|
 Al
Zapanta PAZ Energy
 Striking
It Rich
The search for remaining
pools of hydrocarbons has mobilized enormous
resources. Al Zapanta, a retired two-star general
and president of the U.S.-Mexico Chamber of
Commerce, capitalized on his experience as a former
executive at ARCO when the Dallas/Fort Worth Airport
Authority required minority participation in its
Barnett Shale drilling project. The story of
Zapanta’s PAZ Energy demonstrates the kind of
opportunity that has accompanied the new energy
rush.
“ It is the largest
natural gas project in the country, probably a $3
billion project. … And PAZ Energy is now the largest
minority-owned player in the country in natural gas,
period.”
What is PAZ Energy, and how
did it get involved with this drilling activity?
Some two years ago, the Dallas/Fort Worth Airport
Authority announced that minority participation in
the Barnett Shale drilling on its land was important
to the Authority and that companies bidding on the
project had to include qualifying minority-owned
enterprises for 20 percent of the project. We formed
a group—PAZ Energy LLC— with 11 owners, of which
eight are Hispanic and African-American and three
are women. Chesapeake Energy won the bid and our
participation is 11.03 percent of the total project,
or 55 percent of the required 20 percent minority
participation.
We also raised $125 million with a lender in
Greenwich, Connecticut. We combined this with our
own money, and 8 of the 11 of us have guaranteed the
note. In other words, we have signed on the dotted
line. Our credit agreement pays the lender interest
plus a carry forward once we pay them off in a
revenue-sharing relationship. It diminishes over
time until they get their internal rate of return
that they have bargained for with us. In short, they
will be sharing profit with us for a period of time.
It was one of those marriages made in heaven, so to
speak.
And gas is already flowing
out of the project?
We have 60 million cubic feet of gas that is flowing
out and sold every day now, and that is growing.
They are drilling between five and eight wells a
month, so we will be drilling 334 wells over the
next two and a half years. It is the largest natural
gas project in the country, probably a $3 billion
project after all is said and done. And PAZ Energy
is now the largest minority-owned player in the
country in natural gas, period.
Are your partners also in
the industry?
There is one other industry person, and he was with
Mobil for 18 years. The other people are community
leaders and local businessmen. I tried to form the
company in such a way that we really live up to the
whole idea that 20 percent of ownership should go to
minority-owned businesses.
Has the fact that this is
urban drilling presented a problem?
The beauty of this project is that 18,000 acres have
been leased from the airport, which is the sole
royalty owner. They get a 25 percent royalty.
Normally, when you go into the urban environment,
you may have 250 homeowners, or the municipality and
homeowners or industry, and the operator has to go
deal with every one of them....In this project, we
are just dealing with the airport. But a different
challenge is that DFW is the third-busiest airport
in the world.
So you’ve got the EPA, the FAA and flight safety
rules. All of this had to be taken into
consideration, but they were able to locate and
approve those 334 well sites.
Are there other Barnett
Shale projects besides the one at DFW?
Oh yeah. Barnett Shale is a huge basin. So, I would
say that the 18,000 acres in this project is perhaps
just 10 percent of all the acreage that it is going
to produce, or even around 5 percent. You have maybe
150,000 acres, all the way from Forth Worth up to
Denton, to Dallas, to Arlington.
Are there still
opportunities for the investors there?
Yes. In all the other locations around the airport,
people are in fact leasing their properties for
natural gas development. CT |
