Update on Natural Gas Program
Friday, March 12, 2010
To the University Community:
I am pleased to update you on our recent progress and upcoming activity at the natural gas site at The University of Texas at Arlington.
Since January 2009, Carrizo Oil & Gas, Inc., has been engaged in the process of drilling several additional horizontal wells at the site at the southeast corner of our campus. Carrizo has successfully completed drilling a total of 16 new wells at the site. These new wells are in addition to the six wells already in production, bringing the total number of wells at the site to 22. Carrizo is anticipating that these new wells will start production in August.
The primary beneficiaries of royalties from these new wells will be the property owners to the south and east of campus who have signed leases with Carrizo—including the Arlington Independent School District, the City of Arlington, and numerous commercial and individual property owners.
Natural gas royalties are having a significant impact at UT Arlington. The six wells that went into production in late 2008 have generated approximately $5.5 million in royalties for the University thus far, despite a year of depressed markets for natural gas. Through our Maverick Match program, these funds are being leveraged with private gifts to support student scholarships, faculty and staff recruitment, and the University's campus master plan. As the University continues to make substantial investments in students, faculty, and the campus, we are also helping fuel the revitalization and economic development that are under way in downtown Arlington.
Carrizo is now ready to move into the next phase of activity with the new wells—the completion phase. Earlier this month, Carrizo removed the drilling rig from the site, and this week they moved in the completion rig and other necessary equipment.
The completion phase includes a process known as fracturing, or "fracing," which involves pumping a mixture of water and sand at high pressure into the wells to stimulate the gas flow to the surface. Fracing is a safe and customary practice for wells of this type. Fracing is scheduled to begin next week—the week of March 15—and will be accomplished in two stages. Carrizo estimates that stage one will take place from mid-March through the third week in April. Stage two is expected to take place mid-May through the second week in July. There will be noticeable daytime activity associated with the fracing process, including additional traffic around the site.
As in the past, the University is working closely with Carrizo to ensure minimal impact on the community. For instance, Carrizo will follow only surface road routes approved by the City of Arlington for this specific purpose and will not take other routes through the neighborhoods surrounding campus. Additionally, Carrizo has been conducting extensive assessments of noise at the site this week and plans on using larger and more technologically advanced sound walls than were used previously. The new acoustical sound blankets will be 32 feet tall around the entire location, compared to previous walls that were 16 to 24 feet tall. This should limit noise levels even further below levels allowed by the City of Arlington. During the fracing process, noise levels will continue to be monitored as needed by Carrizo to ensure successful noise mitigation.
Another important development is that the compressor station that has been in operation at the site since early 2009 will be taken offline Monday, March 15, and will be removed from the site shortly thereafter. The pipeline company that owns and operates the equipment, DFW Midstream, has constructed a centralized compressor station a few miles southwest of campus. This new facility will gather and compress gas from multiple well sites in Arlington, including our site, which has the added benefit of reducing the number of compressor facility sites within the city.
I hope you find these updates useful and informative. As our natural gas program progresses, we will continue to communicate with you on a regular basis. Please understand that all schedules are subject to change, but our website will always include the latest news, information, and frequently asked questions: www.uta.edu/naturalgas. And of course, you're welcome to contact me directly anytime at email@example.com.
Should you have any questions regarding leases or royalties, please contact Carrizo Oil & Gas, Inc., at 817-419-7352 or firstname.lastname@example.org.
Thank you for your ongoing support for this important project.
James D. Spaniolo
The University of Texas at Arlington