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, ARCHULETA County, Colorado.
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CASUSE NO. 112
DOCKET NO. 180600446
TYPE: EXCEPTION LOCATION
ORDER NO. 112-284
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REPORT OF THE COMMISSION
The Commission heard this matter on June 11, 2018, at the Lindou Auditorium - Michener Library, University of Northern Colorado (UNC), 501 20th Street, Greeley, Colorado, upon application for an order to except Sections 21 and 27, Township 34 North, Range 5 West, N.M.P.M. (S.U.L.), from Order Nos. 112-60, 112-61, and 112-85, for the development and operations of the Fruitland Coal Seams.
FINDINGS
The Commission finds as follows:
1. Catamount Energy Partners, LLC (Operator No. 10464) (“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 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 vertical well at a designated location for each unit located no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line. The Bull Creek Unit lands (f/k/a Pargin Mountain Unit) were made 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 Bull Creek Unit lands (f/k/a Pargin Mountain Unit) were made subject to this Order.
6. On December 31, 1990, the Commission entered Order No. 112-85, which amended Order No. 112-61 to add two additional field rules for wells producing from among others, the Fruitland Coal Formation. The Application Lands are subject to this Order.
7. On November, 21, 1988, the Commission entered Order No. 112-62, which excluded the Bull Creek Unit (f/k/a Pargin Mountain Unit) from the lands subject to Order Nos. 112-60 and 112-61 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. However, Order No, 112-62 did not exclude the Application Lands – Sections 21 and 27, Township 34 North, Range 5 West, N.M.P.M. (S.U.L.) – from Order Nos. 112-60 and 112-61. Thus, the Application Lands remained subject to Order Nos. 112-60 and 112-61.
8. The lands comprising the Bull Creek Unit, except the Application Lands, were included in what was formerly known as the federal Pargin Mountain Unit, approved by the Bureau of Land Management effective July 29, 1986, with Amoco Production Company as the original unit operator. Applicant became the successor operator. The initial Fruitland Formation Participating Area (P.A.) “A”, approved effective June 30, 1988, contains 200 acres, and the Fruitland Formation P.A. “B”, approved effective December 1, 1995, contains 1,000.56 acres. Effective June 30, 1998 (the 10th anniversary of the initial P.A.), the unit contracted to the boundaries of the two Participating Areas, which are adjacent to, but not included in, the Bull Creek Unit.
9. 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.
10. Effective May 6, 2017, the Bull Creek Unit (COC068667X) was approved by the Bureau of Land Management with Elm Ridge Resources, Inc. named as the original unit operator pursuant to the Unit Agreement for the Development and Operation of the Bull Creek Area, County of Archuleta, State of Colorado, dated December 3, 2004. Applicant is the current designated successor operator. The Bull Creek Unit is an approved federal unit and therefore subject to Rule 318.d.(3). However, Sections 21 and 27, Township 34 North, Range 5 West, N.M.P.M. (S.U.L.) – the Application Lands – which are included in the Bull Creek Unit are still subject to Order 112-60, 112-61, and 112-85.
11. On April 12, 2018, Catamount, by its attorneys, filed with the Commission an Application (“Application”) for an order excepting Sections 21 and 27, Township 34 North, Range 5 West, N.M.P.M. (S.U.L.), from Commission Order 112-60, 112-61, and 112-85, and to make the following described Application Lands subject to Commission Rule 318.d.(3) for the development and operation of the Fruitland Coal Seams:
Township 34 North, Range 5 West, N.M.P.M., (S.U.L.)
Section 21: All
Section 27: All
Bull Creek Unit
Township 33 North, Range 5 West
Section 5: Lots 3, 4
Section 6: Lots 1, 2
Township 34 North, Range 5 West
Section 19: All
Section 20: All
Section 21: All
Section 26: W/SW
Section 27: All
Section 28: All
Section 29: All
Section 30: All
Section 31: All
Section 32: N/2, W/2SW, NESE
Section 33: All
Section 34: NWNW
Township 34 North, Range 6 West
Section 1U: All
Section 2U: All
Section 11U: All
Section 12U: All
Section 13U: All
Section 14U: All
Section 23: All
Section 24: All
Section 25: All
Section 26: All
Section 36: All
12. On May 18, 2018, Catamount filed with Commission 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.
13. On May 8, 2018, 2018, the Bureau of Land Management (“BLM”)t and he Southern Ute Indian Tribe (“SUIT”) submitted a letter of support and concurrence of the Application.
14. Land testimony and exhibits submitted in support of the Application by Denise Greer, Senior Landman for Catamount, showed that Catamount holds oil and gas leasehold interests and has a right to drill in the Application Lands.
15. Geologic testimony and exhibits submitted in support of the Application by Russell Kelly, Sr. Vice President for Catamount, showed that the Fruitland Coal Formation is present throughout the Application Lands, and that the Application Lands are underlain by approximately 38 feet of net coal.
16. Engineering testimony and exhibits submitted in support of the Application by Craig Reid, President of Catamount, showed that the exception location will result in the efficient, economic, and effective productive of the Fruitland Coal Seams, and that the Application will prevent waste and protect correlative rights.
17. Catamount agreed to be bound by oral order of the Commission.
18. 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 excepting Sections 21 and 27, Township 34 North, Range 5 West, N.M.P.M. (S.U.L.), from Commission Order 112-60, 112-61, and 112-85 to establish well location rules consistent with Commission Rule 318.d.(3) for the development and operations of the Fruitland Coal Seams covering the Application Lands.
ORDER
IT IS HEREBY ORDERED:
1. The below described lands are hereby excepted from Order Nos. 112-60, 112-61, and 112-85, and are made subject to Commission Rule 318.d.(3)., such that horizontal wellbores located within the unit and drilled to a depth less than 2,500 feet should be located no closer than 200 feet from the exterior unit boundaries, and any horizontal wellbores drilled within the unit at a depth greater than 2,500 feet should be located no closer than 600 feet from the exterior unit boundaries, with no interior quarter-section setbacks, without exception being granted by the Director:
Township 34 North, Range 5 West, N.M.P.M., (S.U.L.)
Section 21: All
Section 27: All
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.
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 10th day of July, 2018, as of June 11, 2018
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_________________________________
Julie Spence Prine, Secretary