Trinity East's Vapor Chase

Drilling thousands of feet into the earth is a cakewalk compared with dealing with City Hall.

"Trinity East is relying on these good faith representations of the staff in closing this transaction," it read. It also stated there were "no guarantees." About whether other assurances were made beyond the wording of the agreement, Trinity East's Fort would only say, "Would you buy farmland knowing you'd never be able to farm it? Who would do that?"

But if he hadn't already picked up on the prevailing sentiment at council, he must have noticed when even drilling proponent Sheffie Kadane was on the record five days after the agreement was signed, seeking assurances that there would be no parkland drilling.

"We will not be on the surface of any existing parkland. That is correct," Duebner agreed.

City Council members Angela Hunt and Scott Griggs, opponents to drilling on parkland.
Mark Graham
City Council members Angela Hunt and Scott Griggs, opponents to drilling on parkland.
City Manager Mary Suhm made secret promises to Trinity East, but that was just fine with most City Council members.
Sam Merten
City Manager Mary Suhm made secret promises to Trinity East, but that was just fine with most City Council members.

Details

If that wasn't confirmation enough, then-Councilman Dave Neumann said, "My support today is clearly contingent upon the fact that we will not in any way, shape or form damage our parks. Period, the end. And Mary, you're telling us in no way, shape or form, our parks will be at risk?"

"We will bring each drilling site back to you," Suhm replied, leaving herself an opening, and leaving out the agreement with Trinity East she'd just signed. "We will talk to you about what the risks or concerns are, and we will make recommendations. We don't want to risk the parks, either."

"OK, that's not as clear and convincing as I wanted it."

"I said we don't want to risk the parks, either. That is not our intent."

With that understood, Tennell Atkins moved to approve the subsurface drilling of city parkland, and the motion passed. Read the council's resolution: "The city of Dallas is prohibiting surface level drilling and mineral production on parkland as part of the gas leases."

Well, at least officially.


The very month Trinity East signed with the city and forked over millions, natural gas prices had held at around $8 or $9 per million BTUs. Then they plunged, through a winter that should have buoyed them, all the way down to $3.50 by the following spring. Natural gas producers had become so efficient at plumbing the Barnett Shale that they glutted the market with more gas than it needed. But there were other forces at work. Companies like Chesapeake Energy, which had gone on a buying binge fueled by Wall Street, contractually couldn't stop drilling, even though natural gas prices weren't break-even. Others, like Trinity East, had use-it-or-lose-it clauses in their lease agreements. If it didn't drill by a certain date, it lost the millions paid not just to the city, but to the landowners the company signed across Dallas County.

For that reason alone, Trinity East must have happily renewed its lease with the city in July 2011. It should have noticed, however, the troublesome language therein. The contract said Trinity East understood that it had to get a special-use permit from the City Council to drill — a "police power that cannot be contracted away." The contract hedged the same way about drilling the Trinity River floodplain, which would first require an amendment to city ordinance. The contract Trinity East signed said, at root, that they did not have an unequivocal right to drill.

It only got worse from there. A task force was convened to study the issue and recommend a new drilling ordinance. They came back in March 2012 with a set of proposed rules Trinity East feared would prevent them from drilling.

In an indignant letter to the task force, Dallas Cothrum, Trinity East's representative before the city, leveled a not-so-veiled threat. "Prohibiting drilling in public parks is a complete reversal of the city's position when the leases were sold. In fact, two of the pending drill sites are on parklands ... not only were these sites advertised in the original [request for proposals], but they were also specifically identified by city staff before the leases were purchased. It will result in a breach of agreement."

But the task force recommendations remained just that. The City Council didn't take them up. Finally, on December 21, City Council put Trinity East's permits to the Plan Commission, where they were stuck at the tail end of a lengthy agenda. It didn't stop drilling opponents from lining up and begging the commissioners, who had no experience with this issue, not to approve. An approval here, they knew, meant a simple majority would carry the day at the City Council. A defeat meant passage would require a supermajority. Four votes on the City Council could scuttle Trinity East's permits.

The commissioners were clearly uneasy with approving permits when the task force's proposed ordinance waited for council approval — an ordinance that would outlaw the centerpiece of Trinity East's plan. What's more, a few of the commissioners weren't sure whether they even could. The council would have to amend city code to allow drilling in a floodplain, and first hold a separate, public hearing about drilling parkland.

"I don't think we are in any position to authorize permits at a time when doing so is contrary to city ordinance," Commissioner Paul Ridley said. "This should be addressed by the City Council — elected officials — not us."

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13 comments
fracquestions
fracquestions

Brantley, you did a pretty good job of describing the whole enchilada and detailing why TE has no legal RIGHT to drill in parks and floodplains, but you missed the one key element that set the stage and brought us to where we are today. It is important to recognize who, among us, stood up in defense of clean water, clean air, clean soil, our health, our safety, our property values

The massive efforts of key environmental leaders including Raymond Crawford, Jim Schermbeck, Molly Rooke, Rita Beving, Peter Wilson, Jenny Land, Marc McCord, Jeff Jacoby, Cherelle Blazer, and others starting in mid-2010, who had educated themselves on the legal and technical merits of the issue of urban gas drilling, were the only impediment to drilling being allowed in Dallas. Without their monumental efforts drilling would have been approved and Dallas would already be reaping the same environmental degradation, health problems and descreasing property values that our neighbors to the west are experiencing today.

Vndallas
Vndallas

jeez, fort worth has a shitty skyline.

WCGasette
WCGasette

Interesting this:

[...]"They can make a profit, they say, but not if wells haven't been spudded by the expiration dates. There are ways, Blanton says, of "throttling down" production on a well, to extract less gas and wait for the prices to come back up. He knows they will. They always do. "But that's our decision," he said. "It's no one else's decision. Let us make those choices. It's not them with the money in it. It's not them with the exposure."[...]

The more we hear Mr. Blanton pontificate, the more we realize that it's quite possible he has no idea what he's talking about.  He told the Irving City Council on (March 20, 2013) during a round of questioning that the gas from the University of Dallas-City of Dallas Lease at 3400 Tom Braniff was going to the Dr. Pepper Bottling Plant in Dallas. We think maybe he is throwing up a lot of the smoke and the mirrors. 


And since when are drilled, producing wells "exploratory"?  The smell of rotten eggs is not coming from the gas.

Katarina
Katarina

Trinity East needs to diversify.  The rest of the world is going solar, and very successfully.  Since this area of the country has more than 200 sunny days a year, it's time to forget about fracturing and start building solar panels.

cjbwalton
cjbwalton

Great article, but may I point out one statement which I very much doubt has any basis in fact?

"Trinity East spent planning, preparing, consulting, chasing down a paper trail at the appraiser's office and leasing more than 10,000 acres of private and public land in Dallas County, from Irving to Farmers Branch — a mosaic of mineral rights in which Dallas city property was simply a large piece of a much greater whole — the figure was easily four times $19 million."

$76 million? Really? With 25 years of experience in oil and gas work, I have to wonder where that money was spent. Not into personnel with only one floor of employees. Not into title work as what could be cleaner and easier title than municipally owned minerals? Not into well site preparation, no well sites have been approved. Likely not into environmental site assessments as the possibility of drilling has never been near. Perhaps there were suhm city kickbacks, but with the frequency that Trinity East threatens litigation, I'd better not suggest that.

It sounds like they are big gamblers over at Trinity East. Not all gambles pay off - this is especially true in the oil and gas business. This was a questionable $19,000,000 gamble. At $76,000,000 it just looks like idiocy. 

By the way, if the company is out of money and experiences any more well casing failures, will they be well enough funded to handle the clean-up? 



director21
director21

Part 3 of 3

Trinity East gambled that they would get their permits and drill without citizen opposition. They were wrong. CEO Blanton and President Fort are both attorneys, and they are aware of the language of the leases they negotiated and signed. They KNOW that drilling is prohibited in parks and floodplains. If they chose to pay the money and risk being denied permits to drill, then they did so knowingly and with forethought of action. Their timing was very bad! They ran into an obstacle that did not block drillers in Fort Worth, Arlington, Grand Prairie, Mansfield, Colleyville or other places across the Barnett Shale.

Unfortunately for Trinity East, neither the City Manager nor the Mayor has the right to sign away the police powers of the City of Dallas. Sadly, our inept City Attorney, who has already tendered his resignation (or retirement, as it were) has failed to so advise the City Council and City Manager of that fact. He is up to his neck in this charade, and he is trying to save face by siding with the Mayor and City Manager. The fact is, they ran into citizen opposition that was (and still is) far more knowledgeable about this matter than they were, are or ever will be because we chose to take the time and make the effort to educate ourselves and understand the issue inside and out. THAT is the difference!

director21
director21

Part 2 of 3

At the time those leases were signed there was almost zero public opposition anywhere and absolutely no opposition in Dallas because we knew little or nothing about the matter. It had not even been considered. Once we heard about it a rather literate group of us formed to educate ourselves, educate our fellow citizens, educate our elected and appointed leaders and mount a formidable opposition to drilling in Dallas. Regardless of what anybody else says, we have been successful specifically because we HAVE learned the facts and we HAVE told the truth, which is much more than can be said for industry or city government officials. And, because of our knowledge and preparation we have prevailed without the benefit of funding, support or organization. Ours has been truly a grassroots campaign to defend ourselves, our fellow citizens and our city against the invasive and destructive practices of gas exploration and production in a densely populated urban area.

What started as just a few concerned citizens has grown to several hundred concerned citizens in Dallas, and now we are being joined by hundreds of concerned citizens in neighboring communities who also want to protect their environment and the health and safety of themselves and their children. Drilling in parks is insane. Drilling close to a school is unconscionable. Only people lacking integrity and humanity would even consider doing that - or allowing that!

director21
director21

Part 1 of 3

Great article detailing what has transpired on this issue over the past 5 years! Thanks, Brantley, for doing your homework. The key element that people need to take from this story is found on page 4, and is cited below:

"The contract said Trinity East understood that it had to get a special-use permit from the City Council to drill — a "police power that cannot be contracted away." The contract hedged the same way about drilling the Trinity River floodplain, which would first require an amendment to city ordinance. The contract Trinity East signed said, at root, that they did not have an unequivocal right to drill."

Texas law says that a person cannot legally sign away their rights under the law, even willfully. By the same token, a city cannot sign away its police powers, even if the City Manager wants to do it, and so the right of the city to establish restrictions and limitations on what a business is allowed to do within city limits is established in law, and cannot be signed away. Signing a contract that attempts to sign away the police powers of the city results in a contract that is null and void or voidable, in part or in whole, when challenged in court.

dallasdrilling.wordpress.com
dallasdrilling.wordpress.com

@fracquestions There are many Dallas citizens who spoke at countless planning commission hearings and city council meetings. While one or more may start the ball rolling, "it takes a village"to change their universe.

fracquestions
fracquestions

You raise a very important question - if TE does have a major problem will they be financially able to handle it, or will they simply bankrupt that small part of Keystone, walk away from the cleanup and let citizens pay for their mess?

I, too, wonder if they really have spent $76 Million because I doubt they ever had that much money available to spend, but that would depend upon how many acres of private land they leased and at what price. No doubt they spent well over $19 Mil, but $76 Mil does not sound plausible to me, either.

cjbwalton
cjbwalton

Trinity East is an LLC for just that reason.

cjbwalton
cjbwalton

Trinity East is an L.L.C. for a reason. The reason is to limit their liability.

fracquestions
fracquestions

@cjbwalton Exactly, and they will not hesitate to use that out if they deem it necessary, just like H. Ross Perot did on that $19 Million office tower he was building on Cole or Travis several years ago. Corporations are always willing to let the common people subsidize and socialize the costs of their failures.

 
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