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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 FIELD RULES TO GOVERN OPERATIONS IN THE IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO |
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CAUSE NO. 112
ORDER NO. 112-189 |
This cause came on for hearing before the Commission at 9:00 a.m. on July 10, 2006, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow at the option of the operator, an additional well, up to a total of two (2) wells, to be drilled on the 320-acre drilling and spacing units for certain lands in Township 33 North, Range 11 West, N.M.P.M., for production from the Fruitland coal seams.
The Commission finds as follows:
1. Chevron MidContinent, L.P. (“Chevron”), 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 and the terms of the Memorandum of Understanding (“MOU”) between the Commission and the Bureau of Land Management (“BLM”).
4. On December 19, 1990, the Commission issued Order No. 112-85, which among other things, amended Order No. 112-61 and established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Fruitland coal seams including certain lands in Township 33 North, Range 11 West, N.M.P.M., with the units consisting of the N½ and S½ or the E½ and W½ of a full section with the permitted well located, when north of the north line of Township 32 North, in the NW¼ and SE¼ of the section, and when south of the north line of Township 32 North, in the NE¼ and SW¼ of the section, and no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line.
5. Subsequent orders in Cause No 112 have been issued allowing additional wells to be drilled on existing 320-acre drilling and spacing units for production from the Fruitland coal seams.
6. On May 17, 2006, Chevron, by its attorney, filed with the Commission a verified application for an order to allow at the option of the operator, an additional well, up to a total of two (2) wells, to be drilled on the 320-acre drilling and spacing units described below for production from the Fruitland coal seams, with the permitted well to be located no closer than 990 feet to any outer boundary of the unit, and no closer than 130 feet to any interior quarter section line:
Township 33 North, Range 11 West, N.M.P.M.
Section 10: All
Sections 15 and 16: All
Sections 21 and 22: All
7. The verified application states that subsequent drilling and production operations in the Fruitland Coal seams in the Ignacio-Blanco Field have provided geological and engineering evidence to the effect that in the application lands one well will not efficiently and economically drain an area of 320 acres. Instead, Chevron asserts that up to two wells may be required in each such drilling and spacing unit to drain the Fruitland coal seams efficiently and economically. Chevron requests that, at the discretion of the operator, one additional well be permitted to be drilled to and produce from the Fruitland coal seams in each 320-acre drilling and spacing unit in the application lands. Chevron alleges that each such drilling and spacing unit is not smaller than the maximum area that can be efficiently and economically drained by two wells in the Fruitland coal seams, and that the correlative rights of all parties will be protected. Chevron further alleges that the additional wells may be drilled in a manner consistent with the protection of public health, safety and welfare, and that the additional wells are in the best interests of the Southern Ute Indian Tribe.
8. Testimony and exhibits presented at the administrative hearing showed the thicknesses of the upper, middle and lower Fruitland coal seams.
9. Testimony and exhibits presented at the administrative hearing showed that within the application area, the Fruitland coals are laterally discontinuous, that new compartments of Fruitland coal seam gas will be drained by the new wells, and that the new wells will drain the Fruitland coal seam gas more efficiently.
10. Testimony and exhibits presented at the administrative hearing showed that Sections 15, 21, and 22 of the application area are estimated to have 120.2 Billion Cubic Feet (BCF) of gas in place within the Fruitland coal seams.
11. Testimony and exhibits presented at the administrative hearing showed that one (1) well per 320-acres is estimated to recover 25% of the gas in place, while additional wells could increase the gas recovery factor to 65%.
12. Testimony and exhibits presented at the administrative hearing showed which is adjacent to the application area, that the estimated ultimate recovery for the two (2) infill wells in Section 14, Township 33 North, Range 11 West, N.M.P.M. is 1.529 BCF and 1.332 BCF, respectively.
13. Testimony and exhibits presented at the administrative hearing showed with estimated recoverable reserves of 1.37 BCF, an infill well should have a payout in 1.9 years.
14. Testimony and exhibits presented at the administrative hearing showed that the proposed application promotes the efficient and effective development of the Fruitland coal seam resource in place, that the proposed optional infill wells will prevent waste, and that the proposed optional infill wells are economically viable.
15. The Commission has received letters in support of this application from the BLM and the Southern Ute Indian Tribe.
16. No protests to the application have been filed with the Commission or the Applicant.
17. Chevron MidContinent, L.P. agreed to be bound by oral order of the Commission.
18. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow at the option of the operator, an additional well, up to a total of two (2) wells, to be drilled on the 320-acre drilling and spacing units for certain lands in Township 33 North, Range 11 West, N.M.P.M., for production from the Fruitland coal seams.
ORDER
NOW, THEREFORE IT IS ORDERED, that at the option of the operator, an additional well, up to a total of two (2) wells, is hereby allowed to be drilled on the 320-acre drilling and spacing units described below for production from the Fruitland coal seams, with the permitted well to be located no closer than nine hundred ninety (990) feet to any outer boundary of the unit, and no closer than one hundred thirty (130) feet to any interior quarter section line:
Township 33 North, Range 11 West, N.M.P.M.
Section 10: All
Sections 15 and 16: All
Sections 21 and 22: All
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.
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