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.