BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF AN EXCEPTION TO THE WELL ) CAUSE NO. 1

LOCATION REQUIREMENTS OF THE RULES AND )

REGULATIONS OF THE OIL AND GAS CONSERVATION ) ORDER NO. 1-78

COMMISSION FOR OPERATIONS IN THE HAMMER )

HEAD FIELD, WASHINGTON COUNTY, COLORADO )

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 8:30 a.m. on July 12, 1999 in Suite 801, 1120 Lincoln Street, Denver, Colorado, on the application of St. Croix Operating Inc. for an order seeking an exception to the permitted location for the Volberding Farms #7-1 Well to be located in the SW SW of Section 7, Township 2 South, Range 51 West, 6th P.M.

 

FINDINGS

 

The Commission finds as follows:

 

1. St. Croix Operating Inc. (St. Croix) 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 Colorado Oil and Gas Conservation Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth shall be located not less than six hundred (600) feet from any lease line, and shall be located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well drilling to the same common source of supply, unless authorized by order of the Commission or unless waivers are obtained from those parties who will be affected by the exception location. The SW SW of Section 7, Township 2 South, Range 51 West, 6th P.M., lies within the area covered by this rule.

 

5. On June 10, 1999 St. Croix, by its attorney, filed with the Commission a verified application for an order for an exception to Rule 318.a. of the Rules and Regulations to allow the Voldberding Farms No. 7-1 Well to be located in the SW SW of Section 7, Township 2 South, Range 51 West, 6th P.M., 330 feet from an adjacent lease and 70 feet from a producing J Sand Formation well located in the NW NW of Section 18, Township 2 South, Range 51 West, 6th P.M.

 

6. Prior to filing the application for hearing, St. Croix attempted to obtain waivers from the twenty-one (21) affected parties. Sixteen (16) mineral owners executed waivers, four (4) mineral owners refused to execute waivers and one (1) mineral owner did not indicate a position. On June 10, 1999, St. Croix requested a 502.b. variance from the Director to allow the Application for Permit-to-Drill the Well to be approved. By letter dated June 14, 1999 St. Croix was informed that due to the four objections to the exception location the Director would not approve the variance request.

 

7. On June 30, 1999 a protest to the application was filed by five (5) mineral owners from the offset lease alleging that the granting of an exception location would unjustly deprive the protestants of their interest in the oil and gas under the W of Section 18, Township 2 South, Range 51 West, 6th P.M.

 

8. On July 6, 1999 the COGCC staff convened a prehearing conference to clarify the nature and scope of the hearing to be conducted on the application. A summary of the conference was issued July 8, 1999.

 

9. On July 8, 1999 the COGCC staff received a conditional withdrawal of the protest. As a condition of withdrawing the protest, both parties agreed that, in the event the Volberding Farms No. 7-1 Well is drilled and productive, the applicant agrees to pool affected mineral owners in the Volberding Farms No. 7-1 Well and the Heimerman No. 2-18 Well based on geologic and engineering information obtained from the two wells.

 

10. The applicant agreed to provide the former protestants with copies of the geologic and engineering reports and results, and agrees these parties shall have the opportunity to protest the proposed division under the pooling agreement.

 

11. On July 9, 1999 an administrative hearing was held on the application.

 

12. Testimony and exhibits presented at the administrative hearing showed that the proposed well is structurally similar to the productive Heimerman No. 2-18 Well located in Section 18 to the south of the proposed Voldbering Farms No. 7-1 Well.

 

13. Testimony and exhibits presented at the administrative hearing indicated the reservoir quality and the structure of the J Sand Formation change drastically over short distances.

 

14. Testimony and exhibits presented at the administrative hearing indicated that the current production from the Heimerman No. 2-18 Well is 50 barrels of oil per day and 550 barrels of water per day and if the location exception is not approved a new well could not be drilled at a structurally favorable location.

 

15. That at the time of the administrative hearing, the Applicant agreed to be bound by an oral order of the Commission.

 

16. Based on the facts stated in the verified application, having received protests to the application which were subsequently withdrawn and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order allowing the Voldberding Farms No. 7-1 Well to be located at an exception location in the SW SW of Section 7, Township 2 South, Range 51 West, 6th P.M., for the production of gas and associated hydrocarbons from the J Sand Formation.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED that an exception to the permitted location as provided for in Rule 318.a. of the Colorado Oil and Gas Conservation Commission Rules and Regulations is hereby granted for the Volberding Farms #7-1 Well to be drilled 330 feet from the south line and 660 feet from the west line in the SW SW of Section 7, Township 2 South, Range 51 West, 6th P.M., for production from the J Sand Formation.

 

IT IS FURTHER ORDERED that in the event the Volberding Farms No. 7-1 Well is drilled and productive, the applicant shall pool affected mineral owners in the Volberding Farms No. 7-1 Well and the Heimerman No. 2-18 Well based on geologic and engineering information obtained from the two wells.

 

IT IS FURTHER ORDERED that the applicant shall provide the former protestants with copies of the geologic and engineering reports and results and these parties shall have the opportunity to protest the proposed division under the pooling agreement.

 

IT IS FURTHER ORDERED that if a commercial well shall be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantages which the person securing the exception may have over other producers by reason of drilling the well as an exception, including suitable provisions to prevent the production from the well drilled as an exception of more than its just and equitable share of the oil and gas in the pool.

 

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 day of July , 1999 as of July 12, 1999.

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By

Patricia C. Beaver, Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado

July 30, 1999