Located throughout Denton, Johnson, Parker, Tarrant and Wise counties, the Barnett Shale contains an estimated 26 trillion cubic feet of recoverable gas. Private drillers soon discovered that natural gas reserves existed even farther south than they originally thought. In fact, some of the largest are located under Fort Worth-owned parklands, airports, water and wastewater treatment facilities, landfills, golf courses, rights of way, and leasehold and surplus properties.

Knowing that every dollar earned is another dollar to improve municipal services and facilities and being savvy entrepreneurs, Fort Worth council members gave the go-ahead in August 2004 to lease city-owned properties for natural gas drilling.

Lease bonuses for drilling under some 790 acres of city-owned properties have generated an impressive $2.7 million since last August. The city's portion of revenue from one successful well could be as much as $2.5 million over its productive life - 10 to 20 years. It is important to note the city only profits from natural gas drilling on city-owned property. Most drilling occurring within the city limits of Fort Worth is being done by private companies who lease mineral rights from a mineral owner. Only the mineral owner and the mineral lessee profit from the operation. The city only receives ad valorem taxes, which the Tarrant County Appraisal District collects and assesses.

Where the Money Goes
Proceeds go into accounts set aside to benefit the departments responsible for the properties. For example, the lease bonus and future royalties generated by current drilling at Gateway Park will be used to improve city parklands. Those generated from the lease of city-owned airport properties - Alliance, Spinks and Meacham - will go toward aviation enhancements.

So far, six accounts for lease bonuses and royalties have been established: Aviation, Parks and Community Services, Solid Waste, Water, General Properties and Rights of Way. The General Properties account could be used to supplement the city's General Fund, and the Rights of Way account currently supports contract street maintenance work in Fort Worth.

How the Program Works
The City of Fort Worth Department of Engineering is responsible for managing the city's gas lease program. The city has also engaged the services of JP Morgan Chase (formerly Bank One) to assist in managing the city's gas and mineral assets and carefully review all potential leases, ensuring they're a good deal for the city. Gas wells developed on or under city-owned lands must comply with all applicable state and local laws and ordinances.

"Although we're not doing the actual drilling, we're leasing properties to private drillers and reaping significant financial benefits," said Engineering Director Doug Rademaker.

Of course, that doesn't't mean that city leaders rush into lease agreements. It has been a cautious undertaking from the get-go.

The city's Gas Drilling and Production Ordinance, effective since December 2001, keeps everything in check. It ensures that private drilling companies are on the up-and-up, protects neighborhoods and the environment, and requires public information meetings prior to awarding a drilling lease - so city staff and drilling experts can explain the entire process and respond to citizen concerns.

Gas lease agreements for drilling on or under city-owned properties are awarded through a bid process, as outlined in the ordinance, and bid evaluations are based on more than anticipated monetary gain. Before awarding a bid, the city takes a hard look at a bidder's reputation, financial ability to provide services, safety record and history of complying with government regulations.

"While the city wants to beef up revenue, it's not at the expense of our environment or the wonderful quality of life we have here in Fort Worth," Doug explains. "The overall goal is to generate revenues that will have a positive impact on our community."

Besides ongoing drilling activities near Gateway, Quanah Parker and Tandy Hills parks, under lease by Dale Resources, the city has negotiated new leases for property located near Alliance Airport and its Southeast landfill. Plus, the city will bring home 25 percent of all future gross gas sales revenues for each producing well.

And that's not all. Approximately 302 acres of parkland and some 3,420 acres of city-owned airport, water and wastewater, and Lake Worth leasehold property will be advertised for lease before year's end.

Drilling at Gateway Well No. 1 is complete, and drilling for a second well is under way. Gas sales from the first well should begin in September, with the city receiving its first advance on royalties - $100,000 per month until actual royalty payments start. Before it's all said and done, the Eastside park area may have five to 10 natural gas wells.

For more information on natural gas drilling within the city limits of Fort Worth, visit the following website link http://www.fortworthgov.org/engineering/gas%5Fdrilling/ or call (817) 392-7950 and request an informational brochure.