Commission Agenda Item No. 3
Presenter:  Ted Hollingsworth

Action
Request for Storage Lease – Anderson County
Natural Gas Storage Lease at Gus Engeling Wildlife Management Area
January 26, 2012

I.       Executive Summary:  Sage Creek Energy Partners requests a lease from Texas Parks and Wildlife Department to store and retrieve natural gas from a geological formation under the Gus Engeling Wildlife Management Area (WMA).

II.      Discussion:  The recent surge in natural gas production in North America has resulted in an increased demand for gas storage facilities.  Bulk gas storage facilities help mitigate supply and demand fluctuations and stabilize prices.  Natural gas is stored underground in one of two types of geological formation, hollowed out salt domes or depleted conventional oil and gas fields.  A depleted field that meets the geological requirements for gas storage exists under a 547-acre portion of the 26,000+ acre Gus Engeling WMA.

Sage Creek Energy Partners desires to develop this field as a gas storage facility.  They are working with the Texas Railroad Commission (RRC) to provide the geological studies and reviews required for the RRC gas storage permitting process.

As proposed, the gas storage project would involve no surface occupancy on the WMA, other than re-plugging three existing abandoned wells.  At the direction of the TPW Commission, staff has worked through certain logistical and operational issues of the project with Sage Energy Partners and has negotiated terms and conditions under which a lease might be authorized by the TPW Commission.

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

“The Executive Director is authorized to negotiate terms and conditions under which a gas storage lease may be issued for the storage of gas under a portion of the Gus Engeling WMA in Anderson County, and to issue a gas storage lease under those conditions.”

            Attachments — 4

  1. Exhibit A – Resolution
  2. Exhibit B – Location Map
  3. Exhibit C – Vicinity Map
  4. Exhibit D – Site Map

Commission Agenda Item No. 3
Exhibit A

A Resolution by the Texas Parks and Wildlife Commission Regarding the Granting of a Lease Covering Approximately 547 Acres of Real Property in Anderson County for Natural Gas Storage under the Surface of the Gus Engeling Wildlife Management Area

Whereas, Sage Creek Energy Partners (Sage Creek) has requested a lease covering approximately 547 acres for the storage of natural gas under the surface of the Gus Engeling Wildlife Management Area (the WMA) in Anderson County Texas (the Lease); and,

Whereas, Sage Creek proposes to store and retrieve natural gas from a depleted geologic formation approximately 9,000 feet below the surface of the WMA and adjacent properties; and,

Whereas, Texas Parks and Wildlife Department (TPWD) owns and operates the WMA for a variety of conservation and recreation values, including habitat for migratory waterfowl and a broad diversity of other native fish and wildlife resources; and,

Whereas, the Texas Parks and Wildlife Commission (the Commission) finds that as required by Parks and Wildlife Code, Chapter 26, notices of today’s hearing of this matter were published at least once a week for three consecutive weeks in newspapers of general circulation which are published at least six days a week in the communities nearest to the WMA in which such newspapers are published (The Palestine Herald in Anderson County), with the last day of publication being not less than one week or more than two weeks before the date of today’s hearing and that such notices specified the date and time at which the Commission would hear testimony regarding the Easement; and,

Whereas, the only use of the surface of the WMA will be the minimum necessary to replug three (3) abandoned oil/gas wells; and,

Whereas, staff of TPWD have worked with Sage Energy to schedule the use of the WMA to minimize impacts to both fish and wildlife resources and to public hunting opportunities, and the development of facilities on adjacent private land so as to reduce impacts to the WMA; and,

Whereas, Sage Energy has agreed to compensate TPWD for the surface use required to replug three (3) abandoned wells and to compensate TPWD for the Lease and to undertake certain activities and certain mitigation measures to minimize the overall impacts of the Lease on the WMA; and,

Whereas, Sage Energy has provided evidence that the geologic formation proposed for the storage and retrieval of natural gas is suitable and safe for the proposed use, and poses little danger to fish and wildlife habitat; and,

Whereas, TPWD staff believe that granting of a Lease to Sage Energy is not inconsistent with the mission of TPWD; and,

Whereas, the Commission finds, in accordance with Parks and Wildlife Code, Chapter 26, that (1) there is no feasible and prudent alternative to the use or taking of such land (Lease);  (2) the program or project that requires the use or taking of land (Lease) includes all reasonable planning to minimize harm to the land (Lease); and,

Whereas, the Commission finds, in accordance with Section 13.009 of the Texas Parks and Wildlife Code that conveyance of the Lease subject to conditions that will minimize the overall impacts of the Lease on the WMA is in the best interest of TPWD; and,

Now, therefore, the Texas Parks and Wildlife Commission authorizes the Executive Director to take all necessary steps to negotiate terms and conditions under which a Lease may be granted, and to grant a Lease to Sage Energy for the purposes and subject to the conditions described herein and in the motion approved in this Resolution.

Adopted and approved this 26th day of January 2012.

______________________________
T. Dan Friedkin, Chairman
______________________________
Bill Jones, Member
______________________________
Ralph H. Duggins, Vice-Chairman
______________________________
Margaret Martin, Member
______________________________
Antonio Falcon M.D., Member
______________________________
S. Reed Morian, Member
______________________________
Karen J. Hixon, Member
______________________________
Dick Scott, Member
______________________________
Dan Allen Hughes, Jr., Member
 

Commission Agenda Item No. 3
Exhibit B

Location Map for Gus Engeling WMA in Anderson County


Commission Agenda Item No. 3
Exhibit C

Vicinity Map for Gus Engeling WMA 15 Miles Northwest of Palestine


Commission Agenda Item No. 3
Exhibit D

Site Map for Requested Easement at Gus Engeling WMA
Subject Tracts Shown in Red


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