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Item 6A (3)USOUTHLAKE SPIN MEETING REPORT CASE NO. GAS10 -004 / GAS10 -005 / GAS10 -006 PROJECT NAME: XTO — JGJ Unit / Associated Pipeline SPIN DISTRICT: Citywide - SPIN # 7 MEETING DATE: June 21 and June 28, 2010 MEETING TIME: 6:30 PM — 7:30 PM: Information Open House 7:30 PM — 9 PM: Presentation / Q &A Session MEETING LOCATION: 1400 MAIN STREET, SOUTHLAKE, TEXAS CITY COUNCIL CHAMBERS TOTAL ATTENDANCE: June 21, 2010 — Eighty -six (86) June 28, 2010 — Ninety -eight (98) • SPIN REPRESENTATIVE(S) PRESENT: Vic Awtry ( #7); Ronald Evans ( #10) APPLICANT(S) PRESENTING: Walter Dueease, Senior Regulatory Affairs Coordinator, XTO; Richard Smith, Director of Engineering, Energy Transfer; Anthony Welty, Operations Project Engineer, Energy Transfer • STAFF PRESENT: Alison Ortowski, Assistant to the City Manager; Lorrie Fletcher, Planner I STAFF CONTACT: Lorrie Fletcher, (817)748 -8069; Ifletcher @ci.southlake.tx.us EXECUTIVE SUMMARY Property Situation The gas well site is generally located south of E. Highland Street and southwest of State Hwy 114. The installation and operation of a natural gas pipeline that will facilitate the gathering and transportation of produced natural gas is proposed to begin between County Road 3088 and State Highway 114, and will run easterly along the south side of SH 114 and finally turning south along the west property line of Mike's Garden Center and ending on the Milner gas well site. Introduction Vic Awtry, SPIN # 7 representative, introduced the items for discussion and the applicants. Walter Dueease, Senior Regulatory Affairs Coordinator, XTO Introduced himself and presented information regarding the gas well proposed. He gave history of XTO and talked about XTO currently. He discussed the different phases involved in the drilling process and horizontal drilling. Examples were shown of the drill rig and acoustical walls. The Barnett Shale was discussed showing the different gas drilling areas, explaining the core area. He stated there are currently 2500 wells in Tarrant County. He explained the wellbore and talked about completion activity. Fracture stimulation was explained stating this would be conducted during daytime hours only. He presented a typical facility and discussed security and safety measures. A list showing areas of concern and how they are addressed was presented. He showed the concept plan associated with this site and talked about who would benefit from this operation. Rick Smith, Director of Engineering, Energy Transfer Introduced himself and presented information regarding the pipeline route proposed. He gave an overview of Energy Transfer and talked about transportation needs associated with the drill site. He stated Energy Transfer operates over 250 miles of pipeline serving the Barnett Shale. He talked about the specific routes proposed in Southlake, discussing segment 3. Segment 3 is proposed to be approximately 2 miles of 6 inch pipe. He explained pressure, the construction process, HDD and open cut installation options. He discussed the importance of safety regarding the community at large, the pipeline and employees. He explained the information hotline that is available for questions or concerns. The following is a summary of the questions and concerns raised at each meeting. Please visit our city website and view the video for more specific details: http:// www. citvofsouthIake .com /southIakegovernment/boards and commissions /spin /SPIN 2010 Meetina Reaorts.htm QUESTIONS / CONCERNS — June 21, 2010 • There is a concern regarding the fracking process and the toxic chemicals that are added to the water and sand and injected forcefully into the well. o 99'/2% of the constituents used in fracking are water and sand (by volume). There are gelling agents, citric acid, potassium chloride, sodium chloride, and borate salts. When you look at common application of these chemicals, they are used in many of our everyday items such as table salt, pharmaceuticals, plastic, make -up remover, laxatives, and candy. Many of these things that make up frac fluids are things that we encounter every day. What comes out because of what it encountered in the Barnett Shale now has a very high chloride concentration and must be protected which is why we use the above ground steel tanks and dispose of the water at a regulated disposal facility. • How much fluid typically comes back out? o Depends on the well. The majority of the fluid we put in comes back over the life of the well, usually within the first couple of years of production. • There could be millions of gallons of water used for fracking the 27 wells? o Yes, there could be in excess of a million gallons of water used for each well. • Is the pipeline or the entire route along SH 114 six inches? o Yes • There is concern for pipeline issues that are occurring in other locations of Texas as well as other states. o Energy Transfer can speak to this pipeline.. we do not know the specifics of other company's incidences. The HDD method we explained will increase safety significantly. Most incidences are caused by third -party damage. I am not aware of any incidents with Energy Transfer pipelines. • What are you doing to address smell? o We believe the gas produced from this well site would be dry. The wet gas that produces liquid condensation does contain the hydrocarbons which can produce an odor. It is our responsibility to minimize any of the impacts by this activity. • There is a concern about earthquakes and how drilling may be causing them. Have there been any studies done? o XTO has not done any studies about the relationship of drilling to seismic activity. I haven't heard of any results of a study that shows this relationship. • Can you guarantee that there will not be any pollution to our drinking water supply? o We will do everything within our ability that our activities will be regulated and monitored to ensure there will be no impact. • There is a concern about methane in water and the possibility if water igniting from the faucet. o I don't know what the circumstances are and I don't that there is a direct relationship between the drilling of a well and the ignition of gas at a faucet. • What steps are you taking to ensure there is no water pollution on -site? o A cement casing at the level of the aquifer as well as steel casing throughout the entire well is used to protect from any leakage. When the water comes back out, it is stored in steel tanks within a containment ring that is also lined and protected in the event of a spill. • Please address levels of Benzene that may be found around the gas wells. o Southlake is located in the Core Area of natural gas production which means the gas produced is dry. Where you do not find condensation or liquid hydrocarbons, there will be little to no Benzene associated with that production. Quoted from an article written by Brian Shaw (TCEQ) that states Benzene levels in Ft. Worth pose no immediate health risk because the highest measurement taken in the city is less than 4% of the level at which a short term health affect might occur. And, that there is no potential health based reason for concern. • How long will the process take if you gain approval from the city? o If approval is granted, drilling could start in late October. It is likely four wells may be drilled back to back which would be finished sometime late January, early February. Completion activities might take place later that year. We would most likely propose to complete the wells once the pipelines are in place. That could take up to a year. • What public roads will the trucks use? o The trucks would travel SH 114 and exit White Chapel; stay on the frontage road until Highland and turn west into the well site. There will be a best route for the larger trucks and a best route for the day -to -day traffic. You can't exit Highland and get back on SH 114 at that particular location... you may continue down the access road. • Concern for traffic on White Chapel o We will work closely with the City regarding our truck route and timing • When all of that is done, the roads will be restored? o We will have a bond in place with the City that requires any damage done to be repaired. • What is the specific distance from the existing schools in the area as well as the school under construction? o It is in the thousands of feet. I can get those distances for you. • Concern for residents within 1000 foot buffer. Does XTO need a waiver from all of these residents in order to gain approval? o The ultimate decision is up to City Council. • Has the change from 600 feet to 1000 feet caused you problems in areas you previously thought viable? o We have not specifically been denied an application due to the distance of the well. • Where does the flowback water go? o A truck will come as needed and take the water to an approved disposal facility. • Will you use holding ponds or injection wells? o The City of Southlake does not allow holding ponds or disposal wells. The water will be removed and taken to a regulated disposal facility. The nearest one is in Wise County. • What will XTO do regarding air quality? o On -site inspections by XTO employees on a daily basis and routine and periodic monitoring of the sites, stem to stern. • You have your own people conducting these inspections? o Yes, as well as a third party... I can get you the name • What is the general pressure of the Barnett Shale at initial delivery and if it is stepped down to 300 psi or stepped up? At what point is the well shut down? Will there be a compression station? o We would like to produce the well and the acceptance level of the pipeline. The well is shut down when it is no longer economically viable. It is a finite resource. If a gas lift is used, the equipment would have to meet the noise and visual requirements of the ordinance. • Are the valves automatic or manual? o Most are manual... there are pneumatic valves that are controlled by a change in the pressure that is set according to well performance. If the well falls outside of that range, then the valve closes and shuts down the well. • What is the pressure of home delivery gas as opposed to what is in these pipelines? o Home delivery, in grills etc., would be less than 1 pound • Will the city water table be affected by the drilling process? o No, we will not be affecting the city's water well table. Our water source will likely be trucked in from a neighboring city. The property owner may also choose to sell us water. I see no potential impact. • If there is a blowout or kickback during fracking, what is the impact of a structure 650 feet away? o From what I have seen and experienced. There have not been any instances that have impacted anything outside of the boundaries of the pad sites. • How can you proceed without knowing where you are getting the millions of gallons of water? o It's an engineered solution; we will need to find a water resource nearby. • Will you be trucking it in? How many trucks would that add to our traffic problem and road deterioration? o It would add quite a few trucks to the existing traffic that is along SH 114. • Concerned about fracking chemicals... highly toxic. There are several chemicals that are unknown and labeled as a proprietary blend. How can we be sure that we will be safe? o The engineering controls that we have in place ensure the safe and responsible handling and disposal of whatever we bring on site. Not only is our process in a controlled and supervised environment, we are regulated by federal and state laws. Aren't you exempt from the Clean Water and Clean Air Acts? o No, many parts of our activities are regulated by those acts. • Have there been any long term studies done as far as the impact on water and air quality? o The Barnett Shale has been in Tarrant County for 6'/2 years. I don't know of any study that would be any different. Studies done abroad do not relate to the Barnett Shale. • Are you aware of any impact to property prices in the area? o The only one I am aware of was in the City of Arlington where a study was done and they indicated there was not an impact to adjacent properties. • In light of the recent tragedy, why would you still consider outsourcing and not see this all the way through (regarding the pipeline) o Because XTO has a partnership with ETC as a company that we trust and has a proven track record. • Do you have a P &Z and Council date for these yet? o Not yet... it will be posted on the website when it is placed on an agenda • How many psi is the pipeline rated for? o Good to over 1500 psi but we operate at 300 psi or less • What precautions do you take when you operate near other gas mains or gasoline lines? o First we work with those companies to ensure lines are identified; then we adjust the design accordingly using the field survey data. 99% of the time we go below other lines. • What is the required distance between lines? o Fire code requires at least 2 feet separation. We intend to be much deeper. • What is the current height of the drilling rig? o The rig has a height of 175 — 180 feet. The well head is between 5 — 6 feet. • What about the airport? o We have to submit an application to the FAA for their review and certification QUESTIONS / CONCERNS — June 28, 2010 (this summary will only contain questions or concerns not previously addressed on June 21, 2010) Question about distance of drilling from pad site — 7 to 10 thousand feet o Showed and discussed the slide displaying the conceptual units In the state of Texas there are about 110,000 unplugged wells currently. The State is plugging about 1,700 and the industry is plugging about 6,500 per year. Is there any provision for plugging the wells years down the road when production is complete? o Yes there is... City of Southlake has requirements for plugging the well and restoring the site to its original condition. I believe the statistics you gave were for orphaned wells. How many gallons of water are required per frac job? o About 2.5 to 3 million gallons per well. There are 20 wells proposed on this site... approximately 60 million gallons of water in total. • Do the wells have to be re- fracked in 5 years o No, not every time... that is determined by a geologist for economic viability • Will XTO and ETC and all of its contractor vendors provide to the public a report to include the parts per million for every chemical that will be put into the ground for the fracturing process including kerizene, benzene, and formaldehyde? o The material safety data sheets are required by the City of Southlake. We have submitted this list to the City. • There are a number of acres out there that were acquired by Chesapeake. Has there been any action by XTO to acquire those? o As of today, no... however, we may pool some of the property into our units • Concerned about run off and surface water at the corner of the Milner property. What studies have been done to study the flooding issues both coming out of Chapel Downs and Summer Place and also the runoff from that property to Highland? • I can't speak to the investment of the Milners in taking care of the runoff issue. As part of the SUP submittal, we have grading and erosion control plans. It is something we have contracted with Jacobs Engineering to study and present to the city as well as the review provided by city staff. • What if the flooding problem worsens? • We would take a careful look at what caused the problem. • You are bringing roads and trucks over the natural runoff • The grading plan and erosion control plan will be completed and submitted to the city. The construction area coming into the pad site is not in the flood plain. • Question raised regarding the TCEQ's max level of emissions — 24 tons per year. Are you expecting to reach that number? o That is the threshold set by TCEQ. If we would exceed that stated level, we would have to take measures to bring facility back into compliance. • How far can you horizontally drill for the pipeline at a time? o This line will be about 700 -800 feet because our pipe is 6 inch • What other plans does XTO have to drill in Southlake? o One other pad site along SH 26. These two sites are all I know of at this time. • Can you provide the chemicals used by volume? o Yes, I think we can make that available to the City • What are the top three reasons for dangerous accidents? o First on the list would be human error. Policies and procedures are in place to keep employees trained and safe. In terms of the pipeline, the top reason is third party damage. We have several measures in place that monitor pressure and identify line locations. • What does 20 well heads look like? o For each well head, there is a separator; and there are a number of water storage tanks necessary to accommodate however many wells are drilled. The production facility is built as the wells are drilled. • If you are drilling today and do not exceed emission levels but in the future the levels change, are you grandfathered in to the old levels or do you have to abide by new levels? o We have to abide by existing laws; there is no grandfathering. The TCEQ is taking a hard look at all emission sources. • If you exceed levels, do you have to shut down until you bring the levels down? o I don't think so.. we would have very good indication from the monitoring that we do that would show if there was an elevated level of emissions. We would have to take some action early on to take care of any problem before it even reached that threshold. We would not wait until it reached the threshold. o So you stop and fix the problem? Yes, if there is a problem, you stop and take care of it. We would do what we can to fix a problem before it even reached a point of becoming a compliance issue. • How many more pad sites can we expect in the future? o I can only speak of what I am familiar with, which are these two sites • What am I going to see driving down SH 114? 1 don't want to see a bunch of tanks. o The City has a very restrictive landscaping and screening ordinance. There will be landscaping and screening around the perimeter. We have expressed the wishes of the land owner to the City that pipe and rail fencing with 12 foot Leyland Cypress trees be allowed. • Do you have another site out there that is similar that we could look at? o No, we have not used this type of fencing with the Leyland trees before but there other sites in the Ft. Worth basin that have similar types of fencing and landscaping; possibly in Arlington or Mansfield. • Does the number of wells increase the noise? o No, when utilizing the drilling rig, there are noise levels that we cannot exceed. The City only allows an increase over ambient at 3 dB during the night and 5 dB during the day. • Will the existing trees around the site be taken out and new trees put in? o No, the trees around the site will not be taken down. Outside of the blanket perimeter will be the Leyland Cypress or whatever the P &Z and Council would like planted. The sound blankets are taken down after drilling and fracking. They are not there permanently. • What is the closest drill site to Southlake? o Probably on the west side of Keller off of Highway 377. The nearest producing site of another operator would be the west side of DFW which is operated by Chesapeake. • 1 have heard there are 300 to 600 chemicals added to the frac mixture; can you verify if that is true? o It is difficult to comment on the universe of mixtures used worldwide in different reservoirs. The number of additives we use here is probably less than 25. Our additives are provided to the City through the Material Safety Data Sheets. • Of the 60 million gallons of water pumped into the ground during fracking, how much is recovered? o It depends on the porosity and permeability of that particular well's reservoir. The small percentage of water remaining stays in the Barnett Shale and does not get into other levels above or below it. • Many of us do support natural gas as a clean and wholesome alternative to foreign energy resources. We do expect you to rise to the level of our trust by exceptional monitoring, testing, and communication. We expect full transparency and disclosure. We also expect a fully equipped action response plan to prevent and limit catastrophes. You will have to make yourselves as invisible as possible. We want to be a model for safe homegrown energy. o We feel confident in rising to the responsibility and commitment to excellence in our urban drilling and pipelines. • Will you be using a green completion? o The green completion in some terms is something we already employ by reducing the length of time that a well is vented to the atmosphere during the flowback period which is approximately two days. We have learned that the least amount of time the well is open during the flowback period is also beneficial to the operator. How do you define a green completion? o That you capture it all... there is no venting. • I am not aware of a process for the completion of a Barnett well that completely contains the gas and the fluid during the flowback period. • What did Ft. Worth require? • Ft. Worth supports the use of green completions where ever possible. • Is XTO a member of the EPA's Gas Star program? • I do not know but can find out. Generally those are applied to particular facilities. After the pipeline is no longer in use, what is in place either by city regulation or internal policies to make sure that the pipelines are not going to become a hazard? o Preventive maintenance is key. We have active pipeline that was constructed in the 1920's. A well maintained pipeline can last in perpetuity. Vic Awtry gave conclusionary remarks... meeting adjourned. SPIN Meeting Reports are general observations of SPIN Meetings by City staff and SPIN Representatives. The report is neither verbatim nor official meeting minutes; rather it serves to inform elected and appointed officials, City staff, and the public of the issues and questions raised by residents and the general responses made. Responses as summarized in this report should not be taken as guarantees by the applicant. Interested parties are strongly encouraged to follow the case through the Planning and Zoning Commission and final action by City Council.