These FAQ's are FROM the Ryan Place Improvement Association's Drilling Task Force:
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At the March Special Meeting, and subsequent time frame, questions continue to arise, and answers are researched to keep all homeowners in Ryan Place informed about the proposed gas drilling activity along 8th Avenue. These have been updated on a regular basis as the answers are secured.
There are two companies vying for the mineral rights of the RPIA homeowners:
Four Sevens represented by LPS. Four Sevens was formerly represented by Colt Exploration. Four Sevens drill site is proposed along 8th Avenue, across from Braums.
Fort Worth Energy, who claims to be in partnership with Chesapeake. The FWE site is in an industrial area east of Hemphill, between Page and Jessamine, along Jennings.
LIKE AN ELECTION, IF YOU SIGN A LEASE WITH THE RESPECTIVE COMPANIES ABOVE, YOU ARE CASTING YOUR VOTE AND AGREEING TO THE DRILLING ON THEIR PROPOSED SITE.
WE ENCOURACE ALL HOMEOWNERS NOT TO SIGN ANY LEASE UNTIL RPIA CAN FINALIZE A COMMUNITY LEASE WITHIN THE NEXT 30-60 DAYS.
Update to the questions are in BLUE. If a question is marked “TBD”…it is being researched by an RPIA-GO Committee member, and will be posted at a later date.
FREQUENTLY ASKED QUESTIONS (FAQ’S):
Recap of questions from The Special RPIA.Meeting:
WHERE DOES THE PIPELINE ALONG THE FW&W RR END?
In answer to a question Mr. Holcomb explained that his pipeline ROW terminated in Cleburne.
FWE is planning to run their pipeline down the railroad easement on the UP and BNSF tracks east of Hemphill. It will merge with a collection line south of I-20.
WHAT IS THE SOURCE OF THE WATER USED IN THE PROCESS?
He stated that the water used in the fracturing process can come from several sources but that in all cases it is recovered and reused.
FWE indicated that they will purchase water from the City of Fort Worth, and that the used water will be trucked away.
WILL GAS LINES RUN THROUGH RYAN PLACE NEIGHBORHOOD?
He stated that there would not be gathering lines through the neighborhood.
The transfer lines will run along the Fort Worth and Western RR tracks. Leases have been signed with railroad to use the easement.
WHAT TYPE OF NOICE WILL BE ASSOCIATED WITH THE DRILLING?
He reported that there would be some noise associated with the drilling process but probably not more than the trains passing through the area. And also that this noise is continuous and could last as long as 45 days. (n.b. This was later clarified that this is 45 days per well, and potentially 6+ wells will be drilled on the site.)
FWE is planning on drilling approximately 12 wells at their site. The noise will be similar to that proposed by Colt/Four Sevens.
ARE THERE EVACUATION PLANS IN THE EVENT OF AN EXPLOSION? AND IF SO WHO IS FINANCIALLY LIABLE?
He next reported that they have contingency and evacuation plans for the drilling of this site but that he has not personally seen them and also that the drilling company would be financially liable for losses.
By law both companies are required to have published evacuation plans files with the City in the event of a disaster. Fort Worth Fire Department and Police Department have not opposition to either site at this time.
WHAT IS THE NOISE LEVEL TO BE ENCOUNTERED?
In answer to another question Mr. Holcomb reported that he does not have a decibel rating chart the noise associated with wells when they are at a distance from the neighborhood. He also said that when the fracturing process is occurring, the Frac trucks can be fairly loaded.
WILL TRUCKS PASS THROUGH THE NEIGHBORHOOD?
He stated that the Frac trucks would probably not have to pass through the neighborhood. There is no logical reason for them to pass through the residential area, and only would travel on commercial traffic approved streets.
With the FWE drill site east of Hemphill, the truck traffic will be on Hemphill, and South Main, east of Ryan Place.
ADDITIONAL INFORMATION:” The basic city rules are that, unless a truck is involved in a specific delivery to a location that can only be reached by traveling on a residential street, then all "commercial" truck traffic is restricted to truck and commercial routes. These rules likewise apply to any truck traffic associated with a gas well.
The Gas Well Ordinance specifically addresses this issue in Sec. 15-36, Sec. I, Paragraph H - "Vehicle Routes for High Impact Gas Well Permit". (Found on page 18 of the ordinance, when printed from the web site.)
It requires all vehicles associated with drilling or production to use "truck" routes, and they can use a "commercial delivery" route only when not possible to use truck route. Truck routes are more restrictive then commercial routes, and fewer in number. The upshot of this is that residential traffic is strictly prohibited”
WHAT IS THE TOTAL TIME THAT DRILLING WILL TAKE PLACE?
He stated that the drilling process is 45 days per well and that there could be 6 – 10 wells in this area.
The drilling at the proposed FWE site will last for 18 months, using the same time per well as proposed for the 8th Avenue site by Four Sevens.
HOW LONG WILL THE WELL OPERATE?
He stated that it appears that the average life expectancy for wells in this year could be anywhere from 35 – 100 years, based on geologist information available on the Barnett Shale.
HOW MANY LEASES HAVE TO BE SIGNED TO BEGIN DRILLING? HOW MANY ARE CURRENTLY SIGNED?
Per Colt, they have, to date (3/23/07), 61 acres under lease, including the drill site, between the 350 acres between Ryan Place and Berkley. Most of this is from Ryan place, the apartment complex of Park Hill, and commercial properties along 8th Avenue. Most of Berkley residents are waiting for the community lease.
FWE has signed many of the Fairmont residents but they are waiting to work with RPIA on the community lease, as we have suggested to them. However, they will continue to send letters to RPIA homeowners, and some may sign on their own.
Colt/Four Sevens stated that although he does not need to have a lease agreement with all property owners before drilling he would prefer to get them all in agreement and that that would be his desire. It was further clarified that they hope to get at least 75
% of the homeowners to sign leases, which would make the drilling process easier, other wise they have to route the drill around those properties that have not signed.
As of this update( 5/13/07) , less than 10% of RPIA homeowners have signed leases. Approximately 70% of Fairmont have signed leases, and practically no one in Berkley have signed leases.
WHO HAS ALL RECEIVED LETTERS TO DATE?
He stated that he has now sent offers to residents of Mistletoe, Berkeley, Fairmont and Ryan Place neighborhoods. Some residents did not receive a letter under the original mailing but they continue to send letters as they research the TAD tax rolls.
FWE has mailed letters to most RPIA homeowners, but not specific offers have been made.
Both companies have agreed in principle to work with RPIA on a community lease, but they will continue to solicit homeowners, and use creative ways to get people to sign leases, until we have a common lease that represents the neighborhood.
ARE THE MINERAL RIGHTS FOR JUST GAS AND OIL OR ALL MINERALS? HOW DO HOMEOWNERS KNOW?
Mr. Holcomb stated that although the property deed of homeowners may not mention oil and gas rights that the work done by his company has verified that residents here do not have a reservation on mineral rights. (n.b. The leasing company must verify mineral rights in the lease before they can execute the final lease with the homeowner)
WHERE IS THE TRANSMISSION/TRANSFER LINE FOR THE GAS?
He said that the pipeline ROW will be on the Fort Worth and Western rail line.
FWE will run their pipeline down the UP/BNSF rail lines east of Hemphill.
WILL THERE BE A SURFACE SLUDGE PIT FOR DRILL WASTE WATER?
He said that there would be no sludge pits associated with these wells. The drilling waste will be contained in a closed loop system that allows for it to be captured and hauled away.
HAS FOUR SEVENS DRILLED IN AN URBAN ENVIRONMENT BEFORE?
He stated that Four Seven’s has experience drilling in urban environments.
FWE does not have experience in drilling in an urban environment, but their “partner” Chesapeake has experience in drilling in an urban environment. Neither company has drilled in an “historic” neighborhood.
HOW MUCH WATER IS USED IN THE PROCESS?
He reported that the well would use probably less water than what a golf course uses daily. (Additional research has shown that approximately 1MM gallons are used in the drilling process, and at least three times that in the fracing process per well head)
WHERE WILL THE WELLS BE DRILLED?
He reported that all wells drilled would be within the 3 acre ROW secured from the Railroad. (Fort Worth, Western RR along 8th Avenue)
FWE is planning on a site, east of Hemphill in the industrial area between Page and Jessamine, along Jennings east to South Main.
WILL THE GAS WELL/DRILLING AFFECT MY PROPERTY VALUE?
He reported that there could be a property tax increase from TAD if royalty checks are being distributed. (This is true, if gas is found, and distribution of funds occurs to leaseholders) More research is being conducted, and information on the formula’s used to calculate the taxes. See the answer later in the FAQ’s.
HOW MUCH WOULD THE AVERAGE ROYALITIES BE PER CITY LOT?
He reported that he estimates royalties would run probably around 30 per month per well per lot.
WILL THE DRILLING HAVE ANY IMPACT ON THE SOIL STRUCTURE, THUS POTENTIALLY AFFECTING THE FOUNDATIONS IN THE NEIGHBORHOOD?
He reported that the drilling operations should have NO impact on foundations in the area, with the lateral lines being 1 to 1.5 miles below the surface. This has now been confirmed with a couple geologist who live in the neighborhood.
HOW LONG WILL THE PROCESS TAKE?
He reported that his timeline for signing leases is dependent on the residents in the area. He said that after leases have been secured it would be another 12 – 18 months before drilling could begin.
FWE indicated that drilling would not start for atleast two years, under current planning.
HOW IS HE APPROACHING THE LEASING PROCESS WITH OTHER NEIGHBORHOODS?
He stated that he has proposed a community lease, allowing all residents within the 800 acre drilling unit to participate in all royalties within the lease. He said the alternate method would be to draw leases up on smaller units where all neighbors do not participate. (n.b. The Ryan Place committee is working with the other neighborhood associations: Berkeley, Park Hill, Mistletoe, Fairmont, to determine what they are doing, and how to marshal resources.)
FWE’s lease area affecting RPIA is 8th Avenue on the West, Berry on the South, Jessamine on the North, and I-35 on the East.
WHAT IS THE PRESSURE COMING OFF THE WELL HEAD?
He said that while he was not sure what the PSI for these wells are but that he did know it was a low pressure well. There are very specific regulations regarding the safety of the well site, and these are monitored by the State and Federal Governments, and the Railroad Commission.
WHAT HAPPENS WHEN THE GAS IS REMOVED FROM THE SHALE? WILL THE STRUCTURE COLAPSE OR AFFECT THE SOIL STRUCTURE ABOVE?
He stated that he did not know of any long term studies on how moisture loss from the ground could affect foundations. There is no known effect of the moisture affecting the shale structure once the gas has been evacuated. Again, this particular drill hole will be over 5000 feet below the surface.
WHAT IS THE NOISE LEVEL AFTER THE DRILLING CEASES?
He said that after the wells are in and producing there should be no appreciable sound associated with the operation of the gas line. The compressor required to move the gas along the pipeline will not be located at the 8th Avenue site.
CAN WE LIMIT THE LEASE TO JUST GAS AND OIL?
He stated that the lease documents sent to residents include oil, gas and minerals but that they would be happy to strike minerals from the lease agreements.
WHAT ARE THE PLANS FOR SEISMIC TESTING OF THE FORMATION?
Both FWE and Four Sevens stated that seismic has not been performed and that it was not planned on because of the potential negative impact on foundations.
ARE THERE ANY STUDIES TO VALIDATE IF PROPERTIES VALUES WOULD INCREASE?
He stated that property values would most likely increase because the properties would become revenue producing but that he was unaware of any specific studies addressing that issue. He reported that in other area in Fort Worth have seen property value increases from TAD because of drilling operations.
WHAT ARE THE CURRENT AGREEMENTS BEING OFFERED?
Four Sevens stated that the lease agreements currently available offer $500 lease bonus and a royalty that could be $35 – $70 dollars a month. FWE has not offered a specific amount yet, awaiting the community lease from RPIA.
HOW MANY LEASES HAVE BEEN SIGNED TO DATE? HOW MANY WELLS CAN BE ACCOMODATED IN THE AREA?
He reported that only a small portion of the 800 acre unit has been leased yet. He also reported that that lateral spacing requirements would not allow 30 – 40 wells in this area.
Per Colt, they have, to date (3/23/07), 61 acres under lease, including the drill site, between the 350 acres between Ryan Place and Berkley. Most of this is from Ryan place, the apartment complex of Park Hill, and commercial properties along 8th Avenue. Most of Berkley residents are waiting for the community lease.
WHERE ARE OTHER WELLS IN THE AREA, AND HOW ARE THEY DOING?
He next stated that he would be willing to show where some other wells in the area are and provide also revenue and production volumes if asked and given a means of distributing this information.
FWE has purchased property for three separate drill sites in the industrial areas along the railroad tracks, east of Hemphill, between there and I-35, heading south towards I-20.
WHAT REMAINS ON THE SITE, ONCE THE DRILLING IS COMPLETED?
He concluded his presentation by explaining that once the drilling rig has completed its work that what would be left on the site would be a separator and a wellhead along with a small holding tank. He said those facilities would be contained within a firewall and would not be visually distracting to residents.
Additional questions since the kick off of the RPIA-GO Committee:
If a question is marked “TBD”…it is being researched by an RPIA-GO Committee member, and will be posted at a later date.
WHAT WAS THE SOURCE OF THE LEASE HOLDERS/PROPERTY OWNERS?
(2006 TAD data)
IF I DID NOT GET A LEASE, WHAT SHOULD I DO?
(Contact Colt Exploration, or wait for Ryan Place to get the community lease in order.)
IT HAS BEEN STRONGLY SUGGESTED THAT ALL RPIA HOMEOWNERS HOLD OFF ON SIGNING ANY LEASE WITH EITHER FW ENERGY OR COLT EXPLORATION/FOUR SEVENS.
WHAT IS THE PROCEDURE TO GET RPIA HOMEOWNERS TO SIGN ON THE NEIGHBORHOOD WIDE LEASE?
(RPIA meeting, newsletter: Potentially there will be a mass mailing from the leasing company to homeowners, with cover letter from RPIA)
WHEN WILL TAD INCREASE THE PROPERTY VALUES? AFTER THE LEASE IS SIGNED, BEFORE THE GAS FLOWS? WHEN?
(Any valuation will not begin until approximately 12 months after the completion of the well, after a complex set of formulas in accordance with Texas laws. In general, it is believed that the actual amount for each property will be relatively significant, contrary to reports published.
WHERE IS THE COMPRESSOR STATION TO BE LOCATED IN RELATION TO THE WELL?
The compressor runs 24 x 7. Colt and Four Sevens have agreed that there will be no compressor along the pipeline in our area, nor at the drill site at 8th Avenue. This will greatly reduce noise post drilling. This will be included in the terms of the community lease.
WILL THE DRILLING AFFECT MY FOUNDATION?
(Per BlakeGeoServices: We do not think there will be any effect on the foundations. We are dealing with taking a small % of in-place gas from a reservoir which is as stable and non-porous as a brick, not to mention the Barnett occurs 1.5 miles below the surface. To my knowledge, subsidence can occur in more geologically complex areas, when either oil or water is withdrawn in large percentages from shallow reservoirs or aquifers in limestone or faulted terrains leading to sinkholes or slippage along fault planes. In my opinion, no concern here.)
THERE ARE SIGNIFICANT NORTH-SOUTH TRAFFIC CONCERNS FOR 8TH AVENUE. WHAT IS THE PROPOSED ROUTE OF THE TRUCKS TO SERVICE THE WELL?
Per City Ordinance, trucks are restricted to commercial routes, and truck routes, which for the area in question, is Rosedale, 8th Avenue, Berry, Cleburne, and Granbury, to name a few.
FWE is bound by the same City Ordinance as Colt/Four Sevens. However, most traffic will be east of Hemphill, between there and South Main.
HOW ARE THEY GOING TO MARKET THEMSELVES? WHO PAYS THE TRANSPORT COSTS TO THE DISTRIBUTION HUB? (This needs to be addressed in the lease discussions. The intent is to have the leases free of fees for marketing and/or transportation of the gas to end destination)
Per Colt Exploration, there are to be no additional charges from Four Sevens to the leaseholders for transporting the gas, nor marketing fees. This must be stipulated in the lease.
ARE WE GETTING ROYALTIES ON EVERYTHING THEY CAN SELL OR JUST OIL AND GASS? (This needs to be addressed in the lease discussions, but the intent is to limit activity to gas and oil.)
CAN RYAN PLACE ACT AS A PROXY FOR FAIRMONT ORWILL FAIRMONT MOUNT THEIR OWN EFFORT AND JOIN WITH BERKLEY, PARK, AND OTHERS?
Fairmount has joined the Alliance of Neighborhoods, which has been specifically formed to address the gas and oil issues south of downtown.
WHAT ARE FAIRMOUNT AND MISTLETOE DOING ABOUT THE WELL?
Based on information at the Neighborhood Alliance meetings, Fairmount has negotiated leases with Colt Exploration and or Fort Worth Energy, with approximately 70% of the homeowners signing leases. However, they are participating in the Alliance, and will continue to support the Alliance’s efforts to get the best deal for all the other neighborhoods. Mistletoe is part of the Neighborhood Alliance, and for the most part have not signed a lease with any company.)
WILL THE DRILLING AFFECT THE RESALE PROPERTY VALUE? THERE IS A BELIEF THAT IT WILL CHANGE, AND SOME FEEL IT MAY NOT BE POSITIVE, WITH LIMITED INFORMATION ON HISTORIC DISTRICTS. CAN WE GET AN INDEPENDENT RESEARCH TEAM TO ASSESS THIS SITUATION?
TBD, SEE ACTION ITEMS
HOW WILL TAD DETERMINE THE VAUATION OF THE MINERALS? WHEN WILL THEY ASSES THE INCREASED VALUATION, IF ANY?
The value of minerals (gas and old) will be determined after the completion of drilling through a complex formula established by Texas law. The full value will be determined approximately one year after the completion of the drilling.
WHAT IS THE CITY OF FORT WORTH DOING WITH THEIR PORTION OF THE REVENUES?
RPIA and the Neighborhood Alliance have collectively agreed to work together to develop a strategy to deal with the City of Fort Worth. The overall consensus is to work with the City to ensure that a fair share of the City windfall is put back into the neighborhood infrastructure projects.
WHAT WILL THE SONIC VIBRATION FROM THE DRILLING RIG HAVE ON THE FOUNDATIONS OF THE NEARBY HOMES?
Per BlakeGeoServices: “I do not think the rig vibration will have any effect on foundations. I have worked in the mining industry where we would set off explosive charges fairly close to residential areas. Seismic monitoring and inspections showed no impact. I would venture to say that vibrations would not exceed what is given off by traffic on 8th avenue.”
WILL THE DRILL LOCATION MEET WITH THE CITY ORDINANCE OR IS A VARIANCE NECESSARY FOR THE 600 FOOT CLEARANCE. RULE 37?
Per, Four Sevens, the proposed site along 8th Avenue, almost directly across from Braum’s, is considered to be in a “high impact area” requiring special considerations. It does not meet the 6oo foot clearance, and will require one of three activities before the drilling can begin:
- A release from the homeowners, and businesses that fall within the area.
- A variance to the requirements by the zoning commission or appropriate city organization.
- A waiver from the ordinance by the City Council.
Colt/LPS would not be more specific as to what approach, Four Sevens was to take, but they clearly know that they have to pursue an exception process, once they have the requisite number of leases to make the project viable. LPS is convinced they will get enough RPIA homeowners to sign leases, which will be the go-ahead to petition the City Council for a waiver to the high impact drilling requirements.
It appears that FWE locations will not require waivers from the City of Fort Worth, since the drill sites near Ryan Place are in industrial areas, with adequate clearance from residential sites.
WILL THE DRILLING ACTIVITY AND PROXIMITY OF THE GAS WELL RQUIRE A CHANGE IN HOMEOWNERS INSURANCE?
Based on discussions with, USAA, Farmers Bureau, and State Farm, there should be no increase in homeowners insurance specifically due to the fact that the drilling company is required by law to have adequate liability insurance in the event of any type of incident at the drill site or the surrounding area/community. Only if your house was sitting on top of an open pit mine, or a major gas storage tank, would the homeowners policy require changes. Clearly some insurance companies have different underwriting rules, but the large, reputable companies at this point do not consider any additional requirements.
WHAT IS THE RESPONSIBILITY OF THE COMPANY IN THE EVENT OF A DISASTER? IS THERE A PUBLIC EVACUATON PLAN FOR THE NEIGHBORHOOD?
By City Ordinance, Four Sevens is to have a specific evacuation plan before drilling. Colt will produce a specific plan for RPIA to publish on its web site.
WHAT ARE THE TAX CONSEQUENCES FROM THE DRILLING AND DISCOVERY OF GAS IN THE AREA?
The two most obvious tax consequences are:
- The royalty income received from the drilling company is taxable by the IRS under normal income rules.
- The property tax “could” increase based on calculations from TAD as they asses the fair share value of the gas reservoir.
We have asked the committee members to research the tax issues in more detail, and here is what Dave Frye and his group put together:
“Property Tax
If you have an interest in a gas well, Tarrant Appraisal District (TAD) will appraise the value of the well on January 1st of each year. This value is supposed to represent the fair market value of the well and equipment. Just like your home’s appraised value, this value is supposed to represent the price a willing seller and a willing buyer would trade for the well. TAD takes into account the price being received for the well’s natural gas and its estimated remaining life. Your value will be determined by taking the total well value and reducing it by the size of your ownership in the production. That is, if you are entitled to 1 percent of the revenue from the well, you will be assessed 1 percent of the well’s value.
Again, just like your home, the various taxing entities such as Tarrant County, the City of Fort Worth, and Fort Worth ISD will tax the appraised value. These taxes should total a little less than 3 percent of the appraised value.
Severance Taxes
Revenue from the well will have severance taxes taken out before you get paid. (The State needs to get its share).
Income Taxes
You will be responsible for paying Federal Income taxes on the revenue you receive. The company that remits your revenue will not withhold any taxes. (Uncle Sam needs his share, too).
