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Item 4A (2)lug CITY OF SOUTHLAKE TEXAS REGULAR FEBRUARY 15, 2011 CITY COUNCIL MEETING CONTINUED TO FEBRUARY 22 2011 MINUTES specs ica y to consi er item — eso ution o. 10 -057 (GAS10 -004), item 4M —GAS10 -005 (related to GAS10 -004), item 4N —GAS10 -006 (related to GAS10 -004), and item 40— Variance to Noise Ordinance No. 778 (related to GAS10 -004) LOCATION 1400 Main Street, Southlake, Texas 76092 City Council Chambers CITY COUNCIL PRESENT Mayor John Terrell, Mayor Pro Tem Laura K. Hill, Deputy Mayor Pro Tem Brandon Bledsoe, and Councilmembers Carolyn Morris, Pamela A. Muller, Jeff Wang and Al Zito. CITY COUNCIL ABSENT None. STAFF PRESENT City Manager Shana Yelverton, Community Relations Officer Pilar Schank, Director of Finance Sharen Jackson, Director of Planning and Development Services Ken Baker, Planner Lorrie Fletcher, Chief of Fire Services Mike Starr, Fire Marshal David Barnes, Chief of Police Services Robert Finn, Director of Public Works Robert Price, City Attorney E. Allen Taylor, and City Secretary Alicia Richardson. WORK SESSION 1. Call to order Mayor Terrell reconvened the regular February 15, 2011 meeting at 8:35 p.m. Mayor Terrell announced the public hearing for Resolution No. 10 -057 (GAS10 -004) was closed on January 4, 2011. The City has compiled a comprehensive list of speakers, including their views. Additional comments received will be included with the record. Mayor Terrell asked Mr. Taylor to address the recent action taken by the Planning and Zoning Commission. City Attorney Allen Taylor provided a legal review of the recent action taken by the Southlake Planning and Zoning Commission. Mr. Taylor advised that the Commission did not forward a recommendation to deny the request to Council. Therefore, a super - majority vote is not required by the Council. 4L. RESOLUTION NO. 10 -057 (GAS10 -004), SPECIFIC USE PERMIT FOR GAS AND OIL WELL DRILLING AND PRODUCTION ON PROPERTY BEING REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 1 of 11 LOCATED AT 651 AND 655 EAST HIGHLAND STREET ON PROPERTY BEING DESCRIBED AS A PORTION OF LOTS 1R1 AND 2, BLOCK A, MILNER ADDITION. CURRENT ZONING: AG AGRICULTURAL DISTRICT. SPIN NEIGHBORHOOD #7. APPROVED Planner II Lorrie Fletcher presented item to Council and was available to answer questions. Ms. Fletcher outlined updates Council received in their packet. Mr. Walter Dueease, with XTO Energy, Inc., was available to answer questions from Council related to GAS10 -001, GAS 10 -005, GAS 10 -006 and variance to Noise Ordinance No. 778. Council and applicant discussed conditions previously agreed to by XTO Energy, Inc. at the January 4, 2011 City Council meeting. In response to questions from Council, Mr. Dueease provided explanations regarding XTO's request. Motion was made to approve Resolution No. 10 -057, also known as GAS10 -004 the Specific use for Gas and Oil Well Drilling and Production at 651 and 655 East Highland Street including the following stipulations and items agreed to by the applicant with Southlake City Council: ■ Perimeter fencing and screening will meet our ordinance including internal chain link fence and side screening walls for security purposes, and including that fencing and screening, the fencing and screening rendering that was presented at the City Council meeting with a May 1, 2011 deadline on the fencing and landscaping on the north and east sides, the balance by the end of the SUP period or 90 days within fracturing of the last well, whichever comes first; ■ The applicant has agreed to 24 -hour video imaging to be placed and situated to capture all images on the production site. Southlake DPS will have access to the video. The video surveillance system will comply with Section 9.5- 242(yy)(2) and the remote monitor access system shall comply with Section 9.5- 242(yy)(1)of the current ordinance; ■ The air testing will be continuous as soon as the first well is fraced and until one year after three wells are in production. Testing methodology will replicate that outlined in the Klenfelder Limited Ambient Air Quality Evaluation Study dated October 1, 2010. There will be pre- and post testing. The testing will also occur continuously and will be conducted by a consultant selected by the City. The funding for the pre- and post- will come out of the XTO Revolving Fund account established by Ordinance No. 880 -A and the City acknowledges that XTO representatives will need to be present at the time of testing by the City consultant. XTO has agreed to separately pay for the equipment and for monitoring of the continuous air testing and has given us permission to access that property. The location of the monitoring system will be decided by our REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 2 of 11 consulting firm with a representative of XTO. The monitoring system will be a gas chromatograph monitoring system similar to the one in Fort Worth, Flower Mound and Dish. XTO will also allow TCEQ to tie -in to their system and the testing methodology will be consistent with the TCEQ testing procedures. Results will be posted in real time either through TCEQ or the City of Southlake. We've also agreed to set up a review committee which will monitor results and recommend to Council, make recommendation to Council, which will include long term monitoring; ■ They will adhere to state and federal air quality standards and the newly adopted CEQ guidelines; • XTO agrees that engineering casing and a cement program for all wells to be drilled will be submitted; • Pre and post drilling water samples for water wells within 2,000 feet of the well sites will be taken by a third party results / laboratory results made available to the City. The pre - drilling and post completion will also include quarterly testing to consist of third party water sample analysis and flow rate measurement from all water wells within 2,000', noting the individual consent of landowners. The testing methodology will be conducted by a consultant selected by the City and the funding for the water quality testing will be paid by XTO via the revolving fund account established by ordinance 880 -A. Water quality testing methodology will follow the recommendations outlined by Klenfelder, Dr. Kenneth Tramm, in his presentation to the City Council dated September 9, 2010 and will include testing for evaluated TDS, Chlorides, VOCs and TPH. Other possible analyses include dissolved gases (methane, ethane), TPH (fractionated), SVOCs, and other targeted analysis based on drilling additives as disclosed by XTO. Testing will occur pre- and post drilling as outlined in the ordinance. And as I mentioned, the additional testing, quarterly, once fraction, once fracing begins and until one year after the third well is in production. The results will also be reviewed by the committee with recommendations to the Council. Tche City acknowledges that an XTO representative will need to be present at the time of testing by the City's consultant. Also noting again, consent of the land owner to enter their land for testing; ■ Where possible, all tanks and vessels will have a secondary containment system to prevent ground water contamination; ■ XTO will provide the City quarterly gas analysis information that will be extended gas sample analysis of each well and will be agreed to with our consultant. It will come in a format that can be evaluated by the City's petroleum engineer; ■ They will provide all MSDS sheets for types, volumes and concentration for all additives for the drilling and frac program prior to spudding of the first well; REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 3of11 ■ They will meet with the first responders from Southlake to assess possible dangerous situations and that will happen prior to permit issuance; ■ The Special Use Permit will be limited to three years; ■ City's petroleum engineer or consultant will make a decision if a vapor recovery system is needed, and XTO agrees to abide by his or her decision; ■ No no -bleed pneumatic valves will be used at this site; ■ No venting on the site. The applicant has agreed not to complete the fracing process until a sales line is in place, and XTO shall contain gas emissions after stimulation at this site even if the pipeline is not installed; ■ A thermo oxidizer will be used only if our City petroleum consultant makes the recommendation; ■ There will be hydraulic surface testing of Dove Creek. The timing on that will be quarterly once fracing begins and until one year after the third well is in production. Again, that will be reviewed by the committee with recommendations made to the Southlake City Council. The testing methodology will include the testing of TPH, VOC, and chlorides, as well as other compounds identified in the proprietary fracturing fluids. As I mentioned, testing will occur both pre- and post drilling, as well as the quarterly. The testing for pre- and post will be paid out of the revolving fund and, which was established by ordinance 880 -A and the City acknowledges that an XTO representative will need to be present at the time of testing by the City's consultant; ■ Requiring a concrete drive to the pad site and all truck access will be from State Highway 114. Highland and White Chapel will not be used as an alternate route by any site vehicles; ■ No fueled compressors / generators on site. Only the use of electric motors to drive compressors, and they commit to meeting all city ordinances. It is understood this will require right of way from the nearest primary utility line; ■ Soundproof blankets and walls will not be left up between drilling and frac times. It is understood that unless there is a brief period —of less than one month — between these operations; ■ Any compression line or gas lift equipment shall be installed to meet ambient noise levels at the pad boundary. XTO will mitigate all nuisance sound from the use of gas lift compressors at the site pursuant to 9.5 -243 (d)(1)c, which provides that no equipment shall exceed ambient levels at the nearest receptor by 3 dBA. XTO shall not locate gas lift compressors away from the drill site; REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 4of11 ■ XTO will equip any and all compressors, machinery and drilling equipment with the latest technology in noise suppression, muffling devices and pollutant constraints, including the suppression of dust vibration, noxious odors, airborne pollutants and harmful fumes. The applicant agrees to meet the City's noise ordinance in all aspects, and has agreed to continuous noise monitoring; ■ XTO agrees to conduct their work operations during the daylight hours Monday through Friday and any nocturnal operations shall comply with the noise stipulations in the ordinance. They will employ or use a drilling rig that minimizes noise and uses the latest technology for advanced drilling rigs. XTO shall use diesel - electric rigs that employ the latest technology. Pursuant to the ordinance, a noise mitigation plan has been provided to the City. The placement and height of blankets is intended to mitigate all nuisance sound and is designed by an experienced acoustical contractor; noting 20 feet on the south perimeter and around the generators. Reference the Noise Management Plan; ■ Frac operations should only take place during daylight; ■ Noise monitor reports will be provided to the City on a daily basis or after a citizen's complaint is received; ■ Condensation tanks will be painted light tan; ■ There will be no flaring into the atmosphere; ■ XTO will fund from the revolving account, a hand -held air monitoring device to be used by the gas inspector for daily monitoring. XTO agreed to purchase a standard fire department LEL monitor; ■ XTO safety professionals will conduct semiannual NORM detection facility inspections; ■ Requirement for trucks leaving the site to have a mud shaker and a dust control plan will be in place with the City. Periodic watering will occur during dry period or whenever necessary. The surface of the pad site shall use asphalt millings and a dust suppressant emulsion to control nuisance dust; ■ XTO agrees to allow the City and /or gas inspector on -site for daily inspections, and the City will have a key to the site; ■ In the event of an elevated level of emissions the source would be detected and corrective measures would immediately be taken to shut in the well, if necessary, replace the equipment and to re -test to ensure the integrity of the new or replaced equipment; REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 5 of 11 ■ Potable water will be delivered by a contractor and stored in appropriate vessels at the site for the consumption of the employees. Sanitary services are also provided by a contractor who meets state license requirements; ■ Water will be trucked to the site and store in portable tanks, but between October 15 through May 1 St XTO may purchase water from the City of Southlake. The applicant will work with the City noting that their, that we are restricting it to one heavy user at the time with a maximum consumption rate of 1,400 GPM. If there is a water failure system they will be the first to be curtailed. And if their system maintenance they will have to coordinate with the City. We may need to restrict consumption for fracing use; ■ We require full compliance with the surface casing requirements imposed by the State of Texas and the local municipality for ground water protection. XTO shall install such surface casing in the required manner in order to ensure the protection of all fresh water bearing formation under the land. Further, XTO agrees to reimburse the municipality to conduct water testing for all existing water wells near the well site; ■ They have accepted the Erosion Control Plan as submitted, exhibit M &L and grading plan in the SWPPP, Storm Water Pollution Prevention Control Plan; ■ They have agreed to install secondary containment around all separators, tank batteries, and other equipment on the drill site and install triple casing. Permit a city contracted petroleum engineer on -site during casing installation and allow review of relevant reports. The engineering consultant fee will be reimbursed through the revolving account. XTO will give the City 72 -hour notice prior to the well casing being set. Three casings strings and one tubing string is installed in the well. 13 -3/8" conductor is set at +/- 80', 9 -5/8" surface casing is set to +/- 1800', 5-1/2" production casing will be set to total depth, 2 -3/8" tubing will be set to the end of the curve section in the well. XTO shall allow the gas inspector or contract engineer on -site during all operations provided the individual has the appropriate Personal Protective Equipment; ■ The casing string will be pressure tested prior to drilling the next section of the hole. If the casing fails a pressure test then isolation tools will be placed in the hole to locate the leak and the corrective measures will be taken to repair the failure and ensure pressure integrity of the casing string before conducting subsequent operations; ■ To the extent possible XTO will use green fluids, our drilling consultant will work with XTO to determine the appropriateness of the fluids that may be employed in the well; REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 6 of 11 ■ While any operations are taking place at the site, the operator will attempt to shield or direct the light away from adjoining neighborhoods. All lighting shall meet any and all State and Federal regulations; ■ The permit holder operator will on completion of the well run a seating nipple in the tubing string to accommodate the installation of a sub surface safety shut off valve. This will enable the sub surface safety shut off valve to be installed if producing conditions require the devise for safe operation of the well; ■ Equipment on -site shall be low- profile and not exceed eight feet. Equipment should not be visible from adjacent right of way; ■ We have a commitment from XTO that all wells will be capped in accordance with State and Federal regulations at such time production ceases. This applies only when wells that have reached their economic life are plugged and abandoned and not at such time production ceases; ■ They have agreed to an irrigation system and landscape, and have a landscape maintenance plan in place. The landscape irrigation plan is designed by a landscape architect licensed by the State of Texas who will recommend the appropriate type of irrigation for the site. They have also agreed to bubblers for, to provide water to the landscaping material. Landscaping on the permanent sides of the pad will take place in March before the drilling rig moves in. Final landscaping will be installed once fencing is in place any time directed by the City of Southlake landscaper or when seasonally appropriate; ■ They have agreed to mitigate trees removed on -site or removed during the installation of the pipeline and will pay into the City's reforestation fund; ■ They will report all spills and leaks to the City within one hour. And we require a follow -up report within seven days detailing the chemicals released, the impacts of the release, methods used to address the spill or leak, and correction measures to ensure no further spills or leaks; ■ Waste and sludge will be removed from the site by a contractor approved by XTO; ■ We are requiring twenty million in insurance per occurrence and fifty million aggregate; ■ There will be living quarters for approximately fifteen employees and contractors that will be located on the site. All facilities shall be located within the pad site boundary and shall be utilized during the 24 hour drilling operations only. Once the rig is de- mobilized the crew quarters will be removed; REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 7 of 11 ■ Additives for drilling mud are generally stored in an enclosed mud house and used as needed during the drilling operation. Additives for stimulations are stored in containers, sacks and vessels specifically designed for the protection of the additives. The site will not be used for long term storage of additives; ■ XTO is committed to work with the Land Plan Hospital on an evacuation plan if the facility is built; ■ We are also requiring a documented disaster plan to be developed with DPS and placed on file with the City. XTO has submitted an Emergency Response Plan. We have asked them to include Baylor Hospital and Parkland Hospital, as well; ■ XTO is required by the Railroad Commission of Texas to install specific signage at the entrance to the lease, wellhead and tank battery information regarding the name of the operator, well name and number and lease ID number. XTO will maintain the emergency contact information signs and will not change the number; ■ They will limit pipeline pressure to 330 PSI. The current agreement in place with the producers limits the pipeline pressure to 330 PSI; ■ Any concerns or conflicts with City utilities will be addressed with our Public Works Department, prior to construction; ■ To the extent there are no conflicts with existing lines and constructability is not affected, all efforts will be made to install the pipeline in the SH 114 right of way of 114. The applicant has agreed to coordinate with TXDOT and confirm before the pre- construction meeting with Public Works; ■ The applicant will also appear before the Parks Board and Southlake Park Development Corporation once easement documents are created for approval of the pipeline through park property on highway 114; ■ Tree cover will be taken into consideration when determining where the construction method of trenching should be utilized; ■ Pipelines must be a minimum of eight feet deep. Dig tape will be installed in all trench areas and tie -in points where the pipeline is accessible; ■ Notification of residents within 1,000 feet of the boring process. The boring process will continue uninterrupted for 24 hours or will occur on a Sunday. If the process will occur on a Sunday, Energy Transfer will work with the City to perform these notifications of our residents; REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 8 of 11 ■ Inclusion of the Staff Report dated February the 17 2011 including all staff review summaries attached to report; and inclusion of all site plans and exhibits as presented. Motion: Hill Second: Bledsoe Ayes: Bledsoe, Hill, Muller, Terrell, Wang Nays: Morris, Zito Approved: 5 -2 In accordance with Section 4.21 of the City Charter, the caption for this item is listed as follows: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, GRANTING A SPECIFIC USE PERMIT FOR GAS & OIL DRILLING AND PRODUCTION ON PROPERTY LOCATED AT 651 & 655 E. HIGHLAND STREET BEING LEGALLY DESCRIBED AS A PORTION OF LOTS 1R1 & 2, BLOCK A, MILNER ADDITION, MORE FULLY AND COMPLETELY DESCRIBED IN EXHIBIT "A ", AND AS DEPICTED ON THE ASSOCIATED SITE PLAN ATTACHED HERETO AND INCORPORATED HEREIN AS EXHIBIT "B" AND PROVIDING AN EFFECTIVE DATE. 4M. GAS10 -005, CONSIDER REQUESTED VARIANCES TO ORDINANCE NO. 880 -A, GAS AND OIL WELL PERMIT DRILLING AND PRODUCTION ORDINANCE FOR GAS WELL PERMIT(S) ASSOCIATED WITH GAS AND OIL WELL DRILLING AND PRODUCTION ON PROPERTY BEING LOCATED AT 651 AND 655 EAST HIGHLAND STREET ON PROPERTY BEING DESCRIBED AS A PORTION OF LOTS 1R1 AND 2, BLOCK A, MILNER ADDITION. CURRENT ZONING: AG AGRICULTURAL DISTRICT. SPIN NEIGHBORHOOD #7. THIS ITEM IS RELATED TO THE SPECIFIC USE PERMIT (RESOLUTION NO. 10 -057 — GAS10 -004). APPROVED Council received presentation in conjunction with Item 4L. Motion was made to approve GAS10 -005 granting the variance requiring three pipe system and allowing drilling within 1,000 feet of a habitable structure. Motion: Hill Second: Bledsoe Ayes: Bledsoe, Hill, Muller, Terrell, Wang Nays: Morris, Zito Approved: 5 -2 4N. GAS10 -006, CONSIDER REQUESTED VARIANCES TO ORDINANCE NO. 880 -A, GAS AND OIL WELL PERMIT DRILLING AND PRODUCTION ORDINANCE FOR A PIPELINE PERMIT ASSOCIATED WITH GAS AND OIL WELL DRILLING AND PRODUCTION ON PROPERTY BEING LOCATED AT REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 9 of 11 651 AND 655 EAST HIGHLAND STREET ON PROPERTY BEING DESCRIBED AS A PORTION OF LOTS 1R1 AND 2, BLOCK A, MILNER ADDITION. CURRENT ZONING: AG AGRICULTURAL DISTRICT. SPIN NEIGHBORHOOD #7. THIS ITEM IS RELATED TO THE SPECIFIC USE PERMIT (RESOLUTION NO. 10 -057 — GAS10 -004). APPROVED Council received presentation in conjunction with Item 4L. Motion was made to approve GAS10 -006 allowing the location of an unregulated pipeline within private residential areas without an existing pipeline corridor. Motion: Hill Second: Bledsoe Ayes: Bledsoe, Hill, Morris, Muller, Terrell, Wang Nays: Zito Approved: 6 -1 40. VARIANCE TO NOISE ORDINANCE NO. 778, AS AMENDED, FOR ENERGY TRANSFER TO INSTALL A PIPELINE FOR THE TRANSPORTATION OF NATURAL GAS ALONG THE STATE HIGHWAY SH 114 CORRIDOR. THIS ITEM IS RELATED TO THE SPECIFIC USE PERMIT (RESOLUTION NO. 10- 057 — GAS10 -004). APPROVED Council received presentation in conjunction with Item 4L. Motion was made to approve the variance to Noise Ordinance No. 778 granting the noise variance to Energy Transfer to allow the operation of boring equipment. Motion: Hill Second: Bledsoe Ayes: Bledsoe, Hill, Morris, Muller, Terrell, Wang Nays: Zito Approved: 6 -1 MEETING ADJOURNED Mayor Terrell adjourned the meeting at 1:44 a.m. *An audio recording of this meeting will be permanently retained in the City Secretary's Office. REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 10 of 11 John Terrell Mayor ATTEST: Alicia Richardson City Secretary REGULAR CITY COUNCIL MEETING MINUTES, FEBRURY 15, 2011 Continued to February 22, 2011 for Items 4L, 4M, 4N and 40 Page 11 of 11