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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. 112-219 |
This cause came on for hearing before the Commission at 9:00 a.m. on June 11, 2009, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to pool all nonconsenting interests in the established 320-acre drilling and spacing unit consisting of the N½ of Section 22, Township 33 North, Range 8 West, N.M.P.M., for the development and operation of the Fruitland coal seams.
FINDINGS
The Commission finds as follows:
1. BP America Production Company (“BP”), 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 June 17, 1988, the Commission issued Order No. 112-60, which among other things, established 320-acre drilling and spacing units for certain lands, including Section 22, Township 33 North, Range 8 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams, with the permitted well to 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.
5. On July 11, 2000, the Commission issued Order No. 112-157, which among other things, allowed an optional second Fruitland coal seam well to be drilled in each 320-acre drilling and spacing unit for certain lands including Section 22, Township 33 North, Range 8 West, N.M.P.M., with the additional permitted well being located no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line.
6. On July 10, 2006, the Commission issued Order No. 112-190, which among other things, allowed optional third and fourth Fruitland coal seam wells to be drilled in each 320-acre drilling and spacing unit for certain lands including Section 22, Township 33 North, Range 8 West, N.M.P.M., with the additional permitted wells to be located no closer than 660 feet from the unit boundary, with no interior section line setback.
7. On April 16, 2009, BP, by its attorneys, filed with the Commission a verified application for an order to pool all nonconsenting interests in the established 320-acre drilling and spacing unit consisting of the N½ of Section 22, Township 33 North, Range 8 West, N.M.P.M., for the development and operation of the Fruitland coal seams.
8. On May 29, 2009, BP, by its attorneys, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits as provided for by Rule 511.c. Sworn written testimony and exhibits were submitted in support of the application.
9. Testimony and exhibits submitted in support of the application showed that there are four BP-operated Fruitland coal seam wells located in the 320-acre drilling and spacing unit consisting of the N½ of Section 22, Township 33 North, Range 8 West, N.M.P.M., namely: (1) the Pan American Fee GU “C” No. 1 Well, (2) the Pan American Fee GU “C” No. 2 Well, (3) the Pan American Fee GU “C” No. 3 Well, and (4) the Pan American Fee GU “C” No. 4 Well, and that these wells have been drilled, but not yet produced. Additional testimony showed a list of all consenting and nonconsenting owners within the 320-acre drilling and spacing unit, with the nonconsenting owners comprising approximately 7.291893% of the unit which is subject to this compulsory pooling action. Further testimony indicated that offers to lease or to participate were sent to the nonconsenting owners, and that said offers were sent via US Mail, on or about April 13, 2009, to each nonconsenting owner. Testimony showed that the offers to lease/participate and the Authorizations for Expenditures were fair and reasonable, and similar to those prevailing in the area, and that BP has complied with the requirements of Rule 530.a. and §34-60-117(7)(d), C.R.S.
10. BP America Production Company agreed to be bound by oral order of the Commission.
11. 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.c., the Commission should enter an order to pool all nonconsenting interests in the established 320-acre drilling and spacing unit consisting of the N½ of Section 22, Township 33 North, Range 8 West, N.M.P.M., for the development and operation of the Fruitland coal seams.
ORDER
NOW, THEREFORE IT IS ORDERED, that, 1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all the nonconsenting interests in the 320-acre drilling and spacing unit consisting of the N½ of Section 22, Township 33 North, Range 8 West, N.M.P.M. are hereby pooled, for the development and operation of the Fruitland coal seams.
2. The production obtained from the drilling and spacing unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within the drilling and spacing unit; each owner of an interest in the drilling and spacing unit shall be entitled to receive his/her share of the production of the well located on the drilling and spacing unit applicable to his interest in the drilling and spacing unit.
3. Said owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the well(s) and be subject to the penalties as provided for by §34-60-116 (7), C.R.S.
4. Any nonconsenting unleased mineral owner within the drilling and spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his/her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the nonconsenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116 (7)(b), C.R.S. as amended. After recovery of such costs, the nonconsenting mineral owner shall then own his/her proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his/her proportionate share of further costs incurred in connection with the well as if he/she had originally agreed to the drilling.
5. The operator of any well drilled on the above-described unit shall furnish all nonconsenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
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__________day of June, 2009, as of June 11, 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
June 18, 2009