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November 28, 2012


XTO Energy’s proposed zoning changes could lead to natural-gas drilling on city of Dallas land


Environmental Writer

Published: 27 November 2012 11:21 PM

The uneasy quiet that seemed to settle over Dallas’ potential natural-gas fields has been broken.

ExxonMobil subsidiary XTO Energy, which had put its plans in Dallas on hold while the city considered new rules on gas operations, filed applications for zoning changes that would authorize drilling at city-owned Hensley Field, the former Dallas Naval Air Station.

The filings, as well as others expected in the next few days from XTO or other companies, came about two weeks after gas producers received a letter from the city attorney’s office asking them to state their intentions — whether they still meant to drill if allowed, or were ready to abandon their plans.

The letter apparently started a rush to City Hall as companies sought to preserve their options.

XTO leased mineral rights for the Hensley Field land from the city in 2008, part of a $34 million package of deals Dallas made with XTO and another Fort Worth company, Trinity East Energy.

The lease payments have complicated the city’s efforts to chart a course on regulating gas drilling. Since mid-August, the council has met with the city’s attorneys at least three times to work out its legal position in light of potential lawsuits.

XTO’s latest requests are apparently on a fast track, headed to the City Plan Commission at its regular Dec. 6 meeting and to the City Council in January or February.

A new, tougher Dallas drilling ordinance is in the works but has not been approved or even published for review, so the existing ordinance would govern the XTO applications, based on the city’s legal view that one set of rules should apply throughout the process.

The council could vote the requests down, approve them with conditions or buy time by delaying hearing them.

That last option seems increasingly unlikely. Council member Scott Griggs, whose district includes the proposed drilling sites, said swift decisions are called for.

“It’s in our interest to protect the citizens, and it’s in the interest of all involved to give these thumbs up or down,” said Griggs, an advocate of stricter rules.

“Everyone deserves their day at the [plan commission] and before the horseshoe,” he said, referring to the council chamber’s semicircle of member seats. “Sooner rather than later.”

XTO’s latest requests, filed Nov. 16, propose five specific-use permits that would change zoning to allow drilling at the airfield on the south side of Jefferson Boulevard.

XTO said it filed the applications in accordance with the terms of its lease with the city. The company can propose potential drilling sites at the airfield and is allowed to use up to three sites. The lease lets the city pick the ones XTO would use.

“These permit applications are in line with our initial proposal to drill and complete gas wells pursuant to the terms of our lease agreement with the city, which allows for XTO to establish up to three pad sites on certain tracts of land covered by the Hensley Field lease,” company spokesman Jeffrey Neu said.

Zac Trahan, Dallas-Fort Worth program director for the Texas Campaign for the Environment and a backer of tougher rules, said he fears the Dallas City Council might be on the way to approving bad permits and making bad policy along with them — such as amending the existing ordinance to allow drilling in floodplains.

The XTO applications at Hensley Field do not involve floodplains, but other potential sites in the city do.

No indication of a floodplain-drilling amendment has emerged, but Trahan said any such move must be stopped.

“If this is really what is happening right now, it is clearly unacceptable, deplorable, appalling and all the colorful language I can think of,” he said.

Under the city’s process, if the council approves any of the newest applications, XTO could then seek permits for actual drilling. Issuing those is a staff procedure.

But even with all the needed approvals, XTO might not start drilling right away.

U.S. prices for natural gas have been at or near record lows since mid-2009, and many companies have postponed the expensive processes of drilling wells and linking to pipeline networks in hopes of a price rebound.

Gas companies are lobbying for the federal government to approve exports of U.S. gas to energy-poor Japan. Experts say that would boost prices in the U.S. — both the incomes of producers and the utility bills of consumers.

In that sense, XTO might be best served if the council did nothing on its applications so the company could instead seek a renewal of its city lease, standing pat until prices rise.

A lease renewal, however, could be far from assured even if XTO offered more money.

The city’s acceptance of gas-rights payments more than four years ago put a spin on the council’s efforts to rewrite its drilling ordinance to provide greater protection for neighborhoods, schools and other uses.

The council could just turn the applications down — especially any that are nearest to neighborhoods or other conflicting land uses — and possibly send XTO to the courthouse.

Or it could approve the applications for sites most to its liking. In a twist of fate, that could force XTO to do something it might not want to do: drill quickly enough to achieve commercial levels of gas production by Oct. 13, 2013, or lose its lease.

With gas prices low and industry enthusiasm for new Barnett Shale wells in a slump, drilling now might not be the company’s top choice.

One Comment leave one →
  1. November 28, 2012 6:21 pm

    OR the City Council could just do the simplest of things and vote next week (isn’t there a meeting on Dec. 5th?) for a Moratorium Ordinance on acceptance of gas drilling permits until the new Gas Drilling Ordinance is approved. Grand Prairie had the good common sense to do that two years ago.

    Seems Dallas would have a little of that good common sense, too.

    Oh, and the City of Grand Prairie received lots of bonus money from Chesapeake for leasing city property ($14.5 Million in 2008) but that didn’t prevent Grand Prairie from having these Moratoriums after they realized the Gas Drilling Ordinance was weak.

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