BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE RULISON FIELD, GARFIELD COUNTY, COLORADO

)

)

)

)

CAUSE NO. 139

 

ORDER NO. 139-111

 

 

REPORT OF THE COMMISSION

 

                        This cause came on for hearing before the Commission on February 22, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres for the E½ SE¼ of Section 17, Township 7 South, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.     EnCana Oil and Gas (USA) Inc. (“EnCana”), 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 Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located 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, unless otherwise approved by an order of the Commission.  The E½ SE¼ of Section 17, Township 7 South, Range 93 West, 6th P.M. is subject to this Rule for the Williams Fork Formation.

 

5.     On October 8, 2010, EnCana, by and through its attorneys, filed with the Commission a verified application (the “Application”) for an order to allow the equivalent of one well per 10 acres to be drilled in the below-described lands (the “Application Lands”), for the production of gas and associated hydrocarbons from the Williams Fork Formation:

 

Township 7 South, Range 93 West, 6th P.M.

Section 17:

E½ SE¼

 

All future Williams Fork Formation wells to be drilled upon under this Application should be located downhole anywhere upon the Application Lands but no closer than 100 feet from the boundaries of any lease line without exception being granted by the Director of the Commission.  It is provided however that in cases where the 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 ten-acre density Williams Fork wells, the well should be located downhole no closer than 200 feet from the boundaries of any lease line so abutting or cornering such lands without exception being granted by the Director of the Commission.

 

Except as previously authorized by order of the Commission, wells to be drilled under this order 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 Commission pursuant to application made for such exception.

 

6.     On December 16, 2010, EnCana, by its attorneys, submitted a written request with Commission for a continuance in this matter; accordingly, this matter was continued to the February Commission hearing.

 

7.     On January 31, 2011, EnCana, 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 as is provided for by Rule 511 Sworn written testimony and exhibits were submitted in support of the Application.

 

8.     Testimony and exhibits submitted in support of the Application by Danielle Scott, Land Negotiator for EnCana, showed that EnCana is the majority leasehold owner in the Application Lands.  The Application Lands are held in fee both for surface ownership and mineral ownership.  Lands neighboring the Application Lands are subject to Commission Orders allowing the equivalent of one Williams Fork Formation well per 10 acres, with the permitted well to be located no closer than 100 feet from the drilling and spacing unit boundary. 

9.     Testimony and exhibits submitted in support of the Application by Thomas Wiles, Geologist for EnCana, indicated that the Williams Fork Formation is a member of the Mesaverde Group, is a common course of supply and, due to the heterogeneity of the formation, increased density to one well per 10 acres is necessary to recover the hydrocarbon reserves.     

 

10.   Testimony and exhibits submitted in support of the Application by Lafell T. Loveland, Reservoir Engineer for EnCana, showed that EnCana has drilled, tested and completed wells in the Williams Fork Formation of the Mesaverde Group upon lands near the Application Lands with results that illustrate the Application Lands should be drilled on a ten-acre density basis.  One well per 10 acres on the Application Lands will increase resource recovery by 66.8 BCF equivalent.  The increased well density will increase the ultimate recovery of the hydrocarbon resource without capital waste.              

 

11.   The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

 

12.   EnCana agreed to be bound by oral order of the Commission. 

 

13.   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., the Commission should enter an order to allow the equivalent of one well per 10 acres for the E½ SE¼ of Section 17, Township 7 South, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved for the below-described lands, for the production of gas and associated hydrocarbons from the Williams Fork Formation:

 

Township 7 South, Range 93 West, 6th P.M.

Section 17:

E½ SE¼

 

IT IS FURTHER ORDERED, that all future Williams Fork Formation wells to be drilled upon under this Order shall be located downhole anywhere upon the Application Lands but no closer than 100 feet from the boundaries of any lease line without exception being granted by the Director of the Commission.  It is provided however that in cases where the 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 wells, the well shall be located downhole no closer than 200 feet from the boundaries of any lease line so abutting or cornering such lands without exception being granted by the Director of the Commission.

 

IT IS FURTHER ORDERED, that, except as previously authorized by order of the Commission, wells to be drilled under this order 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 Commission pursuant to application made for such exception.

 

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

           

                        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  8th  day of March, 2011, as of February 22, 2011.

                                                       

                                                                        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 8, 2011