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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 IN THE RULISON FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-101 |
This cause came on for hearing before the Commission at 9:00 a.m. on September 22, 2008, in the Sabin-Cleere Conference Room, Building A, Colorado Department of Public Health and Environment, 4300 Cherry Creek Drive South, Denver, Colorado, for an order to allow the equivalent of one well per 9 acres, with the permitted well to be located no closer than 100 feet from the lease line for Lots 3 and 4 in Section 17, Township 7 South, Range 94 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
FINDINGS
The Commission finds as follows:
1. Noble Energy Inc. (“Noble”), 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 April 20, 1990, the Commission issued Order No. 139-16 which, among other things, established 640-acre drilling and spacing units for certain lands including Section 17, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Mesaverde Formation.
5. On July 1, 1997, the Commission issued Order No. 139-31 which, among other things, authorized up to 16 wells to be optionally drilled per 640-acre drilling and spacing unit for certain lands including Section 17, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group.
6. On April 24, 2006, the Commission issued Order No. 139-59 (Corrected), which, among other things, allowed one (1) well per 10 acres to be drilled on certain lands including Section 17, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Iles Formation, with the permitted well to be located no closer than 100 feet from the boundaries of the unit and no closer than 200 feet from any existing Williams Fork Formation well or wells.
7. On June 5, 2006, the Commission issued Order No. 139-61 (Corrected), which, among other things, allowed one (1) well per 10 acres to be drilled on certain lands including Section 17, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 100 feet from the boundaries of the unit and no closer than 200 feet from any existing Williams Fork Formation well or wells.
8. On March 26, 2007, the Commission issued Order No. 139-73 which, among other things, established 40-acre drilling and spacing units for certain lands including Section 17, Township 7 South, Range 94 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing up to one (1) well per 10 acres.
9. On August 7, 2008, Noble, by its attorneys, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 9 acres for Lot 3 (27.49 acres) and Lot 4 (26.96 acres) of Section 17, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
All future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands should be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
Except as previously authorized by order of the Commission, wells to be drilled under this application will be drilled from the surface either vertically or directionally from no more than one pad located on a given lot or parcel unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception. In addition, all wells drilled to the Iles Formation will be drilled only in connection with the drilling of Williams Fork Formation wells.
10. On September 11, 2008, Noble, by its attorneys, 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.
11. Testimony and exhibits submitted in support of the application showed that Noble is the leasehold owner for the application lands, and that, under Order No. 139-73, the application lands have been approved for 10-acre well density for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
12. Testimony and exhibits submitted in support of the application showed that the Williams Fork and Iles Formations are members of the Mesaverde Group and are common sources of supply, and due to the heterogeneity of the formations, 10-acre well density, at least, is necessary to efficiently drain the gas reserves while protecting correlative rights. Additional testimony indicated that based upon cross section, the discontinuous sand bodies within the Williams Fork Formation are smaller than the distance between wells drilled on a 10-acre density basis. Further testimony showed that the sands of the Iles Formation were deposited in a similar environment as the Williams Fork Formation but are more continuous and predictable that what is seen in the Williams Fork Formation. Testimony indicated that six wells drilled at 9-acre density drilling are necessary to efficiently develop the Williams Fork and Iles Formations underlying the application lands and prevent waste, while having no adverse affect on correlative rights.
13. Testimony and exhibits submitted in support of the application showed that the original gas-in-place (“GIP”) for the Williams Fork Formation underlying application lands is approximately 12 BCF. Additional testimony showed that, based on reservoir analysis of an adjacent Williams Fork Formation well, original GIP for a Williams Fork Formation well on the application lands is estimated to be 2.2 BCF, and that, based on an estimated recovery of 65% GIP, the estimated ultimate recovery will be approximately 1.2 BCF, which implies that approximately 8 acres are being effectively drained. Further testimony indicated that under the current spacing and well density order for the application lands, four Williams Fork Formation wells would be able to recover an estimated 4.8 BCF, yielding an estimated recovery of 40% GIP and leaving behind approximately 3 BCF of recoverable gas. Testimony showed that under the proposed 9-acre well density, two additional Williams Fork Formation wells would be able to recover an additional 2.4 BCF, which would more efficiently drain the reservoir. Testimony indicated that 9-acre density drilling is necessary to economically and efficiently develop the Williams Fork and Iles Formations underlying the application lands and prevent waste, while having no adverse affect on correlative rights.
14. 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.
15. Noble Energy Inc. agreed to be bound by oral order of the Commission.
NOW, THEREFORE IT IS ORDERED, that the equivalent of one (1) well per 9 acres is hereby approved for Lot 3 (27.49 acres) and Lot 4 (26.96 acres) of Section 17, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
IT IS FURTHER ORDERED, that all future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands shall be located downhole anywhere within the application lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the application lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given lot or parcel unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception. In addition, all wells drilled to the Iles Formation shall be drilled only in connection with the drilling of Williams Fork Formation wells.
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 September, 2008, as of September 22, 2008.
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
September 23, 2008