BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 112
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE IGNACIO-BLANCO FIELD, ) ORDER NO. 112-156
LA PLATA COUNTY, COLORADO ) AMENDED
This cause came on for hearing before the Commission on April 24, 2000 in the Boettcher Auditorium, Colorado History Museum, 1300 Broadway, Denver, Colorado, on April 25, 2000 in Suite 801, 1120 Lincoln Street, Denver, Colorado, on June 5 and 6, 2000 in the Exhibit Hall, La Plata County Fairgrounds, 2500 Main Avenue, Durango, Colorado and on July 10 and 11, 2000 in Suite 801, 1120 Lincoln Street, Denver, Colorado on the verified application of Amoco Production Company, J.M. Huber Corporation, Hallwood Petroleum, Inc., Four Star Oil & Gas Company, EnerVest San Juan Operating, LLC for an order from the Commission to allow an optional additional well to be drilled for production of gas from the Fruitland Coal seams for certain 320-acre drilling and spacing units in the Ignacio-Blanco Field.
1. Amoco Production Company, J.M. Huber Corporation, Hallwood Petroleum, Inc., Four Star Oil & Gas Company, EnerVest San Juan Operating, LLC, as applicants herein, are interested parties 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 and the terms of the Memorandum of Understanding (“MOU”) between the Commission and the Bureau of Land Management (“BLM”).
4. On June 15, 1988, the Commission issued Order No. 112-60 which established 320-acre drilling and spacing units for the production of gas from the Fruitland coal seams, underlying certain lands in the Ignacio-Blanco Field, with the units to consist of a governmental half section and the permitted well to be located in the NW¼ and SE¼ of each section, no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line. Order Nos. 112-61 and 112-85 were subsequently adopted amending Order No. 112-60 to establish additional field rules for the Fruitland coal seams.
5. On March 6, 2000 Amoco Production Company, J.M. Huber Corporation, Hallwood Petroleum, Inc., Four Star Oil & Gas Company, EnerVest San Juan Operating, LLC (“Applicants”), by and through their attorneys, filed with the Commission a single application requesting an order from the Commission to allow an optional additional well to be drilled for production of gas from the Fruitland coal seams for certain 320-acre drilling and spacing units in the Ignacio-Blanco Field.
6. On March 7, 2000 the Applicants by and through their attorneys, filed with the Commission a revised application to separate the lands north of the Ute Line from those south of the Ute Line, requesting an order from the Commission to allow an optional additional well to be drilled for production of gas from the Fruitland coal seams for the 320-acre drilling and spacing units described below, with the permitted well to be located in any undrilled quarter section no closer than 990 feet to any outer boundary of the unit nor closer than 130 feet to any interior quarter section line. Additional wells located in the E½ of the irregular sections of Township 34½ North should be located no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line.
Township 34 North, Range 6 West, N.M.P.M. (N.U.L.)
Sections 3-10: All
Sections 15-17: All
Township 34 North, Range 7 West, N.M.P.M. (N.U.L.)
Sections 1 thru 8: All
Section 9: E½
Section 10: All
Section 11: W½
Section 12: W½
Section 13: All
Section 14: All
Sections 16 thru 18: All
Township 34 North, Range 8 West, N.M.P.M. (N.U.L.)
Section 1: All
Section 2: All
Section 5: W½
Section 7: All
Section 8: All
Section 10: E½
Sections 11 and 12: All
Sections 14 thru 16: All
Section 18: All
Township 34 North, Range 9 West, N.M.P.M. (N.U.L.)
Section 1: All
Section 2: All
Section 3: E½
Section 9 thru 12: All
Township 34½ North, Range 9 West, N.M.P.M. (N.U.L.)
Section 35: All
Section 36: All
Township 35 North, Range 6 West, N.M.P.M.
Section 19: W½
Section 20: W½
Section 21: S½
Sections 27 thru 34: All
Township 35 North, Range 7 West, N.M.P.M.
Section 16: W½
Section 17: S½
Sections 18 thru 21: All
Section 22: W½
Section 23: E½
Section 24: S½
Sections 25 thru 33: All
Section 34: E½
Section 35: All
Section 36: All
Township 35 North, Range 8 West, N.M.P.M.
Sections 13 and 14: All
Section 15: S½
Sections 20 thru 23: All
Section 25: S½
Section 27: W½
Sections 28 thru 30: All
Section 34: S½
Section 35: N½
Section 36: S½
Township 35 North, Range 9 West, N.M.P.M.
Section 25: S½
7. On April 5, 2000 a Local Public Forum on the application was held in Durango to consider potential issues related to the environment, public health, safety and welfare. At the April 24, 2000 hearing all Commissioners verified that they had viewed the videotapes of the Local Public Forum.
8. Pursuant to Rule 527., Colorado Oil and Gas Conservation Commission (“COGCC”) staff convened a prehearing conference on April 12, 2000. Because La Plata County (“County”) intervened in the application, under Rule 508.i.(4) a Public Issues Hearing must be held. After hearing arguments and discussion, the COGCC Hearing Officer made a preliminary ruling that the technical hearing would be bifurcated from consideration of the environmental and public health, safety and welfare issues raised by the County and the protestants to the Public Issues Hearing.
9. On April 24, 2000 the BLM submitted a letter to the Commission in support of the application for the federal lands in accordance with the conditions of the MOU between the BLM and the Commission.
TIMOTHY BLAKE PROTEST/INTERVENTION
10. On April 10, 2000 Timothy Blake filed with the Commission a protest to the application. On April 23, 2000 Timothy Blake filed with the Commission via facsimile a request to continue the hearing for a minimum of two (2) weeks and to hold the technical hearing in Durango. Mr. Blake did not appear at the April hearing. His motion was denied.
11. On April 10, 2000 La Plata County filed with the Commission a Statement in Protest and Intervention to the application, to raise issues relating to impacts on the environment and on public health, safety and welfare arising out of the application. The County intervenes by right pursuant to Rule 509.a.
12. On April 11, 2000 the County filed with the Commission a Motion for Expedited Discovery and a First Set of Interrogatories and Request for Production of Documents. The motion was mooted by the Applicants’ agreement, stated at the Prehearing Conference, to provide the requested materials to the County.
13. On April 17, 2000 the County filed with the Commission a Motion to Hold Public Issues Hearing in Durango, Colorado. At the hearing, the Commission granted that motion.
14. On April 10, 2000 the San Juan Citizens Alliance (“Alliance”) filed with the Commission a protest to the application and in the alternative sought to intervene on various procedural and substantive grounds.
15. On April 12, 2000 the Alliance filed with the Commission a Motion to Cancel and Reschedule the Preconference Hearing.
16. On April 17, 2000 the Alliance filed with the Commission a Motion to Strike and Dismiss. At the hearing on April 24, 2000 the Commission denied the Motion to Strike, finding that the application contained sufficient information, and denied the Motion to Dismiss finding that the Applicants have standing to bring the application before the Commission.
17. At the hearing on April 24, 2000 the Alliance requested the Commission grant a continuance to the June hearing on the grounds that inadequate notice was given of the Prehearing Conference. The Commission denied the Motion to Continue.
18. At the April hearing the Alliance raised their concern on bifurcation of the environmental and public health, safety and welfare issues to the Public Issues Hearing. The Commission confirmed the preliminary ruling by the COGCC Hearing Officer that the technical hearing would be bifurcated from consideration of the environmental and public health, safety and welfare issues.
19. At the April hearing the Applicants made a Motion to Dismiss the Protests of the Alliance and Timothy Blake and to determine the status of all the parties. The Commission granted the Alliance intervenor status in both the technical hearing and the Public Issues Hearing. In addition, the Commission granted Timothy Blake intervenor status for the Public Issues Hearing.
20. At the April hearing the Director testified that based on a review of adjacent pilot projects and on the La Plata County Development Plan prepared by COGCC staff, an additional well is necessary to be drilled on the 320-acre drilling and spacing units subject to the application in order to efficiently and economically recover gas from the Fruitland coal seams. The Director also testified that independent staff analysis of the Applicants’ economic analysis confirmed the Applicants’ rate of return calculations.
21. The Director recommended that any order granting the application provide for the Director, at the Director’s discretion, to attach drilling permit conditions to require the acquisition and reporting of initial measured bottom hole pressures. Such pressures would be obtained utilizing a bottom hole gauge after a minimum forty-eight (48) hour shut-in period following completion and prior to sales.
22. The Commission heard expert testimony from Gary Weitz, Landman for Amoco Production Company regarding ownership of the land in the Application Area who testified that there are one hundred sixty (160) possible well locations within the Application Area and that the program is expected to take between five (5) and ten (10) years to complete.
23. The Commission heard expert testimony from W.C. Rusty Riese, Consulting Geologist for Vastar Resources, Inc. regarding the geologic development in the area, who opined that the Fruitland coal seams are discontinuous across the Application Area and that granting the application would minimize waste and maximize production from the Fruitland coal seams.
24. The Commission heard expert testimony from J.W. (Bill) Hawkins, Regulatory Affairs Engineer for Amoco Production Company regarding the production and drainage of the Fruitland coal seams in the Application Area. Mr. Hawkins opined that additional wells were appropriate to prevent waste and maximize production. Mr. Hawkins further testified that the drilling of additional wells would be economic for the Applicants.
25. The Commission heard expert testimony from Vu Dinh, Principal Reservoir Engineer for Vastar Resources, Inc. on infill wells from the Fruitland coal seams reservoir regarding production, drainage and reservoir pressure. Mr. Dinh opined that additional wells would recover additional reserves, protect correlative rights and prevent waste within the Application Area.
26. Based on the technical testimony presented by the Applicants the Commission found that one well will not efficiently and economically drain the drilling and spacing units previously designated by the Commission, and that based on geological and engineering data presented at the hearing, additional wells are necessary to allow the gas to be produced at its maximum efficient rate, to prevent waste and protect correlative rights, and to efficiently and economically recover gas from the Fruitland coal seams within the Application Area.
27. Letters, e-mails or telephone contacts in opposition to the application were received from sixty-three (63) La Plata County residents.
28. Letters in support of the application were received from five (5) La Plata County residents.
29. Pursuant to Rule 510., La Plata County officials Mike Matheson, Joe Crain, Josh Joswick made statements regarding the need to consider potential impacts to the environment, public health, safety and welfare issues at a Public Issues Hearing in Durango that might occur if the application is granted.
30. Pursuant to Rule 510., Billy Ray Clary, a mineral owner in La Plata County, made statements regarding issues not within the scope of the application and was directed to handle those concerns at another hearing if warranted.
31. Pursuant to Rule 510., Ken Wonstolen of the Colorado Oil & Gas Association made statements regarding the increasing demand for natural gas and the issue of “balance” related to developing resources while protecting the environment, public health, safety and welfare.
FINDINGS
32. Based on the facts stated in the application and the testimony and exhibits presented by the Applicants at the April Hearing, the Commission finds that the request to allow an optional additional well on the 320-acre drilling and spacing units for production from the Fruitland coal seams for the lands described in Finding #6 in the Ignacio-Blanco Field should be approved. The permitted well should be located in any undrilled quarter section no closer than 990 feet to any outer boundary of the unit nor closer than 130 feet to any interior quarter section line. Additional wells located in the E½ of the irregular sections of Township 34½ North should be located no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line.
33. On April 25, 2000 upon conclusion of the hearing, a BLM representative stated concurrence with the Commission’s decision and clarified the BLM’s position that federal and tribal lands were not subject to the Public Issues Hearing.
PUBLIC ISSUES HEARING
34. The Commission convened a Public Issues Hearing in Durango on June 5 and 6, 2000.
35. A motion was made by the Alliance to admit the videotapes from the April 5, 2000 Local Public Forum into the record. The Commission Chair granted the motion.
36. A motion was made by the Alliance to allow more time for the submission of written Rule 510. statements. The Commission Chair denied the motion.
37. A motion was made by the County to retain the court reporter and allow citizens to make verbal 510. statements after the Commission had left Durango. The Commission Chair denied the motion.
38. A motion was made by the Applicants to deny admission of the Alliance’s witnesses based on failure to receive witnesses’ resumes by the due date. The Commission Chair denied the motion.
39. The Commission continued the Public Issues Hearing in Denver on July 10 and 11, 2000.
40. A motion was made by the County to reallocate the allotted presentation times of the Intervenors. The Commission Chair granted the motion.
41. A motion was made by the Alliance to strike the Rule 510. written statement submitted by Scott Zimmerman. The Commission denied the motion.
STAFF ANALYSIS
42. At the June hearing the Director requested the admission of three documents into the record and testified that based on the information contained within along with the Applicants’ proposed environment, public health, safety and welfare plan the environment, public health, safety and welfare were adequately protected from increased density wells. He further testified that site-specific conditions are the most appropriate to attach to each Application for Permit-to-Drill. In addition, the Director reiterated the condition he recommended to the Commission at the April hearing to require periodic post-production pressure build-up data to be provided by operators.
43. At the July hearing the Director presented and discussed a memorandum to the Commission containing staff’s proposed version of the Applicants’ environment, public health, safety and welfare plan along with staff’s proposed Rule 508.j.(3)B. Conditions. In addition, a memorandum from Debbie Baldwin to the Director was attached regarding clinker and abandoned coal mines associated with the Fruitland coal seams.
APPLICANTS EVIDENCE
44. The Commission heard expert testimony from David Brown, Environmental Specialist for Amoco Production Company regarding the Applicants’ proposed plan to protect the environment, public health, safety and welfare who testified that, along with the Commission’s existing rules, the proposed plan would ensure protection of the environment, public health, safety and welfare from increased density wells.
45. The Commission heard expert testimony from Alexander McLean, Vice President of Engineering and Acquisitions for SG Interests regarding bradenhead testing, types of pumping units, fracing of wells, cavitation and other operational issues. Mr. McLean opined that the proposed plan would adequately protect the environment, public health, safety and welfare.
46. On June 20, 2000 written supplemental testimony was submitted by David Brown regarding the Applicants’ proposed environment, public health, safety and welfare plan.
47. On June 20, 2000 written supplemental testimony was submitted by Alexander McLean regarding toxicity, rights-of-way and cement integrity behind casing.
48. On June 26, 2000 written rebuttal testimony was submitted by W.C. Rusty Riese in response to Warren Holland’s testimony regarding drainage by gas wells of water in the outcrop area, gas seepage, coal fires and contamination of water wells.
49. On June 26, 2000 written rebuttal testimony was submitted by Tamara Joslin outlining the differences between the Applicants’ proposed plan and the County’s proposed plan.
50. On June 26, 2000 written rebuttal testimony was submitted by Thomas Murphy regarding La Plata County coalbed methane outcrop evaluation.
51. On June 26, 2000 written rebuttal testimony was submitted by Daryl Erickson in response to Warren Holland’s testimony regarding the Hickerson Hot Spring.
52. On June 26, 2000 written rebuttal testimony was submitted by Constance Heath regarding certain provisions in the County’s proposed environment, public health, safety and welfare plan.
TIMOTHY BLAKE EVIDENCE
53. The Commission heard expert testimony from Robert Suenram, Realtor regarding the effects of wells on property values, who opined that the presence of wells along with their visual and noise impacts adversely affects real estate sales and purchases.
54. The Commission heard expert testimony from Robert McGrath, M.D. regarding pediatric safety who opined that impacts from wells on children may result in injury or death. The Applicants objected to this witness.
55. The Commission heard fact testimony from Lori Kelly who described the stress she experiences from gas well operations.
56. The Commission heard expert testimony from Deanna Surprenant, LCSW regarding the effects of stress on people where they have no control over a situation. The Applicants objected to this witness.
57. The Commission heard expert testimony from Richard Grossman, M.D. regarding the impact of gas wells on people and the environment. Dr. Grossman expressed concern about the availability of gas for future generations.
58. The Commission heard fact testimony from William Morris who testified that his water well goes bad for several days each time gas wells are fractured.
59. The Commission heard fact testimony from Mac Burkett who described the stress gas operations have had on her and treatment she has undergone for depression and anxiety.
60. The Commission heard fact testimony from Mark Brown who described the stress he has endured from gas operations near his home over the past ten (10) months.
SAN JUAN CITIZENS ALLIANCE EVIDENCE
61. The Commission heard expert testimony from Dale Lehman, Economics Professor regarding the lack of data provided to the Commission to determine cost-effectiveness and economic need for additional wells. Mr. Lehman testified about guidelines for economic analysis for infill development.
62. The Commission heard expert testimony from Wilma Subra, Biologist regarding potential impacts from increased well density on the environment and disposition of oilfield waste.
63. The Commission heard fact testimony from Jane Dryer regarding the presence of combustible gas in her home and possible health effects on her child.
64. The Commission heard expert testimony from Jim Fitzgerald, Sociology Professor regarding the importance of stories told by the public who opined that the application was not sufficient to address public welfare.
LA PLATA COUNTY EVIDENCE
65. The Commission heard expert testimony from David Cox regarding the data used and results obtained in the 3M Coalbed Methane Reservoir Model he prepared. He opined that the model showed no impact from increased well density.
66. The Commission heard expert testimony from Warren Holland, Engineer and Oil and Gas Technical Advisor to the County regarding the significant adverse environmental impacts he believes may result from increased well density. He further testified as to the plan proposed by the County and opined that it would adequately address the environment, public health, safety and welfare issues.
67. The Commission heard expert testimony from Adam Keller, La Plata County Planner and Local Governmental Designee regarding the County’s proposal to require operators to provide annual drilling plans to the County that could be distributed to affected surface owners.
68. On June 20, 2000 written supplemental testimony was submitted by Adam Keller clarifying the County’s proposed environment, public health, safety and welfare plan.
69. On June 20, 2000 written direct testimony was submitted by Joe Crain supporting the County’s proposed environment, public health, safety and welfare plan.
70. On June 20, 2000 written direct testimony was submitted by Josh Joswick supporting the County’s proposed environment, public health, safety and welfare plan.
PUBLIC COMMENT/PARTICIPATION
71. Pursuant to Rule 510., thirty-one (31) citizens of La Plata County made statements regarding potential impacts to the environment, public health, safety and welfare at the June hearing.
72. Pursuant to Rule 510., written statements were filed by or on June 10, 2000 by thirty-four (34) citizens regarding potential impacts to the environment, public health, safety and welfare. All of these statements except those without signatures were admitted into the record.
FINDINGS
73. Based on the testimony and exhibits presented at the June and July Public Issues Hearing and pursuant to Rule 508.j.(3), the Commission finds it necessary to apply conditions to the order to protect the environment from significant adverse impacts and to protect the public health, safety, and welfare, except as to those lands included in the BLM’s Notice of Decision and Order dated May 3, 2000.
74. At its hearing on August 13, 2001, the Director reported to the Commission that members of the GORT, including the local governmental designee, expressed an interest in reducing the number of meetings each year.
75. At its hearing on October 29, 2001, the Director confirmed for the Commission that all members of the GORT were in favor of reducing the frequency of meetings from four (4) times a year to two (2) times a year. In addition, the Director described changes to the Rule 508.j.(3)B (1) and (2) conditions addressing onsite inspections proposed by COGCC staff which have been agreed to by the local governmental designee and two operators with substantial ownership within the affected lands. One proposed change would require an onsite inspection to be conducted if a surface well location is within two (2) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations and an onsite inspection is requested by a surface owner, local governmental designee, operator, or the Director. The other proposed change would not require an onsite inspection if the reason a surface use agreement has not been executed is related to a matter over which the Commission has no jurisdiction.
76. Because of the unduly burdensome requirement to notice all parties to amend the order to address the items described above in Findings 74 and 75, the Director requested and the Commission agreed that the Director should grant a waiver under Rule 502.b. to effect these changes.
NOW, THEREFORE, IT IS ORDERED, that Order Nos. 112-60, 112-61 and 112-85 are hereby amended to allow an optional additional well to be drilled for production of gas from the Fruitland Coal seams for the 320-acre drilling and spacing units described below, with the permitted well to be located in any undrilled quarter section no closer than 990 feet to any outer boundary of the unit nor closer than 130 feet to any interior quarter section line. Additional wells located in the E½ of the irregular sections of Township 34½ North shall be located no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line.
Township 34 North, Range 6 West, N.M.P.M. (N.U.L.)
Sections 3-10: All
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Township 34 North, Range 7 West, N.M.P.M. (N.U.L.)
Sections 1 thru 8: All
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Section 12: W½
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Township 34 North, Range 8 West, N.M.P.M. (N.U.L.)
Section 1: All
Section 2: All
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Township 34 North, Range 9 West, N.M.P.M. (N.U.L.)
Section 1: All
Section 2: All
Section 3: E½
Section 9 thru 12: All
Township 34½ North, Range 9 West, N.M.P.M. (N.U.L.)
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Township 35 North, Range 6 West, N.M.P.M.
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Township 35 North, Range 7 West, N.M.P.M.
Section 16: W½
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Section 23: E½
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Section 34: E½
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Township 35 North, Range 8 West, N.M.P.M.
Sections 13 and 14: All
Section 15: S½
Sections 20 thru 23: All
Section 25: S½
Section 27: W½
Sections 28 thru 30: All
Section 34: S½
Section 35: N½
Section 36: S½
Township 35 North, Range 9 West, N.M.P.M.
Section 25: S½
IT IS FURTHER ORDERED, that the following shall be applied to additional wells where the surface location is proposed to be sited on lands subject to Commission jurisdiction, in addition to any requirements of applicable existing Commission Rules and Regulations:
Well Permit Limitations A Commission hearing shall be required before a drilling permit may be issued for a well site located within one and one-half (1½) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations. The purpose of the hearing shall be to address potential adverse impacts to the Fruitland outcrop.
If a conventional gas well exists within one quarter (¼) mile of a proposed additional well, then the two (2) closest water wells within a one-half (½) mile radius shall be sampled (“water quality testing wells”). Ideally, if possible, the water wells selected should be on opposite sides of the existing conventional gas well not exceeding a one-half (½) mile radius. If water wells on opposite sides of the conventional gas well cannot be identified, then the two (2) closest wells within a one-half (½) mile radius shall be sampled. If two (2) or more conventional wells are located within one quarter (¼) mile of the proposed additional well, then the conventional well closest to a proposed additional well shall be used for selecting water wells for sampling.
If no conventional gas wells are located within a one quarter (¼) mile radius of the proposed additional well, then the selected water wells shall be within one quarter (¼) mile of the proposed additional well. In areas where two (2) or more water wells exist within one quarter (¼) mile of the proposed additional well, then the two (2) closest water wells shall be sampled. Ideally, if possible, the water wells selected should be on opposite sides of the proposed additional well. If water wells on opposite sides of the proposed additional well cannot be identified, then the two (2) closest wells within a one quarter (¼) mile radius shall be sampled. If two (2) water wells do not exist within a one quarter (¼) mile radius, then the closest single water well within either a one quarter (¼) mile radius or within a one-half (½) mile radius shall be selected.
If no water well is located within a one quarter (¼) mile radius area or if access is denied, a water well within one-half (½) mile of the proposed additional well shall be selected. If there are no water quality testing wells meeting the foregoing criteria, then sampling shall not be required. If the BLM or the COGCC have already acquired data on a water well within one quarter (¼) mile of the conventional well, but it is not the closest water well, it shall be given preference in selecting a water quality testing well. The “initial baseline testing” described in this paragraph shall include all major cations and anions, TDS, iron and manganese, nutrients (nitrates, nitrites, selenium), dissolved methane, pH, presence of bacteria and specific conductance and field hydrogen sulfide.
If free gas or a methane concentration level greater than 2 mg/L is detected in a water quality testing well, compositional analysis and carbon isotopic analyses of methane carbon shall be performed to determine gas type (thermogenic, biogenic or an intermediate mix of both). If the testing results reveal biogenic gas, no further isotopic testing shall be done. If the carbon isotope test results in a thermogenic or intermediate mix signature, annual testing shall be performed thereafter and an action plan shall be drafted by the operator to determine the source of the gas. If the methane concentration level increases by more than 5 mg/L between sampling periods, or increases to more than 10 mg/L, an action plan shall be drafted to determine the source of the gas.
The initial baseline testing shall occur prior to the drilling of the proposed additional well. Within one (1) year after completion of the proposed additional well, a “post completion” test shall be performed for the same parameters above and repeated three (3) and six (6) years thereafter. If no significant changes from the baseline have been identified after the third test (the six year test), no further testing shall be required. Additional “post completion” test(s) may be required if changes in water quality are identified during follow-up testing. The Director may require further water well sampling at any time in response to complaints from water well owners.
Copies of all test results described above shall be provided to the COGCC, La Plata County or Archuleta County and the landowner where the water quality testing well is located within three (3) months of collecting the samples used for the test.
Gas and Oil Regulatory Team The Director shall ensure that the La Plata County Gas and Oil Regulatory Team (“GORT”) continues to meet as appropriate, but no less than semiannually. GORT meetings may be scheduled more frequently if the members believe a meeting is appropriate. (GORT includes invited member representatives from La Plata County, BLM, Southern Ute Indian Tribe, industry operators and COGCC. Its meetings are open and typically attended by interested area residents.)
3M Mapping, Modelling and Monitoring Project The Director shall ensure that the 3M Technical Peer Review Team is invited to meet as appropriate, but no less than semiannually to review proposals and results related to the 3M Mapping, Modelling and Monitoring Project.
Post Completion Pressure Build-Up Tests In addition to obtaining a bottomhole pressure on all additional wells, operators shall conduct pressure build-up two (2) to three (3) months after initial production begins and once every three (3) years thereafter. The operator shall provide the data acquired, an evaluation of the data and the procedures utilized to conduct the pressure build-up tests to the Director within thirty (30) days of the conclusion of each test. After reviewing the quality of the pressure buildup data and the adequacy of the geographic distribution of the data, the Director may reduce the number of wells for which pressure build-up testing.
IT IS FURTHER ORDERED, that pursuant to Rule 508.j.(3)B. the Director shall have discretion as described in Exhibit “A” to attach additional conditions to any Applications for Permits-to-Drill additional wells where the surface well location is proposed to be sited on lands subject to Commission jurisdiction.
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.
AMENDED this day of November, 2001.
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
November 19, 2001
The following requirements shall apply to all Applications for Permits-to-Drill additional wells subject to Order Nos. 112-156 and 112-157 where the surface well location is proposed to be sited on lands subject to COGCC jurisdiction in addition to any requirements of applicable existing COGCC rules and regulations:
1.) Prior to approving any Application for Permit-to-Drill, the Director shall conduct an onsite inspection if the surface well location is proposed to be sited within any subdivision that has been approved by La Plata County or Archuleta County. The Director shall conduct an onsite inspection if the surface well location is within two (2) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations and an onsite inspection is requested by the surface owner, LGD, operator, or Director.
2.) Prior to approving any Application for Permit-to-Drill, the Director shall conduct an onsite inspection if the operator and the surface owner have not entered into a surface use agreement. If the reason the surface use agreement has not been executed is related to surface owner compensation, property value diminution, or any private property contractual issues between the operator and the surface owner, then no onsite inspection shall be required.
3.) The purpose of the onsite inspection shall be to identify any potential public health, safety and welfare or significant adverse environmental impacts within COGCC jurisdiction regarding the proposed surface location that may not be adequately addressed by COGCC rules or orders. The onsite inspection shall not address matters of surface owner compensation, property value diminution, or any private party contractual issues between the operator and the surface owner.
4.) When the Director conducts onsite inspections under the conditions in 1.) and 2.) above, the Director shall invite the representatives of the surface owner, the operator and local governmental designee (“LGD”) to attend. The Director shall attempt to select a mutually acceptable time for the representatives to attend. The inspection shall be conducted within ten (10) days, or as soon as practicable thereafter, of either the date the LGD advises the Director in writing that the proposed surface well site location falls within an approved subdivision or the date the operator advises the Director in writing that a surface use agreement has not been reached with the surface owner. If requested by the operator, the Director may delay the onsite inspection to allow for negotiation between the operator and surface owner or other parties.
5.) Following the onsite inspection, the Director shall apply appropriate site specific drilling permit conditions if necessary to prevent or mitigate public health, safety and welfare or significant adverse environmental impacts taking into consideration cost-effectiveness and technical feasibility and relevant geologic and petroleum engineering conditions as well as prevention of waste, protection of correlative rights, and promotion of development.
6.) Examples of the types of impacts and conditions that might be applied if determined necessary by the Director in 5.) above include (this list is not prescriptive or all inclusive):
a.) visual or aesthetic impacts - moving the proposed surface well site location or access road to take advantage of natural features for screening; installing low profile artificial lift methods; constructing artificial features for screening
b.) surface impacts – moving or reducing the size, shape, or orientation of the surface well site location or access road to avoid disturbance of natural features or to enhance the success of future reclamation activities; utilizing an existing surface well site location or access road to avoid the impacts of new construction; utilizing a closed drilling fluid system instead of reserve pits to avoid impacts to sensitive areas [Note: Directional drilling from common surface locations is not a cost-effective or technically feasible option to mitigate surface impacts on 160-acre Fruitland coal seams well density because of the shallow (approximately 2000’) target top depths, the long (average 2640’) displacements and the resulting complications for artificial lift.]
c.) noise impacts – installing electric motors where practicable; locating or orienting motors or compressors to reduce noise; installing sound barriers to achieve compliance with COGCC rules; confining cavitation completion operations (excluding flaring) to the hours of 7 a.m. to 7 p.m. and notifying all area residents within one-half (½) mile at least seven (7) days before cavitation is commenced
d.) dust impacts – watering roads as necessary to control dust during drilling and completion operations
e.) ground water impacts – collecting and analyzing water and gas samples from existing water wells or springs; installing monitoring wells, collecting samples, and reporting water, gas and pressure data
f.) safety impacts – soil gas sampling and analysis; residential crawl space gas sampling and analysis; installing security fencing around wellheads and production equipment
g.) outcrop impacts – performing outcrop gas seep surveys; performing produced water quality analysis; periodic pressure transient testing of high water/gas ratio wells; limiting water production in wells with anomalously high water rates and water/gas ratios; funding investigative reservoir modelling under the Director’s supervision
h.) wildlife impacts – limiting drilling and completion operations during certain seasonal time periods when specific site conditions warrant
7.) If the operator objects to any of the conditions of approval applied under 6.) above, the Director shall stay the issuance of the drilling permit and properly notice and set the matter for the next regularly scheduled Commission hearing at which time the Commission may determine conditions of drilling permit approval.
8.) If the Director has reasonable cause to believe that any existing or proposed oil and gas operations are causing, or are likely to cause, public health, safety and welfare or significant adverse environmental impacts within COGCC jurisdiction that may not be adequately addressed by COGCC rules or orders, the Director may properly notice and set the matter for the next regularly scheduled Commission hearing to order appropriate investigative or remedial action. Reasonable cause may include, but is not limited to, information from the 3M Mapping, Modelling and Monitoring Project.
The Director shall report in writing to the Commission no later than September 1, 2001, as to Applications for Permits-to-Drill received, onsite inspections conducted, surface use agreements reached and permit conditions applied related to proposed additional wells. The Director, after consultation with the Commission, shall notice for Commission hearing a discussion of such report no later than December 15, 2001.