Rock icon Meat Loaf might have sang, “You’ll never drill for oil on a city street,” but that’s not stopping Chesapeake Energy Corp. from attempting to tap natural gas below the Dallas-Ft. Worth International Airport (DFW).

The DFW board of directors Thursday unanimously approved a lease with Oklahoma City-based Chesapeake to begin gas exploration in the Barnett Shale that lies below the Airport’s 18,000 acres. Chesapeake will pay DFW $181 million in initial bonus and a royalty of 25% on all gas produced after the lease is approved by the Dallas and Fort Worth City Councils.

The deal is expected to set new industry standards for minority contractor and investor participation while opening a new revenue stream for DFW that will bolster the Airport’s growth for decades.

“Chesapeake will partner with DFW to open possibly one of the largest single lease opportunities remaining in the Barnett Shale and our airport, our passengers, our owner cities and the North Texas economy will be the direct benefactors,” said Jeff Fegan, CEO of DFW International Airport. “The drilling will create jobs and business opportunities for a number of local firms and the revenue will keep costs down for the airlines that operate here, making our airport even more attractive to new airline competition.

DFW worked closely with the FAA to determine safety and security requirements for the exploration and drilling process. Almost all of DFW’s 18,000 acres are available for exploration, and more than 9,000 acres are available for surface drilling. DFW updated its construction and fire prevention standards and added a chapter to specifically address oil and gas exploration and production. All drilling activities require permits from DFW, which must be approved by the FAA. The drilling will have no impact on airfield operations.

“The bid process was demanding and challenging and we compliment the board members on their attentiveness to the interests of all concerned,” said Chesapeake CEO Aubrey McClendon. “We recognize this is the first of three significant steps leading to the awarding of this important contract and we look forward to similar outcomes from the Fort Worth and Dallas City Councils. Once awarded this lease, Chesapeake is fully committed to collaborate with the airport and FAA officials to develop the valuable natural gas resources underlying DFW in a safe and efficient way to create lasting benefits for the airport, surrounding communities, our minority partners and our company.”

The board-approved lease also features minority investor and contracting participation that is unprecedented in the oil and gas industry. Minority and women-owned business (MWBE) equity participation will be greater than 20%; MWBE subcontractor participation will be greater than 39%. Subcontractors will provide equipment, construction, engineering and consulting services and natural gas marketing. In 2005, Chesapeake had no OSHA incidents in the Barnett Shale and the company’s entire southern division enjoys a safety rating that is 50% better than the industry average.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.