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As Gas Drilling Task Force Begins to Wind Down Deliberations, Who's Fracking Whom?

As he does every week, Dallas Cothrum of MasterPlan Consulting sat in the front row of the city's gas drilling task force meeting yesterday, attentively tuning in, occasionally sighing and taking notes in order to deliver his energy company clients the latest news from the home front. Yesterday was slightly different than the usual look-see; he hoped the task force would address the letter he and former city council member Mark Housewright sent earlier this week.

The letter tells the task force that their set-back recommendation -- 1,000 feet from a well pad to a protected use -- is a "deal-killer" for his clients, and that if that recommendation is put in place (which requires council approval), gas companies would likely pull out of Dallas. Cothrum said a reasonable recommendation would have been a set-back of 700 to 900 feet from a well to a protected use. Task force member David Biegler had previously suggested the upper end of Cothrum's range.

And at yesterday's meeting, the task force members didn't even acknowledge they had received MasterPlan's letter.

The focus was instead on defining protected uses and outlining landscaping requirements and site mitigation. The conversation was thorough, if at times circular, with several items -- such as the definition of "habitable structure" as a possible definition of protected use -- being hashed out and then tabled until next week.

Task force member Terry Welch, a lawyer who defends North Texas municipalities and voted in support of the 1,000-foot set-backs, told Unfair Park later that he disagreed with MasterPlan's letter. "I think [the set-backs are] very reasonable. ... Flower Mound had 1,000-foot set-backs, and there was drilling that was going on. By definition, that's not prohibitive."

He said he and Cothrum are friends and that "we just have to agree to disagree."

"I hope they go back and reconsider the set-backs," Cothrum tells Unfair Park. "That alone will not allow for gas drilling." It rules out the proposed drilling sites at North Lake and Hensley Field, he says. While one of the five sites immediately surrounding North Lake already has an SUP, meaning the zoning case has been approved and is in the midst of the permitting process, Cothrum says, just one well pad is not enough to frack the area.

"On its leases, the city is bypassing hundreds of millions of dollars ... that they sorely need," Cothrum says. Coupled with potentially liability, he says, an ordinance that energy companies see as restrictive could mean a sizable dent in the city's already dwindling wad of cash.

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"You're always in a position to be sued by somebody," Welch said, adding that it's not the task force's role to consider lawsuits resulting from previous decisions by the city.

Those decisions are mainly the city's lease contracts with Trinity East and XTO, amounting to $34 million; it's conceivable that the companies could also sue for the lost (or never found) underground revenue. All of this will likely be taken into account by city council, but as Welch said, it's not part of the task force's charge, as delineated in the very beginning by chair Lois Finkelman.

Another interesting scenario that will potentially be affected by the city's set-back distances is the Cypress Waters residential and commercial development planned for the area north and east of the intersection of I-635 and Belt Line Road, the largest undeveloped tract of land in Dallas. The plan for the land, an area of more than 1,600 acres under development by Billingsley Development Corporation, includes drill sites (see the map on Page 13) polka-dotted around North Lake -- the same sites referenced by Cothrum. In a somewhat awkward real estate arrangement, Luminant, another MasterPlan client and the previous owner of the land, still owns the inside of the drill-site polka-dots. So, depending on whether city council approves the distances recommended by the task force, these plots can either remain relatively useless plots of random land or potentially lucrative bursts of income as planned.

Lest we lose interest in what's become a lengthy task force deliberation process, these things are a reminder that the drawn-out decision-making has some hefty implications for both the public and private sector. Though the city hasn't issued a single drilling permit, development plans and potential lawsuits hinge on the city's new drilling ordinance. The task force has two more scheduled meetings to put together recommendations for council. Then begins the next round of deliberation before the ordinance is finally put in place.

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