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 PICEANCE BASIN BASINWIDE FIELD RULES TO GOVERN OPERATIONS FOR THE WILLIAMS FORK AND ILES FORMATIONS, IN GARFIELD, GUNNISON, MESA, MOFFAT AND RIO BLANCO COUNTIES, COLORADO |
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CAUSE NO. 1
DOCKET NO. 180900710
TYPE: EXCEPTION LOCATION
ORDER NO. 1-229 |
BASIN-WIDE DENSITY AND SETBACK ORDER
FOR PORTIONS OF THE PICEANCE BASIN
The Commission heard this matter on October 29, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon Staff’s request for a Basin-Wide Order to establish setbacks for portions of the Piceance Basin, downhole well density and surface use limits. Staff requested downhole well density at the equivalent of one well per ten acres for the Williams Fork Formation and Iles Formation of the Mesaverde Group with 100-foot setback along the northern and southern unit boundary or lease line for lands not within a unit and 600-foot setback along the eastern and western unit boundary or lease line for lands not within a unit. The below described lands (“Application Lands”) included in this Basin-Wide Order are located in Garfield, Gunnison, Mesa, Moffat, and Rio Blanco Counties and specifically include all Sections within:
Townships 2 North to 1 South in Range 99 West to 96 West;
Townships 2 South to 4 South in Range 99 West to 95 West; and
Townships 5 South to 10 South in Range 99 West to 91 West.
BACKGROUND
1. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. A portion of the Application Lands are subject to this Rule 318.a. for the Williams Fork and Iles Formations.
2. Rule 318.d.(3) requires wells drilled in excess of 2,500 feet in depth shall be located not less than 600 feet from the exterior or interior (if there be one) boundary of a unit. A portion of the Application Lands are subject to this Rule 318.d.(3) for the Williams Fork and Iles Formations.
3. In addition, some of the Application Lands are included within the following Field Orders and Commission Cause Numbers:
4. For many of the Causes identified above, the majority of the Commission Orders for the Williams Fork and Iles formations were entered more than six years ago to establish 10-acre equivalent density, to reduce setbacks to 100 feet, 200 feet, or 400 feet from unit boundaries or from lease lines for lands not within a unit, and to restrict the number of surface locations.
5. Since that time, technological improvements and better understanding of the reservoir based on the production generated and reported caused Staff to evaluate whether the Rule 318.a. and Rule 318.d.(3) setback of 600 feet, and Commission order setbacks of 100 feet, 200 feet, and 400 feet cause less efficient and economic development of hydrocarbons and less protection of correlative rights in the Affected Lands.
6. Through Staff’s review of testimony submitted by operators in support of applications for drilling and spacing units and engagement with stakeholders while investigating the issue, Staff determined that different setbacks would allow more efficient and economic development of hydrocarbons in the Affected Lands and would be protective of correlative rights.
7. Staff determined that creating a basin-wide order would also allow the Commission to authorize downhole density and limited surface locations, which would create a more efficient spacing process as well as more uniform, orderly surface development.
FINDINGS
1. Staff has coordinated with affected industry stakeholders, including Ursa Operating Company LLC (Operator No. 10447), Laramie Energy, LLC (Operator No. 10433), Caerus Piceance LLC (Operator No. 10456), TEP Rocky Mountain LLC (Operator No. 96850), and Vanguard Operating LLC (Operator No. 10531).
2. Staff has also coordinated with local governments, including Garfield, Gunnison, Mesa, Moffat, and Rio Blanco Counties, and other stakeholders, including Colorado Alliance of Mineral and Royalty Owners (CAMRO), West Slope Colorado Oil and Gas Association (WSCOGA), Colorado Oil and Gas Association (COGA), and Colorado Petroleum Council (CPC).
3. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
4. The Commission has jurisdiction over the subject matter embraced in this matter, and of the parties interested therein, and jurisdiction to promulgate the hereinafter-prescribed order pursuant to the Oil and Gas Conservation Act.
6. The information submitted to the Commission show that establishing a Basin-Wide Order will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and generally will protect correlative rights.
7. Therefore, the Commission should enter a basin-wide order modifying the setback requirements of Rule 318.a, and Rule 318.d.(3) and previous Commission orders and establishing downhole well density and surface location requirements for all sections within the Application Lands contained in Garfield, Gunnison, Mesa, Moffat, and Rio Blanco Counties described as follows:
Townships 2 North to 1 South in Range 99 West to 96 West,
Townships 2 South to 4 South in Range 99 West to 95 West,
Townships 5 South to 10 South in Range 99 West to 91 West
ORDER
1. The lands subject to this Basin-Wide Order include all sections within the below described lands (“Application Lands”) contained in Garfield, Gunnison, Mesa, Moffat, and Rio Blanco Counties:
Townships 2 North to 1 South in Range 99 West to 96 West,
Townships 2 South to 4 South in Range 99 West to 95 West,
Townships 5 South to 10 South in Range 99 West to 91 West
2. This Basin-Wide Order for the Williams Fork and Iles Formations supersedes the setbacks, downhole well density, and surface location requirements in previous Field Orders in the lands contained in this Basin-Wide Order for all wells permitted after the effective date of this Basin-Wide Order, unless an exception is granted. The Fields and previous Commission Causes related to this Basin-Wide Order are:
Field Name Commission Cause Number
Brush Creek Cause 369 and 429
Buzzard and Buzzard Creek Cause 371
Grand Slam Cause 510
Grand Valley Cause 479 and 510
Hiawatha and Hiawatha West Cause 113
Kokopelli Cause 313
Mamm Creek Cause 191
Parachute Cause 440
Piceance Horizontal Iles Cause 166
Piceance Horizontal WM Fork Cause 139 and 479
Plateau Cause 166
Rulison Cause 139
Sheep Creek Cause 429 and 399
Shire Gulch Cause 347
Skinner Ridge Cause 510
Trail Ridge Cause 510
Vega Cause 399
West Muddy Creek Cause 399
White River Cause 256
3. All wells permitted after the effective date of this Basin-Wide Order for the production of gas and associated hydrocarbons from the Williams Fork Formation and the Iles Formation of the Mesaverde Group in the Application Lands are subject to the following downhole well density, setback, and surface location requirements. This includes wells for which drilling permits are in process on the effective date of this Basin-Wide Order.
4. To prevent the drilling of unnecessary wells and protect correlative rights, all wells permitted after the effective date of this Basin-Wide Order to develop the Williams Fork Formation and Iles Formation shall be drilled with a downhole density equivalent to one well per ten acres.
5. The completed interval of all Williams Fork Formation and Iles Formation wells permitted after the effective date of this Order upon the Application Lands shall be located downhole with the following setbacks:
a. No well shall be completed closer than 100 feet from the north and south boundaries of the applicable unit, or if there is no applicable unit, the lease lines or boundaries of the Application Lands.
b. No well shall be completed closer than 600 feet from the east or west unit boundaries of the applicable unit, or if there is no applicable unit, the lease lines or boundaries of the Application Lands.
6. Upon receiving sufficient engineering and geologic testimony from an Owner or operator, the Commission may approve a drilling and spacing unit in the Application Lands with different downhole density or setback requirements than those established in Paragraphs 5 and 6 after application and a hearing.
7. All future wells to develop the Williams Fork Formation and the Iles Formation shall be drilled from the surface from no more than one multi-well pad located on a given quarter-quarter section (or lot, tract, or parcel approximately equivalent thereto), unless the Director grants an exception and the surface owner consents in writing.
8. Any well drilled to produce the Iles Formation shall be considered to also develop the Williams Fork Formation.
9. This Basin-Wide Order does not alter the size or configuration of drilling and spacing units for the Williams Fork Formation and Iles Formation created by the Commission prior to the effective date of this Order.
10. Nothing in this Order limits an Owner’s right to file an application for creation of a drilling and spacing unit, seek an exception location pursuant to Rule 318.c., or exercise other rights under the Oil and Gas Conservation Act or other law.
IT IS FURTHER ORDERED:
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 5th day of November, 2018, effective as of October 29, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_______________________________________
Julie Spence Prine, Secretary