D/FW Takes Cues From Regional Airport

Officials at Dallas/Fort Worth Airport, the world's third-busiest, are taking cues from a tiny airfield in south Fort Worth to pump big bucks out of the ground.

D/FW AIRPORT -- Officials at Dallas/Fort Worth Airport, the world's third-busiest, are taking cues from a tiny airfield in south Fort Worth to pump big bucks out of the ground.

They're two of a very few airports across the country hunting for oil and gas to boost nonairline revenue and rely less on the turbulent airline industry.

Fort Worth Spinks Airport recently signed a lucrative lease on its 822 acres for natural-gas drilling. The Fort Worth City Council approved the deal Tuesday.

It includes a $3 million one-time bonus payment and about $1.7 million in annual royalties for the airport.

The numbers have executives at Dallas/Fort Worth Airport drooling over the possibilities of a big payday from their 18,076 acres over the expansive Barnett Shale natural-gas formation.

"We have huge expectations," said John Terrell, D/FW's vice president of real estate, who's methodically leading the airport's charge into the gas-drilling business. "We have 18,000 acres under our control. You don't find that throughout the rest of the Barnett Shale. That's what's actually bringing in the major international players."

Energy experts, who expect to see Irving-based Exxon Mobil Corp. and Houston-based Shell Oil Co. among the bidders, say D/FW faces a fairly small risk for such a potentially huge windfall.

"That much acreage really has an enormous economic impact if it's over there and productive," said Jimmy Thomas, a Weatherford-based consultant in the natural-gas industry. "It has some excellent potential."

But there is some doubt.

Although operators are moving more in that direction, nobody has drilled for gas in the Barnett Shale as far east as D/FW Airport.

"It's still just an unknown in that area," said Kristi Gittens, a spokeswoman for Dallas-based Chief Oil and Gas, the third-largest operator in the Barnett Shale.

The Barnett Shale is an important source of natural gas for not only Texas but the nation as well. It is estimated to have about 26 trillion cubic feet of natural gas. Of that, only 1.6 trillion cubic feet has been tapped since 1993.

One in six oil and gas rigs in the state is drilling in the Barnett Shale. About 2 percent of the nation's natural gas -- 368 billion cubic feet a year -- comes from the Barnett Shale.

"The Barnett's really exploding and taking off in this area," said Paul Midkiff, a JP Morgan Chase consultant who is advising Spinks and D/FW airports on their ventures into natural gas.

Drilling in the Barnett Shale has spread into 14 North Texas counties. D/FW Airport straddles the Tarrant-Dallas county line. At this point, there's no proof that Dallas County has natural gas, experts said.

But Craig Adams still thinks the airport should be OK.

"You are stepping away from the proven part of the field," said Adams, president of Adexco Production, a Fort Worth-based independent oil and gas producer that has been working in the Barnett Shale since 2000. "But I think all the data that I've looked at would indicate the airport ought to be in a good area."

If it does prove successful, and D/FW is able to get the kind of deal Spinks signed, its land tract could yield a one-time cash bonus of $72 million. With 120 to 150 wells, the airport could fetch $27 million to $34 million a year in royalties when it reaches full production, Terrell said, pointing to the Spinks deal for his projections.

That would rank natural-gas drilling as one of the top revenue generators at D/FW. Concession sales, the third-largest category, bring the airport $33 million a year. The airport had $475 million in total revenue during the fiscal year that ended in September.

Although no consultants have told the airport that's what it could get, officials at D/FW think it's possible.

And natural-gas experts are inclined to agree.

"That's hard to imagine, but I guess in this kind of a market, anything may be possible," Adams said. "I think most of us were pretty floored by the price paid over at Spinks Airport. With product prices as high as they are now, the producers can afford to pay these large numbers."

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