Loading...
HomeMy WebLinkAboutGBA 2007-06-28 Minutes MINUTES OF THE MEETING OF THE GAS BOARD OF APPEALS OF THE CITY OF NORTH RICHLAND HILLS, TEXAS JUNE 28, 2007 1. CALL TO ORDER The meeting was called to order by Acting Chairman Tom Duer at 5:04 p.m. 2. ROLL CALL PRESENT Tom Duer Randy Shiflet Brad Greene Kathy Luppy Garry Cope *Kathy Luppy had to leave at 6:05 p.m. CITY STAFF Dir. of Planning & Development Asst. Dir. of Public Works Asst. Fire Chief Asst. to City Manager Recording Secretary John Pitstick Greg Van Nieuwenhuize Kirk Marcum Elizabeth Reining Gina Harner 3. APPROVAL OF NOVEMBER 9, 2006 MINUTES APPROVED Garry Cope, seconded by Kathy Luppy, motioned to approve the minutes from November 9, 2006. The motion carried unanimously (5-0). 4. REVIEW OF PROPOSED CHANGES TO GAS WELL DRILLING AND PRODUCTION ORDINANCE. John Pitstick gave a brief overview while preparing brief power point presentation. The Gas Well Drilling and Production Ordinance passed November 14, 2005. City of North Richland Hills has set up the board in which members are actually chairman of 5 separate boards. Board members are elected by peers and not appointed by Council Page 1 of 17; 06/28/07 GBA minutes which depoliticizes their position. Original Ordinance has been established allowing gas well drilling in all zoning districts. Kirk Marcum, Assistant Fire Chief is currently acting as our fire inspector. Gas company's are allowed to drill without going before Planning & Zoning commission or requiring special use permits. All appeals are determined by the Gas Board of Appeals. Steve Smith, Vice President of Operations for Harding Company has come to answer any questions. Staff will be meeting with representatives from the Harding Company tomorrow. The initial gas ordinance change was taken to City Council on June 11,2007. We received initial input from City Council regarding some of the proposed changes. The Ordinance has been reformatted into 5 sections. The first section covers drilling and production. There is an appeal section which explains appeals to the Gas Board of Appeals. There is a new section which includes gas pipeline Installation. Typically with gas pipeline installation there will be a separate agreement or right of way agreement. This has to be filed with city to run pipelines underneath streets. Mr. Pitstick asked Kirk Marcum to explain the phases of drilling and production. Mr. Marcum explained that they had broken down production into 3 phases to make it easier to understand. Phase 1 is the drilling phase. They are setting the rig up and boring the initial well. With some of the new technology the horizontal bores will be able to go longer from 3200 feet to 6000 feet. Phase 2 is preparing the well for production. They are perforating the pipe and fracturing the shell around the pipe to prepare for gas production. Phase 3 is the final production. Mr. Marcum said that he would like to arrange for the members of the Gas Board to visit a drilling site to gain better knowledge of the different operations. If they aren't able to arrange to visit a site there are slide and power point presentations also available. Chairman Duer asked if the Graham #1-H well is producing or if the pipeline issue was ever resolved? Mr. Marcum said no, but it shouldn't be too long. Mr. Pitstick explained some of the new definitions that will be included in the revisions of the ordinance. There has been emphasis on the gas inspector. The permits have to be approved through Development Review Committee (DRC). DRC is made up of several members of police, fire, public works, planning, and parks departments. The committee meets every Wednesday and they review the initial permits. DRC has 45 days to approve the initial permit. Once the permit is approved the gas inspector follows up on a day to day basis. The gas inspector can make minor changes to the site plan as long as they obey all rules of the existing ordinance. The gas inspector can allow some discretion at the production site. Once they start drilling we will be relying on the gas inspector and fire department to oversee production. Page 2 of 17; 06/28/07 GBA minutes Mr.VanNeiuwenhuize said that when the original ordinance was drafted they perceived that we would be using the railroad commission inspector out of Wichita Falls frequently. We also considered using other gas inspectors in the area. Although since the drilling of the first site of Graham #1-H, the fire department has taken on a very active role. They have worked with Graham #1-H as well as doing research around the area and have become very knowledgeable. In some cases other cities have been contacting our fire marshals office for help with their gas wells and pipelines. The fire marshals office has been given a larger role and responsibility. With this knowledge we have been able to refine our Gas Ordinance. Mr.Pitstick said that by using staff through the fire department it allows access to assistance immediately on site in the case that there was a problem. Many larger cities in this area are contracting out individuals who aren't living locally. Mr. VanNeiuwenhuize said that City of Arlington had a public meeting when they updated their gas ordinance. After the meeting they spent a long time with our fire marshals asking questions. It is interesting that a city of that size would come to us for their knowledge base. Chairman Duer asked who would be responsible for assigning the gas inspector? Mr. Pitstick said the City Manager is responsible for assigning the inspector. The direction we are getting from City Manager and City Council is that they want one lead person they can look to for any issues. They are recommending Kirk Marcum as the gas inspector. Mr. Marcum said that when the ordinance was written there were things in the fire code and NFDA that were going to require the fire departments presence out on the job site regardless. Mr. Pitstick said that Mike Smith and Kirk Marcum took on an aggressive role. It has been a positive experience and we didn't receive any complaints with the drilling of the first well. Mr. Marcum said that he only received 2 formal complaints on the first well. Mr. Pitstick said that we are learning about the wells and aren't sure how many we are going to have. We will have multiple wells on each site. There are a couple areas where City Council has said that they will consider allowing some drilling in the public parks. It would be the far north and far south ends where there would be separate surface agreements. This would be by council approval with separate agreement. City Attorney has said that we will have additional control above and beyond the ordinance on the property in which the city owns. Most of the parks have just been leased for the mineral rights and now they are looking at allowing drilling at a couple potential sites. There will be a whole separate damage agreement, surface agreements in terms of Page 3 of 17; 06/28/07 GBA minutes what they have to do and how the property has to be left once they have completed. They won't have to come back to the Gas Board of Appeals with the separate agreement by council for drilling in the parks. They will also be exempting the distance requirement for that. The new state law set by the railroad commission requires 150 foot setback from the railroad right of ways. Also we are trying to define a setback for new buildings from drilling sites. The previous ordinance has a 600 ft distance requirement from drilling sites and 300 ft distance from tank batteries. These distances are for existing homes and structures. The current ordinance states that once the well is there it will allow you to build as close as 150 ft from the drilling site. Mr. Shiflet asked if "in accordance with state law" could be added to the ordinance so there wouldn't have to be amendments made each time the state law changes. Mr. Pitstick said yes, it has been discussed, although we could be more restrictive then state law in some cases. Mr. Shiflet said that if the state law changed to 200 ft. then our 150 ft. would not be an issue but if they were to change to 100 ft then we might want to discuss revising at that time. Mr. Pitstick said that many of the state requirements have to do with subsurface issues, which is the property below the surface. They aren't dealing with surface property lines. They are dealing with mineral rights. We are dealing with everything above ground such as property lines and houses. Mr. Shiflet said that it might be appropriate to have it state in accordance with state law instead or state regulations. Mr. Pitstick explained the distance requirements for the current ordinance and the proposed changes for the setback requirements. There will be an 8 ft masonry wall around the production site. They were originally proposing to have the setback at 150 feet outside of the production site, although City Council and some of the petroleum engineers in some of the subdivisions had some concerns. With these concerns the distance requirement was maintained at 300 feet from the tank batteries. The new ordinance would state that they would have to come before the board of appeals to grant a variance for existing buildings below 600 feet. The ordinance change would be for all new buildings built after the completion of drilling to have the same setback requirements. Chairman Duer asked if there ever a problem where they would have to bring drilling rig back in? Mr. Pitstick said yes. Page 4 of 17; 06/28/07 GBA minutes Chairman Duer asked what provisions would be given for that? Mr. Pitstick said that the new setback regulations would allow for that. Chairman Duer asked if they are even allowed to approve anything within the 300 foot area? Mr. Pitstick said that with the current ordinance the Gas Board can grant a variance from 600 ft down to 300 ft. and once the bore hole is there new buildings could not be built within the 300 feet. Once the well is in final production a home could be built as close as 150 feet or right next to the tank batteries. With the new ordinance that is being proposed new buildings and homes would not be able to be built within 300 ft once the well is in final production. Graham Ranch has proposed some streets to be built in that area. The burden will be more on the future property owners than it would be for the gas company's. Chairman Duer asked if they are going to put up landscape if they are putting in roads? Mr. Pitstick said that the issue is the burden this will have on future developers. Mr. Greene asked if the area could be used as a park? Mr. Pitstick said they wouldn't want any human habitation or parks within that area. We are trying to set a standard for now and any future development. Mr. Greene asked if there is an ordinance that states that the gas company is responsible for maintaining the land within the production site? Mr. Pitstick said yes, this is the responsibility of the property owner. Mr. Cope asked if in the case of the Graham Well if the property owner signed his lease with the gas company based on the original ordinance with the 150 ft limit after production? The property owner would now be faced with a limitation on his property? Mr. VanNeiuwenhuize said that this was the biggest issue with the Council when it was brought to them in June. The staff would be happy to express any thoughts or concerns that the Gas Board of Appeals may have to the Council. There are always issues that arise with this type of change. Mr. Pitstick said that the 2 things that Council had issues with were the distance of setbacks from the tank batteries and the hours of operations outside of drilling. They would like to have 300 ft. containment from the tank batteries. They also would like all work outside of drilling to be done during daylight hours. Mr. Shiflet asked how the new setback requirements would affect Graham Ranch Phase 3, which is already under contract for purchase? Page 5 of 17; 06/28/07 GBA minutes Mr. Pitstick said that Graham Ranch Phase 3 has not be final platted. Mr. Shiflet said that we also have the property to the West that is in the process of a Zoning change and site plan. Mr. Pitstick said that is correct that Planning & Zoning had just considered something for that property as well. Mr. Shiflet said that that there are about 6 houses that wouldn't be able to be built with the setbacks of the new ordinance. Is Ben Johnson aware of the possible ordinance change? Mr. Pitstick said that he doesn't know if the developers are aware of the proposed change? Mr. Shiflet would like to know if Mark Wood or Mark Howe or the Morrow brothers have been made aware of this change? These are the people that are going to be affected by this ordinance change. Mr. Pitstick said that if the developer came in tomorrow and applied for a permit it would have to be accepted under the current ordinance. Once changes have been approved they will be subject to the new rules and regulations. Mr. Shiflet said that Ben Johnson is half way through his process and the new setbacks will be through about half of his lots on the East side of his planned development. This will be a very nice development and this change will affect that deal. Mr. Pitstick said that he is right that Phase 3 is proposing streets that would be in that area, but also said that Council is emphatic about having the 300 foot boundary from the tank batteries. Mr. Cope said that the Gas board would be limited to 300 feet, they wouldn't be able to grant variances beyond that area? Mr. Pitstick said yes but the Gas Board of Appeals can recommend changes to the ordinances that would reduce that area down. Once the ordinance has passed whatever distance has been determined will be the set regulations. Under the current ordinance they can build as close as 150 ft. from the production site. Mr. Shiflet said that he doesn't feel that this is fair to anyone without notification and opportunity for input. He said that he feels that the Mayor and Council need to get input from someone other than the Gas Board. Mr. Greene asked if the production site is anymore dangerous once complete than the Atmos gas pipes on Smithfield Road? Page 6 of 17; 06/28/07 GBA minutes Mr. Marcum said no. Mr. Pitstick said that we are trying to establish a community standard. We need to get input from the Gas Board and developers. Mr.Shiflet asked why this is being rushed? Mr. Pitstick said that the Gas Company's are ready to move forward and need to know what rules and regulations they will be following. Chairman Duer asked if these sections of land sold since the Board approved Graham #1-H? Mr. Shiflet said no, Ben Johnson on the West Side has purchased since Graham #1-H was approved. Mr. VanNeiuwenhuize said that he doesn't think they have closed on the property yet, the property is still under contract. Mr. Shiflet said that this ordinance does not fit what the developer was told a week ago. It doesn't send a good message when you tell the developer that we love your product and then on the other hand tell him that he can no longer build these houses. Mr. Pitstick said that the current ordinance says buyer beware. If you have a new well that is drilling. We have a 600 ft boundary and you can get a variance down. We can change it to say that this restriction only occurs on the initial drilling. Chairman Duer asked if there were still going to be 2 more drilling sites? Mr. Pitstick said yes. Chairman Duer asked if that means nothing can be done until they complete the other 2 wells? They have gotten approval to drill 3 wells and have only drilled one so far. Can anything be built before they finish the third well? Mr. Pitstick said yes, if they were to come in tomorrow with building permits. Chairman Duer asked if construction could be built within the 600 feet before they finish Graham #2-H and Graham #3-H? Mr. Pitstick said that the problem is that if they came in tomorrow with a building permit to build within the 600 ft the other 2 wells would not be able to be drilled. Chairman Duer asked if they do build then they cannot drill anymore on that site? Page 7 of 17; 06/28/07 GBA minutes Mr. Pitstick said that is correct. If we receive a building permit today and tomorrow received a gas drilling permit, they would not be able to drill the additional wells. It works both ways. Chairman Duer asked before city council passes this, if someone were to come in tomorrow to try to supercede this ordinance change could they get it permitted? Mr. Pitstick said that it would have to be platted and that would take awhile to complete this process but he is correct. They have gotten approval to drill 3 wells. But they haven't come in with applications to drill the other 2 wells yet. Mr. Marcum said that once the application is received then nothing can be built within the regulations that you originally set. Chairman Duer said that is what the Gas Board appealed. Mr. Pitstick said a variance was approved for 3 wells. Chairman Duer said that is correct. He said that they had determined that nothing could be built within 300 ft. Mr. Marcum said that the 300ft from the tank batteries hasn't taken effect yet since the tank batteries are not yet on site. Mr. Greene asked if the gas company knew that they could lose 2 drilling sites if someone comes in and wants to build a home? Mr. Pitstick said that who ever came in first to apply for a permit has the rights. Chairman Duer asked Steve Smith with the Harding Company to speak and answer some questions. Steve Smith, VP operations for Harding Company said that he can address some of these concerns. He said that they just need to find out what rules and regulations they will be working under. This will be important for the developers that will be building on this property also. He said that there has been a tug of war between Mr. Graham and Mr. Johnson. This is what has prevented them from completing the pipeline and fracturing the well and completing the other 2 wells. They have contacted the people with the development to the west and they have agreed to put off building their homes based on the 150 foot setback that is currently set to allow Harding to drill the additional wells. He is here tonight to listen to what is going on and has received a copy of the ordinance from John and has reviewed it and will be meeting with John tomorrow. They are trying to see how this can end up a win-win situation for all involved. They see this as hurting the developers but as the ordinance is written now it has 2 different variances and there has to be some type of give in this. He was supposed to speak at the last City Council meeting on June 11 and was unable to make it. The board has a valid Page 8 of 17; 06/28/07 GBA minutes point about what affect it will have on the property owners. It is his understanding that the measurement is to the home and not the property line. There is a little variance there as to where the homes could be built there. Arlington has 300 feet from the well itself. Chairman Duer asked if the City Council approves this and permits are approved and structures are built and it prevents Harding Company from building wells #2-H and #3-H what recourse do you have? Mr. Smith said they don't have any recourse. The person who would have recourse would be Mr. Graham. He would not be able to develop his mineral rights and the right to capture supercedes surface rights in the state of Texas. So there most likely would be litigation that would come from that. The Harding Company is trying to blend with everyone so that they can get their drilling complete so the developers can begin building their homes. He can see Mr. Graham being upset with this new ordinance because The Harding Company worked with him in designing that particular site for Graham phase 3 that was based on the current setbacks of 150 feet. Mr. Greene asked if the 150 ft boundary is at the black line on the map? Chairman Duer said no that it was at the light blue line. Mr. Greene said that it should just be at the Black line. Chairman Duer said that the black line on the map is the boundary around the production site. Mr. Marcum said that they had a 300 foot circle from the tank batteries. They had 150 feet from that measurement and it does not coincide in any form. We need to determine where the setback distance is going to be measured from. When we tried to set the distance to 150 feet, the City council determined that it was too close. We are trying to make a determination based on what input we have gotten from the Council. The Council would like a measurement based on a specific site on the drilling site. Mr. Pitstick said that he would call Ben Johnson, Mark Howe and Mark Woods and discuss with them the possible ordinance changes. But you have to consider that these are developers that aren't going to living in these homes. We can take the attitude of buyer beware or set it down to the outline of the final production site. We just need to set up a community standard. We can get input from the gas company's and developers but the council is concerned with protecting the future citizen that is going to be living there. Mr. Shiflet said that he feels that if the ordinance changes the city will be setting itself up for a lawsuit? Page 9 of 17; 06/28/07 GBA minutes Mr. Pitstick said that he doesn't understand how it would be up for a lawsuit since no permits have been issued on either side. Mr. Shiflet said regarding Mr. Grahams mineral rights. Mr. Pitstick said that no permits had been issued for the gas drilling either. Mr. Marcum said that what Mr. Smith was discussing were his subsurface rights, you can't stop someone from obtaining subsurface or gaining access to the subsurface rights. Mr. Pitstick said that we could grandfather this site. What would the Board recommend to set for the community standard for setbacks? Mr. VanNeiuwenhuize asked if they would like them to meet with known well site property owners and developers to gain input? Mr. Shiflet said that he thinks that the Gas Board is very small compared to the property owners and developers. He is assuming that the purpose of this meeting is for City Council to hear their input and make a recommendation. Mr. Pitstick said that our community standard is now set at 600 feet and if they want closer than that it needs to go through the Gas Board of Appeals. After the well is complete they can build as close as 150 feet. Chairman Duer asked what the consensus of other municipalities? What decisions have they made on this matter? Mr. Pitstick said that they have been around 200 feet from the drill site. He thinks that Arlington is also 200 feet. Mr. Shiflet said there is another way you can be within the 150 feet, you can shrink it down from 600ft to 300 feet with consent. Buyer beware can be applicable with consent. Mrs. Luppy said she believes that the perception of an ordinary citizen is going to be the safety issue. We have been involved in this process and we know more than the average citizen. When we are presenting this we need to consider how the ordinary citizen will perceive their safety. If for some reason it were to explode that is all that would be remembered. Questioning how the city could have allowed them to build homes 150 feet from the well head whether it is being drilled or in production. Mr. Pitstick said DRC and the staff looked at the red line (300 ft). They were looking at 150 feet outside the masonry wall around the production site. Page 10 of 17; 06/28/07 GBA minutes Mr. VanNeiuwenhuize asked about wanting it to be fair and speaking to the people who are going to be affected by the change and get their input either for or against? Mr. Shiflet said he thinks that the process should allow for the developers and property owners input to be taken to the Mayor and Council for them to make an informed decision. Chairman Duer asked on this specific case with Graham if it could be grandfathered. If that is the case then everything will be new and the new regulations could go into affect? Mr. VanNeiuwenhuize said that isn't necessarily true. Chairman Duer asked if Graham #1-H one could be grandfathered in since has already been drilled? Mr. Pitstick said yes, they could only grandfather in the well that has been drilled. Chairman Duer asked that if the light blue line at 150 feet is where the existing ordinance states they can build up to that point? Since that first well has been drilled can it be grandfathered in and from this point on follow the new ordinance? Mr. Pitstick said that the City Attorney said it is based on vested rights. Do they have a permit in hand. We don't have a permit for the second and third well or any homes at this time. Mr. Cope asked what affect Graham #2-H and #3-H have on the 150 ft (light blue line)? How much will the dimensions of the distances change? Mr. Pitstick said about 10ft. They are also discussing having multiple wells. Chairman Duer said they can't drill within 300 ft from an existing structure. Mr. Marcum said that they need to get away from trying to measure from inside the production site. There are too many variables inside of the wall to measure from. There are going to be multiple wells inside that site. Chairman Duer asked if the area of the rectangle which will be the production site when completed will be the start of the 150 feet. Mr. Pitstick said that if the gas company wanted to avoid being a burden on Ben Johnson's development they could move the production site over to give them more room. Mr. Cope asked if the Gas Board of Appeals could reduce the secondary red line? The existing could be changed from 150 to 100 ft and give everyone a little more room? Page 11 of 17; 06/28/07 GBA minutes Mr. Marcum said that Harding was actually doing that, their drilling site is larger than the production site. Their production will close down to a smaller area. Mr. Smith said that the particular site at Graham is about 2.5 acres on the drill site. The rectangle for the production site is about 2 acres. Mr. Graham worked with The Harding Company and designed the size of their production site. Mr. Shiflet asked why the rectangle of the final production site didn't work for the distance setbacks? Mr. Marcum said the Council liked the idea of 300 feet from the tank batteries. Mr. VanNeiuwenhuize said that they were concerned about the truck traffic that would be coming in to empty the tank batteries. The Council felt that the traffic would be too loud if you had a residential structure right outside the wall of the production site. Mr. Greene asked if the tank battery would remain on site? Mr. Marcum said there were some safety issues in regards to the tank batteries because they do have petroleum in it. Mr. Smith said that the tank batteries would remain on the site. The purpose of the tank battery is to store the water that's produced from the Barnett Shale. As long as the well is producing there has to be a place to store the water until it can be trucked out to the disposal site. Mr. Greene asked if there was any odor? Mr. Smith said that tanks are kept closed. The smell comes when you get into the gas pipeline. The gas that is produced in the Barnett Shale is about 98% methane and is odorless. What you smell is when you get into the gas pipeline. They introduce the odorizer into the line so that leaks can be detected. Mr. Shiflet said that his concern is that the property to the South is a pipeline easement. He is assuming this is where they will be getting the gas out and if this will affect the development to the West that would prevent homes from being built? Mr. Pitstick asked what the Board would recommend for a community standard? Mr. Marcum said that we put this site at Graham up as an example. He thinks that Harding will have their applications in for permits before the development to the West gets started. They won't be able to build within the 300 feet which is part of the current ordinance. Mr. Shiflet asked what distance the red lines on the map are from the well head? Page 12 of 17; 06/28/07 GBA minutes tation of the process. Chairman Duer said then they will be going back to phase 1 for Graham 2 & 3. Phase 1 Mr. Pitstick said that it is 300 ft around the tank batteries and the other is 150 feet outside the production site. Mr. Cope asked if that was the production site or the final site? Mr. Pitstick said that it is the final production site. Mr. Cope asked if it could be 100 ft outside the final production site? That helps everyone and still allows a lot of room to place homes. Can they place the tank batteries anywhere on the site? Mr. Smith said that it isn't technically correct. It depends on how many wells you are going to drill there which will determine where to place the tank batteries. Most of the pad sites are going to have 9 wells or more. There are rigs here in the metroplex that can drill 22 wells on a pad site but can't reach the 6000 foot laterals. Once you move in and drill your first well and move the rig out like they have done at Graham. They bring in the new type of rig in and it has a separate setback. That well is already producing so there is a physical tank battery built that it is producing into. Then they are working around hard lined items such as tanks, hard lines, separators. There is a point of time that if you move the tank batteries around that it can become very costly. Mr. Pitstick asked if they had established the rectangle area for the production site? Mr. Smith said yes, that their area they are working in was established with the landowner. He allowed them 2 acres for their production pad site. Mr. Pitstick said that what Mr. Cope was saying is that once the pad site has been established by the landowner and Gas Company. Setbacks should be 100 feet outside that production site. Mr. Greene asked if the production site should include the stock tank as well? Chairman Duer said no because the stock tank will not be part of the final production site. Mr. Pitstick said that it is just a stock tank of water so they can pump it down while they are fracturing the well. Chairman Duer said that the tank batteries stay but the stock tank goes away. Mr. Shiflet said that his opinion for the community standard is to stay with 150 feet from the final production site. Page 13 of 17; 06/28/07 GBA minutes \ Mr. Pitstick said that Mr. Cope had suggested 100 feet outside the production site. Moving it to 100 ft may resolve any issues that we would have with Ben Johnson's development. But again we just want to focus on the community standard. Mr. Cope said that if we could leave it 150 feet. Chairman Duer asked what point of reference they want the 150 feet to be distanced from? Mr. Shiflet said that he would recommend that it be 150 feet from the outline of the production site. Mr. Pitstick said that they will have the 8 ft masonry wall with landscaping outside of the production site. Mr. Cope said that the reason he originally said 100 ft is because he thought that the gas company might consider a smaller production site, but if they are going to be drilling 9 wells on that site that is not going to be possible. Chairman Duer said that whatever the gas company determines they need as the perimeter for their site then set the 150 feet from that point. Mr. Pitstick said that what they are suggesting is to set the distance outside the final production site. Chairman Duer said yes. Mr. Cope said that the temporary restrictions take care of the rest of it. Mr. Pitstick said that the board is recommending that whatever distance is determined needs to be measured from the outside perimeters of the final production site. Mr. Marcum said that if production site is 2 % acres it is probably 300 feet across plus adding the additional 150 acres outside of that. That will allow for a lot of distance. Chairman Duer asked what the dimensions of the rig that they use? How much space would they need? Mr. Smith said that the rig they use here is a mechanical rig and the one that their partners have is a diesel electric and it requires a 3.45 acre site just to drill. Chairman Duer asked if that is just for the drilling? Then they would need more space then what has been allotted for the production site? Page 14 of 17; 06/28/07 GBA minutes Mr. Smith said that it would fit with what they have it will just be real congested with what they are working on. He doesn't want to get too far into the explanation of what they will be doing because he will be coming before them to do a formal presenwould not be able to occur once a home has been built. Mr. Pitstick said they still have a lot of time before any homes will be built. Chairman Duer said that he was aware, but was just asking if once a home has been built if phase 1 would even be possible within the 300 ft? Mr. Greene asked Mr. Smith if they had an agreement with those developers that they wouldn't start building until the drilling is complete. Mr. Smith said that they have had some challenges but they are all trying to work together to make agreements and arrangements to work around each other. Mr. Cope said that they are going to be limited by the council's decision that their 300 ft limitation is where they are placing the tank batteries not where they are placing the wells. Mr. Pitstick said that the Gas Board is recommending that the community standard be set outside the final production site. He asked Mr. VanNeiuwenhuize to briefly describe the consideration for drilling in the flood way. Mr. VanNeiuwenhuize said that the current ordinance prohibits drilling in the flood way. You can only drill in the fringe. We have been approached by a gas company who would like to drill in the flood way. They've hired an engineering firm who deal with hydrology. They believe they have a plan and will go through FEMA and believe they have a plan that will allow them to drill in the flood way without being a danger to themselves or others. We feel that it is worth looking into and changing the ordinance to allow it under the condition that they follow all ordinances, and gain approval from FEMA. Mr. Pitstick said the fees are going to be increased. The fees will be increased from $5,000 to $10,000. The fees are justified with the amount of time that the fire department and staff are putting into these requests. There will be forfeiture of their application fees after 180 days. If they begin work but are not complete by the 180 days then they can request an extension. They will also be adding the requirement for an annual permit fee of $2000. There are no changes in insurance requirements. We are only allowing closed loop systems. We are not allowing open pits other than natural fresh water ponds for fracturing. Concrete paved roads are required once production begins. They are recommending a permanent masonry wall and landscaping after 90 days of completion of drilling. The gas company's may request for an appeal for partial screening. These will be approved through the Gas Board of Appeals. City Council is concerned with the hours of operation. The current ordinance states that drilling and Page 15 of 17; 06/28/07 GBA minutes fracturing is 24n and the new ordinance is recommending 24n only on drilling all other operations have to be done during daylight hours after 7:00 a.m, Monday -Saturday. There are appeals on distance requirements, hours of operations and landscaping screening. The compressor sites need to be considered because if the gas is not compressed then you get big pipes and pipelines and larger easements and with compressed you get smaller pipes and will take up smaller areas. Some of the compressor sites are noisy because they have compressors running. All compressor sites would have to be approved through Gas Board of Appeals. The appeals for partial screening and masonry walls would only be if they were still drilling and time has passed. There will be no appeals on the closed loop systems. Mr. Cope asked what effect will it have on the appeals board itself if members are lease owners in any propositions? Mr. Pitstick said that if you are receiving money then you will have to abstain from any votes that pertain to that specific case. He said that he will check with the City Attorney to clarify this matter. Mr. VanNeiuwenhuize said the Harding Company wants to put some gas pipelines from the Graham Ranch well to an existing or mobile line. We did not have an ordinance at the time but our law firm had experience in this area and came up with a contract that City Council approved and Harding executed. The major provisions were taken out of that contract and put into ordinance. The contract will mirror the ordinance and now future gas company's are aware of rules and regulations. Mr. Pitstick said that there are typically two different companies the drilling company and the Pipeline company so there are separate agreements for each of those. Mr. Cope asked if any of the provisions in that section are appealed to the Gas Board of Appeals? Mr. VanNeiuwenhuize asked if he was referring to the gas pipeline? Mr. Cope said yes. Mr. VanNeiuwenhuize said that in the State of Texas,the City can only establish rules and procedures if the property is part of the public right of way. With private property it is between the property owners and gas company. With public right of way they would be subject to follow City rules and procedures and pay any fees that are required. Texas limits cities authority and we have virtually no authority on private property. Mr. Pitstick said that pipeline company's have the authority to condemn property. Our society depends on energy and if there are issues and they want to come through our city and have problems. The ordinance we have strictly handles gas pipelines as they cross over or under our rights of way. Page 16 of 17; 06/28/07 GBA minutes 6. ADJOURNMENT The chairman adjourned the meeting at 6:27 p.m. Chairman +f~ ~~ 'ZtðûV IJµ, T m ue --' Kathy Luppy Page 17 of 17; 06/28/07 GBA minutes