BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 113
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE CRAIG-NORTH FIELD, ) ORDER NO. 113-8
MOFFAT COUNTY, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on December 12, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver Colorado, for an order to allow an additional well to be drilled in the 320-acre drilling and spacing units in Section 25 and in the N½ of Section 35, both in Township 8 North, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Lewis Formation.
FINDINGS
The Commission finds as follows:
1. Robert L. Bayless, Producer (“Bayless”), 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 November 26, 1957, the Commission issued Order No. 113-1, which among other things, established 320-acre drilling and spacing units for the production of gas from a member of the upper Lewis Formation, known locally as the Basal Lance, underlying the Craig-North Field, with the permitted well for each unit located in the NE¼ or the SW¼ of each section and not less than 660 feet from the boundaries of the unit. Subsequent orders extended the boundaries of the Craig-North Field by including additional lands under the provisions of Order No. 113-1, including Sections 25 and 35, Township 8 North, Range 91 West, 6th P.M.
5. On October 19, 2007, Bayless, by its attorney, filed with the Commission a verified application for an order to allow an additional well to be drilled in the 320-acre drilling and spacing units in Section 25 and in the N½ of Section 35, both in Township 8 North, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Lewis Formation, with the permitted well to be located no closer than 660 feet from the outside boundary.
6. No protests or other objections were received by the Commission or by the Applicant in response to the application.
7. On November 27, 2007, Bayless, 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. Sworn written testimony and exhibits were submitted in support of the application.
8. Testimony and exhibits submitted in support of the application showed that Bayless has the leasehold interest in the application lands, that there are three surface owners on the application lands, that Bayless has surface use agreements with two of the surface owners, and that one of the surface owners is also a mineral owner with whom the surface use is outlined in the oil and gas lease. Additional testimony indicated that it is Bayless’ intention to drill additional wells from no more than one well site or multi-well site per 160-acre governmental quarter section to minimize surface impact and the amount of time spent on location.
9. Testimony and exhibits submitted in support of the application showed that the Lewis Sandstone is an Upper Cretaceous lenticular turbidite sandstone deposit, that these sandstones were deposited under conditions of decreasing flow regimes by multiple turbidity currents, and that there is considerable variability within these deposits. Additional testimony indicated that the sandstones are very fine-grained and contain kaolinite and chlorite clays, that structural dip is down to the northwest, and that permeability within the Lewis Formation is variable.
10. Testimony and exhibits submitted in support of the application showed that Bayless operates two wells in said Section 25, with projected ultimate recoveries of approximately 1.31 BCF, that drain 109 acres and 69 acres respectively. Additional testimony indicated that these two wells are not capable of fully recovering the gas underlying the two 320-acre drilling and spacing units.
11. Testimony and exhibits submitted in support of the application showed that Bayless operates one well in the NE¼ of said Section 35, with a projected ultimate recovery of approximately 1.2 BCF. Although this well only produces from the lower Lewis Sandstone, it is believed that there are gas reserves underlying the NW¼ of said Section 35 that can only be recovered if a second well is allowed in the 320-acre drilling and spacing unit.
12. The above-referenced testimony and exhibits show that the proposed increased well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
13. Robert L. Bayless, Producer agreed to be bound by an oral order of the Commission.
14. 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 allow an additional well to be drilled in the 320-acre drilling and spacing units in Section 25 and in the N½ of Section 35, both in Township 8 North, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Lewis Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that an additional well is hereby allowed to be drilled in the 320-acre drilling and spacing units in Section 25 and in the N½ of Section 35, both in Township 8 North, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Lewis Formation, with the permitted well to be located no closer than 660 feet from the outside boundary.
IT IS FURTHER ORDERED, that additional wells shall be drilled from no more than one well site or multi-well site per 160-acre governmental quarter section, unless an exception is granted by the Director.
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.
ENTERED this ______ day of December 2007, as of December 12, 2007.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By:______________________________________
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
December 27, 2007