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 SEAMS, IGNACIO BLANCO FIELD, ARCHULETA County, Colorado.

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CAUSE NO. 112 DOCKET NO. 170700474  TYPE:  EXCEPTION LOCATION ORDER NO. 112-277

REPORT OF THE COMMISSION

The Commission heard this matter on July 24, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 South Lincoln St., Suite 801, Denver, Colorado, upon application for an order to except the Federal Pargin Mountain Unit Participating Area “B” from Order Nos. 112-60 and 112-61, for the development and operations of the Fruitland Coal Seams.

FINDINGS

The Commission finds as follows:

1. Catamount Energy Partners, LLC (“Catamount” 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 issued Order No. 112-60, which established 320-acre drilling and spacing units for production of gas from the Fruitland coal seams, with the permitted well to be located no closer than 990 feet from any outer boundary of the unit, nor closer than 130 feet from any interior quarter section line.  The Application Lands are subject to this Order.

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 the production of coalbed methane. The Application Lands were made subject to this Order.

6. On November, 21, 1988, the Commission entered Order No. 112-62, which excluded the Pargin Federal Unit from area spaced in Order No. 112-60, and ordered that if the federal unit is reduced or rescinded, the Commission shall give notice of hearing to space these lands under the appropriate Order of Cause No. 112.  Section 34, Township 34 North, Range 5 West, N.M.P.M. (S.U.L.) of the Application Lands is subject to this Order. 

7. The Pargin Mountain Unit was approved by the Bureau of Land Management effective July 29, 1986, with Amoco Production Company as the original unit operator.  Applicant is the current designated successor operator.  The initial Fruitland Formation Participating Area (P.A.) “A” was approved effective June 30, 1988 containing 200 acres, and the Fruitland Formation P.A. “B” was approved effective December 1, 1995, containing 1,000.56 acres.  Effective June 30, 1998 (the 10^th  anniversary of the initial P.A.), the unit contracted to the boundaries of the two P.A.’s.  P.A. “B”, as contracted, consists of the Application Lands identified.   

8. For lands not spaced or not otherwise subject to an existing Commission order, Commission Rule 318 prescribes the required well setbacks. Pursuant to Commission Rule 318.d.(3), the well location rules otherwise applicable under Rule 318 do not apply to unit operations approved by federal authorities except that no well in excess of two thousand five hundred (2,500) feet in depth shall be located less than six hundred (600) feet from the exterior or interior (if there be one) boundary of the unit area and no well less than two thousand five hundred (2,500) feet in depth shall be located less than two hundred (200) feet from the exterior or interior (if there be one) boundary of the unit area unless otherwise authorized by the order of the Commission after proper notice to owners outside the unit area.

9. On May 25, 2017, (amended June 13, 2017), Catamount, by its attorneys, filed with the Commission an Amended Application (“Application”) for an order to except the Federal Pargin Mountain Unit Participating Area “B” in the below-described lands (“Application Lands”) from Commission Order Nos. 112-60 and 112-61 and to make the Participating Area “B” subject to Commission Rule 318.d.(3), for the development and operation of the Fruitland Coal Seams:

Township 33 North, Range 5 West, N.M.P.M (S.U.L.)

Section 2:  Lots 3 and 4

Section 3:  Lot 1

Township 34 North, Range 5 West, N.M.P.M (S.U.L.)

Section 34:  N½NE¼, NE¼NW¼, S½N½, S½

Section 35:  SW¼SE¼, W½NW¼, SW¼

10.       On June 30, 2017, Catamount filed with Commission Staff Rule 511 testimony and exhibits that show 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.

11.       On July 11, 2017, the Southern Ute Indian Tribe (“SUIT”) and the Bureau of Land Management (“BLM”) submitted a letter of support and concurrence of the Application on the condition that Catamount amend their request “such that no well within the Pargin Mountain Unit Participating Area “B” shall be located less than 660 feet from the exterior boundary of the unit unless authorized by order of the Commission after proper notice to the owners outside the unit area.”

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

12.       Based on the facts stated in the verified Application and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to except the Federal Pargin Mountain Unit Participating Area “B” from Commission Order Nos. 112-60 and 112-61, for the development and operation of the Fruitland Coal Seams.  

ORDER

IT IS HEREBY ORDERED:

1. The Pargin Mountain Unit Participating Area “B” in the below-described lands is hereby excepted from Order Nos. 112-60 and 112-61, and are made subject to Commission Rule 318.d.(3)., such that horizontal wellbores located within the unit shall be located no closer than 660 feet from the exterior unit boundaries, with no interior quarter-section setbacks, without exception being granted by the Director:

Township 33 North, Range 5 West, N.M.P.M (S.U.L.)

Section 2:  Lots 3 and 4

Section 3:  Lot 1

Township 34 North, Range 5 West, N.M.P.M (S.U.L.)

Section 34:  N½NE¼, NE¼NW¼, S½N½, S½

Section 35:  SW¼SE¼, W½NW¼, SW¼

2. The surface location is to be at a legal location within the drilling and spacing unit or on adjacent lands to the Application Lands a/k/a the Pargin Mountain Unit Participating Area “B” in Archuleta County, Colorado.

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 16^th day of August, 2017, as of July 24, 2017

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                                                                                                                            By_________________________________    

                                                                        James Rouse, Acting Secretary