BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE FRUITLAND COAL FORMATION, IGANCIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO

) ) ) ) ) ) )

CAUSE NO.  112 DOCKET NO. 170300175 TYPE:  EXCEPTION LOCATION ORDER NO. 112-270

REPORT OF THE COMMISSION

The Commission heard this matter on March 20, 2017, at the Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado, for an order to reduce the setback on the eastern boundary of Section 28, Township 35 North, Range 6 West, N.M.P.M. to 660 feet such that the productive interval of any proposed wellbore in the Application Lands be located no closer than 660 feet from the east boundaries of the unit and no closer than 990 feet from the west, north and south boundaries of the unit, for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Formation.

FINDINGS

The Commission finds as follows:

1.         BP America Production Company (“BP America” 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 17, 1988, the Commission entered Order No. 112-60 which established 320-acre drilling and spacing units for certain lands including the Application Lands, for the production of gas 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, for the production of methane gas from the Fruitland coal seams.

5.         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 for certain lands including the Application Lands, 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. 

6.         On April 25, 2000, the Commission entered Order No. 112-156 which allowed an optional additional well to be drilled in certain lands including a portion of the Application Lands, with the permitted well to be located in any undrilled quarter section no closer than 990 feet to any outer boundary of the unit nor closer than 130 feet to any interior quarter section line, for the development and operation of the Fruitland coal seams.

7.         On January 30, 2017, the Commission entered Order No. 112-264 which, among other things, established a 640-acre drilling and spacing unit for Section 27, Township 35 North, Range 6 West, N.M.P.M, with up to two sidetrack wells in the unit, that overlays existing 320-acre drilling and spacing units, for the production of gas and associated hydrocarbons from the Fruitland Coal Formation.

8.         On January 19, 2017, the Bureau of Land Management (“BLM”) requested the Application so that the unit boundary setbacks on the east line of Section 28, Township 35 North, Range 6 West, N.M.P.M would be reciprocal with the 660 foot unit boundary setbacks on the west line of Section 27, Township 35 North, Range 6 West, N.M.P.M, as established by Order No. 112-264.

9.         On January 25, 2017, Applicant filed a verified application pursuant to §34-60-116, C.R.S., for an order to reduce the setback on the eastern boundary of Section 28, Township 35 North, Range 6 West, N.M.P.M. (“Application Lands”) to 660 feet such that the productive interval any proposed wellbore in the Application Lands be located no closer than 660 feet from the east boundaries of the unit and no closer than 990 feet from the west, north and south boundaries of the unit, without exception by the Director.

10.       On March 3, 2017, Applicant requested that the Commission: 1) take administrative notice under Commission Rule 519.c.(4), of the geology and engineering testimony approved by Order No. 112-264 and 2) 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.

11.       Land testimony and exhibits submitted in support of the Application by Scott Hammond, Senior Landman, San Juan North for BP, submitted land testimony in support of the Application.  Mr. Hammond’s testimony showed that the Applicant holds an undivided 45.75% leasehold interest in the Application Lands and is therefore eligible to apply for the requested relief.

12.       Applicant agreed to be bound by oral order of the Commission. 

13.       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 reduce the setback on the eastern boundary of Section 28, Township 35 North, Range 6 West, N.M.P.M. to 660 feet such that the productive interval of any proposed wellbore in the Application Lands be located no closer than 660 feet from the east boundaries of the unit and no closer than 990 feet from the west, north and south boundaries of the unit, for the production of oil, gas and associated hydrocarbons from the Fruitland Coal Formation.

ORDER

IT IS HEREBY ORDERED:

1.         Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, the setback on the eastern boundary of Section 28, Township 35 North, Range 6 West, N.M.P.M. is hereby changed to 660 feet such that the productive interval any proposed wellbore in the Application Lands be located no closer than 660 feet from the east boundaries of the unit and no closer than 990 feet from the west, north and south boundaries of the unit, unless an exception is by the Director.

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 27^th day of March 2017, as of March 20, 2017.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By

Peter Gowen, Acting Secretary