Editor’s Note: The author of this story serves as Chairman of the City of Lewisville Oil and Gas Advisory Board. That body has no regulatory authority over specific gas well permits. No portion of the property shown in the article is within the city limits of Lewisville.
By STEVE SOUTHWELL
The Bureau of Land Management will sell a 10-year mineral rights lease for a section of Lake Lewisville at a live auction in Santa Fe, New Mexico on April 20.
The winner will get the rights to extract natural gas locked in the Barnett Shale beneath a 258.9-acre collection of parcels underlying the western arm of Lewisville Lake in the Hickory Creek branch.
The minimum bid is $2 per acre, and BLM charges an annual rental rate of $1.50 per acre for the first five years of the lease, and $2 per acre after that. The lease will remain in effect as long as there is at least one producing well. If gas is produced, the operator would pay a 12.5 percent royalty to be split between the federal government and the State of Texas.
Bidders must be qualified oil and gas operators who have the intent and ability to develop the natural gas resources that the government owns there. An environmental group may not place a bid just to keep the property from being developed.
The auction process began in June 2014 when Fort Worth-based Norwood Land Services contacted the New Mexico office of BLM. That office is responsible for mineral rights on federal lands in New Mexico, Texas, Oklahoma and Kansas. Norwood nominated the tracts at the time, hoping for a sale last April. BLM spokesperson Donna Hummel told The Lewisville Texan Journal that the bureau first worked with the U.S. Army Corps of Engineers, which administers the surface use of the tracts. Hummel said the Corps gave approval for the leasing, subject to certain conditions.
The Corps does not allow any surface occupancy on its property for drilling, and requires that any drill pads be at least 1,000 feet from the water’s edge when the lake is at its full 522-foot conservation pool. A drill site may not be located below the 532-foot spillway elevation. The operator must also comply with stipulations meant to protect wetlands and riparian areas, threatened and endangered species, and cultural resources. The Corps has a standing rule that does not allow any surface occupancy within 3,000 feet of critical facilities such as the dam and spillway. The tract for sale is not affected since it is approximately three to four miles northwest of the dam.
BLM held a two-week public comment period in early September. Officials generally use those comments when crafting environmental assessments. The next step was a 30-day public review of the environmental assessment. That process ended in November. Lease notice was issued Jan. 20, kicking off a 30-day protest period that ends Feb. 19. The public has until then to protest the sale by submitting written comments to BLM.
Hummel said that when the 30-day period is over, the bureau will begin reading the protests and preparing a response. That response could be to either resolve the problem by adding stipulations to the lease, to defer the sale until after the bureau can further analyze it, or to delete the parcel from the sale based on a problem that cannot be resolved satisfactorily.
That process is not always straightforward.
Wendy Park, staff attorney for the Center for Biological Diversity, said a section of the sale notice provides those instructions.
“The process is arcane and obscure,” she said, “You can only file a protest by U.S. Mail or fax.”
According to the Finding of No Significant Impact, there were no public comments submitted during the two-week period for any of the 44 parcels for auction across four states. During the 30-day review of the environmental assessment, only one comment letter was received. The Center for Biological Diversity submitted comments generally opposing further lease sales.
Natural gas development
Drilling around the area up for lease is not new. Carrizo’s Great Expectations pad site is just to the west of the tract. That unit has three wells, each about 9,000 feet deep. But, their horizontals extend from north to south, and do not cross under Corps property. To the east of the subject property, Trio Consulting and Management operates the Sycamore Bend unit, which has one producing gas well. Horizontal drilling would allow an operator to reach into the leased area from either existing pad site. The Lewisville Lake property appears to abut the Sycamore Bend unit, and could be reached without having to cross under un-leased Corps property.
The Lewisville Texan Journal contacted Norwood to inquire about the company’s intentions for the land. A Norwood spokesperson said Thursday that the company is working on behalf of another company, and is bound to confidentiality. They would not provide any further details.
Although natural gas prices have been depressed in recent years, the U.S. Energy Information Administration forecasts a rise. North Texas has not seen much new drilling activity while prices have been down. Prices had spiked to about $6 in early 2014, which could have been the trigger for the nomination of this land for lease. Hummel said that oil and gas operators are looking into the future and planning ahead to have leases lined up for when the market improves.
Environmental and safety concerns
Several environmental groups are mobilizing to try to stop the sale. Rita Beving, of the Clean Water Fund, said her group looked at all Texas properties listed in the upcoming sale. She wants mitigating factors to protect the environment and critical habitat for endangered species as well.
The environmental assessment done was not acceptable, Beving said, as it was done in a more global, cursory nature.
“We have every right to ask officials what analysis they’ve done that shows this won’t affect the water,” she said.
The Center for Biological Diversity is working to stop drilling on all public lands.
“[Public lands] shouldn’t be for sale to the highest bidder,” Park said. “Protecting the public should be a top priority. At a minimum, they have to do a proper and full environmental review.”
The environmental assessment provided by BLM does not mention the lake’s “integrity problems”, Park said; and, she is concerned with drilling affecting the drinking water supply for the City of Dallas and other numerous North Texas cities.
Lewisville Lake has been the subject of recent news reports including the LTJ regarding dam deficiencies. Park is concerned that the fracking process for horizontal wells under the lake could cause increased seismic activity– a concern echoed by Beving. She worries that either fracking, or any possible wastewater disposal that might occur in the vicinity could weaken the dam and cause a breach.
The Sierra Club’s Lone Star Chapter echoed the concerns of the others, emphasizing his concerns about water contamination. He thinks contamination could happen if a well’s cementing or casing were to fail or if a spill were to occur.
“Any oil and gas development near a reservoir does have the potential to lead to water contamination if not managed correctly,” Reed said.
-To read the instructions and get the address or fax number for the protest process, visit http://tiny.cc/blmsalenotice .
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