest. In condemnation proceedings wherein the surface and mineral estate have been severed and the mineral estate is reserved unto the condemner together with the common right law to use the surface estate, such mineral estate is the dominate estate and condemner common law right to use the surface estate has superiority over and priority over any purposes that the condemner desires to use the surface.

31 Law and Legislation Texas Split Mineral rights law was used as the reason that The City of Fort Worth could not unreasonably interfere in the citizens right to access their mineral interest. Although there are arguments in dispute. The city would be sued by its citizens an action called a Taking, If they enforced a no drill or zoned out drilling. Municipality Police Powers: Municipalities in Texas have, under state law and police powers, authority to regulate the drilling for oil and gas within their corporate limits, when acting for the protection of their citizens and the property within their limits looking to preservation of good government, peace and order within. Municipalities have the right to protect the health, safety and welfare of its citizens. We never did an Independent Environmental Study to see if this activity would harm our Health, Safety or Welfare !

32 Reactions 2002 to 2005 City of Fort Worth – First Major City to face Urban Gas Drilling First Ordinance 2001/2002 Attempts to address issues : Permitting and Setbacks by Well Classifications Rural greater than 1,000/Urban Greater than 600 High Impact less than 600 Nuisance Abatement : Noise and Dust Safety Relying on existing RRC & Industry standards. Ordinance considers Industry Recommendations 600 setback; never closer than 300 to residences ? Note the minimum Setback then was 300 and not the 200 now allowed by waiver

33 2002 Ordinance Preface Whereas, the City Council deems that drilling and Production of Natural gas within the city limits without comprehensive regulations could affect the health, safety and welfare of its citizens……. No One then Considered doing an Environmental Impact Study on the affects to our Already Non Attainment Status Air Quality ! **************************************************************** Recent quotes from City Council regarding Trolleys but not Gas Wells: Whatever we do without Vision....People Perish. from Proverbs Councilman Jungus Jordan 23 Feb 2010 regarding Trolley System. Sending in FW, We are rushing to judgment and must be deliberate and proceed with expertise. Councilman Carter Burdette 23 Feb 2010 also regarding spending for Trolley System

34 Major Leasing Initiative by Industry 2004 ~ 2008 Neighborhoods under attack by land men for leases Less than Ethical behavior and practices by land men Common deceptions Lie: You will make a lot of free money Truth: 25% royalty no chargeback lease yields $25.00/$50.00/month Lie: Everyone but you has signed a lease or waiver to drill Truth: They told your neighbors the same thing ! Lie: You cant stop it, we will do it anyway. Truth: They could only do it if the majority agreed. All Neighborhoods not treated the equally Economic and Social Class Neighborhoods organize together to negotiate leases. Just Say No would have been the best alternative

35 What we werent told & didnt think about: Well Sites are seldom just one well and once Industry is in it may mean up to 20 wells on a pad with constant activity. Barnett Shale wells will need reworking, re-drilling and re- fracing at regular 3 to 5 year intervals. Non Stop activity. Drilling NEVER ends; wells will be re-fraced every 3 to 8 years to increase production when production falls off or decreases. Wells mean gathering pipelines to get gas out of neighborhoods and between wells; gas operators can take easements by Eminent domain. We dont share or play nice with even those in our own business. So we have our own. Gas Wells mean Compressor Stations big and small that run 24/7 and can emit LFN low frequency noise, which can cause Vibro- Acoustic disease and VOC emissions. All Gas Drilling and Production can produce VOCs and Toxins

36 What we wish wed known then: The Industry will manipulate any rules to suit them. Industry was exempted from all federal environmental acts, Including Clean Water and Clean Drinking Water Acts. We would be subjected to ruthless leasing tactics. That our neighborhood may be so severely impacted to cause property value and quality of life depreciation. That you need a subordination of lease agreement to lease your mineral interest from your mortgage company before you get a royalty check. Estimation that less than 50 % of current leases have got an agreement with their lender which may hold up their royalties. Homes in close proximity of wells may cost more to insure or insurance may be refused or difficult to find. The Gas in these gathering lines is un-odorized raw, wet gas and corrosive gas.

37 2006 & 2008 Fort Worth Ordinances 2006 : Ordinance comes about from increased complaints and concerns as Gas drilling breaches inner city. Noise/ Lights /Security / Landscaping and Distance to residents still remain major issues. Task Force Initiated to recommend setbacks, well classifications truck Access, Compliance for Violations and permit fees to assure adequate staffing. Many other cities copy Fort Worth Ordinance. *Realization that Rural areas in Counties have No such regulations and Surface Land Owners both mineral owners and non mineral owners are experiencing problems with industry over surface land damage, water problems : Leasing in full swing Urban drilling expanding all over city and surrounding cities. Realization of ancillary infrastructure needs. Compressor stations and Pipelines. Eminent Domain issues as threat of Pipelines through neighborhoods for gas gathering lines. Increased Truck Traffic and use of Residential streets for such traffic. Roadway damage becomes issue. Noise is still a problem. Low Frequency Noise, Environmental Concerns are raised. City Council ignores Minority Report, FWLNA recommendations and Dr Al Armendariz report stating need for Environmental Air and Water Impact Study

38 WHERE ARE WE TODAY? Intended/Unintended Consequences Ordinances with Industry supported Loop Holes Truck Traffic : Gas Vehicles in excess of 3 tons must use commercial truck routes or commercial routes WHEREVER CAPABLE of being used. OK so they can use residential streets with 80 ton water trucks wherever they are not capable. These trucks are tearing up residential streets and county roads all over the region and remains a major problem. Waivers to drill less than 600 ft from a protected use : In FW 100% waivers are required to drill from all residents / property owners within 600 ft of a single well or 600 ft from a Multiple Well Pad Site OR APPROVAL OF CITY COUNCIL who can essential allow it with no waivers and have at 30 % of the waivers. Aussie Site An operator has the option to file for Multiple well Pad site permit or One Or More Wells to evade the distance required to meet waivers Page St. How many wells does it take to require a Multiple Well Site ???

39 WHERE ARE WE TODAY? Intended/Unintended Consequences Waivers that are required to be submitted with permit application are not authenticated by anyone on City Staff. We trust the operator to us tell the truth (?) Environmental Reduced and Green Completions FW 2008 Ordinance Written directly from Industry recommendations, In spite of recommendations made by Minority Report, FWLNA from multiple public input meetings & Dr Al Armendariz report All Wells that have a sales line shall be required to employ reduced emission completion techniques and methods BUT operator may request a variance from gas inspectors office when they believe that these methods are not feasible or would endanger safety of their personnel or the public ? Not Required All wells prior to July 1, 2009 or any First permitted well on a pad site. Flaring of Wells allowed will be allowed as an alternative to venting but not closer than 300 ft from residential building.

40 What we were told we couldnt change : Pipelines and Eminent Domain We must demand our legislative State government to stop these abuses and imbalance in the system or Carter Avenues issues will become the norm. Municipality Authority in ETJs and County Even the manipulated regulations in cities is not afforded to citizens in the County. Legislative changes are needed NOW.

41 Independent Air Quality Study City of Fort Worth City Council agrees to Independent Air Quality Study, February 2010, after revelations of other studies cause concern. What is independent about a study with a committee which includes Industry representation in decision making positions? Both Task Forces where similarly unbalanced and biased. What about a full EIS including water resources ? WHAT IS NEXT ? We Hope a Loud Voice from ALL North Texas. Past lack of protection of our Health, Safety and Quality of Life is NOT GOOD ENOUGH !

42 SHALE BED GAS FIELDS: IMPLICATIONS FOR SURFACE USE WHAT GAS DRILLERS DIDNT SAY & WHAT CITY OFFICIALS DIDNT ASK. MATERIAL BY: JERRY LODBILL North Central Texas Communities Alliance

43 Jerry Lodbill Background Information

44 The Facts… Aubrey McClendon, CEO of Chesapeake, recently said that Chesapeake currently has only 15% of the necessary wells to produce the Barnett Shale, and expects to increase drilling in Fort Worth soon. Estimate: FW now has only about 30% of the wells it will eventually have at full and complete extraction and development. What is required to turn a town or city into a producing urban gas field? This process and all it implies was known to industry when the industry recruited Candidate Moncrief to run for Mayor. The industry never revealed its plan and Mayor Moncrief (the City of Fort Worth) performed zero due diligence before partnering with the industry to git er done here. It didnt have to happen here and it doesnt have to happen in your town.

45 One Pad, Many Wells The shale underlies about 23 counties and will be produced from multiwell pads. This drawing shows 5 wells all with laterals going in one direction. There would be 5 more going in the opposite direction. This arrangement can produce all the gas under about 340 acres more or less. To get all the gas you have to space these units touching so that no part of the shale is not tapped. See the fracked part of the shale around each lateral.

46 Ideal Gas Field Layout Gas field pad units laid like a brick road Long axis is NW to SE here A pad unit is 4000x8000 ft (CHK)- As large as 5000x10000 ft feasible One drilling pad per unitdead center So you can see that these drilling pads must be placed fairly regularly or you will miss part of the pay zone. They knew this from the get go

47 Example: DFW Airport Just to see how it works in actuality heres the layout of the DFW Airport where there were few impediments to regularity This layout has a drilling pad for each 341 acres. To get an idea how close these things are, note that this corresponds to 15 pads per MAPSCO page!!! Now lets look at whats on each pad.

48 Separators The tall towers are separators that remove entrained water solution and most of the the higher carbon compounds such as pentane, hexane and heptane, benzene, toluene, xylene, and carbon disulfide. Each well has its own separator. The wells produce their product at around 650 psi and at a temperature of around 120 Fahrenheit. The separators operate at about 250 psi and send out three product streams-- 1. Gas out 2. Produced natural gas liquids 3. Produced aqueous solution containing many of the hydrocarbons in small amounts. For example, 0.8 g/liter of benzene.

49 Tank Battery The liquids are piped to the tank battery, two tanks per well, usually. These tanks are vented to the atmosphere and emit nasty chemicals. The tanks must be emptied at least once a day, and 80,000 gallon trucks service these tanks. The produced aqueous solution is disposed of and the natural gas liquids (NGLs) are taken to a processing plant.

50 Lift Compressors As the wells age the well head pressure decreases exponentially with time. Sometimes lift compressors are used to suck the gas out during the last period before refracking takes place. These compressors are extremely loud and emit VOCs and NOx from the diesel exhaust. They also are notoriously leaky. Refracking will take another 4-5 million gallons of fracking fluid per well with all sorts of undisclosed nasty chemicals in it. This can be expected to happen every 3-4 years during the life of the wells.

51 Typical Maps Suppose you were on your city council when the drillers came to call. What would you have thought if drillers had told you this sort of density of pads would be required in every zoning category in town? I calculated 7 pads per page, but the DFW Airport has twice that many pads per page!

52 Pipelines, Processors & Compression OK, now lets talk about another subject the drillers didnt mention and the city didnt ask about gathering pipelines. Just as an overview– the drilling pads are at the top left. Flow lines take the gas to the edge of the pad. There the gas goes into the gathering line (here a 16 inch 250 psi line). The gas is wet with water vapor and contains CO2 and perhaps H2S that makes the gas acidic and the most corrosive form of natural gas. These pipelines have been known to corrode through in 3 years. The gas gathering lines go to processing plants where dehydration occurs, usually with triethylene glycol. These plants vent contaminated steam. Next comes a compressor station with all the noise and leaks these are notorious for, and the gas is compressed to 1200 psi and injected into a transmission line that may carry the gas over 1000 miles. Then we get to the city gate where the gas pressure is decreased to about 40 psi and odorized. By the time the gas reaches your home it is at a pressure of about 6 ounces per square inch.

53 Types of Pipelines Gas gathering: <500 psi (unodorized, wet, raw) Transmission: >1200 psi (unodorized, dry, processed) Distribution: <40 psi (odorized, dry, processed) There are three types of pipelines. We are concerned with distribution lines from ATMOS and well drillers gas gathering lines that here will be about 16 inches in diameter and at about psi.

54 Raw Wet Gas Bubbles up through fracking fluid remaining in well Contains 100% humidity Contains low carbon chain alkanes, benzene, mostly methane Contains CO 2 and H 2 S (makes acid with water) Colorless, odorless, tasteless Gas gathering lines transport the most corrosive form of natural gas, called raw or wet gas. This kind of gas has been known to eat through a pipeline in 3.5 years. It is odorless, tasteless, and invisible, and will be at psi.

55 Lifecycles of Gas Wells & Gathering Lines Leasing, drilling, gathering line construction – razzle-dazzle Production decreases exponentially with time Original operators monetize assets and move on – 5 years from start Bottom feeder operators dont value public safety This slide suggests what will happen as the gas field ages. Safety gets short shrift. At this time we are still in the first phase in Fort Worth, but already Chesapeake is talking about drilling more wells.. As processing plants and compressors age they also will increasingly leak.

56 Regulations Regulations do NOT imply safety. Regulations are the result of a tug of war between profit and safety. Profit interests are strong Regulations are only as good as the enforcement budget – always a struggle. The industry and our city government pretend that theyre going keep things safe through regulation. Would you live next door to a fireworks warehouse if the government promised youd be safe as a result of regulation? The only safe way is to keep these gathering lines away from people. And please...dont say but.... Theres no but to it. So...weve seen the bad and the ugly about making a town into a producing gas field. Lets review what material facts were omitted by the drillers and not uncovered by the city fathers.

57 Material Facts Omitted (1) Density of drilling pads Number of wells Need for Pipelines Eminent Domain No setback on pipelines Refracking needs Vented emissions Whoops! In addition to the maze of interconnected drilling pads and the gathering lines going everywhere there was no talk of eminent domain and how they dont even have to keep the pipe away from your home. Nor did they tell that their eminent domain powers dont require any sort of disclosure of appraisal or anything. No control by any authority. The condemned is powerless.

58 Material Facts Omitted (2) Need drilling pads & pipelines in residential zoning 3,000 wells + pipelines =2 Significant Incidents per year Zoning power, public health, safety concerns are legal protection for the city. So why didnt the City do due diligence to find out about the dangers to safety and health of citizens? Why are there more restrictions on sexually oriented businesses than on the gas industry? In Fort Worth the City claimed it had no power to deny people their mineral rights. It ignored its own zoning ordinance that confined all natural gas operations to heavy industrial zoning for a number of years and then rewrote the ordinance to eliminate reference to the gas industry. This was dereliction of duty. THERE IS NO DELICATE WAY TO PUT IT.

59 Avoiding Fort Worths Fate: Be sure zoning restricts heavy industry to specified zones Deny drillers permission to sell mineral leases in the city on the basis of health and safety under police powers Deny pipeline ROW crossing city streets on basis of health and safety Your town can avoid all this fraud and endangerment. Heres how…

60 NORTH CENTRAL TEXAS COMMUNITIES ALLIANCE


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