Gotta love the oil bidness in Texas

I see that Chesapeake Energy was the high bidder for drilling rights in a new portion of the prolific Barnett Shale natural gas play in North Texas. They're paying $181 million in cash and giving up a 25% royalty for the right to drill -- are you ready for this -- under the Dallas-Fort Worth International Airport!

Chesapeake is already a big player in the Barnett Shale, and they've identified at least 250 potential drillsites on this new acreage. Based on their news release, it appears that they'll be working from pads similar to those used on the North Slope of Alaska, drilling multiple wells from one central, small footprint location, using directional drilling (once known by the pejorative term, "slant hole drilling") to stick those steel straws into the producing zones.

Since the lessees are the cities of Dallas and Fort Worth, along with the DFW Airport Board, Chesapeake also gets to deal with this wonderful little detail:

Pursuant to the terms of the bid requirements, approximately 20% of the lease will be owned by various Minority and Women Businesses (M/WBE) that will participate with Chesapeake in the development of the lease.

I'll bite my tongue at this point.

Anyway, if you thought flying in and out of DFW was interesting before, wait until it's underlaid by a dense network of flowlines carrying an abundant supply of flammable material. I can only imagine the interest that the federal Department of Homeland Security is going to take in this project.

Technorati tags: |

Comments

Since you seem to be tongue-tied, let me help. Let's hope these new minority contractors don't windlup like the last minority contractors DFW tried to help:

"International Terminal D opened at Dallas Fort Worth International Airport last July...

The project was... a chance for the world’s third-busiest airport to shine by cutting in minority- and women-owned contractors for a bigger share than ever of one of the richest construction pies in North Texas.

Instead, the project ended up as one of DFW’s worst construction headaches — a multi-million-dollar mess that has spawned bankruptcy filings, bitter disputes over fault, a spate of lawsuits in which the airport has — thus far — paid out millions of dollars in judgments, and a deep well of bad feelings in the North Texas construction industry... Ironically, the project that was expected to bring a lot of much-needed income to the coffers of minority- and women-owned contractors instead drove some of those companies and others out of business or right to the brink."

You can read the complete story here:
http://www.fwweekly.com/content.asp?article=3847

Like so many other government do-good efforts, the end result is often to leave the intended beneficiaries worse off than they were before Big Brother stepped in to help.

As far as the risk of all those gas pipelines running under one of the world's busiest airports. Don't worry. It's my understanding that the city councils of Dallas and Fort Worth are going to pass ordinances prohibiting the pipelines from rupturing.

Posted by: John Peter Smith at August 3, 2006 08:03 PM

...the city councils of Dallas and Fort Worth are going to pass ordinances prohibiting the pipelines from rupturing.

Heh.

Re: the Minority/Women Owned Business mandate...I'd be more worried about this except that Chespeake has enough experience drilling on tribal lands to know how to work with agency-mandated "help."

Posted by: Eric at August 3, 2006 08:40 PM

Of course, Barrett Shale drilling isn't just for North Texas. It's also out in the western sections of the Permian Basin (and you don't have the Dallas or Fort Worth city councils to worry about).

Posted by: John at August 4, 2006 11:23 AM

John, that's right, although it's a bit less accessible and prolific than its north Texas counterpart. Correct me if I'm wrong, but isn't it quite a bit deeper in west Texas?

Posted by: Eric at August 4, 2006 11:35 AM

Yup.

Posted by: Janie at August 4, 2006 07:14 PM

I assume that:

"Pursuant to the terms of the bid requirements, approximately 20% of the lease will be owned by various Minority and Women Businesses (M/WBE) that will participate with Chesapeake in the development of the lease."

Means that M/WBE will be a 20% working interest owner, whom they will have to receive partner approval on for most major decisions?

Sounds like a nightmare.

Posted by: Scotty at August 11, 2006 03:19 PM
Post a comment [Take your time...we're in no hurry.]









Remember personal info?