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Page 1 of 2
City of Fort Worth, Texas
Mayor and Council Communication
DATE: Thursday, January 18, 2007
LOG NAME: 30CITY LEASES
REFERENCE NO.: G-15588
SUBJECT:
Authorize the Provision for Administrative Approval of Leases for Natural Gas Drilling under City -
Owned Properties of Two Acres or Less in Size
RECOMMENDATION:
It is recommended that the City Council authorize the City Manager to approve and execute leases for
natural gas drilling under City -owned properties that are two acres or less in size.
DISCUSSION:
On May 17, 2005, (M&C G-14798) Fort Worth City Council authorized City staff to advertise a request for
proposals from private companies to drill for natural gas under 3,651 estimated mineral acres of City -owned
properties. Most of these properties range from 3 to 800 acres or more in size.
From time to time, the City is asked to lease isolated City -owned properties in various locations that are two
acres or less. City staff is recommending that gas leases for these properties be administratively approved
for natural gas drilling leases after evaluation of the gas company's drilling plan, reputation, financial status,
project team, and compliance history by engineering staff and the City's mineral asset management
consultant, JPMorgan Chase. Staff will report the negotiated lease bonuses and royalty to the City Council
through the regular monthly gas lease report. The leases would be executed through an internal
administrative process involving the Engineering Department, the City Attorneys Office and the City
Manager's Office.
Requirements and guidelines to be followed in determining eligibility for inclusion in the Adminstrative Gas
Lease Process are as follows:
City -owned property two acres or less that is not a City park
No surface use of any kind
No identified adverse impact to the surrounding neighborhood
Compliance with the City's gas drilling ordinance
Minimum bonus to be determined by current market rate
Minimum royalty of 25 percent
The distrubution of lease bonus and royalties will be in accordance with the revenue
distribution policy approved by the City Council
No MWBE goal will be required due to the size of the parcels
In accordance with the Alternative Assets Agency Account Agreement between JPMorgan Chase and the
City (City Secretary Contract 29698), JPMorgan Chase will serve as the depository of the lease bonus and
royalty revenue until the City requests wire transfer of the funds.
http://www.cfwnet.org/council�acket/Reports/mc�rint.asp 1/16/2008
Page 2 of 2
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that this action will have no material effect on City funds.
TO Fund/Account/Centers
Submitted for City Manager's Office b�
Originating Department Head:
Additional Information Contact:
FROM Fund/Account/Centers
Marc A. Ott (8476)
A. Douglas Rademaker (6157)
Jean Petr (8367)
http://www. cfwnet. org/council�acket/Reports/mc�rint. asp 1 / 16/2008