03/15/2010-CC-Agenda Packet-Work SessionAGENDA
CITY COUNCIL WORK SESSION
MONDAY, MARCH 15, 2010
6:00 PM
502 ELM STREET
1. Call Meeting to Order.
2. Discussion on Banking and Finance Reorganization.
3. Discussion on Oil and Gas Well Ordinance.
4. Overview of Items on Regular Agenda.
5. Adjournment.
I, the undersigned authority, do hereby certify that this Notice of Meeting was posted on the
bulletin board, at the City Hall of the City of Sanger, Texas, a place convenient and readily
accessible to the general public at all times, and said notice was posted on the following date
and time: , ,` .m. and shall remain
— -- a _.AV " ._ ,r 1 •t ' !, _
posted ntil nice'n6 is adjourned.
11
Tami rVaber, City Secretary
City of Sanger, Texas
This notice was remove from e r, Ia15 hi0letin board on t
>`t 1 by Ad & C fd''tra`rts :a6►;a`44
This facility is wheelchair accessible and accessible parl ng spaces are available. Requests for
accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact
the City Secretary's office at (940) 458-7930 for further information.
CITY OF SANGER
COUNCIL AGENDA ITEM
AGENDA TYPE ❑ Regular ❑ Special ❑ Consent Reviewed by Finance ❑ Yes 12SJ Not Applicable
❑ Workshop ❑ Executive ❑ Public Hearing Reviewed by Legal Yes Not Applicable
Council Meeting Date: Submitted By:
March 15, 2010 Joseph D. Iliff, AICP
City Manager Reviewed/Approval Initials Date �_ /V _ w
ACTION REQUESTED: ❑ORDINANCE ❑ RESOLUTION # ❑ APPROVAL
❑ CHANGE ORDER ❑ AGREEMENT ❑ APPROVAL OF BID ❑ AWARD OF CONTRACT
❑ CONSENSUS ® OTHER Discussion
AGENDA CAPTION
Discussion of potential amendments to the regulation of oil and gas wells
FINANCIAL SUMMARY
®N/A ❑GRANT FUNDS ❑OPERATING EXPENSE ❑REVENUE ❑CI P ❑BUDGETED ❑NON -BUDGETED
BACKGROUND/SUMMARY OF ITEM
The proposed regulations would require oil and gas production activity to seek and be granted a permit
from the City of Sanger prior to beginning operation. All permits would require the approval of the
City Council. The regulations would apply to the entire city limits, providing standards for the location
of any oil or gas drill site, the design of the site, and the operations conducted within.
The proposed regulations would require the operator to apply for a permit. The city can hire a
consultant to provide a technical review of the application, prepare a report about the proposed activity,
and make recommendations to the City Council. The expense of the consultant's review is paid by the
applicant. City Council is required to conduct a public hearing before approving or denying a permit.
Prior to the public hearing, notice must be published in the newspaper and mailed to the owners of
property within 2,500 feet of the drill site. The applicant is responsible for the cost of the mailed
notices.
All permits are good for one (1) year. Permits can be renewed, suspended, or revoked.
STAFF OPTIONS &RECOMMENDATION
Staff recommends requiring permits for oil and gas production activities, setting standards for the
location, design, and operation of drilling sites and equipment. The ordinance as drafted is intended to
provide for the protection of the public health and safety, while minimizing the city's cost to review
permit applications.
Staff is
comments, feed
List of Supporting Documents/Exhibits Attached:
• Draft Oil and Gas Well Regulations
and direction on these
tions.
Prior Action/Review by Council, Boards, Commissions or Other
Agencies:
• None
DRAFT Drilling Regulations
ARTICLE 4.1100 OIL AND GAS WELL REGULATIONS*
Sec.4.1101 Purpose
The exploration, development, and production of oil, gas and other mineral hydrocarbons
in the city is an activity which necessitates reasonable regulations. Such regulations will prevent
or lessen injury or property damage to citizens. This chapter implements reasonable regulations
for present and future, mineral activities to protect the health, safety, and general welfare of the
public and accomplish the orderly and practical production of available mineral resources. All
provision/requirements of this chapter applicable to an operator are applicable to a permittee and
all provisions/requirements of this chapter applicable to a permittee are also applicable to an
operator.
Sec.4.1102 Definitions
All technical or oil and gas industry words or phrases used herein and not specifically
defined shall have that meaning customarily attributable thereto by prudent operators in the oil
and gas industry. For the purpose of this chapter, the following definitions shall apply unless the
context clearly indicates or requires a different meaning.
Abandonment means "abandonment" as defined by the Texas Railroad Commission and
includes the restoration of the drill site as required by this chapter.
Commission means the Texas Railroad
Consultant means a person familiar with
retained by the city.
Desertion means the ces;
Drilling means any
other hydroc
of the ope
manager.
from
ed in the oil and gas industry who has been
any drill site without compliance with the
d operations, idle wells, or abandonent.
ices for the City of Sanger or such other
to be drilled for the purpose of disposing of
boring of a new well to explore, develop, or produce oil,
Drilling equipment means the derrick, all parts and appurtenances to such structure, and every
piece ofapparatus, machinery, or equipment used, erected, or maintained for use in
connection with drilling.
Drill site means the premises used during the drilling or re -working of a well.
Exploration means geologic or geophysical activities, including seismic surveys, related to the
search for oil, gas, or other subsurface hydrocarbons.
Gas means any fluid, either combustible or non-combustible, which is produced in a natural
state from the earth and which maintains a gaseous or rarified state at standard
temperature and pressure conditions, and/or the gaseous components or vapors occurring
in or derived from petroleum or natural gas.
Gas well means any well drilled, to be drilled, or used for the intent or actual production of
natural gas.
Page 1 of 20
DRAFT Drilling Regulations
High impact area means any area within the city limits of the City of Sanger.
Lessee means a person who has executed an oil or gas lease or sublease, or the owner of the land
or minerals, or his heirs, who conducts or carries on any oil or gas exploration,
development, and operation thereof, or a person conducting the operation for himself or
others.
Lessor means the owner of surface or mineral rights who has executed a lease.
Maintenance means the repair or replacement of any machinery, equipment, apparatus,
structure, facility, or parts used in connection with an oil or gas operation, site, drill site,
or any other work necessary to reduce fire hazards or hazardsto employees, public
health, safety, and welfare.
New well means a new well bore or new hole established at the ground surface and shall not
include re -working or an existing well which is not abandoned.
Oil or gas operation site means the physical location where oil or gas operations are conducted.
Oil well means any well drilled, to be drilled, or used for the intended or actual production of
liquid petroleum or petroleum products or enhanced recovery.
Operator means any person drilling, maintaining, operating, pumping, or in control of a well. If
the operator is not the lessee under an oil or gas lease of any premises affected by the
provisions of this chapter, then such lessee shall also be deemed to be an operator. If no
oil or gas lease exists relating to any premises affected by this chapter, the owner of the
fee estate in the premises shall be deemed an operator.
Owner means a person who owns the legal or equitable title in and to the surfaces of the drill
site or oil or gas operations site.
Permit means a drilling permit issued or sought to be issued under this chapter authorizing the
drilling of an oil or gas well or other oil operations.
Permittee means a person whom is issued a permit authorizing oil or gas operations, and his
heirs, administrators, executors, successors, and assigns.
Person means both the singular and plural and means a natural person, corporation, association,
partnership, receiver, trustee, guardian, executor, administrator and a fiduciary or
representative of any kind.
Processing means operations for gauging, recycling, compressor repressuring, injection,
reinjection, dehydration, stimulation, separation (including but not limited to separation
of liquids from gas), shipping and transportation, and gathering oil, gas other
hydrocarbon substances, water or any combination thereof.
Property owner means the real property surface record owner(s).
Re -working means reoccupation or re-entry of an existing well within the existing bore hole or
by deepening or sidetrack operations which do not extend more than 150 horizontal feet
from the existing well bore, or replacement of well liners or casings.
Rights -of -way means any street, highway, sidewalk, alley, avenue, recessed parking areas, or
other public rights -of -way, including the entire right-of-way.
Page 2 of 20
DRAFT Drilling Regulations
Seismic exploration means the exploration of subsurface geologic condition by the measurement
of direct, refracted, and/or reflected or pressure waves within any number of subsurface
geologic units. Seismic exploration typically involves the generation of sound or pressure
waves by the use of explosives or vibration devices and data collection by the use of
geophones or hydrophones.
Sump or sump pit means an earthen pit, commonly known as a "mudpit", lined or unlined for
the discharge of oil field wastes.
Titles. When the title of any city official is used herein, it shall include that named official and
any duly authorized representative or designee.
Well means a hole(s) or bore(s) to any horizon, formation or strata for the purpose of producing
any oil, gas, liquid hydrocarbon, brine water, sulphur water or for use as an injection well
for secondary recovery or disposal or production of oil, gas, or other hydrocarbons from
the earth.
Well servicing means maintenance work performed in any existing well before which does not
involve drilling or re -working.
Sec. 4.1103 Director empowered to oversee chapter
(a) The director is authorized and directed to enforce this chapter. Whenever necessary to
enforce any provision of this chapter, or whenever the director has reasonable cause to believe
any condition contrary to this chapter exists upon any premise or in ,any building for which a
permit has been issued, the director or his designated representative may enter such place at any
reasonable time to inspect or perform any duty imposed by this chapter. The director shall have
recourse to every remedy provided by law and equity to gain entry. No owner or occupant or any
other person having charge, care, custody, or control of any building or premise shall fail or
neglect after proper demand to permit prompt entry by the director.
(b) The director shall determine the necessity of hiring a consultant. The fees incurred as a
result of the director's and consultant's review shall be paid by the applicant. The director may
require additional or supplemental information' before action is taken on an application. The
director shall provide applicant with an opportunity to withdraw an application prior to engaging
the services of a consultant. The applicant shall be required to pay to the consultant a retainer to
cover the cost of the services prior to consultant's commencement of the work.
Sec. 4.1104
s) required
(a) It shall be unlawful and an offense for any person acting either for himself or acting as an
agent, employee, independent contractor, or servant for any person to participate in oil, gas or
other hydrocarbons production activity within the corporate limits of the city without a permit
having first been issued as provided for by the terms of this chapter. Additionally, a permit shall
be required when the primary access to the drilling site is by way of a city street or public right-
of-way. Applications for such permits shall be available from the planning and development
department.
(b) When a permit has been issued for the mineral exploration or the drilling of a well, such
permit shall constitute sufficient authority for drilling, operation, production, gathering of
production, maintenance, repair, reworking, testing, site preparation consisting of rigs or tank
batteries, plugging and abandonment of the well, and any other activity associated with mineral
Page 3 of 20
DRAFT Drilling Regulations
exploration. Such permit shall also constitute sufficient authority for the construction and use of
all facilities reasonably necessary or convenient in connection therewith, including gathering
lines and discharge lines by the permittee and its employees, agent and contractors. However, in
no case will any issued permit be applicable to more than one well.
(c) As to all wells and/or repressurizing or induction facilities and such other facilities as may
be covered by this chapter existing or previously permitted within the corporate limits of the city
on the effective date of this chapter or which are in existence at the time the land upon which the
same are situated is annexed to the city, no additional permit or filing fee shall be required.
(d) Permits shall be designated by the type of activity and the character of the area. There shall
be the following types of permits: high impact and seismic.
(e) Before filing a site plan or preliminary plat, mineral owner shall notify surface owner by
certified mail, return receipt requested, and show proof of such notice to the city. Mineral owner
has 30 days before filing to designate such persons oil and gas operation location on the surface
owner's proposed plat or site plan.
(f) Applicant shall complete the application and deliver it and any additional required
information to the director. Any costs of processing the application,, including any unpaid fees of
a consultant, shall be paid by applicant prior to the public hearing.
(g) All permits require council approval. Council shall review the application, director's and/or
consultant's report and any other related information. Council may require any change in the
operations, plan, design, layout, fencing, screening, lighting, or other matters reasonably required
by the public interest, health, safety or welfare which are consistent with the standards of the
zoning districts in which the well is located and those districts which surround the well site.
Sec. 4.1105 Application contents
The application shall include full information, including the following:
(1) Appropriate fees:
a. Permit application: Five thousand dollars ($5,000)
b. Permit renewal: Two thousand five hundred dollars ($2,500)
(2) The date of the application;
(3) Name, address and telephone numbers for the mineral lessee, operator/applicant and
surface owner;
(4) The names and addresses of all property owners within 2,500 feet of the drill site
property perimeter.
(5) Site plan of the proposed operation showing the location of all improvements and
equipment;
(6) Map showing proposed operation route and roads for equipment, chemicals, or waste
products used or produced by the oil or gas operation;
(7) Description of type, kind, size, and amount of major equipment used before and after
completion of drilling and re -working;
Page 4 of 20
DRAFT Drilling Regulations
(8) Location and description of all improvements and structures within 500 feet of the
well;
(9) Location of compressor, compressor control, or safety devices with explanation of
operating characteristics of each in any application for a permit for a gas repressuring or
injection facility;
(10) Name of representative with supervisory authority over all oil and gas operation
site activities and a phone number where such person can be reached 24 hours a day;
(11) Legal description of the property to be used for the oil or gas operation, the parcel,
and the production unit (plat description or metes and bounds bearings) and name of the
geologic formation as used by the commission. Property recorded by plat should
reference subdivision, block and lot numbers;
(12) Proposed well name;
(13) Name and address of an individual designated to receive notice;
(14) Evidence of insurance information as required by this chapter,
(15) A survey of the production unit at a scale of one inch per 300 feet or greater by a
certified surveyor including:
a. Lengths and bearing of all boundary lines for production.
b. Exact acreage of the production unit.
c. Exact location of the well within production unit with distances of a minimum
of two adjacent boundary lines of the production unit.
d. Length of maximum diagonal within the production unit.
e. (ieoto
(20)
s of all
i and Te
(21) Required
(22) Potential
the target
the
zone.
and cementing program;
e., vertical shaft, horizontal shaft, and/or slant hole);
required by the Texas Natural Resource and Conservation
goad Commission;
ilities during and after drilling and completion;
pact on noise, air, land, subsurface, and water resources;
(23) Projected life of production well;
(24) Control methods for fire and fugitive oil and gas emissions;
(25) Hours of drilling and completion operation;
(26) Copy of Texas Department of Water Resources Form TDWR-0051 "Depth of
Usable -Quality Ground Water To Be Protected";
(27) Copies of commission forms and drilling permit; and
Page 5 of 20
DRAFT Drilling Regulations
(28) Statement under oath signed by applicant that the information submitted in the
application is true and correct.
Sec. 4.1106 Application review
(a) The director or his designee, will review and report to the city council on all applications
received by the city.
(b) As further provided herein, the director or his designee shall review the application within
30 days of filing. They will review the nature and location of the proposed oil or gas operation
and make recommendations to the council about site plan design, construction, installation,
operation, and maintenance of the proposed oil or gas operation and/or storage facility, and, if
applicable, the following:
(1) Alternate well location due to adjacent land uses.
(2) Air pollution control devices.
(3) Noise and odor control devices.
(4) Type of pump engine.
(5) Height of pump equipment.
(6) Fire control measures, as required by and all applicable city ordinances and codes.
(7) Fencing, visual screening, and/or landscaping as may be required by this chapter.
(8) Proof of contractual responsibilities of pump site and storage size maintenance.
(9) Safety procedures.
(10) Special handling, storage, or disposal of sludge/waste.
(11) Hours of pumping operation.
(12) Gas flaring.
(13) Location of storage facilities.
(14) Traffic loads or patterns, proposed street development, as required by this chapter,
and ingress/egress of vehicular traffic.
(15) Water source used during drilling operation.
(16) Full line location and route between the wellhead and storage facilities.
(c) Screening and landscaping.
(1) Unless otherwise required, fencing, screening and landscaping shall be within the
discretion of `the city council based upon the impact to adjacent areas and the
requirements of this chapter and the requirements of the city's zoning ordinance for the
district in which the well site is located and surrounding districts.
(2) Fencing may be required during the drilling operations and/or separate fencing may
be required after completion of the drilling operations.
(3) A six-foot solid screen fence around the entire perimeter of the site may be required.
Page 6 of 20
DRAFT Drilling Regulations
(4) Any fence should be at least 100 feet from any well, equipment, or structure within
the site, but no closer than 800 feet to any residential property line.
(5) All fencing shall be of a solid neutral color compatible with surrounding uses and
shall be maintained in a neat, orderly, secure condition. Neutral colors for fencing shall
include unobtrusive shades of sand, gray, green, blue, brown, or other colors approved by
the city council.
(6) Upon completion of a well as a commercial producer, any apparatus used in the
production of the well, including pump jacks, shall be enclosed with solid privacy fence
material as to prevent any entry by unauthorized persons and to prevent well equipment
from being seen. The enclosure shall remain locked at all times unless the well is being
serviced by the operator or its service companies.
(7) All sites in high impact areas shall have landscaping and shall be screened by a fence
enclosure constructed of any material compatible with surrounding uses which effectively
screens the site. Such shall be completed within 30 days after completion of drilling or
reworking, or within 30 days after activation of an idle well in a high impact or urban
area.
(d) Before any oil or gas operation begins, all private roads used for access to the site and the
site itself shall be surfaced with crushed rock, gravel, or ore, or oiled and continuously
maintained to prevent dust and mud. Roads shall be at least 30 fe%et wide and shall provide for
area drainage. These requirements may be altered at the discretion of the city council after
consideration of all circumstances, including but not limited to the following:
(1) Distances from public streets and highways and adjoining and nearby property
owners whose surface rights may or may not be leased by the operator.
(2) The purpose for which the property of such owners is or may be used;
(3) Topographical features;
(4)
(e) Upon, completion of review by the director or his designee, a written report and
recommendation shall be made to the city council. The recommendation and report must be
completed within 60 days of receipt of an application. If a consultant is retained, consultant will
have 30 days from receipt of the application to issue recommendations. However, taking into
account the foregoing provisions, should the director feel that additional time is needed for the
consultant to submit recommendations, a request for an extension may be submitted to the city
council.
Sec. 4.1107 Processing of permit applications.
(a) High impact area permits.
(1) After a high impact permit application is submitted, the director, if deemed
necessary, may retain a consultant to evaluate the public impact of the proposed activity.
The consultant shall study the application, proposed site, and proposed operations or
drilling program, and shall draft recommended restrictions or conditions to be appended
to the permit if issued, including but not limited to, minimum separation distance for
Page 7 of 20
DRAFT Drilling Regulations
drilling or other operations, maximum pressures for anticipated operations, minimum test
procedures for equipment, special safety equipment and procedures, hours of operation,
and prohibited operations or techniques. The consultant shall recommend noise reduction
levels and screening where deemed appropriate. The recommendation shall be completed
and delivered to the director and applicant within 30 days after the consultant is retained.
Applicant shall pay for the cost of consultant's study and recommendations prior to the
public hearing.
(2) After the report is received by the city, the city secretary shall cause a notice of
public hearing to be published in the official newspaper of the city, as designated by the
governing body. In no event will a public hearing be held earlier than 15 days from the
date of publication.
(3) All persons with property located within 2,500 feet of the proposed drill site
property perimeter, as shown by the latest county appraisal district certified tax rolls,
shall be sent a notice of the public hearing by certified mail, return receipt requested, at
least 15 days prior. The applicant shall pay the current certified postage fee for each
notification letter. These fees will be paid as part of the application process. No
notification letter shall be necessary if the applicant files a consent form, supplied by the
city secretary, signed and notarized, by each such property owner who would have
received notice pursuant to this paragraph.
(4) At the public hearing, the recommendation of the consultant and/or director shall be
presented and any interested party shall be allowed to speak for or against the issuance of
a permit. After the conclusion of the hearing, the council shall approve or deny the permit
based upon the criteria herein. The council may table any application for up to 60 days
and direct that the director provide further information.`
(5) After the public hearing, council may approve or deny the permit based upon the
criteria set forth herein and may add any conditions necessitated by the health, safety, and
welfare of the public, whether or not they are included in the recommendations of the
consultant and/or director.
(b) Seismic permit.
(1) A proper seismic application shall include:
a. A letter requesting a geophysical permit describing the proposed system, date
work will begin, and date work will end. A statement, approved by the city
attorney, shall' be included in the permit relieving the city of any liability for
damages which may result from such activity.
b. A copy of a valid and existing public liability insurance policy, as required by
this chapter.
c. A plat outlining the areas proposed to be covered by the survey.
d. A description of the seismic method(s) to be used.
e. Requested time period to conduct on -site seismic testing.
(2) The director, after receiving authorization from the city council, may issue a permit
for the applicant to conduct such seismic or geophysical work if the work will not create
Page 8 of 20
DRAFT Drilling Regulations
a public nuisance nor be contrary to public safety. The determination shall include, but
shall not be limited to, consideration of the following.
a. Whether the location of the proposed test, considering the geology of the area,
will reasonably be expected to damage waterlines, sewer lines, structures,
dwellings, or other area improvements.
b. Quality of the proposed seismic survey to be used in implementing the
exploration.
Sec. 4.1108 Location regulations
(a) No oil or gas drill site or operation may be located.
(1) Within 50 feet of any street, right-of-way, alley, or utility easement.
(2) Within 1,000 feet of the property line of a cemetery, park, public or private water
supply well, or residential unit, without a notarized waiver by the residential unit property
owner and the party entitled to occupy the premises.
(3) Within 1,000 feet of the property line of any,school or hospital.
(4) In any public park unless authorized by State law and in compliance with applicable
provisions of this chapter.
(5) In any city streets or alleys.
(b) No drilling or re -working shall occur within `300 feet of any oil storage tank, ignition source,
or building.
Sec. 4.1109 Criteria for granting or denying permit
(a) The council shall review the application, director's and/or consultant's report, and any other
related information and based upon' such reports shall set the principal amount of the security
instrument. Granting the permit shall be conditioned on applicant submitting the security
instrument to the city within 30 days. The council may require any change in the operations,
plan, design, layout, fencing, screening, lighting, or other matters consistent with the city's land
use regulations and other applicable health, safety, and welfare ordinances. The council may
accept, reject, or modify the recommendations in the interest of securing compliance with this
chapter, other city ordinances, and/or to protect the health, safety, and welfare of the community.
(b) The following criteria shall be used by the council when considering a permit request:
(1) That the operations proposed are reasonable under the circumstances and conditions
prevailing in the area;
(2) That the operations proposed are consistent with the health, safety, and welfare of
the public when and if conducted in accordance with the permit conditions to be imposed,
and
(3) That the impact upon adjacent property and the general public of operations
conducted in compliance with the permit conditions are reasonable and justified,
balancing the following factors:
a. The right of owner(s) of the mineral estate to explore, develop, and produce
the minerals.
Page 9 of 20
DRAFT Drilling Regulations
b. The availability of alternate drill sites, both presently and at other times during
the lease terms.
c. The inconvenience, intrusion and conflict with surrounding established land
uses within the corporate limits of the city.
(4) The decision of the council shall be final and in malting its decision, it shall have the
power and authority to refuse any permit to drill any well at any particular location within
the city, when by reason of such particular location the drilling of such wells at the
location would be injurious to the health, safety, welfare or well being of the inhabitants
in the immediate area of the city or would not promote orderly growth and development
of the city. Each permit shall:
a. By reference have incorporated therein all :the provisions of this chapter with
the same force and effect as if this chapter were copied verbatim in such permit.
b. Specify the location of the proposed drill 'site, well, or injection facility by a
metes and bounds description or by specifying a lot and block number, and name
of any applicable addition or subdivision.
c. Contain and specify that the term of the permit shall be for a period of one
year from the date of the permit.
d. Contain and specify such other terms and provisions as may be necessary in a
particular case to accomplish the purpose of this chapter.
e. Contain and specify that no actual operations shall be commenced until the
permittee has complied with the bond and insurance provisions of this chapter.
Sec. 4.1110 Security instrument
(a) A security instrument that covers each well must be delivered to the city before the issuance
of a permit for a well. Approval by the city attorney of such security is required. The instrument
must provide that it cannot be canceled without at least 30 days' prior written notice to the city
and, if the instrument is a performance bond, that the bond cannot be canceled without at least
ten days prior written' notice for non-payment of premium. The instrument shall secure the
obligation of the operator related to the well to:
(1) Repair damage, excluding ordinary wear and tear, if any, to public streets and
infrastructure, including but not limited to, bridges, water lines, and other public
infrastructure, caused by the operator or by the operator's employees, agents, contractors,
subcontractors .or representatives in the performance of any activity authorized by or
contemplated by the permit;
(2) Compliance with the insurance and security provisions set forth in this chapter;
(3) Payment of fines and penalties imposed upon the operator by the city for any breach
of the well permit;
(4) Compliance with the performance standards set forth in this chapter;
(5) Prompt restoration to their former condition, as determined by the director, any
public property damaged by the oil or gas operation;
Page 10 of 20
DRAFT Drilling Regulations
(6) Prompt payment of all fees of a consultant whose services are engaged by the city
pursuant to subsection 4.1103 (b) of this chapter;
(7) Prompt repair of any and all damage to city streets, as determined by the director of
community development, caused by the equipment and vehicles used by
operator/permittee. The director of community development will prepare or cause to be
prepared specifications to be used for repairs. The costs of those specifications shall be
paid by the operator/permittee.
(b) The security instrument may be provided for individual wells or on a "blanket" basis for
multiple wells. The amount of the security shall be a minimum of $50,000.00 for any single well
and a minimum of $100,000.00 for multiple wells on a "blanket" basis.
(c) The security will terminate when the gas well permit
(d) An appeal of the determination of the amou
made to the city council for determination of the
(e) The security instrument provided hereunder shall require't
release and discharge, defend, indemnify and hold harmle
demands, actions, judgments, and executions which it ever h
assigns may have, or claim to have, against the City of Sanger,
officials, officers, servants, successors, assigns, sponsors, voh
or arising out of personal injuries, known or unknown, and inj
or in any way incidental to or in connection with the performa
operator under a gas well permit or caused by or, arising out
occur from the operator operating under the well permit and th
and providing that the permittee/operator shall fully release de
harmless the City of Sanger, Texas, and/or its departments, a
ith
uired under this section may be
.e permittee/operator to expressly
s from and against all claims,
d, or now have or may have, or
rnd/or its departments, its agents,
steers, or employees, created by,
ties to property, real or personal,
ice of the work performed by the
f, that sequence of events which
work performed by the operator,
end, protect, indemnify, and hold
ents, officials, officers, servants,
employees, successors, assigns, sponsors, or volunteers trom ana against eacn ana every ciaun,
demand, or cause of action and any and all liability, damages, obligations, judgments, losses,
fines, penalties, costs, fees, and expenses incurred in defense of the City of Sanger, Texas, and/or
its departments, agents, officials, officers, servants, or employees, including, without limitation,
personal injuries and death in connection therewith which may be made or asserted by operator,
its agents, assigns, or any third' parties on account of, arising out of, or in any way incidental to
or in connection with the performance of the work performed by the operator under a well permit
and, the operator agrees to release, defend, indemnify and hold harmless the City of Sanger,
Texas, and/or its departments, and/or its officials, officers, agents, servants, employees,
successors, assigns, sponsors, or volunteers from any liabilities or damages suffered as a result of
claims, demands, costs, or judgments against the city and/or its departments, its officials,
officers, agents, servants, or employees, created by, or arising out of, the acts or omissions of the
City of Sanger occurring on the drill site or operation site in the course and scope of inspecting
and permitting the gas wells Including, but not limited to, claims and damages arising in whole
or in part from the sole negligence of the City of Sanger occurring on the drill site or operation
site in the course and scope of inspecting and permitting the wells. It is understood and agreed
that the indemnity provided for in this section is an indemnity extended by the operator to
indemnify and protect the City of Sanger, Texas and/or its departments, agents, officers,
Page 11 of 20
DRAFT Drilling Regulations
servants, or employees, whether that negligence is the sole or contributing cause of the resultant
injury, death, and/or damage. Liability for the sole negligence of the city in the course and scope
of its duty to inspect and permit the well is limited to the maximum amount of recovery under
the Tort Claims Act.
(f) The security instrument may be in the form of an irrevocable letter of credit or bond issued
by a bank or surety approved by the city. The instrument shall run to the city for the benefit of
the city, shall become effective on or before the date the permit is issued, and shall remain in
effect until the well is abandoned and the site restored.
(g) A certificate of deposit may be substituted for the letter of credit `or payment bond. The
certificate shall be issued by a bank in Denton County, Texas, shall be approved by the city, shall
be payable to the order of the city to secure the obligations of the operator described above, and
shall be pledged to the bank with evidence of delivery provided to the director. The bank shall be
instructed of the terms and conditions in this chapter for oil and gas,, operation security
instruments. Interest on the certificate shall be payable to the operator.
Sec. 4.1111 Insurance
Operator shall carry a policy or policies of insur,
companies authorized to do business in Texas. The i
of the application shall provide that they
city secretary at least 30 days before tr
policy or policies are canceled, the per
operator's right to operate under such
not be cancel
ctive date of
insurance as provided herein. The policy or
following minimum coverages:
(1) Standard insurance policies requir
a. Commercial general liability
ED
d. W
t
e to all policies.
sued 'by an msurance' company or
ce policy or policies required as part
ed without prior written notice to the
such cancellation. If such insurance
on such date of cancellation and the
until the operator files additional
e aggregate shall provide for the
a. ....General liability, automobile liability and well control insurance shall be
written by a carrier with A:VIII or better rating in accordance with the current
Best Key Rating Guide.
b. Only insurance carriers licensed and admitted to do business in the State of
Texas will be accepted.
c. Deductibles shall be listed on the certificate of insurance and are acceptable
only on a per occurrence basis for property damage only.
d. Policies must provide coverage on an "occurrence" basis. Claims made
policies will not be accepted.
e. The City of Sanger, its officials, employees and volunteers, are to be added as
"additional insured" to the general liability, automobile liability, and well control
Page 12 of 20
DRAFT Drilling Regulations
insurance policies. The coverage shall contain no special limitations on the scope
of protection afforded to the owner, its officials, employees or volunteers and
shall be on a form approved by owner.
f. A waiver of subrogation in favor of the owner with respect to workers'
compensation insurance must be included.
g. Each insurance policy shall be endorsed to state that coverage shall not be
suspended, voided, canceled, reduced in coverage or in limits except after 30 days
prior written notice by certified mail, return receipt requested, has been given to
the City of Sanger.
(3) Commercial general liability.
a. Minimum combined single limit of $5,
injury and property damage.
b. Coverage shall be at least as broad as I
00 O1.
c. No coverage shall be deleted from t
individual exclusions being attached for
(4) Well control insurance.
a. Minimum limit of $5
b. Policy shall cover the cost'
or restoration expenses, seepa;
operator's care, custody, and
added.
(5) Automo
a.
occurrence for bodily
Services Office Number CG
without notification of
rolling a well that is out of control, redrilling
pollution damage. Damage to property in the
1 with a ,sub -limit of $500,000.00 may be
of $500,000.00 per occurrence for bodily
b. The business auto policy must show Symbol 1 in the covered autos portion of
the liability section in Item 2 of the declarations page.
(6)' Workers'
a. Employer's liability limits of $100,000.00 for each accident is required.
b. Texas Waiver of Our Right to Recover from Others Endorsement, WC 42 03
04, shall be included in this policy.
(7) Certifzcates of insurance.
a. Certificates of insurance shall be prepared and executed by the insurance
company or its authorized agent, and shall contain the following provisions:
1. The company is licensed and admitted to do business in the State of
Texas;
Page 13 of 20
DRAFT Drilling Regulations
2. Insurance set forth by the insurance company are underwritten on
forms which have been provided by the Texas State Board of Insurance or
ISO;
3. Sets forth all endorsements and insurance coverage according to
requirements and instructions contained herein;
4. Shall specifically set forth the notice of cancellation, termination, or
change in coverage provisions to the City of Sanger; and
5. Original endorsements affecting coverage required by this section shall
be furnished with the certificates of insurance.
(8) The individual designated to receive notice shall be a resident of Texas upon whom
all orders and notices provided in this chapter may be served in person or by registered or
certified mail. Every operator shall within ten days notify the city secretary in writing of
any change in such individual or mailing address unless operations in the city are
discontinued and abandonment is completed.
Sec. 4.1112 Permit regulations
In the event of a failure of a permittee to comply with any provision of this chapter, the director
shall issue in writing a notice to the permittee of the nature of the non-compliance and stating a
reasonable time, if compliance has not been made, in which the council may suspend or cancel
the permit.
(1) Permit period. A permit shall be issued for one year. At the end of such time, if
operator wishes to continue his oil or gas operation, the permit shall be updated by the
filing of a renewal application.
(2) Renewal.
a. Operator shall submit an application form for a renewal permit no later than
60 days before the expiration of such person's permit, and indicate in the
application what changes, if any, are requested at the operation site. An inspection
and renewal fee as set by the city council shall be paid at the time of re-
application, and operator shall only be required to submit documents with is
application for changes that occurred at the operation site.
b. Within 15 days of the filing of a renewal application, the director or his
designee shall' inspect the oil or gas operation site to determine compliance with
c. If no change in operations is proposed or has taken place, or the operator is re-
working"`' -the operation site, and inspection reveals compliance with this chapter
during the preceding permit period, the director shall issue a renewal permit.
Otherwise, the renewal application shall be processed as an original application.
d. Upon application for a renewal permit, the director can consider the
deterioration of the quality of the material of which such facility or structure is
constructed, the degree of rust and its appearance, and recommend repainting or
other remedial steps to be taken as a condition of renewal.
Page 14 of 20
DRAFT Drilling Regulations
e. If any change or addition to the permit information on the application occurs,
such change or addition during the period of the permit shall be communicated to
the city secretary and the director within ten days of the date of such change or
addition.
Sec. 4.1113 Permit suspension or revocation
(a) The director may, in writing, recommend to the city council the suspension or revocation of
any permit issued under the provisions of this section. Such recommendation shall be based upon
the occurrence of one or more of the following acts or omissions:
(1) Permittee failed, neglected, or refused to perform and comply'with the conditions of
the permit.
(2) Permittee failed, neglected, or refused to comply with or abide by, or in any way
violated any provision of this chapter or any regulation, law, rule, or order either directly
or indirectly, by reason of or in connection with or incidental to the conduct of such
person's oil or gas operation.
(3) Any of the permittee's operations or the continuance thereof upon the premises
covered by the permit pose a hazard to public or private property, to the lives or safety of
persons, or to any legitimate interest in the city.
(4) Any of the permittee's operations or the continuance thereof upon the premises
covered by the permit constitute a public nuisance.
(5) Permittee made any willful misrepresentation of facts in any application for any such
permit or in any report or record required by this chapter to be submitted by the city.
(6) Permittee burned or allowed to burn oil, gas, or other hydrocarbons in the city.
(b) City council shall consider the director's recommendation at a posted public meeting at
which the applicant is allowed to give testimony` regarding the proposed revocation or
suspension. City council's decision to accept or reject the directors recommendation shall be
based upon the criteria contained in subsection (a) of this section, the information received from
the director, and the facts and information presented at the public meeting.
(c) No person shall carry on any operations performed under the terms of any permit during any
period of permit suspension or revocation, or pending a judgment of the court upon any
application for writ taken to review the decision or order of the city in suspending or revoking
such permit; provided, however nothing herein contained shall be construed to prevent the
performance of such operation as may be necessary in connection with a diligent and bona fide
effort to cure and remedy the default or violation for which the suspension or revocation of the
permit was ordered, or such operation as necessary for the safety of persons or as required by the
commission.
Sec. 4.1114 Supplemental permit for deep drilling
(a) Once any well has either been completed as a producer or abandoned as a dry hole, it shall
be unlawful and an offense for any person to drill such well to a deeper geological formation
than that reached in the prior drilling operations without the permittee as to such well, obtaining
a supplemental permit after filing a supplemental application with the city council specifying:
(1) The condition of the well and the casing therein;
Page 15 of 20
DRAFT Drilling Regulations
(2) The depth to which it is proposed that such well will be deepened;
(3) The proposed casing and cementing programs to be used in connection with the
proposed deepening operation.
(b) In the event the council is satisfied that such well may be deepened with the same or greater
degree to safety as existing in the original well, a supplemental permit to the permittee may be
issued for an additional filing fee authorizing the deepening and operation of the well to such
specified depth as applied for. In any deeper drilling or any deeper completion of any deeper
production operations, the permittee shall comply with all provisions contained in this chapter
and applicable to drilling, completion, operation and production of a well or wells.
(c) If the operator has removed the derrick and drilling equipment form the location, the
supplemental permit shall comply with all requirements specified for permits in this chapter.
Sec. 4.1115 Use of streets and alleys
(a) No permittee shall make any excavations for any purpose or construct any lines for
conveyance of fuel, water or mineral on, under or through the streets or alleys or other land of
the city without an express easement or right-of-way license from the city, at a price to be agreed
%upon, and then only in strict compliance with this chapter and any other ordinance of the city and
the specifications established by the Department of Public Works.
(b) The digging up, breaking, excavating, tunneling, undermining, breaking up, or damaging of
any street as herein defined, or leaving upon any street any earth or other material or obstruction,
shall not be permitted unless such persons shall first have obtained written permission from the
Department of Public Works, and then only in compliance with specifications established by
such department.
(c) No well shall be drilled and no permit shall be issued for any well to be drilled at any
location which is within any of the streets or alleys of the city and/or streets or alleys shown by
the comprehensive plan of the city, and no street shall be blocked or encumbered or closed in any
drilling or production operation, or for any mineral exploration unless prior consent is obtained
by the city council, and then only temporarily.
Sec. 4.1116 On -site requirements
(a) If a fence is required pursuant to subsection 4.1106 (d), such fence must remain locked at all
times when the permittee or his employees are not within the enclosure.
(b) At all times from the start of erection of a derrick, mast, or a pinpole, until the well is
abandoned and plugged or completed as a producer and enclosed as herein provided, the
permittee shall keep a watchman on duty on the premises at all times when other workers or
permittee are not on such premises.
(c) No refining process or any processes for the extraction of products from natural gas shall be
carried on at the drill site, except that a dehydrator and separator may be maintained on the drill
site for the separation of liquids from natural gas. Any such separator shall serve only one well.
(d) Only electric prime movers or motors shall be permitted for the purpose of pumping wells.
(e) Permanent weatherproof signs reading "DANGER NO SMOKING ALLOWED" shall be
posted at the entrance of each well site and tank battery. The sign shall include the emergency
Page 16 of 20
DRAFT Drilling Regulations
notification number for emergency services (911) and the operator, drilling block number, and
well and lease designations required by the commission.
(f) No person shall place, deposit, discharge, cause, or permit to be placed, deposited, or
discharged, any oil, naphtha, petroleum, asphalt, tar, hydrocarbon substance, or any refuse
including wastewater or brine, from any oil and gas operation or the contents of any container
used in connection with any oil operation in, into, or upon any public right -of --way, storm drain,
ditch or sewer, sanitary drain or sewer, any body of water, or any private property in the city.
(g) All production equipment on the site shall be painted and
pumping units, storage tanks, buildings and structures.
(h) After completion of well servicing or abandonment,
public property caused by such servicing or abandonment op
(i) All property on which an oil or gas operation occurs shy
pools of oil, water or other liquids, weeds, brush, trash, or otl
(j) Drilling mud, cuttings, oil, or liquid hydrocarbons and
resulting from or connected with the drilling, re -working,
discharged only into a portable steel tank. Unless otherwis(
materials shall be removed from the operation site no later th
(k) At the conclusion of any drilling or
within 48 hours of all equipment and mach
(1) Operator shall at all times comply with
(m) Site development
p.m, unless otherwise f
(n) All fire suppres
enforcement officer,
provided by the per
upkeep shall be pen
times.
(o) .All oil or gas operaei
premises shall at all times'
surplus materials, supplies,
every 30 days.
is not
drilling shall be condu�
tea by the city council.
at all times, including
repair all damage to
ll at all times'be kept free of debris,
er waste material..
all other oil field waste derived or
or deepening of any well shall be
directed by the commission, waste
�n every 30 days.
the drill site shall be cleaned
to produce the well.
anA city requirements.
between 7:00 a.m. and 7:00
ion equipment. required by the city building inspector/code
state law and this article or any other ordinance shall be
11 site, at the permittee's own cost, and maintenance and
ity. Such equipment shall remain on the premises at all
;hall be conducted in a careful and orderly manner and the
iaintained in a neat, clean, and orderly manner. All discarded
refuge shall be removed from the operation site no later than
Sec. 4.1117 Operations and equipment; practices and standards
(a) It shall be unlawful and an offense for any persons to use or operate in connection with the
drilling or re-working"of any well within the corporate limits of the city any wooden derrick or
any steam -powered rig.
(b) All drilling and operation at any well performed by a permittee under this chapter shall be
conducted in accordance with the practices of a reasonable and prudent operation as understood
in the oil and gas industry. All casing, valves, and blow-out preventors, drilling fluid, tubing,
well head, and well head connections shall be of a type and quality consistent with such practice.
Setting and cementing casing and running drillstem tests shall be performed in a manner and at a
Page 17 of 20
DRAFT Drilling Regulations
time consistent with the practices of a reasonable and prudent operator. Each permittee under this
section shall observe and follow the regulations of the Railroad Commission of the state.
(c) An internal combustion engine may be used in the drilling operations of the well, or wells,
and, if an internal combustion engine is used, mufflers shall be installed on all engines so as to
reduce noise to not more than 70 decibels at any point of 100 feet beyond the drill site; all of the
installations to be done in accordance with accepted practices for fire prevention purposes. For
production purposes, only electric power may be used. Drilling operations must be conducted in
such a manner that percolating or ground water will not be adversely affected, including the
prevention of vertical movements of percolating water.
(d) All oil drilling and production operations shall be conducted in such a manner as to
minimize, so far as practicable, dust, noise, vibration or noxious odors, and shall be in
accordance with the best accepted practices incident to drilling for the production of oil, gas, and
other hydrocarbon substances.
(e) Except in case of emergencyno materials, equipment, tools, or pipe used for drilling or
,
production operations shall be delivered to or removed from the site except between the hours of
7:00 a.m. to 7:00 p.m. on any day. On drillstem tests, only one trip will be allowed at night
between 9:00 p.m. and 7:00 a.m. unless an emergency exists.
(f) All production equipment used shall be so constructed and operated so that noise, vibration,
Just, odor or other harmful or annoying substances or effect will be minimized by the operations
carried on at any drilling site or from anything incident thereto, to the injury or annoyance of
persons living in the vicinity; nor shall the site or structures thereon be permitted to become
dilapidated, unsightly or unsafe. Proven technological' improvements in methods of production
shall be adopted as they, from time to time, become available if capable of reducing factors of
nuisance or annoyance. There shall be no venting of gas into the open air except as allowed by
the Railroad Commission.
(g) Storage of equipment.
(1) No drilling equipment, re -working equipment, other portable equipment or idle
equipment which are not essential to the everyday operations of the activity located
thereon shall be stored on the oil or; gas operation site.
(2) Lumber, pipes, tubing, and casing shall not be left on the site except when drilling or
well servicing operations are being conducted.
(3) No person, owner,`or, operator shall store or park any vehicle or item of machinery
in/on any street, right -of --way, driveway, alley, or upon any oil or gas operation site which
constitutes a fire hazard or an obstruction to or interference with fighting or controlling
fires except that equipment which is necessary for the maintenance of the site or for
gathering or transportation of hydrocarbons from the site. The city building inspector,
code enforcement officer and fire marshal are empowered to determine whether any
equipment on the site constitutes a fire hazard.
(4) All well servicing equipment, including portable pulling masts and gin poles, shall
be removed from the leasehold, oil or gas operation site, or drilling site within 15 days
after completion of a well servicing operation.
Page 18 of 20
DRAFT Drilling Regulations
(h) No refinery, dehydrating or absorption plant of any kind shall be constructed, established or
maintained on the premises at any time. This shall not be deemed to exclude a simple gas
separation process.
(i) All electric lines to production facilities shall be located in a manner compatible to those
already installed in the surrounding area or subdivision.
Sec. 4.1118 Storage tanks and separators; types and requirements
(a) It shall be unlawful and an offense for any person to use, construct or operate in connection
with any producing well within the city limits, any crude oil storage tanks, with the exception of
two low -type tanks for oil storage, not exceeding a 5Mbarrel capacity for each well connected
thereto or, in the alternative, low type tanks of sufficient capacity to hold 24 hours of production
for such well; the tanks must be constructed and maintained as closed tanks and properly vented.
A permittee may use, construct and operate a steel conventional separator, heater treater, vapor
recovery unit and such other tanks and appurtenances as are necessary for treating oil with each
such facility, to be so constructed and maintained according to American Petroleum Institute
standards. Each oil/gas separator shall be equipped with both a pressure relief safety valve and
burst plate. All such tanks shall be placed above ground, and the tanks shall be placed upon a
suitable earth or concrete pad.
(b) The use of a central tank battery is permitted so long as not more than two tanks as specified
are used for each well connected to the battery plus one 500-barrel water tank.
(c) The tank or tanks shall be enclosed within a conventional type firewall constructed of
compacted earth; sufficient water shall be used during the firewall construction to assure
adequate compaction.
(d) The firewall enclosing the tanks shall have a minimum capacity equal to two times the
volume of the tanks enclosed.
(e) It shall be unlawful and an offense for any person to locate a storage tank or separator site
with 300 feet of any residence or commercial or public building within the city.
Sec. 4.1119 'Flow lines and gathering lines
(a) Each permittee shall place an identifying sign at each point where a flow line or gas
gathering line crosses any public street or road.
(b) Each permittee shall also place a warning sign at each point where a line carrying H2 S
(Hydrogen Sulfide) gas crosses`any public street or road.
(c) No permittee shall make any excavation for any purposes or construct any lines for
conveyance of fuel, water, or minerals, on, under, or through the streets and alleys of the city
without express permission of the director of community development, in writing, and then only
in strict compliance with this code and any applicable ordinance of the city; provided, however,
emergency repairs may be made without such permission when in the good faith opinion of the
permittee, the delay required to obtain written permission would involve a hazard to person or
property.
(d) The gathering lines and flow lines hereinafter installed in the corporate limits of the city, for
the purpose of transporting oil, gas and/or water in conjunction with the operation of any well,
tank, or tank battery, injection or gathering system are hereby limited to a maximum operating
gauge pressure of 250 psi unless otherwise specifically approved by the director. The location of
Page 19 of 20
DRAFT Drilling Regulations
any such gathering lines and flow lines, if not specified in the permit, must be specifically
approved by the director.
(e) The pipeline shall be tested prior to being placed in service.
(f) The companies responsible for any and all pipelines now existent or hereinafter installed
within the corporate limits are hereby required to furnish the city an it built" plot plan showing
the location of all their facilities for permanent record with the city.
(g) All pipeline within the corporate limits, excepting the utility lines of the city and the
distribution system of any gas company who holds a franchise with the city, designed or utilized
to transport oil, gas, or water in connection with the production and transportation of oil and/or
gas or for repressurizing operations shall hereafter be installed with I the minimum of cover or
backfill specified by the then applicable American National Safety Institute Code for such
pipelines.
(h) The director is authorized to approve a lesser cover or specify a greater cover or backfill in
special cases when in his/her opinion, such variation is advisable and/or will not increase the
degree of hazard.
(i) The requirements for construction in public right-of4ay must conform to such ordinances
of the town regulating such construction.
(j) The digging up, breaking, excavating, tunneling, undermining, breaking up, damaging of any
street as herein defined, or leaving upon any street any earth or other material or obstruction,
shall not be permitted unless such persons shall `first have obtained written permission from the
director of community development, provided, however, that emergency repairs may be made
without such permission when in the good faith opinion of the operator/permittee the delay
required to obtain the written permission would involve a hazard to a person or property.
Operator/permittee shall be responsible for repair and reconstruction of all streets damaged and
for all costs associated therewith.
Sec. 4.1120 Prohibited conduct/penalty clause
(a) It shall be unlawful and an offense for any person to.
(1) Engage in any activity not permitted by the terms of a permit issued under this
(2) Fail.to comply with any conditions set forth in a permit issued under this chapter; or
(3) Fail to comply with any provision or requirement of this chapter.
(b) Except as specifically provided otherwise, any person violating any of the provisions of this
chapter shall be deemed 'guilty of a Class C misdemeanor upon conviction and shall be fined,
except as otherwise provided herein, in a sum not to exceed $2,000.00 for each offense, and a
separate offense shall be deemed committed upon each day during or on which a violation occurs
or continues.
(c) If the governing body of the City of Sanger determines that a violation of this chapter
creates a threat to the public safety, the city may bring suit in the district court of the county in
which the person who committed the offense resides or has an office to enjoin the person, firm,
partnership, corporation, or association from engaging in the prohibited activity. The City of
Sanger is not required to give bond as a condition to the issuance of injunctive relief.
Page 20 of 20