BEFORE THE
IN THE MATTER OF
PROMULGATION AND ) CAUSE NO. 139
ESTABLISHMENT OF
FIELD RULES TO )
GOVERN OPERATIONS
IN THE RULISON ) ORDER NO. 139-80
FIELD,
REPORT OF THE
COMMISSION
This cause came on
for hearing before the Commission at 8:00 a.m. October 2, 2007, in the Public
Hearing Room, Old Court House, 544 Rood Avenue, 2nd Floor, Grand
Junction, Colorado, for an order to
establish 40-acre drilling and spacing units for certain lands in Townships 7
and 8 South, Range 96 West 6th P.M. for the production of gas and
associated hydrocarbons from the Williams Fork and Iles Formations of the
Mesaverde Group.
FINDINGS
The Commission
finds as follows:
1.
PetroHunter Operating Company (“PetroHunter”), 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. Rule 318.a.
of the Rules and Regulations of the Colorado Oil and Gas Conservation
Commission requires wells drilled in excess of 2,500 feet in depth to be
located not less than 600 feet from any lease line, and not less than 1,200
feet from any other producible or drilling oil or gas well when drilling to the
same common source of supply. Certain
lands in Townships 7 and 8 South, Range 96
West, 6th P.M. are subject to this rule.
5. On May 16, 1994, the Commission issued Order
No. 510-1, which among other things, permitted wells to be located no closer
than 400 feet from the boundaries of any lease line and no closer that 800 feet
from any existing Williams Fork Formation wells for certain lands including
Section 34, Township 7 South, Range 96
West, 6th P.M., and for the production of gas and associated
hydrocarbons from the Williams Fork Formation of the Mesaverde Group.
6. On March 20, 2006, the Commission issued
Order No. 139-54, which among other things, established
40-acre drilling and spacing units for the production of gas and
associated hydrocarbons from the Williams Fork Formation, consisting of N½ SW¼
of Section 3 and the E½ SE¼ of Section 4, Township 8 South, Range 96 West, 6th
P.M., with the equivalent of one well per 20 acres allowed.
7. On June 5, 2006, the Commission issued Order
No. 139-62, which among other things, established
40-acre drilling and spacing units for the production of gas and
associated hydrocarbons from the Iles Formation, consisting of the N½ SW¼ of
Section 3 and the E½ SE¼ of Section 4, Township 8 South, Range 96 West, 6th
P.M., and allowing the equivalent of one well per 20 acres.
8. On July 6,
2007, PetroHunter Operating Company (“PetroHunter”), by its attorney, filed
with the Commission a verified application for an order to establish 40-acre
drilling and spacing units for the below-listed lands, for the production of
gas and associated hydrocarbons from the Williams Fork and Iles Formations of
the Mesaverde Group:
Township
7 South, Range 96 West, 6th P.M.
Section 34: SW¼ SE¼
SE¼ SW¼
SE¼ NW¼
SW¼ NE¼
NW¼ SE¼
NE¼ SW¼
Township
8 South, Range 96 West, 6th P.M.
Section 3:
Section 4: NW¼ NW¼
SW¼ NW¼
That all future Williams Fork Formation and Iles
Formation wells shall be located downhole no closer than 100 feet from the
boundaries of the unit unless such unit abuts or corners lands in respect of
which the Commission has not at the time of drilling permit application granted
the right to drill Williams Fork Formation and Iles Formation 10-acre density
wells, in which event the wells shall be drilled downhole no closer than 200
feet from the unit which so abuts or corners the lands in respect of which
10-acre density downhole drilling for the Williams Fork Formation and Iles Formation
wells has not been ordered by the Commission.
In addition, the order should: (a) allow the number of wells which can be optionally
drilled into and produced from the Williams Fork and Iles Formations within the
SE¼ NW¼ of Section 34, Township 7 South, Range 96 West, 6th P.M., to
be the equivalent of one well per 20 acres; and (b) allow the number of wells
which can be optionally drilled into and produced from the Williams Fork and
Iles Formations within the balance of the application lands located within
Section 34, Township 7 South, Range 96 West, 6th P.M., to be the
equivalent of one well per 10 acres.
Further, the order
should: (a) allow the number of wells which
can be optionally drilled into and produced from the Williams Fork and Iles
Formations within that portion of the application lands located in Section 4,
Township 8 South, Range 96 West, 6th P.M., to be the equivalent of
one well per 20 acres; and (b) allow the number of wells which can be
optionally drilled into and produced from the Williams Fork and Iles Formations
within that portion of the application lands located in Section 3, Township 8
South, Range 96 West, 6th P.M., to be the equivalent of one well per
10 acres.
9. In order to
eliminate an overlap between its application and an application simultaneously
filed by Noble Energy, Inc. in Cause No. 139, Docket No. 0708-SP-23,
PetroHunter, by its attorney,
filed with the Commission a written request to remove the following lands from
the application:
Township
8 South, Range 96 West, 6th P.M.
Section 3:
10.
On August 22, 2007, PetroHunter, by its attorney, filed with the
Commission a written request to approve the application based on the merits of
the verified application and the supporting exhibits.
11. Testimony
and exhibits submitted in support of the application showed that the total
acreage in the application lands is approximately 320 acres, all of which are
fee lands. Additional testimony indicated that PetroHunter owns or holds
a portion of the mineral interests underlying the application lands. Further
testimony indicated that the remaining portion of the mineral interests are owned
by Williams Production RMT Co., EnCana Oil & Gas (USA) Inc., Eric Dekam,
Jennifer Dekam, Yates Petroleum Company, Yates Drilling Company, Myco
Industries, Inc. and ABO Petroleum Corporation, who have not objected to PetroHunter’s
application. Testimony indicated that PetroHunter is presently
negotiating surface damage agreements with Steven W. Weller and has previously
entered into a lease agreement prescribing surface use rights with M. Carter
Jolley, Jr. Additional testimony indicated that at the present time, PetroHunter
has not drilled any wells on the application lands and, once drilling
commences, PetroHunter does not intend to drill more than four (4) Williams
Fork Formation and Iles Formation wells downhole per government quarter quarter
section. Further testimony indicated that PetroHunter also does not
intend to have more than one well pad per 40-acre drilling and spacing
unit.
12. Testimony
and exhibits submitted in support of the application showed that the Williams
Fork and Iles Formations of the Mesaverde Group represent a significant gas
resource within the
13. Testimony
and exhibits submitted in support of the application showed that one well
located near the application area would have an estimated ultimate recovery of 858
MMCF of gas from the Williams Fork Formation.
14. Testimony
and exhibits submitted in support of the application showed the recoverable
reserves and the drainage area for a Williams Fork Formation well within the
application lands. Additional testimony indicated that the proposed
spacing for the application lands will prevent waste within the application
area, and the wells in the application lands based on the proposed spacing
rules are economically viable. Testimony indicated that the project is
feasible from engineering and economical standpoints, and that 10-acre well
density would be required to properly drain the Williams Fork and Iles
Formations within the application lands.
15. The above-referenced testimony and exhibits
show that the proposed spacing and density will allow more efficient reservoir
drainage, will prevent waste, will assure a greater ultimate recovery of gas,
and will not violate correlative rights.
16. No
protests to the application have been filed with the Commission or the
Applicant.
17. PetroHunter
Operating Company 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.b., the Commission should enter an order to establish
40-acre drilling and spacing units for
certain lands in Township 7 and 8 South, Range 96 West 6th P.M. for
the production of gas and associated hydrocarbons from the Williams Fork and
Iles Formations of the Mesaverde Group.
ORDER
NOW, THEREFORE, IT
IS ORDERED, that 40-acre drilling and
spacing units are hereby established for the below-listed lands, for the
production of gas and associated hydrocarbons from the Williams Fork and Iles
Formations of the Mesaverde Group:
Township
7 South, Range 96 West, 6th P.M.
Section 34: SW¼ SE¼
SE¼ SW¼
SE¼ NW¼
SW¼ NE¼
NW¼ SE¼
NE¼ SW¼
Township
8 South, Range 96 West, 6th P.M.
Section 4: NW¼ NW¼
SW¼ NW¼
IT IS FURTHER ORDERED, that the equivalent of one well per 20 acres is
hereby allowed to be optionally drilled into and produced from the Williams
Fork and Iles Formations in the below-listed lands:
Township
7 South, Range 96 West, 6th P.M.
Section
34: SE¼ NW¼
Township
8 South, Range 96 West, 6th P.M.
Section 4: NW¼ NW¼, SW¼ NW¼
IT
IS FURTHER ORDERED, that the equivalent of one well per 10 acres is hereby
allowed to be optionally drilled into and produced from the Williams Fork and
Iles Formations within the balance of the application lands located within
Section 34, Township 7 South, Range 96 West, 6th P.M.
Township 7 South, Range 96 West, 6th
P.M.
Section 34: SW¼ SE¼
SE¼ SW¼
SW¼ NE¼
NW¼ SE¼
NE¼ SW¼
IT IS FURTHER ORDERED, that all future Williams Fork
Formation and Iles Formation wells shall be located downhole no closer than 100
feet from the boundaries of the unit unless such unit abuts or corners lands in
respect of which the Commission has not at the time of drilling permit
application granted the right to drill Williams Fork Formation and Iles
Formation 40-acre, 20-acre and 10-acre density wells respectively, in which
event the wells shall be drilled downhole no closer than 200 feet from the unit
which so abuts or corners the lands in respect of which 40-acre, 20-acre and 10-acre
density downhole drilling for the Williams Fork Formation and Iles Formation
wells has not been ordered by the Commission.
IT IS
FURTHER ORDERED, that wells to be drilled under this application shall be
drilled from the surface either vertically or directionally from no more than
one well pad located on a given quarter quarter section unless exception is
granted by the Director of the Colorado Oil and Gas Conservation Commission.
IT IS FURTHER ORDERED, that the provisions contained in the
above order shall become effective forthwith.
IT
IS FURTHER ORDERED, that the Commission expressly reserves its right, after
notice and hearing, to alter, amend or repeal any and/or all of the above
orders.
IT
IS FURTHER ORDERED, that under the State Administrative Procedure Act the
Commission considers this order to be final agency action for purposes of
judicial review within thirty (30) days after the date this order is mailed by
the Commission.
IT
IS FURTHER ORDERED, that an application for reconsideration by the Commission
of this order is not required prior to the filing for judicial review.
CORRECTED this _______ day of November,
2007 as of October 2, 2007.
OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF
By____________________________________
Patricia C. Beaver, Secretary
Dated at
November 1, 2007