IN THE MATTER OF THE PROMULGATION
CAUSE NO. 331
AND ESTABLISHMENT OF FIELD RULES TO
GOVERN OPERATIONS IN THE BUCKBOARD ORDER NO. 331-8
FIELD, YUMA COUNTY, COLORADO
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission on April 22, 2002 at 10:00
a.m. in Suite 801, 1120 Lincoln Street, Denver, Colorado for an order to allow
an optional second well to be drilled on certain 160-acre drilling and spacing
units for the production of gas and associated hydrocarbons from the Niobrara
Formation with the permitted well to be located no closer than 560 feet from the
boundaries. In addition, the applicant requests that for any 160-acre drilling
and spacing unit which does not currently have a well, the initial well shall
also be located no closer than 560 feet from the outer boundaries of the
160-acre drilling and spacing unit.
FINDINGS
The Commission finds as follows:
1. Rosewood Resources, Inc. (“Rosewood”), as applicant herein, is an interested
party in the subject matter of the above-referenced hearing.
2. Due notice of the time, place and purpose of the hearing has been given in
all respects as required by law.
3. The Commission has jurisdiction over the subject matter embraced in said
Notice, and of the parties interested therein, and jurisdiction to promulgate
the hereinafter prescribed order.
4. On November 21, 1977, the Commission issued Order No. 331-1, which
established 640-acre drilling and spacing units for the production of gas and
associated hydrocarbons from the Niobrara Formation with the permitted well to
be located no closer than 990 feet from the unit boundary underlying certain
lands in the Buckboard Field. By Order No. 331-2, dated August 22, 1978 and
upheld by Order No. 331-3 dated September 9, 1981, the size of the drilling and
spacing units within the spaced area was reduced to 160-acres with the permitted
well to be located no closer than 900 feet from the unit boundaries for the
below-listed lands:
Township 3 North, Range 46 West, 6th P.M.
Sections 7 thru 11: All
Sections 14 thru 23: All
5. Order Nos. 331-5, 331-6 and 331-7 were subsequently issued by the Commission
for an order to allow the drilling of an additional well on the 160-acre
drilling and spacing units for the lands described below for the production of
gas and associated hydrocarbons from the Niobrara Formation:
Township 3 North, Range 46 West, 6th P.M.
Section 7: E½
Section 8: N½
Section 9: All
Section 10: N½, SE¼
Section 14: All
Section 15: All
Section 16 All
Section 22: All
Section 23: All
6. On March 7, 2002, Rosewood Resources, Inc. by its attorney filed with the
Commission a verified Application for an order to allow an optional second well
to be drilled on the 160-acre drilling and spacing units described below for the
production of gas and associated hydrocarbons from the Niobrara Formation with
the permitted well to be located no closer than 560 feet from the boundaries. In
addition, Rosewood requests that for any 160-acre drilling and spacing unit
which does not currently have a well, the initial well shall also be located no
closer than 560 feet from the outer boundaries of the 160-acre drilling and
spacing unit.
Township 3 North, Range 46 West, 6th P.M.
Section 7: W½
Section 11: All
Section 19: SE¼
Section 20: All
7. Testimony and exhibits presented at the administrative hearing showed the
location of the application lands in relation to the nearby towns of Yuma and
Eckley. Exhibits also showed the application lands subject to the proposed
optional second well and the ownership of those lands.
8. Testimony and exhibits presented at the administrative hearing indicated that
at the Yuma County Local Governmental Designee’s request, letters were sent to
the surface owners in the application lands advising them of Rosewood’s
application. No protests to the application were received.
9. Testimony and exhibits presented at the administrative hearing indicated that
gas production is better in areas of structural highs within the application
lands.
10. Testimony and exhibits presented at the administrative hearing showed that
the Niobrara Formation in the application area has an average thickness of
approximately thirty (30) feet and is a very porous, low permeability blanket
chalk with some local faulting present.
11. Testimony and exhibits presented at the administrative hearing showed the
average initial gas in has been calculated at 2.5 BCF, with only 17% of the gas
in place recovered.
12. Testimony and exhibits presented at the administrative hearing showed
economic assumptions and profitability, that the drilling of additional wells
will be economic with a gas price of $3.50 MCF, a 38% rate of return and a 2.6
year payout.
13. Further testimony and exhibits presented at the administrative hearing
showed an optional second well will be economic and is necessary to prevent
waste and recover additional reserves while protecting correlative rights of
mineral owners.
14. Rosewood Resources, Inc. agreed to be bound by oral order of the Commission.
Rosewood Resources, Inc. further agreed that compliance with Commission rules is
sufficient to protect the environment, public health and welfare without any
additional plan proposed by the applicant.
15. Based on the facts stated in the verified application, having received no
protests to the application and having been heard by the Hearing Officer who
recommended approval, the Commission should enter an order to allow an optional
second well to be drilled on certain 160-acre drilling and spacing units for the
production of gas and associated hydrocarbons from the Niobrara Formation with
the permitted well to be located no closer than 560 feet from the boundaries. In
addition, the order should allow any initial well in a 160-acre drilling and
spacing unit to be located no closer than 560 feet from the outer boundaries of
the 160-acre drilling and spacing unit.
ORDER
NOW, THEREFORE IT IS ORDERED, that an order be approved allowing an optional
second well to be drilled on the 160-acre drilling and spacing units described
below for the production of gas from the Niobrara Formation with the permitted
well to be located no closer than 560 feet from the outer boundaries of 160-acre
drilling and spacing unit:
Township 3 North, Range 46 West, 6th P.M.
Section 7: W½
Section 11: All
Section 19: SE¼
Section 20: All
IT IS FURTHER ORDERED, that for any 160-acre drilling and spacing unit which
does not currently have a well, the initial well shall also be located no closer
than 560 feet from the outer boundaries of the 160-acre drilling and spacing
unit.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall
become effective forthwith.
IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after
notice and hearing, to alter, amend or repeal any and/or all of the above
orders.
ENTERED this 2nd day of May 2002, as of April 22, 2002.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By Dated at Suite 801 Patricia C. Beaver, Secretary 1120 Lincoln Street Denver, Colorado 80203 May 2, 2001.
(331#8)