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HomeMy WebLinkAbout1-24-08-8 - Resolution - 01/24/2008RESOLUTION NO. 1-24-08-8 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COLLEGE STATION, TEXAS, GRANTING AN OIL AND GAS URBAN PERMIT FOR THE SMITH- MOHAWK UNIT, WELL NO. 1RE NEAR FM 2818 AND JONES -BUTLER ROAD LOCATED WITHIN THE CITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City Council of the City of College Station, Texas, has reviewed an application for an Oil & Gas Urban Permit ("Permit") submitted by Ogden Resources, Ltd. for the Smith - Mohawk Unit, Well No. 1RE; and WHEREAS, Council has reviewed the Project Review Committee report and other related information relating to the afore -described proposed urban gas well located near Harvey Mitchell Parkway (FM 2818) and Jones -Butler Road located within the City of College Station (the"City"); and WHEREAS, pursuant to Chapter 4, Section 13.J Council is required to make certain findings and determinations in granting a permit for an oil and gas operation located within the City; and WHEREAS, the City Council of the City of College Station, Texas, now desires to make such determinations and to grant such permit; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF COLLEGE STATION, TEXAS: PART 1: That the City Council hereby acknowledges receipt of an application, Project Review Committee report and other related information relating to an Oil and Gas Urban Permit to Ogden Resources, Ltd. for the Smith -Mohawk Unit, Well No. 1RE located near the intersection of Harvey Mitchell Parkway (FM 2818) and Jones -Butler Road. A copy of such paperwork and the exact location of said proposed well are attached hereto as exhibits "A" and "B" , respectively. PART 2: That the City Council hereby makes the following determinations with respect to said proposed Permit: 1. That the following amount and type of security instrument has been issued: an irrevocable letter of credit in -the amount of twenty-five thousand dollars and no cents ($25,000) and as attached hereto as exhibit "C." 2. That the operations proposed under the Permit are reasonable under the circumstances and conditions prevailing in the area; 3. That the operations proposed under the Permit are consistent with the health safety, and welfare oT the public when and if conducted in accordance with the permit conditions to be imposed; and 4. That the impact upon adjacent property and the general public of operations conducted in compliance with the Permit conditions are reasonable and justified, balancing the following factors: (1) The right of the owner(s) of the mineral estate to explore, develop, and produce the minerals. RESOLUTION NO. 1-24-08-8 Page 2 (2) The availability of alternate drill sites, both presently and at other times during the lease term. (3) The date of acquisition by the various owners of the surface and mineral estates. PART 3: That based upon the above the City Council hereby grants said Permit and authorizes the City Manager or his designee to take any and all reasonable action to issue same. PART 4: That this resolution shall take effect immediately from and after its passage. ADOPTED this 24th day of January, A.D. 2008. ATTEST: APPROVED: y Mary Ann Pow it nticity with A}Src v City Attorney C.:\Documents and Settingslvcasares\Local SettingslTemporary Internet Files1Content.IE5107WKNK261Resolutionl1J.doc1/25/200811:25:36 AM 1/25/2008 APPROVED: MAYOR Application for Permit TO CONDUCT OPERATIONS FOR THE DISCOVERY AND PRODUCTION OF OIL, GAS, AND ASSOCIATED HYDROCARBONS WITHIN THE CITY OF COLLEGE STATION, TEXAS OGDEN RESOURCES, LTD. SMITH-MOHAWI{ UNIT, WELL #1 RE-ENTRY BRAZOS COUNTY, TEXAS 1. APPLICANT'S NAME AND ADDRESS Stephen E. Ogden, President Ogden Resources, Ltd., 3740 Copperfield Drive, Suite 103 Bryan, Texas 77802-5933 979/776-2704 2. NAME AND ADDRESS OF DRILLING COMPANY Nabors Drilling USA, LP 515 West Greens Road, Suite 1000 Houston, Texas 77067 3. NAME AND ADDRESS OF OPERATOR Ogden Resources, Ltd. 3740 Copperfield Drive, Suite 103 Bryan, Texas 77802-5933 4. PROPOSED NAME OF WELL Smith -Mohawk Unit, Well #1 Re -Entry 5. PROPOSED DEPTH OF WELL Ogden Resources Ltd. intends to re-enter the Smith -Mohawk Unit, Well #1 and drill a 3500' (ST#02) updip lateral and a 3000' (ST#03) downdip lateral in the Lower Austin Chalk formation. The approximate depth of ST#02 is 9400'± (TVD) and 12,900'± (MD). The approximate depth of ST#03 is 9600'± (TVD) and 12,600'± (MD). 6. LOCATION AND DESCRIPTION OF AU. IMPROVEMENTS AND STRUCTURES WITHIN ONE THOUSAND (1000) FEET OF THE WELL Please refer to attached Exhibit A 7. SITE PLAN OF PROPQSED OPERATION, SHOWING LOCATION OF ALL IMPROVEMENTS AND EQUIPMENT Please refer to attached Exhibit B Smith -Mohawk Unit, Well #1 Re -Entry Permit Application Page 1 of 4 12' 195 Application for Permit 8. AREA MAP SHOWING PROPOSED TRANSPORTATION ROUTE AND ROADS FOR - EQUIPMENT, CFfEMICALS, OR WASTE PRODUCTS USED OR PRODUCED BY THE OIL OR GAS OPERATION, AND ALL NATURAL FEATURES QF THE SITE Please refer to attached Exhibit C 9. DESCRIPTION OF TYPE, KIND, SIZE, AND AMOUNT OF MAJOR EQUIPMENT USED BEFORE COMPLETION AND RE -WORKING Please refer to attached Exhibit D 10. DESCRIPTION OF SURFACE EQUIPMENT AFTER DRILLING AND COMPLETION Please refer to attached Exhibit A 11. WELL SURFACE CASING AND CEMENTING PROGRAM Please refer to attached Exhibit E 12. COPIES OF RAILROAD COMMISSION FORMS AND DRILLING PERMIT Please refer to attached Exhibit F 13. SECURITY INSTRUMENT CONSISTING OF AN IRREVOCABLE LETTER OF CREDIT, INDEMNITY BOND, OR CERTIFICATE OF DEPOSIT, AS REQUIRED BY THIS ORDINANCE AND IN THE AMOUNT DETERMINED BY THE CITY COUNCIL WITHIN 30 DAYS AFTER COUNCIL APPROVAL Ogden Resources Ltd. commits to provide the required security instrument in the amount determined by the City Council within 30 days after Council approval of this permit application. 14. NAME OF REPRESENTATIVE WITH SUPERVISORY AUTHORITY OVER ALL OIL OR GAS OPERATION SITE ACTIVITIES AND PHONE NUMBER WHER HE CAN BE REACHED TWENTY-FOUR (24) HOURS A DAY Mike Crocker 979/224-1771 or Steve Ogden 979/218-1685 15. LEGAL DESCRIPTION OF THE PROPERTY TO BE USED FOR THE OIL OR GAS OPERATION, THE PARCEL, AND THE PRODUCTION UNIT (PLAT DESCRIPTION OR METES AND BOUND BEARINGS} AND NAME OF THE GEOLOGIC FORMATION AS USED BY THE RAILROAD COMMISSION. PROPERTY RECORDED BY PLAT SHOULD REFERENCE SUBDIVISION, BLOCK AND LOT NUMBERS. Legal description of property: 919.29 acres out of the -Crawford Burnett Survey, A-7, T. Henry Survey, A-131, and W.H. Frazier Survey, A-122, Brazos County, Texas (Please refer to attached Exhibit A for additional information.) Geologic formation: Giddings (Austin Chalk} - 3 Smith -Mohawk Unit, Well #1 Re -Entry Permit Application Page 2 of 4 196 Application for Permit 16. MINERAL LESSEE NAME AND ADDRESS Please refer to attached Exhibit G 17. 5URFACE OWNER NAME AND ADDRESS Mr. Bruce Smith TLS Properties, Ltd. Post Office Box 19572 Houston, Texas 77224 18. NAME AFID ADDRESS OF AN INDIVIDUAL REPRESENTING THE OWNER/APPLICANT DESIGNATED TO RECEIVE NOTICE Stephen E. Ogden, President Ogden Resources, Ltd. 3740 Copperfield Drive, Suite 103 Bryan, Texas 77802-5933 979/776-2704 19. EVIDENCE OF INSURANCE INFORMATION AS REQUIRED BY ORDINANCE No. 1916: (a) Commercial General Liability $500,000 (b) Automobile Liability $500,000 (c) Workers' Compensation $100,000 Please refer to attached Exhibit H 20. SURVEY OF PRODUCTION UNIT AT A SCALE OF 1 per 300 OR GREATER BY A TEXAS CERTIFIED SURVEYOR INCLUDING: (a) Lengths and bearings of all boundary lines for production (b) Exact acreage of the production unit (c) Exact location of the well within production unit with distances of a minimum of two adjacent boundary line of the production unit (d) Length of maximum diagonal within the production unit. Please refer to attached Exhibit 21. OWNER AND ADDRESS OF EACH PARCEL OF PROPERTY WITHIN ONE THOUSAND (1000) FEET OF THE PROPOSED DRILL SITE Please refer to attached Exhibit J 22. COPIES OF ALL REPORTS REQUIRED BY THE DEPARTMENT Of WATER RESOURCES AND COMMISSION Please refer to attached Exhibit K Smith -Mohawk Unit, Well #1 Re -Entry Permit Application Page 3 of 4 197 Application for Permit 23. STATEMENT UNDER OATH SIGNED BY APPLICANT THAT THE INFORMATION SUBMITTED IN THE APPLICATION 15 TRUE AND CORRECT "1, Stephen E. Ogden, President of Ogden Resources, Ltd., do hereby affirm that the information submitted in and attached to the Application for Permit to Conduct Operations for the Discovery and Production of Oil, Gas, and Associated Hydrocarbons within the City of College Station, Texas for the Smith -Mohawk Unit, Well #I Re -Entry is true and correct." December 7, 2007 STATE OF TEXAS § COUNTY OF BRAZOS § Sworn to and subscribed before me this 7th day of December, 2007 by the above named Stephen E. Ogden, who is personally known to me. Givenunder my hand and seal this day and year last written above. 24. INFORMATION FOR SEISMIC PERMITS Not applicable. Notary Public in and for the State of Texas Smith -Mohawk Unit, Well ##1 Re -Entry Permit Application Page 4 of 4 198 List of Exhibits OGDEN RESOURCES, LTD. SMITH-MOHAWKtJNIT, WELL #1 RE-ENTRY A. Response to Item 6: Location and description of all current improvements and structures within one thousand (1000) feet of the well (Site Plan of Existing Drill Rig Site) B. Response to Item 7: Site Plan of proposed operation, showing location of all improvements and equipment (Drilling Rig Layout) C. Response to Item 8: Area Map showing proposed transportation route and roads for equipment, chemicals, or waste products ... and all natural features of the site (Vicinity and Access Map) D. Response to Item 9: Description of type, kind, size, and amount of major equipment used before completion and re -working. (Equipment Inventory) E. Response to Item 11: Well surface casing and cementing program (Well Diagram) F. Response to Item 12: Railroad Commission Forms G. Response to Item 16: Mineral Lessees' Names and Addresses H. Response to Item 19: Certificate of Insurance I. Response to Item 20: Survey of Production Unit at a Scale of 1 per 300 or greater J. Response to Item 21: Property Owners within 1000 feet K. Response to Item 22: Copies of all reports required by the Department of Water Resources and Commission (Texas Commission on Environmental Quality) 199 JAN -02-2000 16:07 From:OaDEN RESOURCES 9797762706 To!7643496 F,S'7 Federal Aviation Administration Air Traffic .Airspace Branch, ASW -520 2601 Meacham Blvd. Fort Worth, TX 76137-0520 Issued Date: 12/ 19/2007 STEPHEN E OGDEN OGDEN RESOURCES LTD 3740 COPPERFILED DRIVE SUITE 1 D3 BRYAN, TX 77802-5933 DETERMINATION OF NO The Federal Aviation .Administration has conducted Section 44718 and if applicable Title 14 of the Code Structure: Location: Latitude.. Longitude: Heights: Aeronautical Study No. 2007 -ASW -11463-0E TIAT*RD TO AIR NAVIGATION ** an aeronautical study under the ptovisions of 49 U.S.C., of Federal Regulations, part 77, concerning: Drilling Rig Smith -Mohawk 41 COLLEGE STATION, TX 30-35-08.43N NAD 83 96-20-03.75W 130 feet above grotuad level (AGL) 459 feet above mean sea level (AMSL) This aeronautical study revealed that the structure does not exceed obstruction standards and would not be a hazard to air navigation provided the following condition(s), if any, is(are) mct: As a condition to this Determination, the structure is marked and/or lighted in accordance with FAA Advisory circular 70/7460-1 K Change 2, Obstruction Marking and Lighting, flags/red lights - Chapters 3(Markcd),4, 5(Red),&12. See attachment for additional cundition(s) or information. This determination expires on 06119/2009 runless: (a) (b) extended, revised or terminated by the issuing office. the construction is subject to the Licensing authority of the Federal Communications Commission (FCC) and an application fora construction permit has been filed, as rquired by the FCC, within 6 months of the date of this determination. In such case, the determination expires on the date prescribed by the FCC for completion of construction, or the date the FCC denies the application. NOTE: REQUEST FOR EXTENSION OF THE EF'ECTTVE PERIOD OF THIS DETERMINATION MUST BE POSTMARKED OR DELIVERED TO THIS OFFICE AT LEAST 15 DAYS PRIOR TO THE EXPIRATION DATE. This determination is based, in part, on the foregoing description which. includes specific coordinates, heights, frequency(ies) and power. Any changes in coordinates; heights, and frequencies or use of greater power will Page 1 of 3 200 JAN -02-2008 16:07 From:OGDEN RESOURCES 9797762706 To:7643496 P.6/7 void this determination. Any future construction or alteration, including increase to heights, power, or the addition of other transmitters, requires separate notice to the FAA. This determination docs iuclude temporary construction equipment such as cranes, derricks, etc., which may be used duffing actual construction of the structure. However, this equipment shall not exceed the overall heights as indieaied above. Equipment which has a height greater than the studied structure tequircs separate notice to the FAA. This determination concerns the effect of this structure on the safe and efficient use of navigable airspace by aircraft and does not relieve the sponsor of compliance responsibilities relating to any law, ordinance, or regulation of any Federal, State, or local government body. A copy of this determination will be forwarded to the Federal Communications Commission if the structure is subject to their licensing authority, lfwc can be of further assistance, please contact our office at (817) 838-1994. On any future correspondence concerning this matter, please refer to Aeronautical Study Number 2007 -ASW -11463 -OE. Signature Control No: 551553-101066453 Linda Steele Technician Attacbtmcnt(s) Additional information Page 2 of 3 201 (DNE) JAN -02-200E 16:07 From:OGDEN RESOURCES 9797762706 To:7643496 P.7'7 Additional information for ASN 2007 -ASW -11463 -OE Temporary drilling rigs shall be obstruction flagged AND lighted in accordance with FAA Advisory Circular 70/7460-1K, Obstruction Marking and Lighting. A copy of this advisor' can be obtained at the web site: oeaaa.faa.gov. Notify the Easterwood Field Airport Manager, or his representative, prior to raising the temporary drilling rig and when the project is complete and the temporary drilling rig has been removed from the site. This determination shall be valid for a period of 18 months. while the determination is valid, it is permissible to return the temporary drilling rig to the site without submitting a oew FAA Form 7460-1, Notice of Proposed Construction or Alteration, provided there are no variances from location or height. IF THERE ARE ANY CHANGES IN LOCATION OR HEIGHT, A NEW FAA FORM 7460-1, NOTICE OF PROPOSED CONSTRUCTION OR ALTERATION, MUST BE SUBMmED. Page 3 of 3 202 DEC -12-2007 17:26 From:OGDEN RESOURCES 9797762706 To:764349E Derr! Type a• non. on WS F prrn smith -Mohawk Unit, well #1 Re -Entry P.2'4 Fora AADANed OMB P ) zo.000r eap.aerdrr rye: 791,477 Failure To Provide All RcgtrestQd Information May belay Proce6sin8 of tour NotfceFOR U.a DeurandrtniMpptMrn Notice of Proposed Construction or Alteration rQerm 1..Ptie„ AM" ... Ino FM eiBE aR�_ lerortr„ real Skyey hp .,!Mr -1, Sponsor (person. company, etc. propo9ing the action): pun or Stephen E. Ogden 35 • 08 0 432N s. Latitude: 3 a 96 a 20 10. Longitude: 03 Other Aie4trt 5131) 749W Name, Ogden. Resources, Ltd. 11. Datum: kl NAD 83 , NAD 2: ❑ I t Nearest: Girt: IN Co1SEP C Ati411 514(1 TX Maass: 374Q Coope old prive_bite 103 City Btran State, Zip; 7TAl1?-593 3 13, Hearst PUDhC-1Se (notprimee-use) w Milterr Fal.5tgtwgod MI= or Heliport _ Telephone: 979-.171i 271]1 Fit: 127761706 14. Distance from #13. ro Structure! 7886' ( 4 2. Sponsor's R9prosentstive (if entorfh3n *11: Attn. of - 15. Direction from #13- to structom: 580.E • 46- Silo Elevation (A+xsy: 17. Total Stluttute Height (A014 jil. Overall Height (,19 a- x17) ((MSL): 19. Previous FAA Aeronautical Study Number unknown of extreme,: minute PM 2513 FM 2154 t Name _..229 134 n morass: ._ _.95A k -Ok quynraigle Mee %oh University campus City. Stay: Zip: Telephone. Far ZO. Description of Location: (Amen a USGS 7.5 aha precise site merked and any ceitiMa survey) N 811'W -7216' to endRunway 28-10 ' N 72.W^ 2.3 t ii to intersection FM 60 & N 24'W • 2.2 mi to intersection FM 60 & N 14'1N-1.7 mi to Kyle Field on Texas A&M '— 3. (Notice Of: ❑ New Construction 4. Duration: ❑ Permanent C Temporary S. Work Schedule: eep,nninG JadustyjOQB 1} A)tersaon 0 Existing ( 3 rrtorrtle. 0 d/y6) • End April 2008 6. Type: 0 Antenna tower ❑Crane ❑ Land(!u 0 Water Tank 7. marking/Painting andfar Lighting 0 Red rights end Pawl ❑ Duai 0 Alvin - Papaw. Intpnc.Iy 0 P.,µ1- ❑ V1r+.ea • High tntenyty OOltia B. FCC Antenna Structure Registration 0 Building ID Power Late }Oma oijw U d 't(tne rJg wit"n derrick Preferred: - Red sou Medium (r.tn my white fled enc high !mortally µMite Number (if applicable}. 21. Complete Description of Propane Ogden, Resources. Ltd wilt to -anter and drill an oitwcll It the existing location. A drilling rig wi:1 be on location for approximately 60 days. Mast height is 130 ft_ A workorer rig will be on location approximattty 30 days prior aim 14 days after drilling rig. Mast height is 96 ft. Frequency/Power (kilo) n/a n/a Noticed required by 14 Cede 01 Fedeeal R41.1146an9, part 77 pursuant to 49 U.S.C- Seddon 44719. Paero•,s who knowingly and wN(Ingly violate the flood nnfvrveme rite pt pen 7r ave sucuct so.a civ penny of 51,000 per clay unO) the h06ee is retetred, parmimM to 49 li S.C., 5ee'iiorl 46301{7} rI Aer9Ny c frtify Ma( 41 of 9.4 alta., aiatensente made by iiia are true, templets. and l WCttlrtl +t accordion watt ellibrishaid marleing;l.lig'rt'enp steffiliettlt se necessary. earrect to tint beat of my knowledge. in addit)on, I agree to mirk and/or Debt the _ NO110e ��► Relnuccet, Ltd. ^�` 039 No,cmbc, )0-21)01 Taped or anneal mime and TAO of Person ging Stephen E. Ogden; President, 0 den FAA Form 746-1 (2.591 Supersedes Previous Edition Eledionia VerSion (Adobe) 203 HSN. 005 2-0o.317nstFpy DEC - 12 -PO07 17:2F Err': :' F.E OUR'rS 9 •97' - TriE, - ... • - _1. .�'•r• \ •,•i .4 (' 1. •r. s�.I1a' 't• 0 • !` f(X' .f,. ,\.. +'- !;• :•'+ - :• } '�.:' r' • .' ..' "�'7• / , ''.•.' • ' a 3 • � ' 4 .. ' 4 � • , . • ::,, % a , •. • ' • , �vA� • , f ,• • • i''. =f i * ••• 1' •'y�. �..,• ••i • I : -411 , v _ .r' ' ' :.•;i•;:• - . e.? ` : 4 ` , Y ;f .,+r:i , •- + � • • 4. j l" j .,,,,,•-• t ape .. . • ., :`.' .♦ Alt '` '.�a �J.:i' ♦ te r'... . : 441..' ' t ......1.:.......: .: ..:' ....... . - ,..i . ::': N s : ..1 . /), ,11 ‘: ':,..... . ...,r. ....' .... • • h ' 4. ,j r\ " 'j �f' • • • • J `•' ..' • F , .-c.' •� 'y am .. . • ��r • , r . , • +.� • •r'l `, is ,r ' _ ::, • i - fi r ;, �: �•^ . �' t ' :.4 '• : jy .if 1 e ; 11 • • • •. �' • ' •� • • • >: 1 ' -j, 204 SMITH—MOHAWK UNIT RE #1 SURF. LOC. ELEV.. 329' OPERATOR: Ogden Resources. Ltd OIL & GAS OPERATIONS PERMIT APPLICATION CITY ENGINEER'S REPORT TO PLAN REVIEW COMMITTEE (PRC) DATE: 1/09/08 CASE FILE NO. 07-327 WELL NAME: Smith -Mohawk Unit, Well No: 1RE APPLICANT: Ogden Resources, Ltd., Bryan, Texas DRILLING COMPANY: Nabors Drilling USA, LP, Houston, Texas TYPE: Rural Classification, 2 each Vertical/Horizontal Wells LOCATION: Surface - The southwest corner of FM 2818 and Jones -Butler Road DEPTH: ST#02 9,400 feet Total Vertical Depth and 12,900 feet Measured Depth ST#03 9,600 feet Total Vertical Depth and 12,600 feet Measured Depth ACCESS: From Harvey Mitchell Parkway South, on an existing access road. REQUIRED PERMITS SUBMITTED: YES NO NOT REQUIRED Texas Railroad Commission X X $000 Texas Water Commission X Legal Consultant Federal Aviation Agency X Technical Consultant Airport Zoning Board Height Variance X X Drainage Development Permit X Driveway Access Permit X Insurance Certificates X RECOMMEND SECURITY FOR COMPLIANCE WITH PERMIT TERMS AND ORDINANCE: A minimum of $25,000 is required for security by the ordinance. GROUND WATER PROTECTION: Existing casing will be used. Surface casing was set and cemented to 2330' according to Cementing program submitted with the approved 1996 application. Water zones are protected. FEES PAID: YES NO NOT REQUIRED REPORT COMPLETED Application Fee X $000 Legal Consultant X Technical Consultant X ESTIMATE OF CONSULTANT FEES: Legal none Technical Consultant none ` Total $000 OTHER CONSIDERATIONS: There is an existing well on the drilling site. The original well is a rural classification well and was permitted in 1996. The applicant is proposing to re-enter the existing well bore, or hole, and drill two additional wells. Drilling will consist of one (1) well parallel to the original well and one (1) well in the opposite direction of the original well. Development around the site has changed the well classification from rural to urban. SCHEDULE FOR COUNCIL ACTION: City Council Regular Meeting: Publish according to Rural Classification schedule for Public Hearing and Council Action January 24, 2008. C:\DOCUME-1\chooks\LOCALS-1\Temp\City Engineer report .DOC 1 of 1 207 RURAL OIL AND GAS PERMIT ISSUED BY THE CITY OF COLLEGE STATION, TEXAS PERMITTEE: Ogden Resources, Lrd. 3740 Copperfield Drive, Suite 103 Bryan, Texas 77802-5933 EXPIRATION DATE: January 25, 2009 WELL NAME: Smith -Mohawk Unit, Well No. 'IRE PERMIT NO: 07-327 REGULATION: The City Council of the City of College Station has determined that the testing and exploration for and development, production and storage of oil, gas, and mineral hydrocarbons (including enhanced or secondary recovery thereof) within the City limits. is an activity which necessitates reasonable regulations in order that such activities will not cause injury or property damage to the citizens of the City, and that such activities should conform to the comprehensive plan and zoning ordinances of the City as far as practicable in order to preserve the integrity of said ordinances and regulations. The City recognizes that conflicting property rights exist in the carrying out of such activities, and further recognizes the rights of all property owners, minerals and otherwise, to the peaceable enjoyment of their property and the benefits and revenues therefrom. UNLAWFUL: It shall be unlawful to engage in any activity not permitted by the terms of this permit and the applicable laws, or to fail to comply with any condition set forth in this permit. PERMIT TERMS: This permit is issued in accordance with Ordinance No. 1916, Chapter 4 Section 13 of the Code of Ordinances of the City of College Station, Texas, and with applicable ordinances, rules, regulations and laws of the City of College Station, the State of Texas and of the United States of America and their respective agencies, commissions and regulatory bodies. Ogden Resouces, Ltd. is hereby issued this Oil and Gas Permit, having posted a Security Instrument in the amount of Twenty -Five Thousand and No/100 Dollars ($25,000.00), in the form of irrevocable letter of credit or indemnity bond, or certificate of deposit as set forth in Ordinance No. 1916, and required by action of the City Council. Additional terms and conditions of the granting, issuance and continued effectiveness of this Oil and Gas Permit: None 208 1. ADMINISTRATION: 1. Permittee shall comply with Permittee's Application for Permit to conduct operations for the Discovery and Production of Oil, Gas and Associated Hydrocarbons within the City of College Station, Texas except as modified by this permit. 2. Permittee shall assume responsibility for, and promptly pay to the City of College Station, the cost of any inspection performed by the City of College Station or its representative during the term of this Oil and Gas Permit. 3. Permittee shall comply will all applicable Ordinances, Rules, Regulations and Laws of the City of College Station, the State of Texas, and of the United States of America and their respective agencies, commissions, and regulatory bodies. II. ACCESS 1. Access to the Drill Site shall be via existing access road off FM 2818 is acceptable. Any future required or requested modifications should be submitted for City review and permitting. 2. The access road must have at a minimum, an asphalt surface from the street to the right-of- way line that conforms to the minimum pavement design as described in the College Station Standard Specifications for Street Construction. III. WATER PROTECTION: 1. Before commencement of any earth work related to oil and gas operations, a Development Permit shall be obtained by Permittee from the City Engineer. 2. Surface casing shall be set and cemented to a depth of not Tess than 2,100 feet to protect fresh water. IV. SCREENING AND FENCING: 1. The site shall be screened on all four (4) sides of the production facility with a minimum of a six (6) foot solid screen fence with neutral colors as noted in the ordinance. The screen shall be constructed of a material compatible with surroundinguses which effectively screens the site. It shall have a gate which shall be kept closed and locked except while occupied by Permittee, Permittee's personnel, Permittee's agents/representatives, City Engineer/designate or the Fire Department. 2. Landscape shall be provided per the Ordinance where a landscape plan shall first be submitted to the City for approval prior to installation. 209 V. DRILLING OPERATIONS: 1. Permittee shall confine light and noise associated with exploration and production activities to the site to the maximum extent possible. Permittee shall employ a drilling rig equipped with hospital type mufflers. Permittee shall employ properly muffled, water-cooled or electric motors for compressors during production. 2. Permittee shall comply with all Ordinances and Railroad Commission requirements pertaining to flaring gas. In no event shall the flaring of gas exceed ninety (90) calendar days after completion of the well. Further, Permittee shall install prior to entry into the target zone, a sufficient separating device or system(s) (at least two in series) to ensure that gas, oil, other fluids and solids are separated to a sufficient degree that the in the event the flaring of gas is necessary in connection with the safe drilling and completion of the well (subject to the limitation set forth herein), such flare shall, to the maximum extent possible, be clean burning and emit neither noxious smoke nor odors. Permittee shall equip flare lines with'hmokeless flare ignition system. The flare shall be directed away from existing trees to the maximum extent possible. 3. At the conclusion of the drilling operation all equipment, materials and constructed items shall be removed from the area outside the production site. This area shall be returned to its original state within thirty (30) days of the completion of the drilling operation. 4. All earth pits proposed to hold liquids shall be lined with an impermeable membrane or liner. Upon the completion of drilling operations all cuttings, pit contents and fluids shall be removed from the pits and Drill Site. The liner shall be removed to the maximum extent practicable and the pits shall be filled and leveled. Burning of sludge pits shall not be permitted. 5. Production and storage tanks shall be contained within earthen berms constructed in accordance with applicable oil field practice. Berms shall be constructed and maintained to retain not less than 133% of the capacity of the largest of such tanks. 6. Permittee shall paint tanks, vessels and prime movers a neutral color, or such other color scheme as may be approved by the City Planner. VI. EMERGENCY SERVICES: 1. Permittee shall erect and maintain signs which identify the well by name, the operator, his address and a 24 hr emergency contact telephone number at the well site and at the intersection of the well site access road with the public street. 2. The College Station Fire Department will provide emergency response and limited fire fighting services. 210 CHECK LIST FOR ISSUANCE The following items must have been received and on file with the City before this permit is issued: Approved Drainage Development Permit: Not Required Security instrument: $25,000.00 Certified Postage re-embersement: $13.50 Public Notice re-embersement: $88.58 Considered by City Council this 24th day of January, 2008 Issued this the day of , 2008 City Engineer Date City Secretary Date Fire Chief Date 211 Privileged and Confidential Attorney Client Communication EXPLANATION OF KEY PROVISIONS OF THE SETTLEMENT AGREEMENT BETWEEN ACSC AND ATMOS 1. An 80%•Reduction of Atmos' Requested $52 Million Rate Increase Atmos' Statement of Intent filing made with the Cities in September, 2007, requested a $52 million rate increase. The Settlement Agreement substantially reduces the Company's request, authorizing a $10 million rate increase effective for bills rendered by Atmos on or after March 1, 2008. During the time that ACSC members have retained original jurisdiction in this case, rate experts working on behalf of ACSC have investigated the support for the Company's requested rate increase. It is likely that if the merits of the Company's requested increase were litigated before the Railroad Commission ("RRC"), testimony filed by ACSC experts would support an increase of approximately $8 million. However, it is extremely unlikely that the RRC would adopt ACSC's position in its entirety. A contested case proceeding before the RRC on the Company's current application will take several months and cost ratepayers millions of dollars in rate case expenses. The $10 million rate increase provided by the Settlement Agreement is within the zone of reasonableness based on the evidence that would be offered at hearing. Cities' experience before the RRC indicates that it is more likely than not that the $10 million rate increase agreed to as part of the settlement is a better result than what would be ordered by the RRC. 2. Elimination of Piecemeal Ratemaking ("GRIP") in Favor of a Comprehensive Rate Review Mechanism ("RRM") The Settlement Agreement authorizes a three year experiment with an expedited rate review process that replaces GRIP ratemaking. There will be no GRIP filings while RRM is operative. ACSC has opposed all GRIP filings as piecemeal ratemaking because gas utilities were able to receive a rate increase simply by showing a change in their invested capital instead of a more comprehensive view of all of the components that affect rates, like revenues and expenses. However, Cities have been unsuccessful thus far in defeating GRIP at the Legislature and in court. The RRM process, starting with the first filing to be effective in October, 2008, should be a more comprehensive process that will allow cities with original jurisdiction the opportunity to review information regarding changes to Atmos' revenues and expenses as well as its invested capital. In addition, Atmos and ACSC agreed to certain constraints on the magnitude of changes to expenses and invested capital under RRM. The agreement also freezes Atmos Mid-Tex's rate of return on equity and its capital structure for purposes of the RRM filings to avoid the parent company manipulating Atmos Mid-Tex's overall rate of return. PREPARED FOR SETTLEMENT PURPOSES ONLY 1 212 Privileged and Confidential Attorney Client Communication If the RRM process is not successful, Cities and the Company are free to revert to the statutory plan for rate changes (GRIP surcharges or a full contested case proceeding). Expenses incurred by ACSC to review RRM filings will be reimbursed by Atmos. 3. Establishes a Conservation Program to Reduce Natural Gas Consumption Atmos' conservation program will be implemented effective with the first RRM in October. The Settlement Agreement calls for contributions of $1 million from both shareholders and ratepayers, but limits ratepayer -supplied dollars to investment in materials and supplies. 4. Gas Cost Uncollectibles to be Recovered Through the Gas Cost Recovery Factor Instead of Base Rates At Atmos' request, Cities will authorize a transition of gas cost uncollectibles from base rates to the gas cost recovery factor coincident with the RRM experiment in October. The level of uncollectibles recovered in base rates will be reduced dollar for dollar as uncollectibles are shifted to the gas cost recovery factor. 5. Improves Residential Rate Design Atmos agrees to change residential rate design as part of the RRM process and to fix the residential customer charge at $7.00 with all other costs being recovered through the commodity charge. The settlement achieves what cities could not win through litigation on residential rate design. The RRC has systematically gutted the rate design policy approved by cities for TXU Gas during the 1990s. In the past two contested cases, the RRC has increased the residential customer charge, sending residential customers the false signal that the cost of natural gas declines as consumption increases. 6. Provides for Rate Certainty As part of the Settlement Agreement, Atmos and ACSC agree to dismiss their appeals of the two most recent cost of service rate cases. Atmos has continued to pursue the appeal regarding cost responsibility for the replacement of poly -1 pipe. While the Commission came to the right decision in assigning that cost to shareholders, its findings and conclusions are not as strong as they could or should be and thus there is a potential that a business -oriented appellate court could rule in favor of Atmos. The poly -1 pipe issues have an invested capital potential liability in excess of $80 million if an appellate court reverses the RRC. ACSC also agrees to drop its appeals of GRIP cases with the exception of the declaratory action case (regarding interpretation of the GRIP statute) that has already been argued to the Court of Appeals. PREPARED FOR SETTLEMENT PURPOSES ONLY 2 213 Privileged and Confidential Attorney Client Communication 7. Reimbursement of GRIP Rate Case Expenses To date, the ACSC has expended .more than $500,000 litigating the four GRIP surcharges implemented by Atmos. Atmos and the RRC have taken the position that cities are not entitled to rate case expense reimbursement in GRIP surcharge cases. Pursuant to the Settlement Agreement, Atmos will reimburse ACSC for expenses associated with litigation of the four GRIP filings. 8. Protects Cities' Interest The Settlement Agreement includes a "Most Favored Nations" clause so that ACSC members will receive the benefit of any concessions that may be made to other parties, including the RRC. PREPARED FOR SETTLEMENT PURPOSES ONLY 3 214