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BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
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IN THE MATTER OF APPLICATIONS FOR PERMIT- TO-DRILL WITHIN ONE AND ONE-HALF MILES OF THE OUTCROP CONTACT BETWEEN THE FRUITLAND AND PICTURED CLIFFS FORMATIONS, LA PLATA COUNTY, COLORADO |
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CAUSE NO. 112
ORDER NO. 112-161 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Colorado Oil and Gas Conservation Commission at 10:00 a.m. on October 29, 2001, at the Chancery Building, 1120 Lincoln Street, Suite 801, Denver, Colorado, on the verified application of Texaco Exploration & Production, Inc. for an order to allow the Wheeler #12U-4 Well to be drilled 1335 feet FNL and 1070 feet FEL in the SE¼ NE¼ of Section 12U, Township 34 North, Range 10 West, N.M.P.M., within one and one-half (1½) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations.
The Commission finds as follows:
1. Texaco Exploration & Production, Inc. (“Texaco”), as applicant herein, is an interested party in the subject matter of the above-referenced matter.
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. On July 28, 2000, the Colorado Oil and Gas Conservation Commission entered Order No. 112-157 allowing an optional 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, including Section 12U, Township 34 North, Range 10 West, N.M.P.M.
5. In accordance with Well Permit Limitations in Order No. 112-157, “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.”
6. On August 8, 2001, Texaco Exploration & Production, Inc. by its attorney, filed with the Commission an Application for Permit-to-Drill the Wheeler #12U-4 Well, proposed to be located 1335 feet FNL and 1070 feet FEL in the SE¼ NE¼ of Section 12U, Township 34 North, Range 10 West, N.M.P.M., approximately one mile from the outcrop contact between the Fruitland and Pictured Cliffs Formations.
7. On September 10, 2001 La Plata County filed with the Commission a statement in Protest and Intervention raising environmental and public health, safety and welfare concerns regarding the proposed well. The County intervenes by right pursuant to Rule 509.a.
8. This matter was originally scheduled for the September 24 and 25, 2001 hearing but was continued to the October Hearing due to the cancellation of the September Hearing.
9. On October 4, 2001 a prehearing conference was held to discuss the conditions of approval for the permit-to-drill the Wheeler No. 12U-4 Well proposed by La Plata County. After discussion of each condition between the parties and Colorado Oil and Gas Conservation Commission (“COGCC”) staff, Texaco proposed to modify the language of certain conditions and circulate to La Plata County and COGCC staff for additional review.
10. On October 5, 2001, the COGCC Hearings Manager discussed with the Commission’s Assistant Attorney General and the Commission Chair the request to handle this matter administratively, provided the parties and COGCC staff reach an agreement on the conditions of permit approval. The Commissioners were polled as to their preference and all Commissioners voted in favor of an administrative process.
11. On October 15, 2001 Texaco provided a revised draft to La Plata County and COGCC staff. On October 18, 2001, all parties stated their agreement with the revised draft, modified slightly by COGCC staff, described below:
“A monitor well is scheduled to be completed at approximately 1400 feet FSL and 1280 feet FEL in Section 7, Township 34 North, Range 9 West, N.M.P.M. by November 1, 2001. Upon completion, the monitor well shall measure water levels and pressure data. Based upon a November 1, 2001 completion of the monitor well, Texaco agrees not to commence sales from the Wheeler #12U-4 Well before December 1, 2001. Should the monitor well not be completed by November 1, 2001, Texaco agrees not to commence producing the Wheeler #12U-4 Well until at least thirty (30) days after the monitor well is completed provided however that in any event Texaco shall be allowed to commence sales from the well after December 20, 2001.”
“Annual field reconnaissance of the outcrop located in Section 7, Township 34 North, Range 9 West, N.M.P.M. shall be undertaken by Texaco or its contractor in order to identify any methane seeps and to document any changes to vegetation or seep activity throughout the productive life of the Wheeler #12U-4 Well unless and until it is demonstrated to the COGCC staff that continued reconnaissance is unnecessary. Field conditions permitting, the initial reconnaissance shall be undertaken as soon as possible but no later than July 1, 2002. All data acquired in connection with such reconnaissance activities shall be provided to the COGCC Director and to the La Plata County Local Governmental Designee. Data will include topographic base maps, significant seeps or areas of stressed vegetation of 25 feet or greater and surface gas seepage concentration data within the identified seep and stressed vegetation areas. If methane seeps are detected by field reconnaissance, soil gas probes shall be installed to monitor the seep activity along the outcrop in Section 7, Township 34 North, Range 9 West, N.M.P.M. Such probes shall be installed in patterns and with measurements taken in a manner consistent with data collection from existing soil gas probes in the area. Should Texaco not complete the first field reconnaissance by July 1, 2002 for reasons other than inability to secure necessary and reasonable access, Texaco agrees to shut-in the Wheeler #12U-4 Well until the field reconnaissance is completed and until any required soil gas monitoring is in place. Texaco undertakes to use good faith efforts to secure necessary and reasonable access rights to conduct the annual reconnaissance surveys and install and operate any necessary soil gas monitoring. Both La Plata County and the COGCC agree to assist in such efforts if requested by Texaco. Failing in such efforts to secure necessary and reasonable access, Texaco nonetheless shall have the right to produce the Wheeler #12U-4 Well.”
“Texaco agrees to submit quarterly gas and water production curves for the Wheeler #12U-4 Well to the COGCC and the La Plata County Local Governmental Designee. Based on the COGCC staff's review of any of the data provided, if the Director concludes that further water production would be likely to cause significant adverse environmental impacts or an adverse impact on public health, safety, or welfare, the Director and Texaco shall negotiate in good faith to establish conditions which would mitigate any such significant adverse environmental impacts or adverse impact on public health, safety and welfare. In the event such negotiations are unsuccessful, the Director may recommend a Commission hearing on the matter.”
“These conditions shall be considered binding on any successor-in-interest to Texaco.”
12. Based on the conditions of approval agreed to by Texaco, La Plata County and COGCC staff, the Commission should enter an order to allow the Wheeler #12U-4 Well to be drilled 1335 feet FNL and 1070 feet FEL in the SE¼ NE¼ of Section 12U, Township 34 North, Range 10 West, N.M.P.M., within one and one-half (1½) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations.
13. On October 24, 2001, La Plata County withdrew its Protest and Intervention conditioned on the Commission’s approval of the proposed conditions for permit approval of the Wheeler #12U-4 Well.
NOW, THEREFORE, IT IS ORDERED that the Wheeler #12-4 Well is hereby approved to be drilled and completed for production of gas from the Fruitland Coal Formation at a location of 1335 feet FNL and 1070 feet FEL in the SE¼ NE¼ of Section 12U, Township 34 North, Range 10 West, N.M.P.M., within one and one-half (1½) miles of the outcrop contact between the Fruitland and Pictured Cliffs Formations.
IT IS FURTHER ORDERED, that the following shall be added as conditions of permit approval for the Wheeler #12-4 Well:
“A monitor well is scheduled to be completed at approximately 1400 feet FSL and 1280 feet FEL in Section 7, Township 34 North, Range 9 West, N.M.P.M. by November 1, 2001. Upon completion, the monitor well shall measure water levels and pressure data. Based upon a November 1, 2001 completion of the monitor well, Texaco agrees not to commence sales from the Wheeler #12U-4 Well before December 1, 2001. Should the monitor well not be completed by November 1, 2001, Texaco agrees not to commence producing the Wheeler #12U-4 Well until at least thirty (30) days after the monitor well is completed provided however that in any event Texaco shall be allowed to commence sales from the well after December 20, 2001.”
“Annual field reconnaissance of the outcrop located in Section 7, Township 34 North, Range 9 West, N.M.P.M. shall be undertaken by Texaco or its contractor in order to identify any methane seeps and to document any changes to vegetation or seep activity throughout the productive life of the Wheeler #12U-4 Well unless and until it is demonstrated to the COGCC staff that continued reconnaissance is unnecessary. Field conditions permitting, the initial reconnaissance shall be undertaken as soon as possible but no later than July 1, 2002. All data acquired in connection with such reconnaissance activities shall be provided to the COGCC Director and to the La Plata County Local Governmental Designee. Data will include topographic base maps, significant seeps or areas of stressed vegetation of 25 feet or greater and surface gas seepage concentration data within the identified seep and stressed vegetation areas. If methane seeps are detected by field reconnaissance, soil gas probes shall be installed to monitor the seep activity along the outcrop in Section 7, Township 34 North, Range 9 West, N.M.P.M. Such probes shall be installed in patterns and with measurements taken in a manner consistent with data collection from existing soil gas probes in the area. Should Texaco not complete the first field reconnaissance by July 1, 2002 for reasons other than inability to secure necessary and reasonable access, Texaco agrees to shut-in the Wheeler #12U-4 Well until the field reconnaissance is completed and until any required soil gas monitoring is in place. Texaco undertakes to use good faith efforts to secure necessary and reasonable access rights to conduct the annual reconnaissance surveys and install and operate any necessary soil gas monitoring. Both La Plata County and the COGCC agree to assist in such efforts if requested by Texaco. Failing in such efforts to secure necessary and reasonable access, Texaco nonetheless shall have the right to produce the Wheeler #12U-4 Well.”
“Texaco agrees to submit quarterly gas and water production curves for the Wheeler #12U-4 Well to the COGCC and the La Plata County Local Governmental Designee. Based on the COGCC staff's review of any of the data provided, if the Director concludes that further water production would be likely to cause significant adverse environmental impacts or an adverse impact on public health, safety, or welfare, the Director and Texaco shall negotiate in good faith to establish conditions which would mitigate any such significant adverse environmental impacts or adverse impact on public health, safety and welfare. In the event such negotiations are unsuccessful, the Director may recommend a Commission hearing on the matter.”
“These conditions shall be considered binding on any successor-in-interest to Texaco.”
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 October, 2001, as of October 29, 2001.
GAS AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________________
Dated at Suite 801 Patricia C. Beaver, Secretary
1120 Lincoln Street
October 30, 2001