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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 RULISION FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-104 |
This cause came on for hearing before the Commission at 9:00 a.m. on February 23, 2008, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to vacate the 320-acre drilling and spacing unit consisting of the W½ of Section 21, Township 6 South, Range 93 West, 6th P.M. as established in Order No. 139-21, establish an approximate 160-acre drilling and spacing unit consisting of the NW¼ of said Section 21, and allow the equivalent of one well per 10 acres, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
FINDINGS
The Commission finds as follows:
1. Laramie Energy II, LLC (“Laramie”), 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 July 16, 1991, the Commission issued Order No. 139-21, which among other things, established 320-acre drilling and spacing units, including the W½ of Section 21, Township 6 South, Range 93 West, 6th P.M., with the permitted well to be located in the NE¼ and SW¼ of each governmental section and no closer than 600 feet to the boundaries of the quarter section and no closer than 1200 feet from another producing or producible well in the same formation, for the production of gas and associated hydrocarbons from the Mesaverde Formation.
6. On December 5, 2009, the Bureau of Land Management (“BLM”), by its representative, submitted a written protest to the application, which caused Laramie to continue the application to the January hearing in anticipation of filing an amended application.
7. On December 31, 2008, Laramie, by its attorneys, filed with the Commission a written request to continue this matter to the February hearing, and the hearing in this matter has been continued in order to amend and renotice the application.
That as to all future Williams Fork Formation and Iles Formation wells to be drilled upon the requested 160-acre drilling and spacing unit, the wells should be located downhole anywhere in the unit but no closer than 100 feet from the boundaries of the unit, without exception being granted by the Director of the Oil and Gas Conservation Commission. It is provided, however, that in cases where a 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 10-acre density Williams Fork Formation wells, the wells should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands, without exception being granted by the Director of the Oil and Gas Conservation Commission.
That, except as previously authorized by order of the Commission, wells to be drilled under this application should be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) 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 February 9, 2009, Laramie, by its attorneys, filed with the Commission a written request to approve the amended application based on the merits of the verified amended application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the amended application.
11. Testimony and exhibits submitted in support of the application showed that the lands in the vicinity of the application lands have been approved for 10 acre density for the Williams Fork and Iles Formations.
12. Testimony and exhibits submitted in support of the application indicated that the geologic model of the Williams Fork Formation in the major producing areas of the Piceance Basin is well understood and consists of extensive log, completion, and reservoir engineering data from wells inside current 10-acre density areas and the extremely useful and representative nearby outcrops of producing rocks. Additional testimony indicated that based upon outcrop studies, the majority of 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 indicated that 10-acre density drilling is necessary to develop the Williams Fork Formation underlying the application lands. Testimony indicated that the depositional environment of the Iles Formation is similar to that of the Williams Fork Formation and that it is gas bearing underlying the application lands.
13. Testimony and exhibits submitted in support of the application showed that based on gas-in-place calculations, a typical Williams Fork Formation well in the vicinity of the application lands will drain approximately 5 acres, and achieve an estimated ultimate recovery of approximately 536 MMCF. Additional testimony indicated that, in the vicinity of the application lands, the Iles Formation cannot be economically developed by the drilling of stand alone wells but can be developed economically if drilled together with the Williams Fork Formation.
14. 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.
15. Laramie Energy II, LLC agreed to be bound by oral order of the Commission.
ORDER
IT IS FURTHER ORDERED, that the equivalent of one (1) well per 10 acres is hereby approved for the NW¼ of Section 21, Township 6 South, Range 93 West, 6th P.M., for the production gas and associated hydrocarbons from the Williams Fork and Iles Formations.
IT IS FURTHER ORDERED, that for all future Williams Fork Formation and Iles Formation wells to be drilled upon the requested 160-acre drilling and spacing unit, the wells shall be located downhole anywhere in the unit but no closer than 100 feet from the boundaries of the unit, without exception being granted by the Director of the Oil and Gas Conservation Commission. It is provided, however, that in cases where a 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 10-acre density Williams Fork Formation wells, the wells shall be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit 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 quarter quarter section (or lots or parcels approximately equivalent thereto) 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 March, 2009, as of February 23, 2009.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert A. Willis, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
March 12, 2009