Presenter: Mike Herring

Commission Agenda Item No. 11
Nomination for Oil and Gas Lease
Sheldon Lake State Park – Harris County
Brazos Bend State Park – Fort Bend County
November 1999

I. DISCUSSION: The Department has been requested to nominate a portion of the tract of land known as the Sheldon Lake State Park, for oil and gas leasing. The Department owns all the minerals, approximately 2,265.87 mineral acres, under the tract. Approximately 662 acres have been nominated.

The Department has been also been requested to nominate a portion of the tract of land known as Brazos Bend State Park for oil and gas leasing. The tracts nominated are 1,531.79 acres and 1,638.934 acres.

Staff recommends the Commission continue its policy of requiring a minimum cash bonus bid of $150 per acre and a fixed royalty of 25 percent, with a $10 per acre delay rental for a 3-year lease. It is also recommended that the leases be subject to the restrictions shown at Exhibit A.

II. RECOMMENDATION: The staff recommends the Texas Parks and Wildlife Commission adopt the following motion:

"The Executive Director is authorized to nominate for oil and gas lease to the Board for Lease for Parks and Wildlife Lands, the Department's mineral interest in the Sheldon Lake State Park and Brazos Bend State Park, at $150 per acre with a 25 percent royalty, $10 per acre rental, and a 3-year term, incorporating the restrictions set out in Exhibit A."

Attachments - 4

1. Exhibit A - Conditions for Sheldon Lake State Park
2. Exhibit B - Conditions for Brazos Bend State Park
3. Exhibit C - Fiscal Note for Sheldon Lake State Park (Available Upon Request)
4. Exhibitr D - Fiscal Note for Brazos Bend State Park (Available Upon Request)

Commission Agenda Item No. 11
Exhibit A

Sheldon Lake State Park

This Exhibit contains terms and conditions staff recommends be included in an oil and gas lease covering the Sheldon Lake State Park. This condition, if approved by the Commission, shall be forwarded to the Board for Lease. The lease shall contain the following provision:

Any provision herein to the contrary notwithstanding, it is agreed and understood that no entry shall be permitted on the surface of the leased land. Any development of the land shall be by means of directional wells located off the leased land, or by pooling of said land with other land or leases as provided by Subchapter E, Chapter 52, Natural Resources Code.

Commission Agenda Item No. 11
Exhibit B

Brazos Bend State Park

This Exhibit contains terms and conditions staff recommends be included in an oil and gas lease covering certain areas in the Brazos Bend State Park. These terms and conditions, if approved by the Commission, shall be forwarded to the Board for Lease.

(1) Prior to mineral recovery activities, Lessee must obtain archeological clearance from the Texas Historical Commission, under the provisions of Section 191.0525 of the Texas Natural Resources Code.

(a) Archeological clearance must be site-specific and shall not be construed to authorize any other or additional use within the designated rights-of-way or activity sites. The Department recommends use of GIS/GPS technology in archeological surveys.

(b) Two complete copies of all documentation, survey information, reports, USGS 7.5 minute topographical maps and other information relating to archeological clearance shall be provided to the land manager prior to commencement of mineral recovery activities.

(2) If an undocumented archeological or cultural site is discovered during mineral recovery or associated operations, all work in the immediate area should cease and the site shall be reported to the land manager and the Texas Historical Commission; work may continue where no archeological deposits are present. This report shall be the sole responsibility of the operator. Under the provisions of SubSection 191.0525 (g) of the Texas Natural Resources Code, the Texas Historical Commission will then determine whether or not further investigation is necessary prior to proceeding with activities.

(3) All drilling operations shall be conducted from existing pads located within the park.

(4) The operator shall notify the land manager in writing 48 hours where practicable, but in no case less than 24 hours in advance of the initial entry to begin operations. Where written notification is not possible verbal notification shall be considered sufficient. An entry schedule for drilling operations and routine maintenance shall be developed in consultation with the land manager. Entry for emergency purposes such as fire, explosion, or injury shall not require prior notice. The land manager shall be notified as soon as possible after the emergency event.

(5) All reasonable precautions, including consultation with the land manager, shall be taken to avoid disturbance of fish, wildlife or critical plant resources during mineral recovery operations. Particular caution shall be taken to avoid and protect sensitive habitats, such as wetlands. Activities affecting wetlands may require coordination with other state and federal agencies.

(6) Geophysical, drilling, and gathering line construction and routine maintenance activities may be prohibited during nesting, breeding, and migration activities to minimize interference with specific species identified by the land manager to require alternative scheduling. To the degree possible, operations requiring alternative scheduling will be determined during the prework conference with the land manager or when the 24 hour advance notice is given to the land manager prior to initial entry to begin operations.

(7) All soil removal or borrow sites shall be off site.

(8) The land manager shall schedule a prework conference to explain specific habitat concerns and needs to survey work crews and all other employees and agents of the operator that may be on Department lands during the proposed activity. This conference shall cover prohibited activities and potential consequences. Attendance shall be mandatory and additional prework conferences may be scheduled as needed. The Department shall prepare a summary of concerns addressed at the prework conference(s), and for each employee or agent that cannot attend a prework conference, the operator shall submit a statement signed by the employee or agent, indicating the employee or agent has read the summary.

(9) Use of existing surface or subsurface water resources and placement of water wells shall be coordinated with the land manager. Water wells must be drilled according to specifications approved by the Department and in compliance with Texas Natural Resource Conservation Commission regulations. Any freshwater wells developed shall be cased and left intact for use by the Department after expiration of the lease.

(10) Vehicular activity.

(a) Vehicular activity shall be confined within the boundaries of the geophysical lane, existing road ROW, pad site, gathering line corridor or access routes authorized by the land manager.

(b) If road construction is necessary, operator shall incorporate design criteria to restrict road width to the minimum area required for transport of equipment and personnel to the site. Road width shall be authorized by the land manager.

(c) Entrance to and travel within Department lands shall be over established routes or as authorized by the land manager. Additional service roads shall not be constructed unless authorized by the land manager. All roads used in conjunction with mineral recovery activities shall be regularly maintained by the operator to support designated Department uses. Operator shall restore all roads to preconstruction conditions, unless otherwise authorized by the land manager.

(11) Cutting, clearing, or other vegetation disturbances shall be confined within the boundaries of the staked geophysical lane, to include only line-of-sight clearing unless otherwise authorized by the land manager. The width of any clearing shall be authorized by the land manager, who may require the applicant to off-set around Department facilities and vegetation or other habitat structures.

(12) Shot holes:

No shots in excess of 40 pounds dynamite or dynamite equivalent shall be used in upland areas unless authorized in advance by the Texas Parks and Wildlife Board for Lease

Shots shall be discharged only in daylight hours unless authorized in advance by the Texas Parks and Wildlife Board for Lease

Shot holes shall be filled and plugged in accordance with Texas Railroad Commission regulations.

(13) Geophysical operations may be restricted, depending on the energy source employed, to avoid impacts to sensitive resources including, but not limited to, utilities, facilities, cultural resources, biologically sensitive areas, and wells. Standards adopted by the International Association of Geophysical Contractors entitled "Safe Operating Distance Chart Commonly Used and Accepted by the Geophysical Industry" shall provide guidance to the Department in determining these restrictions.

(14) A closed drilling fluid system shall be used for any oil based drilling operations.

(a) Water-based drilling muds shall be used where feasible.

(b) All oil based drilling fluids, cuttings, completion fluids and any other products of drilling or completion operations shall be contained in steel tanks or lined pits. Any open pits shall be fenced to exclude livestock when present in the pasture. The fencing should be of a type to exclude access by park visitors.

(c) All ditches around the rig for the purpose of catching oil based fluids involved in rig operations shall be lined. These lined ditches will drain into a lined catch basin.

(d) All oil and gas waste materials including trash and garbage will be removed to an off-site disposal facility approved by the Texas Railroad Commission and the operator shall notify the land manager of the facility to be used.

(15) Pad should be located in previously disturbed areas, such as abandoned well sites or other disturbed areas when practicable. The pad size will be restricted to the minimum area required to conduct drilling operations, store equipment and supplies, and contain waste materials. Vegetation damage, equipment and supply storage, and removal of fill materials from outside pad and road boundaries are prohibited unless authorized by the land manager.

(16) Gathering Lines. The gathering line alignment shall be predetermined and located whenever possible in nonvegetated areas or in existing road rights-of-way (ROW). Storage of pipe and other materials shall be in nonvegetated areas if available, and these areas shall be authorized by the land manager. Gathering line ROW shall be no greater than is necessary to construct and maintain the gathering line and shall have erosion control measures. The gathering line ROW may be left unvegetated for gathering line access and maintenance only as authorized by the land manager.

(17) Lessee shall conduct all operations so as to prevent the escape of gases, liquids or other deleterious substances from established gathering line or other facilities onto or into area lands or waters. Gathering line shall be hazard marked so that the distance between sequential markers is not more than 300 ft or line of sight. Operator is authorized to patrol and inspect the line and shall notify the land manager prior to entry. Operator is responsible for correcting any problems resulting from the gathering line or its construction. In addition, the Lessee shall take immediate remedial action in emergency situations.

(18) Restoration of the activity site(s) to preconstruction condition shall be the responsibility of the operator. The restoration plan shall include a full assessment of immediate and long-term restoration costs, including labor, and a timetable setting forth a schedule for all restoration activities. At the operator's option, restoration can be performed either by the operator or the Department. Where the Department assumes responsibility for restoration of an activity site, a timetable for payment to the Department for all costs associated with restoration activities shall be set forth in the restoration plan.

(a) Restoration measures within that plan may include, but are not limited to, reestablishment of former surface contours, restoration of soil structure, restoration of preconstruction drainage patterns, removal of excess fill materials from Department lands, discing or plowing of compacted soils, fertilization, revegetation with site appropriate native species, construction of nesting platforms, denning sites, or other wildlife habitat improvements to replace natural features lost or altered by mineral recovery activities.

(b) The standard or level of revegetation to be reached shall be set forth in the restoration plan. Site specific native plant species shall be used. The use of exotic plant species is prohibited.

(c) Where restoration to preconstruction condition is not feasible, the plan may include measures to compensate for unavoidable habitat loss.

(d) Following completion of restoration procedures, the land manager shall verify that restoration of any environmental damage has been satisfactorily completed and may, at that time, require additional restoration measures to satisfy the conditions of the restoration. When the land manager verifies restoration is complete the operator shall be notified in writing.

(e) If the Department and the Lessee cannot reach agreement on the method of restoration, the Department shall request the restoration plan and all procedures be docketed for consideration and final decision before the Parks and Wildlife Board for Lease. Should no resolution occur at that time the issue shall be submitted for arbitration.

(19) Lessee will be required to sign a Surface Use Agreement (SUA) with the Department covering matters left to the discretion of the land manager under the terms and conditions listed above.

(20) Compensation for surface damages shall be $2500 per drill site, not to exceed two acres and $1250 per acre for any other acres disturbed. The surface damages will be in the form of goods and services.

(21) The Lessee shall save, hold harmless, defend and indemnify the State of Texas, its agents and employees for losses, damages or judgments and expenses on account of bodily injury, death or property damage, or claims for bodily injury, death, or property damage of any nature whatsoever, and by whomsoever made, arising out of the activities of the lessee, the lessee's agents, employees, or subcontractors associated with the exploration and or recovery of any and all oil, gas or minerals.