This is a developing story. At this point, we want to get as much information out here as quickly as we can, so we can begin to ask the important questions - as a neighborhood, and as a city.
A neighbor came to me today and informed me that in the northeastern part of my precinct, folks had been approached by a drilling company, Cherokee Horn Energy, LP with an offer to lease the minerals under their property.
My neighbor heard from one of his other neighbors that the drilling would be done "behind the wooded area" in Central Park, which is Lewisville's little urban forest area, surrounding Timber Creek.
Cities all over the Western side of DFW have seen drilling in recent years in a massive natural-gas bearing formation known as the "Barnett Shale", approximately two miles below us, and ending somewhere around I-35E to the East.
There are several problems here:
1. Central Park is worth protecting - not just the trees, but the wildlife and the tranquility. 2. The minimum setback for drilling is 400 feet from a dwelling, but even that is paltry. If you draw 400 ft radii around dwellings, you see that there is some land to the east of the park, between the park and SH 121. 3. The leases being offered don't sound very good, and the terms greatly favor the lessee (driller).
Lewisville's Oil and Gas Ordinance will not allow drilling within 800 feet of a residence without approval from the City Council. The Texas Railroad Commission, I believe will not allow closer than 200 feet. Both distances are still too close, given the noise and air pollution.
The drilling company is acting as if this is a done deal, but today was the first I've heard about any drilling plans for Lewisville. For all I know, this could have been in the works for months. I don't think I would have missed a City Council approval for drilling that close to residences.
Updates are posted below: Update #1: According to the Texas Railroad Commission's GIS maps, ATMOS has two natural gas pipelines that cross Timber Creek, on the west side of S.H. 121, one 16 inch, and one 12.75 inch. But these are for processed gas, I believe.
Update #2: Here are some of the documents. Click to view full-size:
Q.What rules are in place to prevent wells from being placed too close to my house or becoming a nuisance?
A. The Lewisville City Council adopted an ordinance in 2006 that establishes certain restrictions on the location, appearance and operation of gas wells within city limits. Companies will be made aware of those restrictions when they apply for a drilling permit. Some specific restrictions include:
No well can be drilled within 400 feet of a residence, church, public building or park, hospital or school
Drilling sites must be surrounded by a fence between 8 and 10 feet tall
Landscaping and irrigation is required along all street frontages
On-site operations (other than automated drilling) can only be conducted between 7 a.m. and 10 pm.
Noise from the site cannot exceed 78 decibels at a distance of 300 feet (there are some specific rules for various sound sources listed in the ordinance)
For more information on well-site restrictions, please review Ordinance 3329-04-2006 (available through the city website at www.cityoflewisville.com).
Lets look at some pros and cons of gas drilling here in town: Pros: - Free $100 gas card for some - Paid-up lease compensation as cash signing bonus. (Below market rate) - 20% royalty - $1 per year shut-in royalty. (If the well is not producing) - Addition to the property tax revenue, and royalties for the city for city minerals.
Possible Cons: (in no particular order) - Not getting paid enough - Destruction of trees and open area. - Possible water table contamination - Possible contamination of streams. - Toxic sludge pits that may overflow if it rains. - Eyesore of the drilling rig, then the finished well and its storage tanks - Dirty air from diesel drilling rigs with no emissions controls - Fire / Explosion danger to residents and firefighters - Produced hazardous waste, including hydrocarbons, saltwater, and naturally occurring radioactive materials (NORM). - Extreme noise pollution during drilling. - Light pollution at night - Eminent domain condemnations for pipelines and roads - Damage to local streets from heavy drilling equipment. - Added risks from pipelines crossing residential areas - Loud compressor stations - Possible difficulty selling your property due to title problems. Fannie and Freddie apparently are rejecting some loans with active leases. (Says my friend in the mortgage biz)
Update #4: First, there is another Lewisville organization trying to get a neighborhood organized to get a better price and ensure environmental protections: The Summit Area Neighborhood Association
I went with a couple of neighbors and spoke to the land men today. The two proposed drilling locations are to the Southeast of the Timber Creek neighborhood, which is east of Valley Parkway. The other is bounded by S.H. 121 on the East, and Central Park on the West. Each site will have multiple boreholes, and each bore hole will have 6 horizontal run shooting out from it underneath Southern Lewisville neighborhoods.
Proposed Drilling Locations:
These locations are not to scale, but they're situated where I was shown.
What neighborhoods are involved? Draw a 1000 foot radius around each drilling location, and those neighborhoods and property owners are definitely involved, if they own mineral rights.
Now draw a 2000 foot radius, and those properties are most likely also involved. These wells will be drilled approximately 2 miles deep, then horizontally from the bottom of the vertical shaft, probably 6 horizontal runs in each, extending 1000 to 2000 feet.
For a rough estimate of the area, to be drawn from these wells, you might consider the area bound by FM 3040 on the South, S.H. 121 Business on the East, Bellaire on the North, and Old Orchard on the West. Of course, I've described roughly a square, but really, the shape will be defined more by geology.
What is the offer? What we're hearing right now is that for those who own 100% of their mineral rights, on a typical lot of about 1/10 acre, it's a $500 signing bonus, plus a 20% royalty after transportation costs. At this point, we are not sure when the signing bonus gets paid.
At the moment, they are saying they are not making deals with individual mineral owners for higher royalties or bonuses. They are however offering some extra money in exchange for putting up a sign in your yard for "peer pressure".
When did the City of Lewisville Permit these Wells? They haven't yet. No permits have been applied for yet, because the drillers are trying to determine how much acreage they can pool. The egg has to come before the chicken here. Because the sites are in such close proximity to residences, and because so many trees will have to be taken out, it is almost assured they will have to go before the City Council for approval, and ask for variances from set backs, and to work out routes for the truck traffic.
Other wells in Lewisville? Sometime prior to 1977, there were a couple of wells drilled that turned out to be dry holes. These are located in the Valley/Vista neighborhood along Cassion Dr., in the backyards of residences. Presumably they were shut-in, but it cannot be guaranteed they were properly cemented. This can pose a danger, as was demonstrated recently in Ohio.
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Anonymous
Posted: 2008/8/17 6:48 Updated: 2008/8/17 7:18
Get your neighbors organized NOW, TODAY
1. Make a flyer and distribute it today. The drilling company uses landmen to intimidate mineral owners into signing. They create an urgency so people will sign bad leases and will not be fully informed.Tell them not to sign. I'm sending you the name of an oil & gas attorney who negotiates for mineral and surface owners. He's good. He can negotiate you a lease on YOUR terms. If some sign prematurely they will be screwed.
2. Educate your neighbors that the drilling is only the beginning. They will have to run a high pressure pipeline to transport the gas. Because Perry vetoed the eminent domain bill last session, private oil companies can use ED to sieze your property for pipelines. They can run these pipelines through your front yards and they are very dangerous. (See what's happening in Ft. Worth.) The unprocessed, highly corrosive wet gas is more dangerous than the gas Atmos runs through their pipelines.
They will have to put a compressor station somewhere. LOUD!
There will be a never-ending stream of trucks haulig the contaminated drilling waste and 100 barrels per day of toxic, highly corrosive produced water to a disposal facility.
After spending a very late night and just about all day today researching this with regard to our neighborhood, and after talking to the drilling company rep today, I do believe you're right.
We need to organize so that we can negotiate as a block to ensure several things: - We get the best deal for our mineral rights - We get safety. We don't need gas leaks, explosions, chemical spills, or pollution of any kind. - We have our quality of life preserved, keeping noise, truck traffic, road damage, smells, and such to a bare minimum. - We need to ensure that pipelines servicing the wells are placed safely, and the owners of the easements are properly compensated.
Therefore: Lets start collecting email addresses. Sign up for our email list... (Request an invitation) ]Visit our Google Group[/url] and request an invitation. We're not going to share your email with anyone without your consent, and we'll keep the traffic to a minimum. But we plan to have a public town-hall style meeting Thursday to talk about stragegy.
Please Note: This is not for the purpose of a general debate about energy policy. I'm sure we all have our opinions about that. I think what we need to ask ourselves at this point is whether drilling in residential areas in Lewisville can be done safely, and with minimal damage, and pay us fairly. To that end, we can cooperate.
Whatever you do, Don't Sign Anything Yet. Bear in mind that the drilling company wants to nail down these low royalty and bonus rates quickly. They will try to rush us in our decisions. They will try to convince you that even if you say no, they'll drill anyway. They'll say what they need to in order to convince you that it's fair to pay 1/10 of what some other communities are getting per acre.
A 20% royalty *after* transportation costs? What costs? Are they in writing? As we all know, the price of fuel has risen, and thus trucking costs as well. So everytime that happens, transportation costs will rise, which means less money for the folks willing to get into the deal.
Not to mention the fact drilling in such a nice area is about the most assinine thing I have heard in quite some time. I think one too many people are drinking the Kool Aid of those Tommy Lee Jones commercials showing a gas well right smack dab in between some baseball fields.
And again, isn't Lewisville the town that banned wind turbines because of their "noise"? And yet it is ok for a gas well to give off 78 decibels? If you look at this chart, that is as noisy as heavy passing traffic or a wood chipper http://www.sengpielaudio.com/TableOfSoundPressureLevels.htm Not hugely annoying, but a wind turbine is 50 decibels or less.
Regarding transportation costs, I assume that is the cost of transporting the gas via pipeline to wherever it's being sent. Maybe it includes hauling off produced water and such. The actual costs are going to be whatever they're going to be, but the problem I see is the ability to play games with that number if the well operator also owns the pipeline company. You could manipulate the transportation costs taking money from one pocket to put in the other. (Like Chesapeake) Then you don't have to pay as much in royalties.
With this being right in the middle of town, specifically in a place that is one of the last enclaves of wildlife, and full of trees, and sheds water into the Trinity, it just doesn't sit well. They are going to have to cut down hundreds if not thousands of trees to get the rigs in and allow clearance for roads and setbacks from the well for fire protection. I don't know how that jives with the city's tree ordinance.
The land man said the noise will be equivalent to someone mowing their lawn a block or two away. I'm not sure I believe that. Not only will the drilling make noise, but the trucks coming and going, and the compressor station when the well is completed - depending on how it's built.
The city's wind ordinance was hasty and ill-informed and overly broad. There are many models of wind turbine that are noiseless and do not have problems with ice throw. I hope they'll revisit that in light of some of the newer models. Further, there are plots of land where windmills would work just fine, no matter how big they were.
We don't need gas leaks, explosions, chemical spills, or pollution of any kind. - We have our quality of life preserved, keeping noise, truck traffic, road damage, smells, and such to a bare minimum. - We need to ensure that pipelines servicing the wells are placed safely, and the owners of the easements are properly compensated.
But, oh well...
I have a recording of a drilling rig that I can send you in email. There is also one on my blog HERE
You ask for a "free royalty." According to what other areas are getting for royalty, you should get 25 to 30% FREE royalty which means they do not deduct the transportation charges.
I spoke to someone from the Flower Mound group today, who basically told me the following: - Cherokee Horn is NOT a drilling company. Their MO is to come in and buy up rights, then resell them for a huge profit to companies like Chesapeake. - Your monthly royalty check for an average lot is likely to be about $40. - These wells are likely to be good producing wells, like the ones at DFW. The amount they're offering for the signing bonus is about 10 - 20% of what it's really worth. - The noise and traffic will be much worse than you think. - They'll have to refracture these wells every couple of years, which will mean more rigs and truck traffic. - They will suck the water table dry. - During the fracture of the well, they may use a proprietary chemical mixture, thought to sometimes contain carcinogens like Benzene.
Again, these are assertions from a Flower Mound homeowner who has been fighting this same company for months.
If true, they do seem to put quite a damper on any thoughts of making any money without screwing ourselves and our neighbors.
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Anonymous
Posted: 2008/8/19 7:25 Updated: 2008/8/19 7:55
Re: Other assertions
I think going through a central website (like www.lewisvillegasowners.com) is going to be the best idea. No offense to your blog - which I will be checking regularly for now - but they seem to have a handle on the process of how we need to go to Cherokee Horn and get more... or even to go straight to a drilling company like Chesapeake. I'm just hoping that they will take any Lewisville residents affected by these 2 drill sites. I don't know why they wouldn't, but I don't even know what area they are targeting.
Also, a note that I haven't seen anywhere. I think we should be getting bonuses and royalties with our property going to the middle of the street, not just what is being shown on dentoncad.com. I don't know this for sure, but it seems that some neighborhoods have been able to work this deal.
Absolutely agreed. That is a site I want to keep up with. This blog is more of a general news an opinion site.
If our needs and situation match up with the Summit Area Neighborhood Association (lewisvillegasowners.com) then perhaps we should join up. On the other hand, with our situation, there are a couple of differences:
1. We have trees and parks that will be affected. 2. We have many more residential neighborhoods 3. The company (Cherokee Horn) is different than the one approaching their neighborhood (Williams)
The way I see it, this thing will probably shake out into groups of people who either A) Oppose all drilling B) Oppose urban drilling C) OK with drilling for the right price, and with the right concessions D) Pro-drilling at all costs
I think that groups A,B, and C can work together. Even if you oppose it, you may not be able to stop it. If so, you're going to want to get paid and get concessions. Even if you're OK with drilling, you need to make sure you have all the information about what to expect, and learn *why* the folks who have been around drilling lean against it. Group D will have already signed, so they really won't have any bargaining power.
We'll reach out to that group, and see if we can work together.
That's what I suspected. I looked up Cherokee Horn on the Texas Railroad Commission website and there is little information to be found which means it is unlikely they are an operator.
When you hear figures thrown around like $30,000 per acre as a signing bonus, it's helpful to know how much you own:
One acre is 43,560 square feet.
So, get the size of your lot - either from your survey, or you can look it up on your county appraisal office website. (Denton County, click here to search)
In my case, the lot is a modest 6,300 sq ft.
So 6300/43560 = .1446 = 14.46%
Now take that result and multiply by the percentage of your mineral rights that you own:
.1446 * 100% = .1446 effective acres
Now multiply the result by the signing bonus per acre:
That is a good question. I believe the city ordinance requires a 400 foot setback from schools, but even so, there will be noise from trucks, and dangers from spills or blowouts.
Summer Wilhelm is the City's Director of Emergency Management. I think I'll send an email over to her and ask whether there is some planning taking place, and whether the city might have some information that we could help distribute to affected residents.
I can see importance of using natural gas in combination with wind and solar as we convert (I hope) to a better form of power. I worry that as more people are persuaded by the 'show me the money' attitude, we may find that like Fort Worth, we have no safe neighborhoods left. I have to assume that some testing indicates the sites in your map are points of least dense rock and therefore either cheaper or easier to drill. Yet, I doubt that these two sites will be the end of the number of drills we see, that sounds, sites, smells, and traffic will be so much worse than we are prepared for. I wonder why a drilling company didn't buy up this land in the mid to late 80s, before it became neighborhoods. I don't think we know the whole story and maybe we will not. Even in the Lewisville - Flower Mound area we have a safe, quiet and beautiful neighborhood something that a relatively unusual these how can the price of that be assessed?
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Anonymous
Posted: 2008/8/26 11:17 Updated: 2008/8/26 11:21
Re: Drilling in our backyards
Thank you for a great, informative site. I live right on Central Park (house backs up to trees across the alley) and I love that park. Until I read this I had no idea CH was planning to take out trees in the park. Our neighborhood organized late, but we've stemmed the signatures at about 50% to 60%. CH offered only $500, so the rest us have been holding out for market value. But the Park issue sheds a whole new light for me, as does the second well site CH just announced in the their most recent "final, final offer" letter. These folks are thieves, and rude at that, having hung up on an attorney our group retained to negotiate. Now, before I sign, regardless of amount, I'll need to see that nothing's going to happen to Central Park.
I'd love to see a copy of that "final final offer" letter.
With regard to the trees in Central Park, they could make the case that *they* won't cut the trees there. And it would be technically true. They'd be cutting trees on private property.
BUT: Later when they need to put a pipeline through to connect the other well, they'll likely need to cut some trees and make a permanent easement. I'm not at this point certain whether feeder pipelines have the same eminent domain rights as a common carrier pipeline.
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Anonymous
Posted: 2008/8/26 16:45 Updated: 2008/8/26 16:48
ilikemyhoodthewayitis
Yes, currently the gas companies get to exercise eminent domain. Why? Somehow they get around it. In Fort Worth, they just had this happen to a neighborhood. One woman tried to fight it and has since signed under pressure. Go to this link. This is just one of many articles Star Telegram has done. www.star-telegram.com/804/story/817765.html By the way, Cherokee Horn is a sleezy, unethical company but not much better than the rest. The problem with Cherokee Horn is they are a younger company and don't have the experience and the money to buy the media like Cheasapeake and the larger companies. Also, they won't end up doing the drilling, they will probably flip all the leases. Right now they are just the middle man. Too bad some of the neighborhoods have 50% to 60% signed but it is really the homes surrounding the drill site that are the most important. Without them signed, they can't go under to get to the rest of the area. It could be stopped, they might not want to spend the money drilling if they can't go farther than 1000' to 3000' ft. This is what is happening in Flower Mound at a couple sites. Without variances they can't put the rigs close to some homes, schools, environmentally sound areas and flood plains. This is making it non profitable because it is cutting down the footage they have to drill. Good luck
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Anonymous
Posted: 2008/8/26 19:56 Updated: 2008/8/26 20:11
Re: Drilling in our backyards
That final, final offer is basically a threat that if you don't sign up now you will lose out on ANY rolalty money EVER. This is the 5th one I've gotten from these guys.
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Anonymous
Posted: 2009/7/7 7:58 Updated: 2009/7/7 16:05
Re: Drilling in our backyards
Any update on when/if the drilling will start or how many leases they have? I haven't signed and I am in the Hedrick Estates subdivision, seems like many of my neighbors already have.
What we're currently hearing is that it may happen next summer. Gas prices need to rebound into the $6 - $7 per MCF range before it becomes economical.
I'm not sure where Hedrick Estates is, but if you're in Southern Lewisville, you may be in what they're calling the Ingram pool.
It seems to me to be pretty inevitable that drilling will occur at some point. Residents of East Lewisville don't seem to have too much to worry about though, since the Duwe well out there didn't show very much promise.
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