Presenter: Corky Kuhlmann

Commission Agenda Item No. 19
Action
Nominations for Oil and Gas Lease
Hidalgo, Johnson, Nueces and Starr Counties
November 2005

I. Executive Summary: This item is a request for the recommendation by the Texas Parks and Wildlife Commission (Commission) to the Board for Lease for Parks and Wildlife Lands for the nomination of TPWD mineral interest for lease at Bentsen Rio Grande Valley State Park, Cleburne State Park, Mustang Island State Park and the La Grulla unit of the Las Palomas WMA at the minimum standard fees or greater.

II. Discussion: Minerals owned by or held in trust for Texas Parks and Wildlife Department (TPWD) may be leased by the Board for Lease for Parks and Wildlife Lands under Natural Resources Code § 34.051 for the purpose of prospecting or exploring for and mining, producing, storing, caring for, transporting, preserving, selling, and disposing of the oil, gas, or other minerals. State lands are typically offered for lease sale at scheduled intervals. The Board for Lease has traditionally respected recommendations of the Texas Parks and Wildlife Commission (Commission) relative to leasing minerals owned by TPWD. The Board for Lease has received a nomination at Bentsen Rio Grande Valley State Park, Cleburne State Park, Mustang Island State Park and the La Grulla Unit of the Las Palomas WMA for a lease sale offering. The purpose of this commission item is to alert the Commission to this nomination and seek recommendations for the Board for Lease. The lease request is for Bentsen Rio Grande Valley State Park which totals approximately 587.5 acres in Hidalgo County, 447.55 acres being Cleburne State Park in Johnson County and 568 acres part of Mustang Island State Park in Nueces and 30.38 acres part of the La Grulla Unit of the Las Palomas WMA, Starr County, Texas.

Staff recommends the Commission approve the lease to the Board for Lease of Parks and Wildlife Lands at minimum terms of a cash bonus of $150.00 per acre and a fixed royalty of 25 percent, with a $10.00 per acre delay rental for a 3-year lease. The lease will also include the conditions no surface occupancy and off site directional drilling only. Except for Mustang Island State Park which will be restricted to the following conditions; any drill site will be determined by Texas Parks and Wildlife Department and any surface use must be approved by and coordinated with TPWD.

III. Recommendation: The staff recommends the Texas Parks and Wildlife Commission adopt the following motion:

"The Executive Director is authorized to recommend nomination for oil and gas lease to the Board for Lease for Parks and Wildlife Lands, approximately 587.5 acres at Bentsen Rio Grande Valley State Park, 447.55 acres at Cleburne State Park, 568 acres out of Mustang Island State Park and 30.38 acres out of the La Grulla Unit of the Las Palomas WMA at a minimum of $150.00 per acre with a 25 percent royalty, $10.00 per acre rental, and a 3-year term, incorporating the restrictions set out in Exhibit A.”

Attachments - 2

Exhibit A - Restrictions
Exhibit B1-B4 - Locator Maps

Commission Agenda Item No. 19
Exhibit A

Restrictions on Activities

This Exhibit contains terms and conditions staff recommends be included in an oil and gas lease covering the area of Bentsen Rio Grande State Park, Cleburne State Park and the La Grulla Unit of the Las Palomas WMA. These terms and conditions, if approved by the Commission, shall be forwarded to the Board for Lease of Parks and Wildlife Lands:

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. Otherwise, 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.

This Exhibit contains terms and conditions staff recommends be included in an oil and gas lease covering the area of Mustang Island State Park. These terms and conditions, if approved by the Commission, shall be forwarded to the Board for Lease of Parks and Wildlife Lands:

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, except in areas and along routes approved by TPWD and with written permission from TPWD granting access to specific limited areas. Otherwise, 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.