Presentation to Dallas City Council by Ed Ireland, Ph. D. August 1, 2012

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2 Presentation to Dallas City Council by Ed Ireland, Ph. D. August 1, 2012

3 Today s Presentation Provide background information on the Barnett Shale Provide factual information to evaluate the recommendations from the Dallas Gas Drilling Task Force (DGDTF) relative to the existing City of Dallas gas drilling ordinances.

4 Source: U.S. DOE, April 2011

5 Facts about the Barnett Shale Barnett Shale Formation is 7,000-10,000 feet deep Underlies 5,000 square miles in 24 counties. Dallas County is the eastern-most county. As of June 1, 2012, 18,298 Barnett Shale natural gas wells have been drilled 1,681 producing wells are in the City of Fort Worth Many more wells are within the city limits of other municipalities in the Barnett Shale. Development is safe and protective of human health and the environment.

6 Facts about the Barnett Shale Tremendous economic impacts from natural gas development (report by the Perryman Group, Sept. 2011) 110,000 jobs $11 billion per year in economic stimulus $730 million in additional revenues to local governments and school districts. City of Fort Worth has received $182 million as of June 1, 2012 from leasing city-owned lands for natural gas drilling School districts have benefitted: Fort Worth ISD has received over $861,000 in lease payments in 2011 Arlington ISD, Burleson ISD and Mansfield ISD have each received over $2.5 million in lease payments in 2011 These numbers do not include additional ad valorem tax benefits

7 Why Dallas should encourage the development of natural gas To reap the economic benefits for the citizens of Dallas revenues to the City in the form of minerals leases bonuses and ongoing royalties Property tax benefits Increased sales taxes To protect and promote the private property rights of Dallas citizens so they can reap the economic benefits of their mineral rights.

8 Well Setbacks

9 Setback Regulations Existing: 300 feet from any institutional and community service use, recreation use or residential uses, measured from the wellhead. DGDTF: 1,000 feet to a protected use measured from the property line of the pad site. Fort Worth: 600 feet from a protected use measured from the wellhead.

10 Health Protective Setbacks Safety Protective Setbacks City of Dallas Current Task Force Proposal Mickey Leland NUATRC June 2012 Ordinance Requirement City of Fort Worth City of Fort Worth Air Quality Study International Fire Code Set Back 300 feet 1000 feet 600 feet** 100 meters 600 feet*** 300 Feet 328 Feet Clear Space * 6.5 Acres 134 Acres 26 acres** * Assume a 4 acre pad site ** Measured from the wellhead *** Affirmatively answered question "Is setback protective?" Data does not support extending setbacks greater than 600 feet from the wellhead

11 Fort Worth Star Telegram July 15, 2011* Air quality study finds no major health threats * Commenting on results of Fort Worth Air Quality Study

12 Land use ordinances

13 Land use ordinances Existing: Gas drilling and production is an industrial use permitted in residential and nonresidential zoning districts. DGDTF: Same but to drill in floodplains requires approval of the U.S Army Corps of Engineers and other appropriate agencies. Drilling on park land is permitted on park land not currently being used as a public park or playground and other restrictions.

14 Existing oil & gas wells in floodplains in nearby counties 4,352 oil and gas wells within 100-year floodplain per Railroad Commission of Texas: 50 in Dallas County 1,070 in Tarrant County. 803 in Denton County. 2,429 in Johnson County No impacts to water or floodways

15 A Typical Barnett Shale Pad Site Rockwood, Fort Worth 14

16 Completed well site in Barnett Shale Hidden Creek, Burleson 15

17 Completed well site in Fort Worth Poly, Fort Worth 16

18 Sound Mitigation

19 Sound Ordinances Existing: Drilling may not produce a sound level greater than 78 db and fracturing may not exceed 85 db or 5 db above background noise, whichever is greater. DGDTF: Drilling equipment may not exceed the ambient noise level by more than 10 db during fracturing operations and by more than 5 db during daytime hours for activities other than fracturing. Continuous noise monitoring is required during drilling or operating compressors if the well is within 1,000 feet of a protected use.

20 Sound Ordinances Fort Worth ordinances permit intermittent exceedances: 10 db for 5 minutes 1 db for 15 minutes 20 db for less than 1 minute

21 Air Quality

22 Air emissions ordinances Existing: Electric motors or internal combustion engines may be used during drilling but only electric motors may be used during production. Except as permitted by the Railroad Commission, operator shall not vent gases into the atmosphere or burn gases by open flame. If venting or burning is permitted, it must be at least 300 feet from any structure.

23 Air Emissions Ordinances DGDTF: Well may not flow or vent directly into the atmosphere without first directing the flow through separation equipment or into a portable tank (Fort Worth). Vapor recovery equipment is required for tanks that have an estimated rolling annual aggregate emissions rate of 25 tons of VOC. Vapor recovery equipment must be operated to ensure 95% recovery efficiency.

24 Areas of Dry Gas in the Barnett Gas Phases Barnett Shale Fort Worth Basin Dry Gas: <1,050 BTU Condensate bearing: 1,050 1,250 BTU Oil: >1,250 BTU Most natural gas in this area is considered dry gas / lean gas Approximately 95%+ methane Trace amounts of VOCs, CO2 and nitrogen Virtually no treatment necessary Nearly same quality as delivered to homes No Barnett Shale wells in urban Tarrant County produce condensate Gas gets dryer/leaner as you move east Source: Barnett Shale Energy Education Council, October

25 Air Quality in the Barnett Shale One of the most monitored areas in the nation Texas Commission on Environmental Quality operates a permanent ambient air monitoring network 7 existing sites 8 additional proposed 5 managed by UTA 1 managed by North Texas Commission SB nd Session of the Texas Legislature Reassigns some Texas Emissions Reductions Program funding to install approximately 15+/- additional monitors as part of a regional network within TCEQ regions 3 and 4 Project Managed by the North Texas Commission

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27 Proposed New Auto GC Locations 26

28 Wichita Falls Bowie Jack County (2) Weatherford Parker County Palo Pinto Eastland Abilene Proposed New Auto GC Locations Proposed SB527 Monitor Locations Several Sites May Have Multiple Monitors 27

29 What the air monitors have found in the Barnett Shale Over 100,000 air samples have been collected over the past 10 years. Results : air emission attributable to gas drilling and production do not approach health effects levels. air measured by these monitors in Barnett Shale is not significantly different than in areas that have no natural gas production Air samples at the Hinton Street monitor in Dallas look like those in Fort Worth, Dish, Eagle Mountain Lake and other monitors in the Barnett Shale

30 Implications for air emissions ordinances Dallas should continue to recognize and support the jurisdiction and authority of the Environmental Protection Agency and the Texas Commission on Environmental Quality Oil and Natural Gas Sector New Source Performance Standard/40 CFR 60 OOOO Reduced Emissions completions Low Bleed Pneumatics Enhanced storage tank requirements No vapor recovery required on dry gas wells VOC <6 tpy. Enhanced monitoring and recordkeeping Maintenance requirements on compressors 40 CFR 98 Subpart W Greenhouse gas control Gas analysis is required when well is completed and periodically afterward to verify dry gas. Support the TCEQ in their air monitoring programs. Local government preempted from making this a requirement.

31 Water Use and Quality

32 Water Ordinances-Existing Operator must ensure that ground water is not contaminated by gas drilling and production and related activities. Operator shall not deposit any substance (i.e. brine, refuse, wastewater, etc.) into or upon a right-of-way, storm drain, ditch, sewer, body of water, sanitary drain, private property or public property. Operator must comply with all federal, state and local storm water quality regulations.

33 Water Ordinances-DGDTF Operator must offer baseline testing of wells within 2,000 feet of a well bore and surface water within 750 feet of the well bore, including immediately upstream and downstream.

34 Water used for Drilling and Hydraulic Fracturing Tarrant Regional Water District - 0.5% total water sales volume Area municipalities report 1% of their water total sales volume In Dallas, water would be purchased through the City (surface water)

35 Water Quality Issues in the Barnett Shale No incident of groundwater contamination due to gas drilling or disposal operations has been confirmed within the Barnett Shale area (Texas Joint Groundwater Monitoring and Contamination Report) Biggest impacts to groundwater quality in Texas Overuse (due to population growth in rural areas) Drought Improperly installed and cased water wells Unlicensed water well drillers

36 Wellbore Integrity 7 layers of protection isolate our well bore from its surroundings, preventing any exposure of chemicals, gas, or produced water with the environment 1. Conductor casing 2. Cement, sealing conductor casing in place 3. Surface casing is drilled to a minimum depth of between 50 to 100 feet below the deepest freshwater aquifer as specified by the RRC 4. Cement, sealing surface casing in place 5. Production casing 6. Cement, sealing production casing in place 7. Tubing 35

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