While the outcry against the petroleum industry drilling in residential areas is as high as ever, a small, privately-held petroleum and real estate company in Midland, Texas, is making headlines for pulling off what some might consider an impossible feat: creating communities where people are willingly moving onto active oil and gas fields and living harmoniously with the industry.
Fasken Oil and Ranch Ltd. - a small operator not well known outside the Texas borders - has been featured in local news coverage for its planning, design and operations in the oil patch.
Its owners' ability to see the "big picture" combined with simple, yet meaningful courtesies toward the community makes the company a prototype for operating in populated areas, said AAPG member Dexter Harmon, exploration manager for Fasken.
"There are all kinds of people just dying to buy a lot and build a house here. They ask all the time, 'When will lots be available?'" Harmon said.
"As a matter of fact," he added, "they are getting impatient."
What's the Catch?
It is only fair to note that Fasken has a major leg up on most operators. It holds both mineral and surface rights to the 165,000 acres it owns in the Midland area, and it is simultaneously developing its land for hydrocarbons and real estate endeavors.
This obviously reduces major conflicts like the May 2014 one experienced in Denton, approximately 330 miles northeast of Midland. Denton residents voted to ban hydraulic fracturing, citing environmental damages, health concerns and nuisances created by the industry.
The vote was overturned in June after Texas Gov. Greg Abbott passed a law prohibiting local bans on hydraulic fracturing.
Yet, despite Fasken's built-in immunity to the recurring conflict between mineral and surface rights owners, the company has taken extraordinary measures to develop its land - so much so that residents are quickly filling up its apartment units and office buildings and are excitedly awaiting the single family homes to come.
How It All Began
David Fasken, an attorney from Toronto with mining experience, purchased 222,600 acres northwest of Midland from a rancher in the early 1900s. He incorporated the Midland Farms Company in 1913 and sent his son, Robert, to oversee its operations.
Robert's son, also named David, followed in his footsteps.
When oil was discovered in the Permian Basin's North Cowden and Mabee fields in the 1940s, the Fasken family leased much of its acreage to Stanolind Oil and Gas Company, thus opening the door to their first venture into the petroleum industry.
The family later acquired ranchland near Laredo, Texas - never realizing such a purchase would one day put them in the middle of the Eagle Ford play. (The company currently is developing real estate in and near San Antonio and Laredo.)
In the Midland area, the Fasken's ranchland turned into a thriving oil patch. It operated as such for decades, prompting the Midland Farms Company to become Fasken Oil and Ranch in 1995.
The Fasken family then opted to turn part of its land into commercial and private real estate developments because it was no longer suitable for ranching.
In 2009, the idea for a master-planned community called The Vineyard was being tossed about, Harmon said, noting it is one of the largest Midland has ever seen. Sitting on roughly 1,000 acres of an active oil field west of Midland, 320 acres are under development and have been dedicated to the city.
The acreage is home to four office buildings, including the company's 60,000-square-foot headquarters, an elementary school named after a Fasken family member and the first phase of a 352-unit apartment complex, which reached 88 percent occupancy in less than two weeks after its grand opening.
In the works are four additional office buildings, the completion of the apartment complex, a large townhome project, two neighborhoods comprising more than 800 upscale single family homes, retail strip malls, restaurants, a new high school, a nine-hole golf course designed to tie into an adjacent country club's courses, trails and lots of green space - a welcome sight amid the region's dusty plains.
Marrying Industry and Real Estate
About the time Fasken was contemplating The Vineyard, the Wolfberry play was taking off in Midland, breathing new life into the Permian Basin through breakthroughs in horizontal drilling and hydraulic fracturing.
Knowing oil and gas activities would increase, Fasken opted to first drill its Wolfberry wells and construct the needed infrastructure, such as roads, facility lines and access ways to pipes, pump jacks and batteries. Its vertical wells were drilled with generous, 40 acre-spacing, which equates to 16 wells per square mile, to accommodate future real estate development, said AAPG member Jeff Bryden, a geologist with Fasken.
Tighter well spacing was used in areas not planned for residential use.
Fasken geologist and AAPG member Stonnie Pollock said that because the drilling of horizontal wells leaves less of a footprint, the wells can more easily be constructed after residential sites are developed without disrupting communities.
"We planned the well locations and the locations of the streets with future residents in mind," Harmon said. "We have tried to be a good neighbor from the very beginning."
Prior to planning The Vineyard, Fasken's general manager, Norbert Dickman, and others took a trip to California to study how the state managed to successfully locate million dollar homes and businesses adjacent to pumping units. Upon returning to Midland, Chuck Hedges, Fasken's general counsel who also oversees real estate development for Fasken, met with the city of Midland to help write rules and regulations that would be respectful toward future oil patch residents, Harmon said.
"We worked with the city to develop the rules," Harmon said, "and we stayed within the rules."
Checklist
High on Fasken's list of priorities for developing The Vineyard were the following items:
♦ Water - Realizing fresh water is a valuable commodity in west Texas, Fasken drilled to 1,700-foot depths to retrieve brackish water, and then led the industry in treating and using brackish water in the well drilling and completion process in the Permian Basin, Pollock said.
"Fresh water is very limited out here," he said, "and we don't want to exploit that for oil and gas reasons."
Fasken also plans to treat brackish water and use it to irrigate the development and golf course.
♦ Seismic - When Fasken began shooting 3-D seismic lines within the city limits in March it went out of its way to inform the public of its activities and to avoid disturbing the peace, said AAPG member Glenn Winters, chief geophysicist for Fasken.
Not only did the company help publicize its activities in the local media and distribute flyers to residents, it shot seismic strictly during school hours (8:30 a.m. to 3:30 p.m.) to avoid conflicts with rush hour traffic.
Furthermore, although the company was ready to acquire seismic data last November, it waited for the holiday season to pass, Winters added.
"We are good corporate citizens here," he explained. "We serve on boards in our own respective organizations, and we are part of the Midland community."
♦ Well operations - Unlike many operators, Fasken limited the hours of hydraulic fracturing operations.
"When we get close to houses and to people, we shut off the motors and pumps at 7 p.m.," Harmon said. "Of course it takes us longer to complete the job, but we don't want to bother our neighbors during evening and night hours."
♦ Communication - Fasken isn't shy about pointing out what they see as a bias against the industry by mainstream media, but the company believes operators should have a louder voice when informing the public of its intentions and processes.
"The oil and gas industry often doesn't get a fair shake, and as a result we sometimes don't say enough because we are afraid we will get misrepresented," Pollock said. "But the industry and state and local regulatory agencies must do a better job at educating the general public."
Fasken employees have walked door-to-door to talk to residents about the seismic acquisition and horizontal drilling processes. They explain that new horizontal wells will be located 6,000 to 10,000 feet below the ground, and that the hydraulic fracturing process will not disturb them.
The company also makes its way into local public schools to teach students about the drilling process, Bryden added.
Common Sense
Having developed apartments and single family homes in Laredo prior to embarking on The Vineyard, Harmon said the company learned many lessons about how to properly develop real estate, such as constructing alleyways to access homes to achieve a cleaner look in a community.
Yet when it came to developing real estate in an oil field, The Vineyard is the company's nascent venture. With no pre-existing model to follow, executives remembered the ruffled feathers of nearby residents of unincorporated Gardendale, Texas, where operators drilled around the clock and close to homes and businesses.
"People there threatened to incorporate and write ordinances that prevented drilling," Pollock said.
Wanting to avoid similar fallout, Fasken simply took a "common sense" approach, Harmon said, reiterating the company's desire to respect residents, conserve water, drill away from homes and keep nuisances to a minimum.
Because Fasken's reputation precedes itself, the oil fields on which The Vineyard sits can be likened to white noise or wallpaper.
"People know this is an active oil field. They see the wells out there, but they know everything we do is first class. We're not going to be working out there 24 hours a day with bright lights shining into their windows. Our headquarters are here so we can oversee everything and take care of things," Harmon said.
"It's the Golden Rule: Treat other people how you'd want to be treated," he added. "That's what we're doing."