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HomeMy WebLinkAboutIR 8730INFORMAL REPORT TO CITY COUNCIL MEMBERS To the Mayor and Members of the City Council • SUBJECT: WATER SALES TO GAS WELL DRILLERS t :,s No. 8730 November 29, 2005 Page 1 of 3 The purpose of this Informal Report is to respond to Council's questions raised during the November 15"' Pre - Council meeting concerning water usage in connection with natural gas well drilling operations and also to advise the Council of current and proposed procedures to address issues relating to such usage. Contract meters Gas well drilling operators have the option to utilize contract meters which are movable meters that are designed to be attached to fire hydrants. Contract meters are used by businesses like gas well drilling operations that need water for use in the field rather than at a fixed location. Currently, the Water Department has 422 contract meters issued, primarily to construction, landscape and power washing companies. Thirty -two of the 422 contract meters have been issued to companies known to be engaged in gas well drilling operations. The meters record consumption and are generally read and billed monthly. Because of the high volume of water usage, meters issued to gas well operators are required to be read Customers who wish to obtain a contract meter enter into a contract with the City. Although the party obtaining the meter is required to identify the hydrant where the meter will be located, customers are currently able to remove a meter from the specified hydrant and move it to another hydrant. In the case of certain types of customers where the water usage is not significant and the nature of the business requires a mobile water source, such as landscape companies, allowing the customer to move the meter is acceptable. However, the Water Department reserves the right to confiscate any meter that has been moved from the assigned hydrant. Because of the volume of water used for gas well operations, the Water Department has determined that it is important to monitor the location of such meters and is investigating ways to modify contract meters so that they can be locked to a specific hydrant and cannot be moved by anyone other than Water Department personnel. As of November 14, 2005, the Water Department has suspended issuing new contract meters for gas well drilling until it has refined its policy for meter use. Field investigations have shown that the usual practice to transport water from fire hydrants to drilling sites is to lay polyethylene pipe from the hydrant as much as five miles to the well site. However, on occasion, tanker trucks have been used to obtain water from a hydrant and transport the water to the well site. The use of tanker trucks presents two potential problems: truck traffic in neighborhoods and the potential that water will be transported outside the city limits without being billed at the rate for outside city use, which is two times the in -city rate. The Water Department is considering two policy changes to address these ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8730 To the Mayor and Members of the City Council November 29, 2005 Page 2 of 3 SUBJECT: WATER SALES TO GAS WELL DRILLERS *M • Prohibiting the use of contract meters to fill tanker trucks for gas drilling. All gas drillers would be required to obtain city water for well sites through polyethylene pipe. Water Department personnel would set the meter, lock it to a specified hydrant, take the meter readings and move it to the next well site upon request. • Require gas well operators seeking a contract meter to submit a copy of the Fort Worth drilling permit before a meter will be issued. Such a requirement would eliminate the sale of water for wells outside the city limits or, at least, would allow the Water Department to identify cases where the water should be charged at twice the in -city rate. Usage of water in connection with drilling _operations Approximately 420,000 gallons of water are required to drill and approximately 2 million gallons of water are required to frac a natural gas well. The general practice is to dig a holding pit near the gas well and fill the pit with water. There are approximately 300 existing gas wells in the City and a total of approximately 450 wells are permitted to be drilled within the City. Water usage by gas well operators with 32 contract meters accounted for 61 % of all contract meter sales, but only 0.62% of total water sales from January 2005, through May 2005. Water sold to gas well drillers is currently billed at the commercial rate. However, after analyzing water use for gas well operations, the Water Department has determined that usage patterns more closely resemble irrigation customers. Accordingly, effective January 1, 2006, gas well drillers will be reclassified as irrigation customers, which will result in a rate increase from $1.97 per CCF (100 cubic feet) to $2.33 per 100 CCF. (One hundred cubic feet (CCF) equals 748 gallons.) The City is currently in Stage 1 of the Drought Contingency/Emergency Water Management Plan which calls for voluntary conservation measures. If drought conditions are serious enough to require mandatory conservation measures, the Water Director can initiate Stage 2, 3 or 4, each of which imposes progressively stricter water conservation requirements. On December 14, 2005, a meeting with gas well drillers is scheduled to discuss water issues relating to gas drilling operations, including how the imposition of conservation measures would imparct operations. Gas drilling operations are not addressed in the current plan, but will be addressed when the Water Department proposes arnendments to the plan in Spring 2006. r .-9 V" 1111 _1ij3. The Water Department recently received a complaint from a citizen that tanker trucks were used to take water from a hydrant in the Chapel Creek neighborhood and to transport the water to a well site outside the city limit& After investigating, it has been deter that the comer in question had obtained two cororad meters that wet to be used on one hydrant at a dim bcatiam The meters were returned to the Water Department on November 21, 2003. Usap registered by thew meters was charged at the outside the city water rate because the water was used outside the city limits, ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8730 November 29, 2005 Page 3 of 3 Staff is working to address the unique impact of gas well drilling on water operations. As such, any new regulations or procedures developed by the department will be conveyed to the City Council. Should you have any questions in the interim, please contact Water Director Frank Crumb at 817- 392 -8207. Charles R. Boswell City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS