BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND                        )                      CAUSE NO. 1

ESTABLISHMENT OF FIELD RULES TO GOVERN                     )

OPERATIONS IN THE MAMM CREEK FIELD,                              )                      ORDER NO. 1-106

GARFIELD COUNTY, COLORADO                                              )

 

REPORT OF THE COMMISSION

 

            This cause came on for hearing before the Commission on July 12, 2004 at 9:00 a.m. in Suite 801, 1120 Lincoln Street, Denver, Colorado on the amended application of EnCana Oil and Gas (USA) Inc. for an order to change the existing well setbacks in Rule 318.a. for certain lands to allow wells drilled in excess of two thousand five hundred (2,500) feet such that the wells will be permitted to be drilled from one multi-well surface site in each governmental quarter-quarter section provided that the bottomhole locations are no closer than six hundred (600) feet from the outer section boundaries and that no internal lease line or setbacks between bottomhole locations be required for production of oil, gas and associated hydrocarbons from the Mesaverde Formation.

 

FINDINGS

 

            The Commission finds as follows:

 

1.  EnCana Oil and Gas (USA) Inc. (“EnCana”), 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.  Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless authorized by order of the Commission upon hearing.

 

            5.  On May 24, 2004, EnCana, by its attorney filed with the Commission a verified Application for an order to change the existing well setbacks in Rule 318.a. that apply to the below-listed lands to allow wells drilled in excess of two thousand five hundred (2,500) feet such that the wells will be permitted to be drilled from one multi-well surface site in each governmental quarter-quarter section provided that the bottomhole locations are no closer than six hundred (600) feet from the outer section boundaries and that no internal lease line or setbacks between bottomhole locations be required for production of oil, gas and associated hydrocarbons from the Mesaverde Formation:

 

Township 7 South, Range 92 West, 6th P.M.

                                                                                Section 8: All

                                                                                Section 17: All

                                                                                Section 20: All

 

            6.  At the time of the administrative hearing, the Applicant agreed to amend the application to specify that the Mesaverde Group was the subject of the application rather than the Mesaverde Formation.

 

7.  Testimony and exhibits presented at the administrative hearing showed that the application lands have not been spaced or unitized by the Colorado Oil and Gas Conservation Commission or the Bureau of Land Management.  All lands in the application area are currently subject to COGCC Rule 318.a.  Additional testimony indicated that the application lands are subject to either pooling agreements or communitization agreements on an individual section basis.

 

8.  Testimony and exhibits presented at the administrative hearing showed that a number of wells currently exist in the application area.  Certain of these wells located between Sections 8 and 17 were drilled as exceptions to Rule 318.a.  Production from these wells is being divided between the pooling unit in Section 8 and the Communitization Agreement in Section 17.

 

9.  Testimony and exhibits presented at the administrative hearing indicated that any additional drilling allowed by this application would be done from central drilling pads at a density of no more than one pad per governmental quarter-quarter section, utilizing existing drilling pads to the extent practicable.  Additional testimony and exhibits showed the location of the Mesaverde Group in the stratigraphic section and the subdivisions of the Mesaverde Formation known as the Williams Fork and the Iles Formations.

 

10.  Testimony and exhibits presented at the administrative hearing showed that the Mesaverde Group consists of fluvial sands that cannot be correlated beyond 20 acres.  Additional testimony indicated that there is no communication between wells, that almost all of the porosity in the sands is secondary porosity, and that fracturing is also present running in a northwest to southeast direction.  Further testimony indicated that these reservoir properties result in different drainage areas for each well.

 

11.  Testimony and exhibits presented at the administrative hearing showed the calculated drainage areas of the existing wells in the application area.  Additional testimony and exhibits showed the areas of the reservoir that are not being drained under the well location setbacks required in COGCC Rule 318.a.

 

12.  Testimony and exhibits presented at the administrative hearing showed that the best thirty (30) day production is more or less uniform from wells currently drilled in the application area.  Additional testimony indicated that allowing wells to be drilled at a distance closer than one thousand two hundred (1200) feet would protect correlative rights, prevent waste, and allow for economic and efficient drainage of the Mesaverde Group reservoir.  Further testimony indicated that granting this application would result in the drilling of fourteen (14) to eighteen (18) additional wells in Sections 8 and 17 and an unknown number of additional wells in Section 20. 

 

12.  EnCana Oil and Gas (USA) Inc. agreed to be bound by oral order of the Commission.

 

13.  Based on the facts stated in the verified application, having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to change the existing well setbacks in Rule 318.a. that apply to the lands described in Finding No. 5 above to allow wells drilled in excess of two thousand five hundred (2,500) feet such that the wells will be permitted to be drilled from one multi-well surface site in each governmental quarter-quarter section provided that the bottomhole locations are no closer than 600 feet from the outer section boundaries and that no internal lease line or setbacks between bottomhole locations be required for production of oil, gas and associated hydrocarbons from the Mesaverde Group.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, Rule 318.a is hereby amended to change the existing well setbacks that apply to the below-described lands to allow wells drilled in excess of two thousand five hundred (2,500) feet such that the wells will be permitted to be drilled from one multi-well surface site in each governmental quarter-quarter section provided that the bottomhole locations are no closer than 600 feet from the outer section boundaries and that no internal lease line or setbacks between bottomhole locations be required for production of oil, gas and associated hydrocarbons from the Mesaverde Group.

Township 7 South, Range 92 West, 6thP.M.

                                                                                Section 8: All

                                                                                Section 17: All

                                                                                Section 20: All

 

            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 July, 2004, as of July 12, 2004.

 

 

                                                OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

 

 

 

                                                            By__________________________________________

                                                                                    Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

July 27, 2004