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