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AGENDA ITEM # 20 KEY FOCUS AREA: AGENDA DATE: COUNCIL DISTRICT(S): DEPARTMENT: CMO: MAPSCO:

Better Cultural, Arts and RecreationalAmenities August 10, 2011 6 Park & Recreation Paul D. Dyer, 670-4071
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SUBJECT
Authorize a public hearing to be held on September 14, 2011 to receive public comments concerning the surface use of two locations at L.B. Houston Park, from Royal Lane to Northwest Highway (golf course and gun range site) for natural gas drilling and mineral production by Trinity East Energy, LLC - Financing: No cost consideration to the City

BACKGROUND
On February 27, 2008, the City of Dallas (the "City") authorized two oil and gas leases with Trinity East Energy, LLC ("Trinity East"). The leases cover City-owned property, including City-owned park land. On August 15, 2008, and pursuant to City Council's authorization, Trinity East and the City executed two thirty-six month oil and gas leases, one known as the "Group 1 Lease" and the other known as the "Group 2A Lease". The leases contain specific terms, conditions, and limitations on the use of the City-owned property for oil and gas exploration, development and production, including but not limited to limited surface rights. The Group 1 Lease conveys to Trinity East the subsurface mineral rights of 137 tracts of City-owned property for the purpose of exploring, drilling, and producing oil and gas, laying pipelines, and building roads and tanks thereon to produce, save, treat, process, store, and transport oil and gas and other products manufactured from oil and gas produced from the City-owned land subject to the express limitations on the surface use set forth in the lease. The Group 1 Lease limits Trinity East's surface use to designated drill sites and ancillary surface uses on City-owned land. This lease expressly distinguishes between "Drill Site Location" and "Proposed Drill Site Location", the latter involving park property having additional statutory and common law requirements for such use. The lease does not guarantee that Trinity East may use the "Proposed Drill Site Locations" as surface drill sites. '

BACKGROUND (continued) Trinity East has requested the use of two of these "Proposed Drill Site Locations" for surface drilling operations. These two "Proposed Drill Site Locations" are located on L.B. Houston Park, which is designated City-owned park land. On August 20, 2008, the City Council held a public hearing and authorized the change of use of certain park land, including L.B. Houston Park, to be used in accordance with the terms and conditions of the oil and gas leases, including the Group 1 Lease with Trinity East, authorized by City Council on February 27,2008. This action will consider the surface use for gas drilling and mineral production at two locations within L.B. Houston Park (see Exhibit A). Each of these two locations is a designated "Proposed Drill Site Location" in the Group 1 Lease. The first drill site is located just south of the gun club ("gun range site") and north of Northwest Highway and is 5.775 acres. The second site is located on the west side of L.B. Houston Golf Course in an area where radio broadcast towers once stood ("radio tower site") and is 3.818 acres. Each drill site would contain temporary and permanent structures as detailed on the attached site plans for each site (Exhibits B and C). The City Council desires to call and hold a duly advertised public hearing and, after which, to make appropriate findings to satisfy the requirements of the Texas Parks and Wildlife Code, Chapter 26 (Section 26.001 through 26.004) that may be applicable to the surface use of L.B. Houston Park for drill sites and ancillary uses, including but not limited to surface access and pipelines. In addition to the "Chapter 26" public hearing process, Trinity East must obtain a Specific Use Permit ("SUP") for these proposed drill sites. Additionally, because these two proposed drill sites are located within the 100-year floodplain, Trinity East must obtain floodplain permits. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Oil and Gas Lease and use of certain park land subject to the terms of the oil and gas lease was deferred on February 6,2008 by Council Majority. City Council authorized the Oil and Gas Lease and use of certain park land subject to the terms of the oil and gas lease on February 27,2008, by Resolution No. 08-0720. The Park and Recreation Board authorized the public hearing on June 5, 2008. City Council authorized the public hearing on June 25, 2008, by Resolution No. 08-1813. City Council authorized a public hearing to receive comments on August 20, 2008, by Resolution No. 08-2200.

Agenda Date 08/10/2011 - page 2

PRIOR ACTION/REVIEW (Council, Boards, Commissions)( continued) City Council authorized an amendment to the Oil and Gas Leases ("Lease 1" and "Lease 2A") on June 22, 2011, by Resolution No. 11-1826. FISCAL INFORMATION No cost consideration to the City.

Agenda Date 08/10/2011 - page 3

COUNCIL CHAMBER

August 10, 2011 WHEREAS, the City of Dallas (the "City") owns land in Dallas, Texas, known as L.B. Houston Park, which was acquired for park purposes and has been maintained as park land; and WHEREAS, on February 27, 2008, the City Council authorized two oil and gas leases with Trinity East Energy, LLC ("Trinity East") covering City-owned property, including park land; and WHEREAS, on August 15, 2008, Trinity East and the City executed two oil and gas leases, one known as the "Group 1 Lease" and the other known as the "Group 2A Lease", covering City-owned land, including park land; and WHEREAS, on August 20, 2008, City Council held a public hearing and passed a resolution authorizing the utilization of park land, including L.B. Houston Park, for the uses identified in the oil and gas leases authorized by City Council on February 27, 2008; and WHEREAS, the Group 1 Lease grants to Trinity East certain subsurface mineral rights and surface rights to 137 tracts of City-owned land for the sole purpose of exploring, drilling, and producing oil and gas, laying pipelines, and building roads and tanks thereon to produce, save, treat, process, store, and transport oil and gas and other products manufactured from oil and gas produced from the City-owned land subject to the express limitations on the surface use set forth in the lease; and WHEREAS, the Group 1 Lease limits Trinity East's surface use to designated portions of City-owned land; and WHEREAS, the Group 1 Lease expressly distinguishes between "Drill Site Location" and "Proposed Drill Site Location", the latter having additional statutory requirements that must be satisfied before non-park use; and WHEREAS, two of the "Proposed Drill Site Locations" are located within L.B. Houston Park, which, as park land, has certain additional statutory requirements that must be satisfied before non-park use; and WHEREAS, the Group 1 Lease does not guarantee that Trinity East may use a "Proposed Drill Site Location" as a surface drill site; and WHEREAS, Trinity East has requested the use of two "Proposed Drill Site Locations" within L.B. Houston Park for surface drilling operations as shown on Exhibits A, B, and C to this resolution; and

COUNCIL CHAMBER

August 10, 2011 WHEREAS, the City Council desires to call and hold a duly advertised public hearing and, after which, to make appropriate findings to satisfy the requirements of the Texas Parks and Wildlife Code, Chapter 26 (Section 26.001 through 26.004) that may be applicable to the surface use of L.B. Houston Park for drill sites and ancillary uses, including but not limited to surface access and pipelines; Now, Therefore, BE IT RESOLVED BY THE PARK AND RECREATION COUNCIL OF THE CITY OF DALLAS: BOARD AND THE CITY

SECTION 1. That the Park and Recreation Department is hereby authorized and directed to advise in writing of such proposed use of the park property by delivering a notice for publishing to the official newspaper to be advertised once each week for three consecutive weeks, the last publication to be not less than one week nor more than two weeks before the date of the hearing, which shall be held in the City Council Chambers on September 14,2011. SECTION 2. That the approval of the aforementioned project by the City Council, at the close of said hearing, shall be construed as making the proper findings as to the use, taking and conveyance of park land, consistent with the Texas Parks and Wildlife Code and the Texas Local Government Code. SECTION 3. This resolution shall take effect immediately from and after its passage in accordance with the provisions of the Charter of the City of Dallas, and it is accordingly so resolved.

Exhibit A
LB Houston Park

Golf Course and Gun Club Proposed Trinity East Gas Well Sites

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