HomeMy WebLinkAboutMINUTES-04/23/2013-AdjournedApril 23, 2013
COUNCIL OF THE CITY OF FORT COLLINS, COLORADO
Council -Manager Form of Government
Adjourned Meeting - 6:00 p.m.
An adjourned meeting of the Council of the City of Fort Collins was held on Tuesday, April 23,
2013, at 6:00 p.m. in the Council Chambers of the City of Fort Collins City Hall. Roll Call was
answered by the following Councilmembers: Campana, Cunniff, Horak, Overbeck, Poppaw,
Troxell, and Weitkunat.
Staff Members Present: Atteberry, Nelson, Roy.
Items Relating to the Oil and Gas Operator Agreement
Between the City and Prospect Energy, LLC.: Continued to May 21, 2013
The following is the staff memorandum for these items.
"EXECUTIVE SUMMARY
A. Second Reading of Ordinance A'o. 057, 2013 Terminating the Moratorium Imposed by
Ordinance No. 145, 2012 with Respect to Oil and Gas Operations Conducted under an Oil
and Gas Operator Agreement Between the City and Prospect Energy, LLC and Exempting
Such Operations from the Prohibitions Contained in Section 12-135 of the City Code
(Options I and 2).
B. Resolution 2013-036 Approving an Amendment to the Oil and Gas Operator Agreement
Between the City and Prospect Energy, LLC (Options I and 2).
On March 19, 2013, Council approved an Operator's Agreement with Prospect Energy to conduct
oil and gas operation in the city limits. The terms of the Agreement ensure stringent public health
and safety measures are in place through Best Management Practices (BMPs), which generally
exceed. current requirements mandated by the Colorado Oil and Gas Conservation Commission
(COGCC), and provide strict controls on the release of methane gases and other volatile organic
compounds (VOCs). The Council also adopted on First Reading, Ordinance No. 057, 2013, by vote
of 5-1 (nays: Ohlson, absent: Poppaw), removing the Moratorium imposed by Ordinance No. 145,
2012, with respect to an Oil and Gas Operator Agreement with Prospect Energy.
Option #1- Amended Operator Agreement Resolution 2013-036
Resolution 2013-036 will further amend the Operator's Agreement with Prospect Energy to clarify
that (1) no new drilling will occur in anyplugged or abandoned well in the Fort Collins Field and
that (2) all Colorado Oil and Gas Conservation Commission rules to be effective A ugusi 1, 2013 will
apply to any exploration and drilling activities in the Undeveloped Acreage (UDA), and (3) along
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April23, 2013
the west and southern boundaries of the UDA, a 1, 000 foot set -back shall be required from any
residential area in accordance with COGCC standards of measurement, and (4) the Amended
Agreement must be executed by both parties on or before .tune 15, 2013.
Option 92 —Amended Operator Agreement Resolution 2013-036
Limit the Agreement to the Fort Collins Field by removing UDA from the Operator Agreement and
prohibit re-entry into plugged and abandoned wells.
BACKGROUND /DISCUSSION
During Council discussion on March 19, 2013, questions arose regarding the inclusion of
Undeveloped Acreage (UDA) in the Operator Agreement. Staff responded incorrectly as to when
staff was aware of the UDA. The UDA was disclosed on March 1, 2013. Staff received the first
Operator Agreement that included the UDA on March 7, 2013.
Council further inquired as to how development ofthe UDA may occur. Generally, Prospect Energy
is limited to the terms and conditions contained in a confidential Surface Use Agreement (SUA) with
Anheuser-Busch, Incorporated signed in April 2011. According to the Lorimer County mineral
lease notice (Attachment 4), the SUA is for a primary term of three years expiring March 2014. If,
at the expiration of the Primary Term of the SUA, lands not then included within a producing or
spacing unit are not engaged in drilling or reworking operations, then the lease expires. According
to the notice, an option to extend the agreement for an additional three years is available if Prospect
Energy makes an additional payment.
In addition to any requirements imposed by the SUA, any oil and gas development would be
required to comply with the Council -approved Operator Agreement. A key aspect of the Agreement
requires the following:
Conceptual Review —No less than thirty (30) days prior to the submission of an Application for a
Permit to Drill (APD) (note: APD is the Colorado Oil and Gas Conservation Commission (COGCC)
permittingprocess), Prospect Energy will schedule a meeting.with the City to review the proposed
new well or drilling activity. The goal of this meeting would be for staffand the applicant to review
the proposed oil and gas operation in a manner that ensures compliance with the operator
agreement and applicable state and federal regulations. This pre -submittal meeting will also allow
the applicant and staff to:
• explore site -specific concerns
• discuss project impacts and potential mitigation methods including field design and
infrastructure construction to minimize impacts
• discuss coordination of field design with other existing or potential development and
operators
• identify sampling and monitoring plans for air and water quality, and other elements of the
operator agreement as contained in Exhibit A (Best Management Practices).
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April 23, 2013
STAFF RECOMMENDATION
If Council desires to have the Best Management Practices described in the Operator Agreement
apply to the UDA, Staff recommends adoption of the Option 41 Ordinance No. 057 on Second
Reading and Resolution 2013-036-Amending the Agreement to clarify that (])no new drilling will
occur in any plugged or abandoned well in the Fort Collins Field and that (2) all Colorado Oil and
Gas Conservation Commission rules to be effective August 1, 2013 will apply to any exploration and
drilling activities in the Undeveloped Acreage (UDA), and (3) along the west and southern
boundaries of the UDA, a 1, 000 foot set -back shall be required from any residential area in
accordance with COGCC standards of measurement, and (4) the Amended Agreement must be
executed by both parties on or before June 15, 2013. "
Mayor Pro Tern Horak suggested the item should be delayed until the conclusion of the work
session. City'Attorney Roy recommended the item be postponed to a specific date.
Mayor Pro Tern Horak made a motion, seconded by Councilmember Poppaw, to postpone Second
Reading of Ordinance No. 057, 2013 to May 21, 2013.
Mayor Weitkunat asked if Council would be willing to suspend the rules and allow citizens to
comment regarding the continuation.
Councilmember Poppaw asked if a suspension of the rules is necessary, given the fact that public
comment would be taken on the existing motion. City Attorney Roy replied it is considered a
suspension of the rules because this is technically the same meeting as the previous meeting and the
rules state there is only opportunity for citizen comment once per item, regardless of how many
motions are made during the discussion of the item.
Councilmember Cunniffmade'a motion, seconded by Councilmember Poppaw, to suspend the rules
to allow public comment regarding the continuation of this item. Yeas: Troxell, Horak, Weitkunat,
Overbeck, Poppaw, Campana and Cunniff. Nays: none.
THE MOTION CARRIED
Rico Moore, 721 West Myrtle, supported the motion to postpone the item in order to allow citizens
an opportunity to study the issue and allow media to report on possible chemical spills by Prospect
Energy.
Leo Buccelloto, Fort Collins resident, stated there is a moratorium and ban on fracking in place and
questioned why Prospect Energy may be allowed to use hydraulic fracturing and expand its
operations using that process. He questioned the agreement he suggested was signed with Prospect
Energy behind closed doors and accused the Council of the appearance of corruption.
Rob Willis, Counsel for Prospect Energy, stated this process has been ongoing for over a year and
the Memorandum of Understanding has been contemplated by Prospect Energy for several months.
He stated his client has attempted to be transparent and is disappointed that there is a possibility of
postponement.
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April23, 2013
Scott Hall, Prospect Energy, opposed the possibility of postponement and stated he would like a
decision on the item. He stated there are some development and lease expiration deadlines being
faced by the company.
Diane Vella, Fort Collins resident, stated this is the first she has heard of this item and supported
postponement to allow time for additional information to be provided.
Dolores Williams, 415 Mason Court, questioned the inclusion of the Undeveloped Area and
expressed concern about potential health and safety issues.
Ward Luthe, Fort Collins resident, questioned aspects of the operatoragreementand supported
postponement of the item.
Brad Palmeroy, Wellington Operating Company, stated he is a former owner of the Fort Collins
Field and supported protection of the rights of mineral owners. He stated there is a general lack of
understanding of the definition of tracking-
Councilmember Cunniff clarified Council's intent to hold the work session regarding the
moratorium and operator agreement after the work session on the mall redevelopment.
Mayor Pro Tem Horak stated meetings between Prospect Energy and staff have not involved
Councilmembers and stated no agreement was signed prior to a vote.
Councilmember Troxell stated Council may be losing sight of doing what is best for Fort Collins.
He stated Prospect Energy has been forthright and up -front and has been involved with the
discussions for several months.
Councilmember Poppaw opposed the notion that Council is corrupt and stated the point of this
postponement is to allow the opportunity for the public to have a dialogue about this after the facts
are presented at a work session.
Councilmember Campana opposed the suggestion of a conspiracy and stated the original objective
of the moratorium was to balance the importance of the oil and gas industry with the health and
safety concerns of the community.
Mayor Weitkunat stated this is an emotionally charged issue and Council is attempting to make the
best decision possible for the community.
The vote on the motion to postpone the item to May 21, 2013, was as follows: Yeas: Horak,
Weitkunat, Overbeck, Poppaw, Campana, Cunniff and Troxell. Nays: none.
THE MOTION CARRIED.
Mayor Pro Tern Horak made a motion, seconded by Councilmember Poppaw, to adjourn the
meeting to the end of the work session in order to give Council the opportunity to go into Executive
Session or to adjourn to April 29, 2013. Yeas: Weitkunat, Overbeck, Poppaw, Campana, Cunniff,
Troxell and Horak. Nays: none.
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April23, 2013
THE MOTION CARRIED.
(Secretary's note: Council adjourned at 6:37 p.m. until the conclusion of the work session and
reconvened at 10:15 p.m.)
Adjournment
Mayor Pro Tem Horak made a motion, seconded by Councilmember Conniff, to adjourn to 6:00
p.m. on Monday, April 29, 2013, so that the Council may consider any additional business that may
come before the Council, including a possible Executive Session. Yeas: Weitkunat, Poppaw, Horak,
Troxell, Campana, Cunniff and Overbeck. Nays: none.
THE MOTION CARRIED..
The meeting adjourned at 10:20 p.m.
ATTEST:
City Clerk
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