Houston City Council on Wednesday approved a three-year agreement with Southern Star Exploration LLC to explore for conventional natural gas beneath three municipal parks and a public works center in an industrial area.
The $200,000 lease agreement, which the council passed unanimously, gives the Houston-based producer the right to prospect for gas in Herman Brown, Brock and Maxey parks, as well as the public works center on McCarthy Road.
Steve Hartzell, a co-owner of privately held Southern Star, told NGI on Thursday that it will be at least six to eight months before the company can determine whether gas exploration is worthwhile. Acquiring and processing extensive 3-D seismic data will come first, he said. There is, however, some history to indicate that hydrocarbons are there.
"There already is a significant amount of production within the city of Houston," Hartzell explained. And the areas that Southern Star is targeting are in industrial areas close to the Houston Ship Channel -- some in part of the old Clinton Field, which produced a total of around 100 Bcf years ago, he said.
"I don't really know if we will be drilling; it will take some time to acquire and process the data," Hartzell said.
Southern Star isn't looking for unconventional gas -- and it won't use hydraulic fracturing in any case. The producer is assessing sandstone reservoirs, "typical, Gulf Coast reservoirs...Miocene, Frio...We absolutely have nothing to do with shale," he said. "We're not a shale player."
No drilling will be done within the parks either, he said. Instead, Southern Star will use a slant drilling technique with the equipment located adjacent to any area that is developed.
The producer met with affected stakeholders to explain the exploration process before taking the proposal to the city. "The residential areas are on the fringe, but we don't want to be in a residential area to begin with," said Hartzell. Once the explanations are given, "We've been well received."
All of the royalties that Houston may receive from the drilling proceeds would be pumped back into the parks. The Herman Brown Park, which is by far the largest tract of land to be explored at 750 acres, was deeded to the city with a mandate by the family that any minerals proceeds be returned to the park. Hartzell thinks that's the right thing to do in any case.
Houston Mayor Annise Parker, who has taken some heat for advocating the drilling plan, assured the public that the city was "not allowing drilling in the park." But if there is gas found, it could provide "a great benefit" to Houston, she said.
"We think there's an opportunity to secure some funding we wouldn't normally have access to, and we think it can be done in an environmentally and community-sensitive way," Andy Icken, Houston's chief development officer, told the Houston Chronicle.
In addition to the exploration lease, Houston would receive 25% in gas royalties. And Parker said Southern Star already has agreed to "comply with all state, environmental regulations that are required for any oil and gas drilling operation."
Southern Star was incorporated in 2002 originally to acquire working interests in oil and gas exploration projects along the upper and lower Texas Gulf Coast. Since then Southern Star has expanded its business to include projects using proprietary 3-D seismic data.
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