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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 12/20/2011 - RESOLUTION 2011-113 AUTHORIZING AN INTERGOVERNMENTDATE: December 20, 2011 STAFF: John Stokes Daylan Figgs AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 21 SUBJECT Resolution 2011-113 Authorizing an Intergovernmental Agreement with the Colorado State Board of Land Commissioners and Larimer County Regarding the Energy by Design Planning Process. EXECUTIVE SUMMARY Soapstone Prairie Natural Area (Soapstone) and Meadow Springs Ranch (MSR) are owned by the City of Fort Collins Natural Areas Program and Fort Collins Utilities, respectively. Soapstone and MSR are considered split estate properties as the City owns the surface estate and the mineral estate (including oil and gas) is owned by other parties. The State of Colorado owns approximately 12,400 acres of mineral rights underlying the properties: 3,500 underlying Soapstone and 8,900 underlying MSR. The Colorado State Board of Land Commissioners (SLB) has contracted with The Nature Conservancy (TNC) to conduct an Energy by Design (EbD) planning process on Soapstone and MSR. The goal of the EbD process is to develop a plan that conserves key natural, recreational, landscape view, agricultural, and cultural resource values while providing reasonable access to the SLB’s and others’ mineral estate. This plan also includes strategies to avoid, minimize, and mitigate surface impacts to key resources. Subject to Council review and approval of the proposed MOU, the City will be a partner in the planning process. The Memorandum of Understanding outlines the responsibilities of each party for the Energy by Design planning process. BACKGROUND / DISCUSSION Colorado, like many western states, recognizes separate ownership of the surface estate and the mineral estate and the private property rights associated with each. When different parties own the surface and minerals, this is referred to as “severed” or “split” estates. Soapstone and MSR are considered split estates as the City owns the surface estate and other parties own the mineral estate (including oil and gas). Of the several parties that own the underlying mineral rights, the majority are owned by Anadarko Land Corp, Anadarko E&P Company LP (together referred to as Anadarko), and the State of Colorado. State-owned minerals are managed by the SLB. A mineral investigation conducted by a professional geologist as part of the due diligence investigations during the purchase of Soapstone in 2004 revealed the mineral rights were severed from the surface ownership. The investigation concluded the probability of resource extraction was so remote as to be negligible. A second investigation conducted in 2008 that focused primarily on the potential for petroleum exploration supported this finding. During the period from 2008 to present, technologies have greatly advanced in the areas of horizontal drilling and hydraulic fracturing or “fracking”. Geologic formations once thought to have limited potential for economic viability are now being developed into productive oil and gas wells. The recent discovery of economically viable wells in the Niobrara Shale formation, the same shale formation underlying Soapstone and MSR, is a result of these new technologies. To date, oil and gas activities on City properties have been limited to a small portion of MSR located in Weld County. In 2010, the City received Notices of Intent by Slawson Exploration to drill on two sites located within MSR. The minerals were leased to Slawson by the SLB in 2005; Slawson did not drill the intended wells. In 2011, the City was contacted by Tidelands Geophysical and Seitel Data with requests for seismic surveys on portions on MSR. Access to MSR was granted by the City and the surveys were conducted in the summer of 2011. In March 2010, SLB staff contacted Natural Areas staff to discuss the possibility of leasing State owned mineral rights underlying portions of Soapstone and MSR. The dialog that occurred between the City and SLB led to the decision to delay the leasing actions and to form a collaborative effort between the SLB, City, County, and TNC to develop a plan for oil and gas development that preserves key natural, recreational, landscape view, agricultural, and cultural resource values while providing reasonable access to the SLB’s and other’s mineral estate. December 20, 2011 -2- ITEM 21 In the November 4, 2011 SLB Board of Commissioners Meeting, SLB staff were authorized to contract with TNC to fund a planning process developed by TNC called Energy by Design and to enter into a Memorandum of Understanding with the City and Larimer County to complete the plan. Larimer County was included, given its role as a long term conservation partner in the Mountains-to-Plains project and due to the fact the SLB owns a portion of the minerals underlying Red Mountain Open Space. The City, County, and SLB will utilize the TNC Energy by Design planning process to develop a Comprehensive Drilling Plan for the Project Area generally described as Soapstone, MSR, and Red Mountain Open Space. This partnership will also work with other surface and mineral estate owners and mineral lessees in the Project Area to develop terms and conditions for a form of Surface Use Agreement (SUA). The SUA would allow defined surface use activities for oil and gas development in the Project Area while minimizing surface impacts and protecting natural, recreational, agricultural, landscape view, and cultural resources. The approach entails a “no net loss” strategy that requires mineral companies to protect habitat of equal value accomplished through on-site as well as off-site mitigation (including land and water conservation). For those minerals that are not controlled by the State, the ability to achieve no net loss will depend on the willingness of oil exploration and production companies to participate in the planning process as well as the implementation phase. While no company has as yet committed to the process, the three major exploration and production companies affiliated with the properties (either through ownership or lease holdings) have been contacted and expressed interest in the project. The MOU indicates the City and Larimer County will be responsible for: • Managing public outreach and organizing public information sessions • Responding to public concerns • Managing the process for any required approvals from the City Council or the County Board of Commissioners • Managing communications with other stakeholders in the project area • Providing TNC and the SLB previously acquired data, maps, field studies, research, and other information regarding the cultural, natural, recreational, agricultural, and landscape resources within the Project Area. The SLB will be responsible for: • Scope of Work with TNC • Providing the staff support and financial compensation for TNC’s work products • Implementing the Comprehensive Drilling Plan, Surface Use Agreement, and goals of the MOU by incorporating appropriate terms and conditions in the SLB oil and gas leases • Obtaining any required approval from the Board of Land Commissioners. FINANCIAL / ECONOMIC IMPACTS The City will be responsible for providing staff time necessary to complete the Energy by Design planning process. The State Land Board is contracting with TNC and is responsible for compensating TNC for the work products described in the MOU. ENVIRONMENTAL IMPACTS Energy by Design is a process designed to bring together all of the parties of interest, including surface owners, mineral rights owners and lessees, in order to develop a common understanding of natural, cultural, scenic, agricultural, and economic resources. One the resources have been carefully identified and understood, the participants design an approach to exploration and production activities intended to direct surface activities associated with extraction activities away from critical natural and cultural resources (such as wetlands, rare species, and cultural sites). The approach entails a “no net loss” strategy that requires participating mineral companies to protect habitat of equal value accomplished through on-site as well as off-site mitigation (including land and water conservation). Staff believes this collaborative process represents the City’s best approach for protecting the City’s surface interest. December 20, 2011 -3- ITEM 21 STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BOARD / COMMISSION RECOMMENDATION At its December 14, 2011 meeting, the Land Conservation and Stewardship Board discussed the proposed Memorandum of Understanding. A memo from the Board is attached (Attachment 3) and the minutes from that meeting will be provided in the “Read-before” packet on Tuesday, December 20, 2011. ATTACHMENTS 1. Map of the Project Area and State Land Board Mineral Ownership 2. Land Conservation and Stewardship Board memo, December 15, 2011 !H !H ¹ Attachment 1 - State Land Board Sections in the Laramie Foothills Area Created by City of Fort Collins Natural Areas - 2011 Project Area Larimer County !H Slawson Abandoned Drill Site Siesmic Site State Land Board Sections City of Fort Collins Utilities Larimer County City of Fort Collins NA 0 0.5 1 2 Miles RED MOUNTAIN OPEN SPACE SOAPSTONE PRAIRIE NATURAL AREA MEADOW SPRINGS RANCH RESOLUTION 2011-113 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING AN INTERGOVERNMENTAL AGREEMENT WITH THE COLORADO STATE BOARD OF LAND COMMISSIONERS AND LARIMER COUNTY REGARDING THE ENERGY BY DESIGN PLANNING PROCESS WHEREAS, the City is the owner of major land holdings in northern Larimer County, including Soapstone Prairie Natural Area (“SPNA”) and Meadow Springs Ranch (“MSR”); and WHEREAS, both SPNA and MSR (together referred to as the “Properties”) were acquired by the City for significant public purposes, and each are of substantial value and concern to the City; and WHEREAS, the Colorado State Board of Land Commissioners (“State Land Board”) owns the minerals associated with approximately 3,500 acres that are part of SPNA and approximately 8,900 acres that are part of MSR, for a total of approximately 12,400 acres; and WHEREAS, Larimer County (the “County”) has a similar interest in preservation of the conserved lands in northern Larimer County, including Red Mountain Open Space, which is owned by the County and also is the site of substantial mineral rights holdings of the State Land Board; and WHEREAS, in response to concerns raised by the City and the County regarding the potential for oil and gas exploration on the Properties through leasing of mineral interests by the State Land Board, and in recognition of the substantial natural resource and other values associated with the Properties, the State Land Board has proposed to collaborate with the City and the County in developing a plan for oil and gas development that preserves key natural, recreational, landscape view, agricultural and cultural resource values while providing reasonable access to the mineral interests on the Properties; and WHEREAS, the State Land Board has contracted with The Nature Conservancy (“TNC”) to provide consulting assistance and support for the proposed collaboration, referred to as the Energy by Design process; and WHEREAS, in order to document the parties’ respective rights and responsibilities, the State Land Board has proposed an intergovernmental agreement between the Board, the City and the County, entitled Memorandum of Understanding, the form of which is attached hereto as Exhibit “A” and incorporated herein by this reference; and WHEREAS, staff has reviewed the proposed Memorandum of Understanding, and has recommended that the City proceed as proposed in order to allow the Energy by Design process to proceed; and WHEREAS, the Memorandum of Understanding provides that the City and the County will manage public outreach associated with the process, and will provide to the State Land Board and TNC previously acquired data, maps, field studies, research and other information regarding the natural, recreational, landscape view, agricultural and cultural resource values on their respective properties; and WHEREAS, in addition, the Memorandum of Understanding provides that the Energy by Design process will result in the development of a comprehensive drilling plan on the parties’ properties to preserve existing resource values and avoid net loss of such values that may result from oil and gas exploration; and WHEREAS, the City Council has reviewed the Memorandum of Understanding and considered the benefits and advantages associated with developing a plan for preserving the resource values on the Properties in anticipation of potential oil and gas development; and WHEREAS, Article II, Section 16 of the City Charter empowers the City Council of the City, by ordinance or resolution, to enter into contracts with other governmental bodies to furnish governmental services and make charges for such services or enter into cooperative or joint activities with other governmental bodies; and WHEREAS, C.R.S. §29-1-203 also provides that governments may cooperate or contract with one another to provide certain services or facilities when such cooperation or contracts are authorized by each party thereto with the approval of its legislative body or other authority having the power to so approve. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the City Manager is hereby authorized to enter into an intergovernmental agreement with the State Land Board and Larimer County in substantially the form attached hereto as Exhibit “A”, entitled Memorandum of Understanding, together with such additional or modified terms and conditions as the City Manager, in consultation with the City Attorney, deems necessary and appropriate to effectuate the purposes of this Resolution or protect the interests of the City. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 20th day of December A.D. 2011. Mayor ATTEST: City Clerk FINAL DRAFT 1 Memorandum of Understanding THIS MEMORANDUM OF UNDERSTANDING is made and entered into as of , 2011 (the “Effective Date”), by and among the State of Colorado (the “State”), acting by and through the Colorado State Board of Land Commissioners, (the “Board”), the City of Fort Collins, and Larimer County. The parties may be referred to hereinafter collectively as the “Parties” and each individually as a “Party.” Recitals This Memorandum is made with respect to the following facts: A. The Board is a trustee agency and governmental entity of the State and, pursuant to Article IX, Sections 9 and 10 of the State Constitution and Title 36, Article 1, Sections 100.3 through Section 153 of the Colorado Revised Statutes, the Board serves as the trustee of the lands granted to the State in public trust by the federal government, lands acquired in lieu thereof and additional lands held in public trust. The Board owns a portion of the mineral estate within the Project Area (as defined below). B. The City of Fort Collins is a governmental entity and is the owner of surface estate in Meadow Springs Ranch and the Soapstone Prairie Natural Area which are a portion of Project Area. C. Larimer County is a governmental entity and is the owner of surface estate in Red Mountain Open Space which is a portion of the Project Area. D. The Nature Conservancy (“TNC”) is a non‐profit corporation which has been hired by the Board to utilize its Energy by Design framework to create an analysis and map of the project area for the Board as described in the Scope of Work attached as Exhibit A. E. The Project Area includes three open space parcels which are adjacent to one another and cover over 60,000 acres north of Fort Collins, along the Wyoming border:  Meadow Springs Ranch. City‐owned, 26,000 acres.  Red Mountain Open Space. County‐owned, 15,000 acres.  Soapstone Prairie Natural Area. City‐owned, 22,058 acres. These properties are split estate, with the major mineral owners/lessees being the Board, Anadarko, Marathon, and Chesapeake. A map of the Project Area is attached as Exhibit B. Agreement NOW, THEREFORE, the Parties agree as follows: 1. Vision. The Board is interested in leasing and developing its oil and gas holdings on trust lands within the Project Area. TNC shall provide the Board an analysis and map of the Project Area which depicts areas and resources critical to meeting both community value and statewide conservation goals. Utilizing TNC’s work product, the Parties will work collaboratively with each other and with oil and gas lessees and other EXHIBIT A FINAL DRAFT mineral owners, to develop a plan for oil and gas development that seeks to preserve key natural, recreational, landscape view, and cultural resource values while providing reasonable access to the Board’s and other’s mineral estate, with specific strategies to avoid, minimize, and mitigate surface impacts to such resources. 2. Purpose. The Parties acknowledge that the general purpose of this Memorandum is to establish the Parties’ intent and expectations regarding their long‐term cooperation and good faith dealing towards each other related to the future development of the mineral estate within the Project Area. The Parties recognize that such cooperation and good faith dealing is necessary to ensure that successful realization of the vision of this Memorandum of Understanding. The Parties shall, on an ongoing basis, cooperate and coordinate with each other to achieve the goals in this Memorandum of Understanding and the Scope of Work, including, without limitation, attending meetings and sharing information relevant to the Project Area on a timely basis and by acting in good faith towards each other in the management and implementation of activities on both parcels. The Parties shall use reasonable efforts to cause their employees, consultants and agents to cooper ate with the provisions of this Memorandum of Understanding. 3. Products. The Parties envision that the following products will be developed to accomplish the goal of managing oil and gas development so as to avoid, minimize, and mitigate the surface impacts and protect natural, recreational, scenic, and cultural resources. a. TNC shall provide the final product and analysis required under the Scope of Work to the Parties. b. The Parties shall work with each other and other mineral estate owners in the Project Area to develop a Comprehensive Drilling Plan that serves the goals of this Memorandum of Understanding. c. The Parties and other mineral estate owners in the Project area shall develop proposed terms and conditions for a form of Surface Use Agreement that would allow for defined surface use and impact for development of oil and gas in the Project Area while avoiding, minimizing, and mitigating surface impacts and protecting natural, recreational, landscape and cultural resources. The Surface Use Agreement may restrict oil and gas development completely on certain portions of the Project Area to avoid impacting sensitive natural or cultural resources. However, the Parties contemplate that said Surface Use Agreement will provide reasonable access for development of the oil and gas in the mineral estate. 4. Roles and Responsibilities of the Parties. The Parties agree to the roles and responsibilities as allocated in this paragraph in addition to cooperating to develop the products as discussed in paragraph 3. The Parties intend to use best efforts by assigning staff resources to meet these responsibilities. 2 FINAL DRAFT a. City of Fort Collins and Larimer County shall be responsible for the following: i. managing the public outreach and information process by communicating with the public, organizing public information sessions, and responding to public concerns regarding this Memorandum of Understanding in a manner consistent with the spirit of and stated purpose of this Memorandum of Understanding, ii. managing the process of any required approvals of the form of Surface Use Agreement from the City Council of Fort Collins and the Board of County Commissioners for Larimer County, respectively, upon development of a mutually agreeable form of Surface Use Agreement, iii. managing communications with other stakeholders in the Project Area including Great Outdoors Colorado, citizens’ groups, and surface lessees, and iv. providing to TNC and the Board previously acquired data, maps, field studies, research, and other information regarding the cultural, natural, recreational, and landscape resources within the Project Area for TNC’s use in creating the final products required in the Scope of Work. This shall be considered an in‐kind contribution to support the goals of this Memorandum of Understanding. b. The Board shall be responsible for the following: i. entering into the Scope of Work with TNC and providing the staff support and financial compensation for TNC’s work product; ii. incorporating terms and stipulations in their oil and gas leases in the Project Area designed to implement the Comprehensive Drilling Plan, Surface Use Agreement, and the goals of this Memorandum; and ii. obtaining any required approval from the Board of Land Commissioners for the Surface Use Agreement, Comprehensive Drilling Plan, and oil and gas 3 leases. 5. Ongoing Cooperation. In addition to consulting on the Comprehensive Drilling Plan and Surface Use Agreement, the Parties shall, on an ongoing basis, cooperate and coordinate with each other regarding the development of the mineral estate and furthering the goals to avoid, minimize, and mitigate the impacts to the surface estate and the protected resources described above in the Project Area. Such ongoing cooperation shall include, without limitation, sharing relevant information on a timely basis and acting in good faith towards each other in the implementation of activities in the Project Area. It is the Parties’ intent that upon development and execution of one or more Surface Use Agreements in the Project Area, the City of Fort Collins and Larimer County shall enforce the terms of the Surface Use Agreement and the Board shall enforce the terms of any oil and gas lease in the Project Area in order to ensure long term success in implementing the FINAL DRAFT goals of this Memorandum. The commitments in this paragraph shall survive termination of this Memorandum. 6. Communications. The Parties agree to the following process for addressing media contacts and requests for inspection of records under the Colorado Open Records Act: a. With regard to media contacts and news releases, the parties will work together on joint news releases, public announcements, advertisements or publicity concerning the products anticipated from this Memorandum. This is not to limit the parties from responding to media inquiries or information requests from constituents. Standard talking points and project information will be jointly created and used by the parties to provide consistent and clear details to the general public. The parties will also keep each other informed when interviews have been conducted with various media outlets, to ensure parties involved are kept informed of public response. b. The Parties acknowledge that certain Parties to this Memorandum are subject to the provisions of the Colorado Open Records Act and may, in certain circumstances, be obligated to allow inspection of certain records that are made, maintained or kept by the Parties. Upon receipt of a request to inspect any records concerning this Memorandum or its products, the Party in receipt of the request shall confer with the other Parties to provide them notice and an opportunity to respond to the request for inspection. 7. Term. If the Parties have not developed a Comprehensive Drilling Plan and Surface Use Agreement by December 31, 2013, this Memorandum shall terminate and be of no furth e r forc e or effect. 8. Termination. Any Party to this Memorandum may terminate participation in the Memorandum by providing thirty (30) calendar days written notice of termination to the other Parties. In the event of termination of any party, upon expiration of the notice period, the entire Memorandum shall also terminate as to the remaining Parties’ particip at ion a nd all Parties shall be relie ved of further obligation under the Memorandum. 9. Miscellaneous Provisions a. Notices. Any notice required or permitted to be given under this Memorandum shall be in writing and shall be deemed given upon personal delivery or on the second business day after mailing by registered or certified United States mail, postage pr epaid, to the appropriate party at its address stated below: If to the Board: hrough the Colorado State Board 4 State of Colorado, acting by and t of Land Commissioners 1127 Sherman Street, Suite 300 FINAL DRAFT Denver, CO 80203 Attn: Director, and Minerals Director ins: If to the City of Fort Coll ___________________________ If to Larimer County: ________ _________________ b. Amendment. This Memorandum may be amended by written agreement executed and delivered by the Parties. c. No Partnership. Nothing in this Memorandum shall be deemed in any way to create between any of the Parties any relationship of partnership, joint venture or association, and the Parties hereby disclaim the existence of any such relationship. d. Assignment. No Party may assign, charge, encumber or otherwise amend any of its rights and obligations under this Memorandum without the prior written consent of the other Parties. IN WITNESS WHEREOF, each Party has executed this Memorandum of Understanding or has caused it to be executed, under seal, on its behalf by its duly authorized representatives as of the Effective Date. STATE OF COLORADO, acting by and through the COLORADO STATE BOARD OF LAND COMMISSIONERS: By: N ame: William E. Ryan___________________________ T itle: Director, State Board of Land Commissioners CITY OF FORT COLLINS By: Name: Title: 5 FINAL DRAFT 6 LARIMER COUNTY By: N ame: T itle: Exhibit A ­ Scope of Work Mountains to Plains Energy by Design Summary: The Nature Conservancy (TNC) will utilize its Energy by Design (EbD) framework to identify opportunities to avoid, minimize, and mitigate the impacts of oil and gas development to natural and cultural values associated with three open space parcels in northern Larimer County. EbD is designed to achieve “no net loss” outcomes to biodiversity values in light of energy development. TNC will work collaboratively with the State Land Board (SLB) as its client, project partners including the City of Fort Collins and Larimer County, and with a technical team comprised of experts from government agencies (federal, state, and local) and conservation organizations. The project will provide for an “onsite analysis” of priority biodiversity values prior to SLB’s lease sale (Phase I), which SLB can use to guide the development of a Minerals Development Plan (Phase II). Following the creation of the Minerals Development Plan, the lessee(s) may opt to participate in a third phase of the project, to identify and implement offsite mitigation opportunities associated with unavoidable impacts onsite (Phase III). This SOW covers Phases I and II, and briefly describes Phase III. Project goal: SLB seeks a strategy to lease and develop its oil and gas holdings on trust lands within the Soapstone Prairie Natural Area, Red Mountain Open Space, and Meadow Springs Ranch parcels in northern Larimer County. SLB and TNC will work collaboratively with Larimer County and the City of Fort Collins, and in conjunction with oil and gas lessees and other mineral owners, to develop a plan for oil and gas development that provides access to the state’s mineral estate, with specific strategies to avoid and minimize surface impacts to key natural and cultural resource values. This initiative may also be part of SLB’s goals to create oil and gas development master plans on specific trust lands in the future. Project area: The project area includes three open space parcels with severed estate ownership between the surface owners and minerals holders, with the SLB being one of the major minerals owners with over 15,000 acres in trust. The three open space parcels are adjacent to one another and cover over 60,000 acres north of Fort Collins, along the Wyoming border:  Meadow Springs Ranch. City‐owned, 26,000 acres.  Red Mountain Open Space. County‐owned, 15,000 acres.  Soapstone Prairie Natural Area. City‐owned, 22,058 acres. Timing and milestones: The project will be completed by December 30, 2012. There are three phases of this project, of which the SLB and TNC will work together directly on the first two. The deliverables for Phase I will be completed by June 30, 2012. TNC’s work on Phase II will be completed by December 30, 2012. There will be three project check‐ins over the life of the project, during which time SLB and TNC will agree whether to proceed and if so, whether changes are needed. Documentation of these decision points will be recorded through review and acceptance of summary meeting notes exchanged by the parties as part of the progress reports provided after each technical team meeting. Milestone Date PHASE I – ONSITE ANALYSIS (Led by TNC) Target selection, collect available data, identify data gaps  Technical team meeting #1  November 30, 2011  Project Check‐in: evaluation and status review between SLB and TNC  December 2011 Create draft maps of importance of natural and cultural values. Develop different options for combining this information to identify important places for avoidance and minimization of energy development  Technical team meeting #2  January 2012  Project Check‐in: evaluation and status review between SLB and TNC  February 2012 Based on input from technical team, create draft final results for priority areas for avoidance and minimization of impacts associated with potential energy development EXHIBIT A to MOU Milestone Date  Technical team meeting #3  March 2012  Project Check‐in: evaluation and status review between SLB and TNC  April 2012 Complete Phase I  Send draft deliverables to SLB for comm ent  April 2012  Edit and send final deliverables to SLB  June 2012 PHA SE II – MINERALS DEVELOPMENT PLAN (Led by SLB)  TNC’s contribution to minerals plan complete  December 2012 Phase I (Onsite Analysis) – Identify priority areas for avoiding and minimizing impacts: TNC will lead this phase. This phase will identify and map priority natural and cultural resource values for the three open space properties to inform SLB’s oil and gas leasing decisions. Example inputs include maps of natural and cultural values such as rare plants, wildlife habitat, cultural sites, and viewsheds. Example data sources i nclude Colorado Division of Parks & Wildlife and the Colorado Natural Heritage Program. TNC will look to the City and County for guidance on how best to address cultural values. This phase will aid SLB decisions regarding which stipulations to build into the Minerals Development Plan and associated leases, such as no surface occupancy and restricted surface occupancy (see Phase II below), a nd may also be used to decide provisions of Surface Use Agreements between the SLB and the surface owners (City of Fort Collins and Larimer County). The onsite analysis will involve the identification and mapping of priority natural and cultural resource values by the project partners and a technical team. The final product will show a map of areas and resources that are critical to meeting both local community value and statewide conservation goals (see Figure 1 as example). The map will incorporate available GIS data and may involve habitat modeling as necessary. The final product will take into account the uniqueness (i.e., irreplaceability) and importance of the natural resource values in any one unit of analysis relative to the Central Shortgrass Prairie ecoregion as a whole, with rare and difficult‐to‐mitigate‐for values being of greater importance (e.g., rare plants) than more common and easier‐to‐mitigate‐for values (e.g., mule deer habitat). Phase II (Minerals Development Plan) – Identify a drilling plan for the project area: SLB will lead this phase. The second phase of the project, in which some support will be required on an hourly basis from TNC to the SLB, will require the development of a drilling plan for the minerals estate on SLB holdings, which may also include a leasing plan, stipulations and surface use agreements. This phase will also require participation and involvement with other mineral estate owners, representatives from Larimer County and the City of Fort Collins, and a potential operator. In this phase, there are no specific deliverables for TNC. Rather, TNC will ontribute technical support in the development of the drilling plan upon SLB request, and as the budget nder this contract permits. c u Optional Phase III (Mitigation Plan) – Identify a plan for potential offsite mitigation: TNC would lead this phase, should it occur. This phase of the project is not defined in this scope of work, as the goal of the parties is to have a comprehensive plan which seeks to avoid and minimize disturbances to the site first, essentially conducting onsite vs. offsite mitigation plans. However, there may be a need for offsite mitigation. This project phase is anticipated to require participation with TNC, other mineral estate owners, representatives from Larimer County and the City of Fort Collins, the selected minerals operator, and other stakeholders as ecessary. The SLB may be a participant, but does not anticipate financially supporting this phase of the roject. n p Summary of deliverables from TNC  Phase I Report – This report will describe the background, methods, results, and participants for Phase I so the SLB has documentation of what decisions were made, by whom and why. For example, the report will describe: o Natural and cultural targets selected and rationale o o GIS layers used, including sources of data and modifications made Weighting/prioritization of each GIS layer and rationale o Method for combining individual GIS layers – final method used and other methods tried – in order to identify recommended avoidance and minimization areas. o Any other information and explanation to make it clear how the analysis was developed. The fina system m l map(s) will prioritize important areas, with a “ranking system.” For example, this ranking o ay show: Tier 1 – areas where avoidance is legally required (e.g., threatened and endangered species) o Tier 2 – areas where avoidance (e.g., no surface occupancy) is recommended based on rarity or other significance of the natural and cultural values o Tier 3 – areas where minimization of impacts (if avoidance is not possible) would be sufficient to protect natural and cultural values o Tier 4 – areas where energy development is preferred, such as already‐disturbed areas. TNC will provide all materials, include the reports and associated shapefiles by email and/or CD, based on the delivery method preferred by the SLB. Color hard copies of the report will only be provided upon request by the SLB and if the budget allows.  Phase II contributions – SLB does not necessarily expect any specific deliverables from TNC for the Minerals Development Plan. However, as described above, SLB may request input from TNC on an hourly basis as needed and as the project budget permits. Use of results: The final report for Phase I will be provided to the SLB from TNC, with copies of the report also going to the contributing stakeholders. All parties will be providing data and services for the study and will share in joint ownership of the document and findings. The final report is also expected to be a “living product” which will be used to make decisions regarding a Minerals Development Plan, which is expected to include a leasing plan, stipulations, surface use agreements, and a drilling plan. “Living product” means that SLB may include additional or updated data should the need for doing so arise between the completion of this project and the lease sale; it is not expected that TNC would rerun the EbD analysis after its completion. While all parties expect to use the report, the contract to provide data and the memorandum of understanding do not guarantee that the plans devised in this report will be implemented. Responsibilities  TNC will facilitate the completion of all work on the Energy by Design analysis, including the completion of all GIS work, and soliciting input from Project Partners and the technical team. TNC will provide input to the drilling plan as requested by SLB and as remaining hours allow under the project budget.  SLB will participate on the technical team and work with TNC to ensure that EbD deliverables will meet SLB’s needs, and provide data to TNC as needed for the EbD analysis. SLB will facilitate the completion of the Minerals Development Plan (Phase II) once the EbD analysis is complete.  Project partners (City, County) will participate on the technical team and provide data to TNC as needed and complete all duties pursuant to the Memorandum of Understanding between the SLB, the City and the County. Figure 1. Sample results for onsite analysis. This map shows the final results for the onsite analysis of sensitive features for an EbD project that TNC completed with Questar, in northwestern Colorado and southwestern Wyoming. The map shows three types of avoidance areas – legal avoidance, recommended avoidance, and sensitive vegetation avoidance. TNC could create a similar map for the Mountains to Plains project area. MountainsBoard to Plains Energy by Design 12/14/11 2011 - State Land Sources:Surface- 8/1/2011 SAMS Minerals- 3/29/2010 SAMS Red Open Mountain Space Soapstone Natural Area Prairie Meadow Ranch Springs ¦¨§25 2 1 1 7 6 5 6 5 8 4 5 4 3 2 1 4 9 5 8 9 8 9 9 8 8 4 3 2 1 9 5 7 4 2 1 8 3 1 7 3 2 6 5 3 9 4 6 7 7 6 6 7 3 2 23 14 26 34 13 35 36 30 11 35 31 29 24 31 32 11 32 11 11 12 25 10 25 11 18 36 28 33 13 26 17 25 19 23 27 25 26 14 33 34 10 35 30 33 29 28 20 33 36 16 17 16 32 20 21 26 24 17 13 17 21 32 12 35 36 13 12 28 34 25 17 15 32 28 33 34 20 35 16 16 10 29 35 34 29 15 36 13 27 22 12 27 29 36 12 14 26 27 29 25 24 10 15 14 13 12 15 32 21 14 26 18 28 27 22 16 23 16 31 33 18 15 18 30 10 22 19 17 30 28 31 30 18 11 31 10 30 14 31 18 19 15 34 27 19 20 21 22 23 24 19 20 21 22 23 24 19 20 21 22 23 24 22 23 24 19 20 21 22 23 24 19 20 21 22 23 24 19 20 21 3 27 22 11N 69W 11N 68W 10N 69W 10N 68W 11N 70W 11N 67W 12N 69W 12N 68W 10N 70W 10N 67W 12N 70W 12N 67W LARIMER WELD ^ ¦¨§25 ¦¨§70 ¦¨§76 Project Area Outline SLB Mineral Estate SLB Surface Ownership Soapstone City of Ft. Collins Prairie Natural Area- Meadow City of Ft. Springs Collins Ranch- Red Larimer Mountain County Open Space- 0 1 2 Miles Mountains Energy by to Design Plains Project Area EXHIBIT B to MOU