~ TRINITY EAST ENERGY

February 7, 2013 Dallas Plan Commission 1500 Marilla Street Dallas, Texas 75201 RE: Trinity East Energy's Response to Letter dated January 30, 2013 from Terry Welch To the members of the Dallas City Plan Commission: We are in receipt of a letter dated January 30,2013 from Terry Welch addressed to the CPC regarding the SUP Applications of Trinity East Energy. We would like to respond to the assertions and questions raised by Mr. Welch.

On page 1 of the letter, Mr. Welch erroneously states in Section 1 that: "Dallas has adopted regulations that would permit one compressor for natural gas wells on a pad site since a single, on-site compressor for the pad site would be "equipment" and "structures" for natural gas production." However, nowhere in this section, or any other section, does the Code mention "one" compressor, or "a single, on site compressor" as Mr. Welch's letter would lead you to believe. Mr. Welch has merely read into the Code some additional words that will get to his desired result, but those additional words, and his conclusion, are not the law. The truth is that many production sites contain more than one separator or compressor, depending on the volume of gas produced and dther production related issues. If you take Mr. Welch's added language literally, only one piece of any type of equipment would be allowed on any drillsite, no matter what the volume of gas produced or the capacity of that one piece of equipment. That would be an absurd result. The reality is that the Drilling Ordinance provides broad flexibility in equipping a production site to accomplish the stated requirement of conducting operations "in accordance with the practices of a reasonable and prudent gas drilling operation in the State of Texas" (Section 5IA-12.107(a)(1)). With that standard in mind, and recognizing the benefits of removing much of the equipment normally found on a gas production site, Trinity East has designed a system and a plan which allows for the relocation of separation equipment, wastewater storage tanks, compressors, and other equipment from the two park land sites and the placement of that equipment on private land in an industrial zoning district. Furthermore, and very importantly, it allows for the redirection of truck traffic off of park land for water removal and a small footprint on park land. This plan was developed in concert with, and with the support of, the Parks Department. Frankly, we believe the CPC would be hard

pressed to find anyone who would object to the resulting benefits to the park land from this design. On page 2 of his letter, Mr. Welch surprisingly takes the position that if we merely present the argument that it is OK to put the normal production equipment for three sites onto one site (even if it greatly enhances and benefits public land) that it will take us down the slippery slope to "50 compressors on one site" and the "permanent housing of30 or 50 tank trucks" thus authorizing a "truck barn". Mr. Welch fails to note that the existing 1M zoning already allows a Commercial Motor Vehicle Parking use on the site. These wild predictions are entertaining, but we are before the CPC to address a real life proposal, with real life facts, which are before the CPC for consideration on the merits of this system design ONLY. The site plan included as a part of the ordinance will limit the use to only what is shown. His speculations completely ignore the reality that the design before the CPC incorporates only the equipment which is required for the gas produced from these three sites. To reinforce that fact, the SUP includes a condition to that effect. The equipment necessary for gas production can be placed on three separate sites, or on one site. We believe the design we have developed incorporates common sense, and the parks department and city staff agree with us. It is interesting to note that in support of his slippery slope argument Mr. Welch points out in his note at the bottom of Page 2 that Section 51A-12.107(g)(5), which deals with on-site equipment, "provides no limitation on the number of on-site tanks that may be used at a pad site." He should note that it also provides no limitation on the number of compressors, a salient fact which completely rebuts his earlier statement that the regulations only "permit one compressor." PAGE 3 The last paragraph on page three of Mr. Welch's letter alludes to the Matrix prepared by the Task Force and somehow concludes that the City's interpretation of existing regulations has changed because the City's interpretation ofthose regulations appears to contradict a one sentence comment made by the Task Force. Iam not sure what the comment means or exactly what it is addressing, but Ithink it is obvious that the City is not bound by a short, unsubstantiated, and vague comment made in the Task Force matrix. Our applications are made under the ordinance that exists today and when we consummated our deal with the City of Dallas. PAGE 4 On page 4 Mr. Welch addresses air quality issues, and recites some emission statistics for this site, which frankly are not correct. We certainly agree that emissions mitigation is serious and non-negotiable, and we will comply with all applicable laws and regulations regarding emissions. We would urge the CPC to consider the extensive laws, rules, regulations and permitting processes which are already in place, and allow the

TCEQ to address this issue, which is their area of expertise. The Chief Toxicologist of the TCEQ, Dr. Michael Honeycutt, noted this Monday: "This agency has put a lot of resources into monitoring and inspecting the oil and facilities in the Barnett Shale. Things are looking really good as far as air quality." PAGES Mr. Welch appears to urge the CPC to somehow adopt all of the Task Force recommendations and incorporate them into this process. It is our opinion, and that of other industry members, that those recommendations, if adopted, will amount to a de facto ban on drilling in the City. That approach has been used to stop drilling in several cities in the DFW area, and a majority of the task force recommendations are taken from those cities. Mr. Welch's firm, in fact, has had a hand in drafting ordinances for his municipal clients that amount to a de facto permanent moratorium on drilling. Mr. Welch also complains about the lack of very specific and detailed standards in several conditions in the SUP related to emissions. Again, this is an area of expertise which is extensively controlled and monitored by existing laws, rules, regulations and permitting processes. Those issues aside, we encourage the CPC to follow its charge to consider the SUPs before it based upon the ordinance which is in effect. We would also encourage the CPC to consider the recommendations of the city staff, and the thoughtful considerations and expertise of the parks department staff in its role in developing this plan. PAGE 6 Threat of Litigation - Trinity East Energy has never communicated any threats of litigation to the City. In fact, we have patiently cooperated with delays for the Task Force and are concentrating on the land use issues that are before the Commission. PAGE 7 Mr. Welch somehow concludes that the "review process is being rushed". Apparently Mr. Welch is unaware that this process began five years ago when, at the City's invitation, Trinity East paid the City a very significant sum to lease city owned land. (Side note - Gas leases without the right to drill and extract the gas are worthless.) Working with the parks department, city staff, the U. S. Army Corps of Engineers, the flood plain administrator, and a group of very qualified engineers, architects, and planners we began the process four years ago of designing, surveying, and testing the system design, and pursuing SUPs and drilling permits. The SUP's currently before the CPC were filed two years ago. Mr. Welch is, respectfully, mistaken. Sincerely, Trinity East Energy, LLC