Title
Staff Update, Board Discussion and Possible Action Regarding Temporary Access License / Frac Pond Water Use Agreement by Legend Natural Gas
Requested Action
Consider Approval of Temporary Access License / Frac Pond Water Use Agreement
Recommendation
Approval of Temporary Access License / Frac Pond Water Use Agreement
Description/History
Representatives of Legend Natural Gas contacted MEDC staff regarding their desire to purchase water from the Frac Pond located on the MEDC Heritage Parkway property. The purpose of the water would be for driling on what is referred to as the Mansfield Partners South Pad site. As a condition of their SUP, Legend must identify a source of frac water.
This matter was referred to attorney Bryn Meredith with TOASE, the City’s oil and gas counsel. Mr. Meredith has negotiated the attached Temporary Access License, giving Legend temporary access to the Frac Pond for the purposes of extracting frac water for the above referenced pad site. The agreement is on a month to month basis with a 30 day cancellation notice by either party. It is also important to note that the agreement states no access will be allowed until Legend is in full compliance with all of the terms of their SUP.
MEDC will be compensated for the water that is extracted at 20 cents per barrel. Legend’s current estimate of volume is approximately 15,000 barrels of water during the drilling phase and approximately 150,00 barrels of water during the fracing phase for each well, for a total of 165,000 barrels of water per well. They anticipate drilling 7 wells which would be a total of 1,155,000 barrels. At the rate of .20 cents per barrell, MEDC could see as much as $231,000.
Justification
The Frac Pond is already in use by Chesapake Energy for the purposes described in this License. It will eliminate or reduce truck traffic and the resulting damage to local roads. The fees paid to MEDC under this License will support MEDC’s ongoing city-wide economic d...
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