BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE RULES AND ) CAUSE NO. 1
REGULATIONS OF THE COLORADO OIL )
AND GAS CONSERVATION COMMISSION, ) ORDER NO. 1-104
WELD COUNTY, COLORADO
This cause came on for hearing before the Commission on January 5, 2004 at 10:00 a.m. in Suite 801, the Chancery Building, 1120 Lincoln Street, Denver, Colorado, on the application for an order to revoke the variances and Applications for Permit-to-Drill for three wells, all located on an existing well pad in the SW¼ SW¼ of Section 7, Township 2 North, Range 67 West, 6th P.M. that were approved by Director Griebling on October 1, 2003.
1. St. Vrain Partners, LLC (“St. Vrain”), 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 October 1, 2003, Colorado Oil and Gas Conservation Commission Director Richard Griebling approved three (3) Applications for Permit-to-Drill (“APDs”) from EnCana Oil & Gas (USA) Inc. (“EnCana”), for the Wandell #14-7 Well, the Wandell #23-7 Well, and the Wandell #24-7 Well (the “Wells”), all located on an existing well pad in the SW¼ SW¼ of Section 7, Township 2 North, Range 67 West, 6th P.M. Director Griebling also approved a variance to Rule 603.a.(1) and (2) to allow the wells to be located less than 150 feet from the surface property line and less than 150 feet from a public road. EnCana had sent letters on September 9, 2003 to the affected parties requesting waivers to Rule 603.a.(1) and (2) and received no protests from the parties.
5. On December 9, 2003, St. Vrain, by its attorney, filed with the Commission a Verified Application for an order to revoke the variances and APDs approved by Director Griebling on October 1, 2003. St. Vrain alleged its property is located less than 150 feet from the proposed location of the Wells and the existing well pad is located approximately 76 feet from a public road. The application was docketed for the January 5-6, 2004 hearing.
6. On November 17, 2003, EnCana filed with the Commission a Verified Protest and Cross-Application to St. Vrain’s application.
7. A prehearing conference was held on this matter on December 17, 2003. A prehearing conference summary was submitted to the parties on December 19, 2003.
8. A staff analysis was submitted to the parties on December 18, 2003 and to the Commissioners on December 31, 2003.
9. On December 30, 2003, St. Vrain filed with the Commission a Protest to EnCana’s Cross Application.
10. On December 30, 2003, EnCana’s Points of Law were filed with the Commission.
11. At the time of the hearing, St. Vrain’s attorney stated that St. Vrain would not be presenting witnesses during the hearing.
12. The Commission heard testimony from Pat Marx, Engineer from EnCana, who utilized exhibits to show the location of the proposed wells, the existing Wandell #2 Well drilled in 1973 and testified that all of the wells are more than 350 feet from the nearest home. Mr. Marx indicated that drilling three (3) wells at one site would minimize surface disturbance and that EnCana views the locations as an accommodation to surface developers. He also indicated that the cost of drilling directionally would be approximately eighty thousand dollars ($80,000) to one hundred thousand dollars ($100,000), which would be paid for by EnCana. Mr. Marx testified that safety considerations were taken into account by EnCana who will use Caza Drilling Rig 54 to drill the wells, and that the location will be fenced and patrolled by a security guard. He described the route used to access the existing Wandell #2 Well that would also be used by Caza Drilling for drilling the Wells, and testified that equipment moves would be limited to daylight hours. Mr. Marx testified that a traffic control study requested by EnCana and performed by SHE, transportation specialists, concluded that the closure of Dogwood Street would cause a minimum impact on traffic. He also noted that the town of Firestone had not requested that Dogwood Street be closed. Mr. Marx believes the drilling of the wells would protect public health, safety and welfare.
13. The Commission heard testimony from Larry Lorenz, drilling supervisor for Caza Drilling, who described the 105 foot Rig 54 that will be used for the drilling of EnCana’s Wells. Mr. Lorenz stated that the three (3) motors on the rig are silenced with mufflers and confirmed the results of a test that was performed in October 2003 on the noise produced by rigs showing that Rig 54 meets COGCC noise standards. Mr. Lorenz stated that dishwashers, washing machines, and window fans have similar noise levels to Rig 54. He stated that rig lighting can be directed downward and would be in compliance with COGCC standards.
14. The Commission heard testimony from Richard Starkey, reservoir engineer for EnCana, who utilized exhibits to show reserve estimates. Mr. Starkey indicated that the total reserves equal 1.5 BCF for the three (3) Wells and the present value equals $1 MM. He stated that waste will occur if the Wells are not drilled, and that twenty (20) wells are needed to recover the gas reserves. Mr. Starkey confirmed that the Wells will be drilled in accordance with Rule 318A.
15. Pursuant to Rule 510., Ken Wonstolen, of the Colorado Oil and Gas Association (“COGA”), made a statement indicating that EnCana’s proposal is in compliance with COGCC Rules. He urged the Commission to rule in favor of EnCana.
16. After deliberations, the Commission upheld the Director’s decision to grant the variances and approve the APDs but expressed safety concerns regarding the rig transport and drilling operations. Based on the testimony and exhibits presented, the Commission finds that both applications should be denied and additional provisions should be added as conditions to the APDs.
NOW, THEREFORE IT IS ORDERED, that the application filed by St. Vrain Partners, LLC for an order to revoke the variances and Applications for Permit-to-Drill for the Wandell #14-7 Well, is hereby denied.
IT IS FURTHER ORDERED, that the Cross-Application filed by EnCana Oil and Gas (USA) Inc. is hereby denied.
IT IS FURTHER ORDERED, that additional conditions are necessary to address safety concerns regarding the rig transport and drilling operations, and the Applications for Permit-to-Drill shall be amended to include the following conditions: All public roads and other public access within one hundred fifty (150) feet of the wellhead including sidewalks shall be closed during drilling rig transport and operation. It is recommended that during the transport of the drilling rig to and from the location, pilot vehicle, flagmen, including temporary road blocks be used to ensure the safe conduct of such transport operations.
IT IS FURTHER ORDERED, that the provisions contained in the above orders 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.
IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.
IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.
ENTERED this day of January, 2004, as of January 5, 2004.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
January 20, 2004