Denton City Council members said they were on track to vote on a gas drilling permit moratorium next week after getting briefed by attorneys and staff members Tuesday.
Four council members publicly called for a moratorium last month, saying they were reluctant to approve new permits while the city works to revamp its natural gas drilling and production ordinance.
A task force is meeting weekly to help develop ordinance changes, and staff members have said they hope to get a draft ordinance to the council in March.
Council members met behind closed doors with attorneys for nearly an hour Tuesday morning to discuss the issue.
Afterward, City Manager George Campbell said council members had reiterated their desire to vote on a moratorium next Tuesday.
City staff members are recommending a 120-day moratorium, but the length is still subject to change, Mayor Mark Burroughs said in an interview.
"We're talking about a defined period," he said. "Within that scope, I think it's quite reasonable. The issue is getting the language right."
A moratorium has been a top priority of many residents and was a key recommendation in a recent report by the Denton Stakeholder Drilling Advisory Group, another task force advising the city.
Council members had been reluctant to discuss the issue until Jan. 10, when the council faced two drilling-related permit requests and decided to delay them, mostly because of the ordinance review.
Council members did not discuss a moratorium during the public portion of their annual planning session Tuesday but did hear an update on the city's nine-month-old gas well inspections division. The city hired Arlington gas well coordinator Darren Groth to lead the division, which monitors well sites for compliance with city rules.
City gas well inspectors performed 1,592 inspections and issued 2,344 violation notices in 2011, Groth said. Most operators complied with the notices before citations were issued, he said.
At a November meeting, Groth said inspections had turned up some wells that lacked city permits, although the sites had permits from the Texas Railroad Commission, the state regulatory agency over oil and gas.
Under questioning from council member Kevin Roden on Tuesday, Groth said his staff was still researching the extent of the problem and planned to work with the city prosecutor's office to pursue compliance if needed.
"There are some [wells without city permits] out there," Groth said. "I just don't know how many."
Groth reported last year that his division had verified the total number of wells in Denton and started imposing a new annual inspection fee.
At the time, operators had paid only a fraction of the more than $165,000 in new city-imposed fees, but Groth said a discrepancy in the number of permits issued by the Railroad Commission and the number of active wells explained some of the gap. The state number of 1,382 gas wells included permits for wells that were plugged or never drilled and wells in areas of Denton's extraterritorial jurisdiction where the city lacks regulatory authority, officials have said.
After subtracting the sites mistakenly sent invoices, the city's collection rate is now more than 95 percent, Groth said.
The division was expected to pay for itself through industry fees, but city officials based those estimates on the state's well count. Groth's inspectors have verified about 450 active gas wells under the city's jurisdiction.
Roden asked how the drop in fee revenue would affect the division's budget. Mark Cunningham, the city's planning director, said the division cut costs by not hiring two of the planned six employees and by driving used cars instead of new ones.
The division should be able to cover its costs going forward if the city can collect all the fees owed by active wells, Cunningham said.
The city has issued 21 drilling permits since an initial phase of ordinance changes took effect in August 2010, and several applications are imminent, Groth said.
Over the same period, average U.S. natural gas prices hit the lowest levels since 2002. City staff members said the decline may be to blame for a drop in state drilling permits issued in Denton in 2011.
The state issued 24 permits here last year, a 52 percent decline compared with 2010 and the lowest annual total since 2000, according to city data.
LOWELL BROWN can be reached at 940-566-6882. His e-mail address is lmbrown@dentonrc.com .
