BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE MCCLAVE FIELD, KIOWA COUNTY, COLORADO

)

)

)

)

CAUSE NO. 105

 

ORDER NO. 105-45

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on August 18, 2009, at the La Quinta Inn & Suites, 2833 Toupal Drive, Trinidad, Colorado, for an order to vacate the 640-acre drilling and spacing unit, established under Order No. 105-1, for Section 6, Township 20 South, Range 48 West, 6th P.M., and establish a 160-acre drilling and spacing unit for the SE¼ of said Section 6, for the production of gas and associated hydrocarbons from the McClave Sand Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.      Grynberg Petroleum Company (“Grynberg”), 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.

 

4.      On May 15, 1957, the Commission issued Order No. 105-1, which among other things, established 640-acre drilling and spacing units, for certain lands, including Section 6, Township 20 South, Range 48 West, 6th P.M., for the production of gas from the McClave Sand, and allow wells to be no closer than 600 feet from any exterior boundary line.

 

 5.     On April 26, 1960, the Commission issued Order No. 105-2, which among other things, amended Order No. 105-1, to allow the well to be located within a radius of 990 feet from the center of the 640-acre drilling and spacing unit for certain lands, including Section 6, Township 20 South, Range 48 West, 6th P.M.

 

6.      On or about February 13, 1973, the State Pyles #1 Well (API No. 05-061-06155), located in the NW¼ SE¼ of Section 6, Township 20 South, Range 48 West, 6th P.M., was   completed in the McClave Sand Formation and placed on production in or around June 1974. On or about May 26, 1999, a Notice of Alleged Violation (“NOAV”) issued stating that the well was shut-in for a two-year period without demonstrating mechanical integrity.  On or about August 1, 2007, a Form 10, Certificate of Clearance/Change of Operator, was filed wherein Jack J. Grynberg d.b.a. Grynberg, was listed as operator of the State Pyles #1 Well.

 

7.      On June 29, 2009, Grynberg, by its attorney, filed with the Commission a verified application to:  (1) vacate the 640-acre drilling and spacing unit, established under Order No. 105-1, for Section 6, Township 20 South, Range 48 West, 6th P.M., for the production of gas and associated hydrocarbons from the McClave Sand Formation, and (2) establish a 160-acre drilling and spacing unit for the SE¼ of said Section 6, for the production of gas and associated hydrocarbons from the McClave Sand Formation.

 

8.      On August 4, 2009, Grynberg, by its attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits as is provided for by Rule 511.  Sworn written testimony and exhibits were submitted in support of the application.

 

9.      Testimony and exhibits submitted in support of the application showed that Grynberg intends to reenter [sic] and recomplete the State Pyles #1 Well (the “Well”) to optimize recovery of the remaining recoverable gas reserves from the McClave Sand Formation, which are estimated to be 174 MMSCF.  Additional testimony showed that the drainage area of the Well is approximately 148 acres, and that the reduction of the drilling and spacing unit, in a manner consistent with the drainage area of the Well, is necessary to obtain an economic return on the costs associated with the reentry and recompletion of said Well.

 

10.    The above-referenced testimony and exhibits show that the proposed spacing will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

 

11.    Grynberg Petroleum Company agreed to be bound by oral order of the Commission.

 

12.      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., the Commission should enter an order to vacate the 640-acre drilling and spacing unit, established under Order No. 105-1, for Section 6, Township 20 South, Range 48 West, 6th P.M., and establish a 160-acre drilling and spacing unit for the SE¼ of said Section 6, for the production of gas and associated hydrocarbons from the McClave Sand Formation.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that:  (1) the 640-acre drilling and spacing unit, established under Order No. 105-1, for Section 6, Township 20 South, Range 48 West, 6th P.M., for the production of gas and associated hydrocarbons from the McClave Sand Formation, is hereby vacated, and (2) a 160-acre drilling and spacing unit is hereby established for the SE¼ of said Section 6, for the production of gas and associated hydrocarbons from the McClave Sand Formation.

 

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 25th day of August, 2009, as of August 18, 2009.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By  Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado  80203

August 25, 2009