RECORD OF PROCEEDINGS

 

                                  June 4, 2002

 

            The Oil and Gas Conservation Commission met on June 4^th at 10:00 a.m. in the Anasazi Room, La Plata County Courthouse, 1060 East 2^nd Avenue, Durango, Colorado, for a hearing in Cause Nos. 112, 315 and 520 (2 matters).

 

            Those present were:

 

                        Stephen Sonnenberg              Chair

                        Brian Cree                               Vice Chair

                        Tom Ann Casey                      Commissioner

                        Michael Klish                           Commissioner

                        Abe Phillips                             Commissioner

                        Lynn Shook                             Commissioner

                        Peter Mueller                           Commissioner

                        Carol Harmon                         Assistant Attorney General

Rich Griebling                         Director

Brian Macke                            Deputy Director

                        Patricia Beaver                       Hearings Manager

 

The Commission unanimously approved the minutes from the April 2002 meeting.

 

Executive Director’s Report:  Shane Henry, Assistant Director of the Department of Natural Resources (“DNR”) discussed the following:  Colorado has exceeded its fire suppression budget with 520 fires to date and many thousands of acres destroyed.  Mike Long, Division of Minerals and Geology Director has taken a position with Shell Oil in the oil shale program.  The state budget shortfall is estimated to be approximately $100 million dollars this fiscal year.  The Executive Director’s office is coordinating schedules with the Las Animas County Commissioners, Department of Natural Resources agencies and the Water Quality Control Division to hold a one day forum in Las Animas County on coal bed methane water issues in July.

 

Director’s Report: Director Griebling provided a written report and discussed the following:  The permit level is 7% behind last year’s record second highest level of 2,273 permits.  Public meetings held by Deputy Director Macke in Delta and Gunnison County showed a high level of public interest.  Deputy Director Macke attended a meeting in Glenwood Springs with the Board of Realtors who showed interest in communicating mineral and surface owner information to the public.  Deputy Director Macke has also made presentations at seminars on private property and leadership in Weld County.  All monitoring wells have been drilled in La Plata County and additional information will become available once the wells have been on-line for a period of time.  The 2001-2002 data clean-up project has been approved by the legislature.  Two variances under Rule 502.b. were granted this month.  Diversified Operating Company’s request for a variance was removed but will be resubmitted for next month.  Complaints have declined even though Applications for Permits to Drill have increased. 

 

Commissioner Casey requested an update on the status of the hiring freeze for the production and levy data backlog.  Director Griebling informed the Commissioners that a waiver has been submitted for the hiring freeze process. 

 

AAG’s Report:  The Allen Oil & Gas federal case deposition and discovery have been completed and the Assistant Attorney plans to file a motion for summary judgment; if unsuccessful the case will go to trial in 2003.  Oral arguments in the Town of Frederick case will be presented in July and Assistant Attorney Harmon will observe since the Colorado Oil and Gas Conservation Commission is not a party.  Assistant Attorney Harmon has had contact with the Delta County Attorney regarding the County’s inquiry on establishing rules and she has provided him with information from other county court cases.  Assistant Attorney Harmon will attend the IOGCC meeting to discuss Colorado’s public participation process with other states’ attorneys.  An update on the information requested by the Commissioners on executive sessions and attorney-client confidentiality privileges will be provided next month; several issues have come up and Assistant Attorney Harmon would like to finalize her research before reporting back to the Commissioners.

 

Commissioner Comments:  Chair Sonnenberg thanked BP Amoco and J.M. Huber for their participation in the June 3, 2002 field tour and Mark Weems, COGCC Field Inspector for his involvement. 

 

Audience Comments:  Josh Joswick, La Plata County Commissioner - Thanked Commissioners and staff for coming to La Plata County.  Informed Commission on how helpful Morris Bell was at the Neeley on-site.

 

Susan Franzheim – Asked:  1) if well density less than 160-acres will be needed, 2) for information on the proposed ombudsman position, and 3) if the Commission would publish information on using produced water for beneficial use.  Chair Sonnenberg recommended that staff publish information on produced water in hard copy and on the COGCC website. 

 

Ed Hamilton – Concerned with how much radon can develop from the Fruitland coal methane.  Mentioned that radon has half life of four days and that radioactive lead accumulates over time and can cause radioactive concerns.  Hamilton has not detected radon from the coal but would like to know if Commission has any information on this issue.  Staff has no information on radon occurring in coal bed methane formations. 

 

Adam Keller, La Plata County Planner – Concerned that moving a location or changing densities after an existing well has been in place will cause problems for builders and surface owners.  Interested in information from Commissioners of any proposed shale production wells. Commissioner Mueller indicated that there are no plans in Colorado, but there are some plans in New Mexico.  Commissioner Casey believes Colorado is not a likely place for Lewis shale production but in New Mexico it is used as a recompleted zone.

 

Craig Larson, La Plata County Assessor – Has worked with the Colorado Oil and Gas Conservation Commission (“COGCC”) to retrieve production information needed to perform his job and was able to get this information off the website.  Informed the Commission that with losing a COGCC staff person and the addition of the hiring freeze he is at a disadvantage in getting the information needed to do his job.  Larson feels he can no longer rely on COGCC production information since data entry is so far behind.

 

Jane McGary, Paonia resident – Interested in obtaining additional information on the COGCC process as it relates to proposed gas drilling in Delta County.

 

Cause No. 1V, Docket No. 0206-OV-05, La Plata County, request to approve an Order Finding Violation finding MarkWest Resources in violation of Rule 1003.a. for the Tiffany No. 2-17 Well located in the NE¼ NW¼ of Section 17, Township 32 North, Range 6 West, N.M.P.M. was continued to the July 2002 hearing.

 

Cause No. 112, Docket No. 0206-EX-01, Ignacio-Blanco Field, La Plata County, request by CDX Rockies, LLC for an order to allow the drilling of the Anderson #1 Coalbed Methane Well and the completion of the Thursinger #1-5 Well located in the S½ of Section 5, Township 32 North, Range 6 West, N.M.P.M. was approved.  Testimony was provided by applicant Al Arlian, Land Manager regarding ownership of the application lands and the adjacent lands, the location of the existing Thursinger #1-5 Well and the proposed location for the Anderson #1 Well, the proposed horizontal legs, and the surface use for a typical 320-acre drilling and spacing unit with two (2) vertical wells versus the two (2) wells proposed using horizontal technology.  Testimony was provided by James Fassett, Senior Geologist regarding the geologic development generally in the San Juan Basin and specifically in the application lands.  Testimony was provided by Michael Zuber, Consulting Engineer regarding the estimated gas in place, the estimated gas recovery for wells, and the expected production and recovery from the proposed Anderson #1 Well.  Testimony was provided by Brad Boyce, Manager regarding the results from using horizontal completion techniques in coal seams in West Virginia and the initial results from using these techniques on a nearby recently completed well.  A 510.a., statement was made by Kirk Brown, a working interest owner with Petrox Resources, Inc. regarding the recent production of wells near the application lands.  Staff analysis provided by Rich Griebling, COGCC Director indicated that the staff strongly supports CDX’s application based on the benefits from reducing surface impacts while recovering greater methane gas reserves from fewer wells.

 

Consent Agenda:  The Commission unanimously approved the consent agenda, which included the following:

 

Cause No. 315, Docket No. 0206-AW-03, Vernon Field, Yuma County, request by Samedan Oil Corporation for an order to allow an additional well to be drilled on the 160-acre drilling and spacing units on certain lands in Township 1 South, Range 44 West 6^th P.M. and Township 2 South, Range 44 West, 6^th P.M. for the production of gas and associated hydrocarbons was approved.

 

Cause No. 520, Docket No. 0206-UP-04, Oakdale Field, Huerfano County, request by Rocky Mountain Gas Supply, LLC for an order to pool all non-consenting owners in the 160-acre drilling and spacing unit consisting of the SE¼ of Section 4, Township 29 South, Range 69 West, 6^th P.M. for the development and operation of the Dakota and Entrada Formations was approved, pending notice of five additional parties and allowing a twenty day period to file protests.

 

Cause No. 520, Docket No. 0206-UP-05, Oakdale Field, Huerfano County, request by Rocky Mountain Gas Supply, LLC for an order to pool all non-consenting owners in the 160-acre drilling and spacing unit consisting of the SW¼ of Section 33, Township 28 South, Range 69 West, 6^th P.M. for the development and operation of the Dakota and Entrada Formations was approved.

           

            The meeting adjourned at 2:47 p.m.

==============================================

The Secretary was therefore authorized to issue the following orders:

 

Order No. 112-165, Ignacio-Blanco Field, La Plata County:  Approves the request by CDX Rockies, LLC for an order to allow the drilling of the Anderson #1 Coalbed Methane Well utilizing a horizontal completion technique at an exception location as close as 660 feet from the north, east and south lines of the drilling unit in the S½ of Section 5, Township 32 North, Range 6 West, N.M.P.M. and the completion of the Thursinger #1-5 Well utilizing a horizontal completion technique at an exception location as close as 926 feet to the west line of the unit in the S½ of Section 5, Township 32 North, Range 6 West, N.M.P.M. 

 

Order No. 315-8, Vernon Field, Yuma County:  Approves the request by Samedan Oil Corporation for an order to allow an additional well to be drilled on the 160-acre drilling and spacing units on certain lands in Township 1 South, Range 44 West 6^th P.M. and Township 2 South, Range 44 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Niobrara Formation.

 

Order No. 520-2, Oakdale Field, Huerfano County:  Approves the request by Rocky Mountain Gas Supply, LLC for an order to pool all non-consenting owners in the 160-acre drilling and spacing unit consisting of the SE¼ of Section 4, Township 29 South, Range 69 West, 6^th P.M. for the development and operation of the Dakota and Entrada Formations, pending notice of five additional parties and allowing a twenty day period to file protests.

 

Order No. 520-3, Oakdale Field, Huerfano County:  Request by Rocky Mountain Gas Supply, LLC for an order to pool all non-consenting owners in the 160-acre drilling and spacing unit consisting of the SW¼ of Section 33, Township 28 South, Range 69 West, 6^th P.M. for the development and operation of the Dakota and Entrada Formations.

 

 

Signed: 

           

Patricia C. Beaver, Secretary

 

 

Approved:

 

Stephen Sonnenberg, Chair