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 FOR THE FRUITLAND COAL SEAM FORMATION, IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO |
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CAUSE NO. 112
DOCKET NO. 1312-AW-81
ORDER NO. 112-240 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 28, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to approve up to a total of four wells within each of two approximate 320-acre drilling and spacing units established for Sections 5 and 8, Township 32 North, Range 6 West, N.M.P.M., for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation.
FINDINGS
The Commission finds as follows:
1. XTO Energy Inc. (“XTO” or “Applicant”), 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 15, 1988, the Commission entered Order No. 112-60 which, among other things, established 320-acre drilling and spacing units for production of gas from the Fruitland Coal Seam Formation with 990 foot setbacks to the outer boundary of each unit and 130 foot setbacks to the interior quarter section line. Sections 5 and 8, Township 32 North, Range 6 West, N.M.P.M. are subject to Order No. 112-60 for the Fruitland Coal Seam Formation.
5. On August 15, 1988, the Commission entered Order No. 112-61 which amended parts of Order No. 112-60 and established additional rules for production from the Fruitland Coal Seam Formation. Sections 5 and 8, Township 32 North, Range 6 West, N.M.P.M. are subject to Order No. 112-61 for the Fruitland Coal Seam Formation.
6. On October 22, 1999, the Commission entered Order No. 112-155 which, among other things, allowed an additional well in certain 320-acre drilling and spacing units for production from the Fruitland Coal Seam formation, with the additional permitted wells to be located in the NW¼ and SE¼ of each section in Township 32 North, located no closer than 990 feet from the boundaries for the quarter section, nor closer than 130 feet to any interior quarter section line. Sections 5 and 8, Township 32 North, Range 6 West, N.M.P.M. are subject to Order No. 112-155 for the Fruitland Coal Seam Formation.
7. On October 17, 2013, XTO, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to approve up to four wells within each of two approximate 320-acre drilling and spacing units established for the below-described lands (“Application Lands”) for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation (“Fruitland Coal”), with the productive interval of the wellbore to be located no closer than 660 feet from the unit boundaries, without exception being granted by the Director:
Township 32 North, Range 6 West, N.M.P.M
Section 5: S½ (DSU #1, 320-acres)
Section 8: W½ (DSU #2, 320-acres)
Applicant requests to eliminate interior quarter section line setbacks to enable the drilling of horizontal wells.
8. On December 5, 2013, La Plata County (“La Plata” or “Intervenor”) filed an Intervention to the Application. La Plata and XTO entered discussions regarding a Memorandum of Understanding (“MOU”) between the parties.
9. On December 6, 2013, XTO requested and Commission staff granted a continuance to the January 27, 2014 hearing.
10. On January 16, 2014, XTO requested and Commission staff granted a continuance to the March 17, 2014 hearing.
11. On March 7, 2014, XTO requested and Commission staff granted a continuance to the April 28, 2014 hearing.
12. On March 19, 2014, XTO, 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. Sworn written testimony and exhibits were submitted in support of the Application.
13. On April 2, 2014, La Plata withdrew its Intervention, conditional upon the COGCC entering an order approving the Application with the Conditions of Approval set forth in Exhibit A of the Memorandum of Understanding between XTO and the Board of County Commissioners of La Plata County, approved April 1, 2014.
14. Land Testimony and exhibits submitted in support of the Application by G. Scott Thompson, Regional Land Manager (Rockies) for XTO, showed the minerals within the Application Lands are held in Fee, the surface is held in Fee and that XTO, by virtue of its leasehold interest, is an owner with the right to drill within the Application Lands.
15. Geologic Testimony and exhibits submitted in support of the Application by Michael Thomas Williams, Associate Geologist for XTO, showed within the Application Lands: the location of existing, producing wells drilled to the Fruitland Coal, a type log from the Flagg 6-3 Well showing the presence of the Fruitland Coal and an isopach map showing the Fruitland Coal ranges from 40 to 60 feet thick and exists throughout the Application Lands.
16. Engineering Testimony and exhibits submitted in support of the Application by George Harold Staus, Reservoir Engineer for XTO, showed nearby 320-acre units approved for up to four wells to the Fruitland Coal with no observed impact on pre-existing Fruitland Coal wells. Volumetric Analysis showed the estimated ultimate recovery (“EUR”) from existing development to be 3.2 BCF of natural gas per well, a 17% recovery factor. Testimony concluded that drilling two infill wells to the Fruitland Coal would result in additional EUR of 5 BCF per well, increasing the recovery factor from 17% to 69% within the 320-acre unit.
17. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.
18. XTO agreed to be bound by oral order of the Commission.
19. 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 approve up to a total of four wells within each of two approximate 320-acre drilling and spacing units established for Sections 5 and 8, Township 32 North, Range 6 West, N.M.P.M., for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation.
ORDER
IT IS HEREBY ORDERED:
1. A total of up to four wells within each of two approximate 320-acre drilling and spacing units established for the below-described lands, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Seam Formation, with the productive interval of the wellbore to be located no closer than 660 feet from the unit boundaries, without exception being granted by the Director:
Township 32 North, Range 6 West, N.M.P.M
Section 5: S½ (DSU #1, 320-acres)
Section 8: W½ (DSU #2, 320-acres)
2. Interior quarter section line setbacks, are herby eliminated, to enable the drilling of horizontal wells.
3. XTO and La Plata County are subject to the Conditions of Approval set forth in Exhibit A to the Memorandum of Understanding between XTO and the Board of County Commissioners of La Plata County, approved April 1, 2014. The Conditions of Approval are also conditions of approval of this Order.
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 23rd day of May, 2014, as of April 28, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary