BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE BUZZARD CREEK, SHEEP CREEK, VEGA, BRUSH CREEK, AND MIDDLETON CREEK FIELDS, MESA COUNTY, COLORADO |
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CAUSE NO. 1, 369, 386, 399, and 429
ORDER NO. 1-127, 369-5, 386-4, 399-5, and 429-10 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on September 22, 2008, in the Sabin-Cleere Conference Room, Building A, Colorado Department of Public Health and Environment, 4300 Cherry Creek Drive South, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the lease line, for certain lands in Townships 8 and 9 South, Ranges 92 and 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
FINDINGS
The Commission finds as follows:
1. Delta Petroleum Corporation (“Delta”), 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 pursuant to the Oil and Gas Conservation Act.
Section 30: |
That part of Tract 59 in Section 30 (80.00 acres) andthat part of Tract 60 in Section 30 (39.18 acres)Containing 119.18 acres, more or less |
Section 31: |
That part of Tract 59 in Section 31 (80.00 acres),that part of Tract 60 in Section 31 (4.95 acres) andthat part of Tract 62 in Section 31 (50.34 acres)Containing 135.29 acres, more or less |
Section 25: |
That part of Tract 60 in Section 25 (54.72 acres)Containing 54.72 acres, more or less |
Section 36: |
That part of Tract 58 in Section 36 (160.00 acres),that part of Tract 60 in Section 36 (61.15 acres) andthat part of Tract 62 in Section 36 (109.66 acres)Containing 330.81 acres, more or less |
Section 17: |
AllContaining 640.00 acres, more or less |
Section 1: |
SW¼, SW¼ SE¼, and SE¼ SE¼ nka Lot 8 (21.35 acres)Containing 221.35 acres, more or less |
Section 2: |
All: Lot 1 (40.22 acres), Lot 2 (40.27 acres), Lot 3 (40.33 acres), Lot 4 (40.38 acres), S½ N½, SW¼ and SE¼Containing 641.20 acres, more or less |
Section 3: |
Lot 1 (40.40 acres), Lot 2 (40.40 acres), Lot 3 (40.40 acres), Lot 4 (40.40 acres), S½ N½, and S½Containing 641.60 acres, more or less |
Section 4: |
All: Lot 1 (40.39 acres), Lot 2 (40.36 acres), Lot 3 (40.34 acres), Lot 4 (40.31 acres), S½ N½, and S½Containing 641.40 acres, more or less |
Section 5: |
All: Lot 1 (40.42 acres), Lot 2 (40.65 acres), Lot 3 (40.89 acres), Lot 4 (41.12 acres), S½ N½, and S½Containing 643.08 acres, more or less |
Section 6: |
All: Lot 1 (41.08 acres), Lot 2 (40.81 acres), S½ NE¼ and SE¼Containing 321.89 acres, more or less |
Section 7: |
E½Containing 320.00 acres, more or less |
Section 8: |
AllContaining 640.00 acres, more or less |
Section 9: |
AllContaining 640.00 acres, more or less |
Section 10: |
All: N½ N½, SW¼ NE¼, S½ NW¼, W½ SW¼, NE¼ SW¼, SE¼ SW¼, SE¼ NE¼, NW¼ SE¼, NE¼ SE¼, and S½ SE¼Containing 640.00 acres, more or less |
Section 11: |
All: N½ NW¼, NE¼, S½ NW¼, and S½Containing 640.00 acres, more or less |
Section 12: |
AllContaining 640.00 acres, more or less |
Section 13: |
N½ and N½ S½Containing 480.00 acres, more or less |
Section 14: |
N½, SW¼, N½ SE¼, and SW¼ SE¼Containing 600.00 acres, more or less |
Section 15: |
AllContaining 640.00 acres, more or less |
Section 16: |
All: W½ NW¼, NE¼ NW¼, NW¼ NE¼, NE¼ NE¼, S½ NE¼, SE¼ NW¼, and S½Containing 640.00 acres, more or less |
Section 17: |
All: W½, NE¼, and SE¼Containing 640.00 acres, more or less |
Section 18: |
E½Containing 320.00 acres, more or less |
Section 19: |
All: Lot 1 (41.32 acres), Lot 2 (41.24 acres), Lot 3 (41.16 acres), NE¼ NW¼, and NE¼Containing 323.72 acres, more or less |
Section 20: |
W½ and NE¼Containing 480.00 acres, more or less |
Section 21: |
N½Containing 320.00 acres, more or less |
Section 22: |
N½ N½Containing 160.00 acres, more or less |
Section 29: |
W½ W½ and SE¼ SW¼Containing 200.00 acres, more or less |
Section 33: |
SE¼ NW¼, SW¼ NE¼ and NW¼ SE¼Containing a total of 120.00 acres, more or less |
10-ACRE DENSITY LANDS
Township 9 South, Range 92 West, 6th P.M.
Section 17: All
Containing 640.00 acres, more or less
Township 9 South, Range 93 West, 6th P.M.
Section 2: Lot 1 (40.22 acres), Lot 2 (40.27 acres), Lot 3
(40.33 acres), Lot 4 (40.38 acres), S½ N½, SW¼
Containing 481.20 acres, more or less
Section 3: All: Lot 1 (40.40 acres), Lot 2 (40.40 acres), Lot 3
(40.40 acres), Lot 4 (40.40 acres), S½ NE¼, S½ NW¼,
SW¼, SE¼
Containing 641.60 acres, more or less
Section 4: All: Lot 1 (40.39 acres), Lot 2 (40.36 acres), Lot 3
(40.34 acres), Lot 4 (40.31 acres), S½ N½, S½
Containing 641.40 acres, more or less
Section 5: All: Lot 1 (40.42 acres), Lot 2 (40.65 acres), Lot 3
(40.89 acres), Lot 4 (41.12 acres), S½ N½, S½
Containing 643.08 acres, more or less
Section 6: Lot 1 (41.08 acres), Lot 2 (40.81 acres), S½ NE¼,
SE¼
Containing 321.89 acres, more or less
Section 7: E½
Containing 320.00 acres, more or less
Section 8: All
Containing 640.00 acres, more or less
Section 9: All
Containing 640.00 acres, more or less
Section 10: N½ N½, SW¼ NE¼, S½ NW¼, W½ SW¼, NE¼
SW¼, NW¼ SE¼
Containing 440.00 acres, more or less
Section 11: N½ NW¼
Containing 80.00 acres, more or less
Section 16: W½ NW¼, NE¼ NW¼, NW¼ NE¼
Containing 160.00 acres, more or less
Section 17: W½, NE¼
Containing 480.00 acres, more or less
Section 18: E½
Containing 320.00 acres, more or less
Section 19: Lot 1 (41.32 acres), Lot 2 (41.24 acres),
Lot 3 (41.16 acres), NE¼ NW¼, NE¼
Containing 323.72 acres, more or less
Section 20: W½
Containing 320.00 acres, more or less
Section 29: W½ W½, SE¼ SW¼
Containing 200.00 acres, more or less
Section 33: SE¼ NW¼, SW¼ NE¼, NW¼ SE¼
Containing 120.00 acres, more or less
All future Williams Fork Formation and IIes Formation wells to be drilled upon the above-described lands should be located downhole anywhere within said lands but no closer than 100 feet from a lease line or the boundaries of said lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the above-described lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of said lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
In addition, the Applicant is requesting an order that all future permitted wells located in the Middleton Creek Federal Unit and the Buzzard Creek Federal Unit as described below, be located no closer than 100 feet from the exterior boundary of the federal units (or lease line if applicable), without exception granted by the Commission. In cases where the Middleton Creek Federal Unit lands or Buzzard Creek Federal Unit lands abut or corner lands where the Commission has not, at the time of the drilling permit application, granted the right to drill 10-acre density Williams Fork Formation or Iles Formation wells, the wells should be located downhole no closer than 200 feet from the boundary or boundaries of the federal units or drilling unit abutting or cornering such lands (or lease line if applicable), without exception granted by the Commission.
MIDDLETON CREEK FEDERAL UNIT LANDS
Township 8 South, Range 92 West, 6th P.M.
Section 30: That part of Tract 59 in Section 30 (80.00 acres) and that part of Tract 60 in Section 30 (39.18 acres)
Containing 119.18 acres, more or less
Section 31: That part of Tract 59 in Section 31 (80.00 acres), that part of Tract 60 in Section 31 (4.95 acres), and that part of Tract 62 in Section 31 (50.34 acres)
Containing 135.29 acres, more or less
Township 8 South, Range 93 West, 6th P.M.
Section 25: That part of Tract 60 in Section 25 (54.72 acres)
Containing 54.72 acres, more or less
Section 36: That part of Tract 58 in Section 36 (160.00 acres), that part of Tract 60 in Section 36 (61.15 acres), and that part of Tract 62 in Section 36 (109.66 acres)
Containing 330.81 acres, more or less
BUZZARD CREEK FEDERAL UNIT LANDS
Township 9 South, Range 93 West, 6th P.M.
Section 1: SW¼, SW¼ SE¼, SE¼ SE¼ nka Lot 8 (21.35 acres)
Containing 221.35 acres, more or less
Section 2: SE¼
Containing 160.00 acres, more or less
Section 10: SE¼ NE¼, SE¼ SW¼, NE¼ SE¼, S½ SE¼
Containing 200.00 acres, more or less
Section 11: NE¼, S½ NW¼, S½
Containing 560.00 acres, more or less
Section 12: All
Containing 640.00 acres, more or less
Section 13: N½, N½ S½
Containing 480.00 acres, more or less
Section 14: N½, SW¼, N½ SE¼, SW¼ SE¼
Containing 600.00 acres, more or less
Section 15: All
Containing 640.00 acres, more or less
Section 16: NE¼ NE¼, S½ NE¼, SE¼ NW¼, S½
Containing 480.00 acres, more or less
Section 17: SE¼
Containing 160.00 acres, more or less
Section 20: NE¼
Containing 160.00 acres, more or less
Section 21: N½
Containing 320.00 acres, more or less
Section 22: N½ N½
Containing 160.00 acres, more or less
10. On September 9, 2008, Delta, by its attorneys, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the application.
11. Testimony and exhibits submitted in support of the application showed that mineral interests underlying the application lands are a mixture of fee and federal and that Delta, along with EnCana Oil & Gas (USA), is the majority leasehold owner for those lands. Additional testimony showed that the application lands are adjacent to lands that have been approved for 10-acre well density.
12. Testimony and exhibits submitted in support of the application showed that the geologic model for the Mesaverde Group underlying the application lands has regionally extensive gas accumulation in discontinuous fluvial sandstones that are lenticular in profile with low porosity of less than 13% and low permeability of less than 0.1 millidarcy. Additional testimony showed that some of the highest gas-in-place per section found in the South Piceance Basin for the Mesaverde Group is located under the application lands. Further testimony indicated that 10-acre well density is necessary to develop the Williams Fork and Iles Formations underlying the application lands while preventing waste and that correlative rights will not be affected by increased well density.
13. Testimony and exhibits submitted in support of the application indicated that 10-acre well density for the Williams Fork and Iles Formations for the application lands is necessary to efficiently and economically drain the gas reserves, prevent waste, and protect correlative rights. Additional testimony showed that an additional estimated 65% of gas-in-place will be recovered by increasing well density from 20-acre to 10-acre for the Williams Fork and Iles Formations underlying the application lands. Further testimony indicated that changing the setbacks from the federal unit boundaries will result in conformance with the surrounding lands and efficient recovery of the gas reserves.
14. The above-referenced testimony and exhibits show that the proposed increased well density and setbacks will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
15. Delta Petroleum Corporation agreed to be bound by oral order of the Commission.
16. Based on the facts stated in the verified application, having received no protests, and based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the lease line, and to allow the same setbacks from certain federal unit boundaries, for certain lands in Townships 8 and 9 South, Ranges 92 and 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
Township 9 South, Range 92 West, 6th P.M.
Section 17: All
Containing 640.00 acres, more or less
Township 9 South, Range 93 West, 6th P.M.
Section 2: Lot 1 (40.22 acres), Lot 2 (40.27 acres), Lot 3
(40.33 acres), Lot 4 (40.38 acres), S½ N½, SW¼
Containing 481.20 acres, more or less
Section 3: All: Lot 1 (40.40 acres), Lot 2 (40.40 acres), Lot 3
(40.40 acres), Lot 4 (40.40 acres), S½ NE¼, S½ NW¼,
SW¼, SE¼
Containing 641.60 acres, more or less
Section 4: All: Lot 1 (40.39 acres), Lot 2 (40.36 acres), Lot 3
(40.34 acres), Lot 4 (40.31 acres), S½ N½, S½
Containing 641.40 acres, more or less
Section 5: All: Lot 1 (40.42 acres), Lot 2 (40.65 acres), Lot 3
(40.89 acres), Lot 4 (41.12 acres), S½ N½, S½
Containing 643.08 acres, more or less
Section 6: Lot 1 (41.08 acres), Lot 2 (40.81 acres), S½ NE¼,
SE¼
Containing 321.89 acres, more or less
Section 7: E½
Containing 320.00 acres, more or less
Section 8: All
Containing 640.00 acres, more or less
Section 9: All
Containing 640.00 acres, more or less
Section 10: N½ N½, SW¼ NE¼, S½ NW¼, W½ SW¼, NE¼
SW¼, NW¼ SE¼
Containing 440.00 acres, more or less
Section 11: N½ NW¼
Containing 80.00 acres, more or less
Section 16: W½ NW¼, NE¼ NW¼, NW¼ NE¼
Containing 160.00 acres, more or less
Section 17: W½, NE¼
Containing 480.00 acres, more or less
Section 18: E½
Containing 320.00 acres, more or less
Section 19: Lot 1 (41.32 acres), Lot 2 (41.24 acres),
Lot 3 (41.16 acres), NE¼ NW¼, NE¼
Containing 323.72 acres, more or less
Section 20: W½
Containing 320.00 acres, more or less
Section 29: W½ W½, SE¼ SW¼
Containing 200.00 acres, more or less
Section 33: SE¼ NW¼, SW¼ NE¼, NW¼ SE¼
Containing 120.00 acres, more or less
IT IS FURTHER ORDERED, that all future Williams Fork Formation and IIes Formation wells to be drilled upon the above-described lands shall be located downhole anywhere within said lands but no closer than 100 feet from a lease line or the boundaries of said lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the above-described lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of said lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
IT IS FURTHER ORDERED, that all future permitted wells located in the Middleton Creek Federal Unit and the Buzzard Creek Federal Unit as described below, shall be located no closer than 100 feet from the exterior boundary of the federal units (or lease line if applicable), without exception granted by the Commission. In cases where the Middleton Creek Federal Unit lands or Buzzard Creek Federal Unit lands abut or corner lands where the Commission has not, at the time of the drilling permit application, granted the right to drill 10-acre density Williams Fork Formation or Iles Formation wells, the wells shall be located downhole no closer than 200 feet from the boundary or boundaries of the federal units or drilling unit abutting or cornering such lands (or lease line if applicable), without exception granted by the Commission.
MIDDLETON CREEK FEDERAL UNIT LANDS
Township 8 South, Range 92 West, 6th P.M.
Section 30: That part of Tract 59 in Section 30 (80.00 acres) and that part of Tract 60 in Section 30 (39.18 acres)
Containing 119.18 acres, more or less
Section 31: That part of Tract 59 in Section 31 (80.00 acres), that part of Tract 60 in Section 31 (4.95 acres), and that part of Tract 62 in Section 31 (50.34 acres)
Containing 135.29 acres, more or less
Township 8 South, Range 93 West, 6th P.M.
Section 25: That part of Tract 60 in Section 25 (54.72 acres)
Containing 54.72 acres, more or less
Section 36: That part of Tract 58 in Section 36 (160.00 acres), that part of Tract 60 in Section 36 (61.15 acres), and that part of Tract 62 in Section 36 (109.66 acres)
Containing 330.81 acres, more or less
BUZZARD CREEK FEDERAL UNIT LANDS
Township 9 South, Range 93 West, 6th P.M.
Section 1: SW¼, SW¼ SE¼, SE¼ SE¼ nka Lot 8 (21.35 acres)
Containing 221.35 acres, more or less
Section 2: SE¼
Containing 160.00 acres, more or less
Section 10: SE¼ NE¼, SE¼ SW¼, NE¼ SE¼, S½ SE¼
Containing 200.00 acres, more or less
Section 11: NE¼, S½ NW¼, S½
Containing 560.00 acres, more or less
Section 12: All
Containing 640.00 acres, more or less
Section 13: N½, N½ S½
Containing 480.00 acres, more or less
Section 14: N½, SW¼, N½ SE¼, SW¼ SE¼
Containing 600.00 acres, more or less
Section 15: All
Containing 640.00 acres, more or less
Section 16: NE¼ NE¼, S½ NE¼, SE¼ NW¼, S½
Containing 480.00 acres, more or less
Section 17: SE¼
Containing 160.00 acres, more or less
Section 20: NE¼
Containing 160.00 acres, more or less
Section 21: N½
Containing 320.00 acres, more or less
Section 22: N½ N½
Containing 160.00 acres, more or less
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.
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 September, 2008, as of September 22, 2008.
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
September 25, 2008