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 SEAMS, IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO |
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CAUSE NO. 112
DOCKET NO. 1412-AW-26
ORDER NO. 112-247 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 26, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to approve two additional wells in an approximate 320-acre drilling and spacing unit established for the E˝ of Section 9, Township 33 North, Range 10 West, 6th P.M., for the production of gas and associated hydrocarbons from the Fruitland Coal Seams.
FINDINGS
The Commission finds as follows:
1. Four Star Oil & Gas Company (Operator No. )(“Four Star” or “Applicant”) 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 November 9, 1959, the Commission entered Order No. 112-6 which established 320-acre drilling and spacing units, for the production of gas from the Fruitland-Pictured Cliffs and Mesaverde Formations.
5. On July 16, 1979, the Commission entered Order No. 112-46 which amended Order No. 112-6 and approved an additional well for an approximate 320-acre drilling and spacing unit, for the production of oil, gas, and associated hydrocarbons from the Fruitland-Pictured Cliffs, Dakota-Morrison, and Mesaverde Formations.
7. On June 17, 1988, the Commission entered Order No. 112-60 which approved the Fruitland Coal Seams as a separate source of supply and established 320-acre drilling and spacing units with one well at a designated location for each unit.
8. On August 15, 1988, the Commission entered Order No. 112-61 which amended parts of Order No. 112-60 and established rules for the production of coalbed methane in the Fruitland Coal Seams, with the productive interval of the wellbore to be no closer than 990 feet to any outer boundary of the unit, and no closer than 130 feet to any interior quarter section line, without exception granted by the Director.
9. On August 17, 1998, the Commission entered Order No. 112-146 which amended Order No. 112-61 to allow the Ute E No. 3 Well located 1,600 feet FNL and 1,640 feet FEL in the NE1/4 of Section 9, Township 33 North, Range 10 West, N.M.P.M., to be recompleted from the Fruitland Coal seams as an additional well for the 320-acre drilling and spacing unit consisting of the E˝ of Section 9, Township 33 North, Range 10 West, N.M.P.M.
10. On October 16, 2014 (Amended November 13, 2014), Four Star, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to approve an additional two wells, for a total of four wells, within an approximate 320-acre drilling and spacing unit established for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Formation; and require the productive interval of the wellbore to be located no closer than 990 feet from the unit boundaries, and no closer than 130 feet to the interior boundaries, without exception granted by the Director.
Township 33 North, Range 10 West, N.M.P.M
Section 9: E˝
11. On November 24, 2014, Four Star requested, and Commission staff granted, a continuance to the January 26, 2015 hearing.
12. On January 6, 2015, Four Star, 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. Land testimony and exhibits submitted in support of the Application by Andrew W. Wetherell, Land Representative Colorado/SJB for Four Star, showed that Four Star holds oil and gas leasehold interests and has a right to drill in the Application Lands.
14. Geologic testimony and exhibits submitted in support of the Application by Russell J. Warner, Production Geologist for Four Star, showed a subsea structure map constructed on top of the Fruitland Coal seams with a contour interval of twenty feet and the dip is approximately 40'/mile to the south under the Application Lands. Applicant also submitted a Fruitland Coal seam net isopach map with a countour interval of 5'. Log criteria used for coal identification were formation density values equal to, or less than 1.80 g/cc and gamma ray values equal to, or less than 100 API units. Net pay thickness ranges from approximately 43 to 71 feet. Moreover, the precedent for 80 acre density in the Fruitland Coal seam was previously established by other operators, including Chevron Midcontinent LP and Four Star Oil & Gas Company, in nearby lands. Four Star also requested that the Commission take administrative notice of the geologic testimony in Order No. 112-216
15. Engineering testimony and exhibits submitted in support of the Application by James Micikas, Petroleum Engineer for Four Star, showed the cumulative production to date, current decline rate per year, remaining recoverable reserves, and estimated ultimate recovery for the Southern Ute E #3 well, and the Southern Ute E #5 well, both currently producing from the Fruitland Coal Seams in the Application Lands. The EUR was determined using decline curve analysis. Applicant also provided the calculation of original gas in place for the Application Lands based on the preceding exhibits, including existing EUR, remaining GIP, and the current recovery factor. and an appropriate 320-acre drilling and spacing unit with up to four wells is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Fruitland Coam Seams.
16. On or before January 6, 2015, Four Star and La Plata County (“La Plata”) reached an agreement in which La Plata agreed not to protest the Amended Verified Application provided that Applicant recompletes the third anticipated well in the Application Lands in the existing UTE E 2 well, and any fourth well in any other existing well located on the Application Lands. La Plata otherwise reserves the right to assert the above objections to the Amended Verified Application if Applicant files an application for a permit to drill a new well in the Application Lands.
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. Four Star 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 based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to approve two additional wells in an appropriate 320-acre drilling and spacing unit established for the E˝ of Section 9, Township 33 North, Range 10 West, 6th P.M., for the production of gas and associated hydrocarbons from the Fruitland Coal Seams.
ORDER
IT IS HEREBY ORDERED:
1. Two additional wells, for a total of four wells, within an appropriate 320-acre drilling and spacing unit established for the below-described lands, are hereby approved, for the production of gas and associated hydrocarbons from the Fruitland Coal Seams Formation:
Township 33 North, Range 10 West, N.M.P.M
Section 9: E˝
2. The productive interval of the wellbore to be located no closer than 990 feet from the unit boundaries, and no closer than 130 feet to the interior boundaries, without exception granted by the Director.
3. If the proposed wells are recompleted, then the recompletion of the third anticipated well within the Application Lands shall be in the existing UTE E 2 well, and any fourth well shall be in any other existing well located on the Application Lands.
4. La Plata otherwise reserves the right to assert the above objections to the Amended Verified Application if Applicant files an application for a permit to drill a new well in the Application Lands.
IT IS FURTHER ORDERED:
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 ___ day of February, 2015, as of January 26, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary