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 FOR THE WILLIAMS FORK AND ILES FORMATIONS, RULISON FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 139
DOCKET NO. 171000739
TYPE: SPACING
ORDER NO. 139-126 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 30, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate all approximate 40-acre drilling and spacing units established by Order No. 139-73 for Section 19, Township 7 South, Range 94 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations; 2) maintain 40-acre spacing under Order No. 139-73 within the NEĽNEĽ of Section 19, Township 7 South, Range 94 West, 6th P.M., for the Rulison Federal #19-41C (17M) Well, and exclude the Rulison Federal #19-41C (17M) Well from the proposed drilling and spacing unit for the production of the oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations; and 3) establish one approximate 600-acre drilling and spacing unit for Section 19, Township 7 South, Range 94 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations.
FINDINGS
The Commission finds as follows:
1. Caerus Piceance LLC (Operator No. 10456) (“Caerus” or “Applicant”), 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 May 10, 2007, the Commission entered Order No. 139-73, which among other things, established numerous 40-acre drilling and spacing units for certain lands, including Section 19, Township 7 South, Range 94 West, 6th P.M., and approved the equivalent of one well per 10 acres within each 40-acre unit, for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations.
5. On August 31, 2017, amended June 20, 2018, Caerus, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate all approximate 40-acre drilling and spacing units established by Order No. 139-73 for Section 19, Township 7 South, Range 94 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations; 2) maintain 40-acre spacing under Order No. 139-73 within the NEĽNEĽ of Section 19, Township 7 South, Range 94 West, 6th P.M., for the Rulison Federal #19-41C (17M) Well (API No. 05-045-18772) only, and exclude the Well from the proposed drilling and spacing unit for the production of the oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations; and 3) establish one approximate 600-acre drilling and spacing unit for the below described lands (“Application Lands”), and approve the drilling of one well per 10 acres in the unit, for the production of oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations.
Township 7 South, Range 94 West, 6th P.M.
Section 19: Lots 1-4, E˝W˝, E˝ (All)
6. In the Application, Caerus further requested that the bottom-hole location of the approved wells shall be no less than 100 feet from the north and south unit boundaries and no less than 600 feet from the east and west unit boundaries, unless such east or west boundary abuts or corners lands for which the Commission has, at the time of the drilling permit application, granted the right to locate the bottom-hole of the wellbore closer than 600 feet from the east or west boundary of the proposed unit. Provided, however, that if the Commission has, at the time of the drilling permit application, granted to the owners of the adjacent or cornering lands the right to locate the bottom-hole location of a wellbore on such adjacent or cornering lands closer than 600 feet to the east or west proposed unit boundary, then the bottom-hole location of the wellbores within the proposed unit are authorized to be located at a distance equivalent to that permitted on the adjacent or cornering lands, without exception being granted by the Director. Further, if the Commission has, at the time of the drilling permit application, issued a field-wide order covering the Application Lands and lands adjacent thereto establishing unit boundary setbacks less than those proposed herein, then the bottom-hole location of the wellbores within the proposed unit are authorized to be located consistent with such order, without exception being granted by the Director.
7. On October 16, 2017, TEP Rocky Mountain, LLC (“TEP”) filed a Protest. On December 19, 2017, TEP field a motion to withdraw its Protest. On July 10, 2018, the Hearing Officer granted TEWP’s motion to withdraw its Protest.
8. On June 27, 2018, Caerus, 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.
9. Land testimony and exhibits submitted in support of the Application by Aubree Besant, Director of Land for Caerus, showed that Caerus holds oil and gas leasehold interests and has a right to drill in the Application Lands.
10. Geologic testimony submitted in support of the Application by Michael Leibovitz, Geologist for Caerus, showed the Williams Fork and Iles Formations are present throughout the Application Lands, are approximately 2,800 feet think and are made up of interbedded sandstones and shales deposited in a fluvial floodplain, with the basal 1,800 feet being saturated with gas that can best be accessed by allowing 10-acre bottom-hole well locations.
11. Engineering testimony submitted in support of the Application by James Bautsch, Reservoir Engineer for Caerus, along with testimony demonstrated that the requested one well per 10 acres for the Williams Fork and Iles Formations in the Application Lands, along with the proposed setbacks from the unit boundaries, will promote efficient drainage, protect correlative rights, and prevent waste.
12. 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 hydrocarbons, and will not violate correlative rights.
13. Caerus agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Application, the protest having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter and order: 1) vacating all approximate 40-acre drilling and spacing units established by Order No. 139-73 for Section 19, Township 7 South, Range 94 West, 6th P.M., except in the NEĽNEĽ of Section 19, Township 7 South, Range 94 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations; 2) maintain 40-acre spacing under Order No. 139-73 within the NEĽNEĽ of Section 19, Township 7 South, Range 94 West, 6th P.M., for the Rulison Federal #19-41C (17M) Well only, and exclude the Rulison Federal #19-41C (17M) Well from the proposed drilling and spacing unit for the production of the oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations; and 3) establish one approximate 600-acre drilling and spacing unit for Section 19, Township 7 South, Range 94 West, 6th P.M., and approve the drilling of one well per 10 acres in the unit, for the production of oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations.
ORDER
IT IS HEREBY ORDERED:
1. All 40-acre drilling and spacing units established by Order No. 139-73 for the below described lands for the production of oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations are hereby vacated:
Township 7 South, Range 94 West, 6th P.M.
Section 19: Lots 1-4, E˝W˝, W˝NEĽ, SEĽNEĽ, SEĽ
2. An approximate 40-acre drilling and spacing unit established by Order No. 139-73 for the NEĽNEĽ of Section 19, Township 7 South, Range 94 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Williams Fork and Iles Formations is hereby maintained for the Rulison Federal #19-41C (17M) (API No. 05-045-18772) only. No additional wells shall be drilled in the approximate 40-acre drilling and spacing unit created and pooled by Order No. 139-73. The Rulison Federal #19-41C (17M) shall continue to pay to the approximate 40-acre drilling and spacing unit created and pooled by Order No. 139-73. Upon the plugging and abandonment of the Rulison Federal #19-41C (17M), the approximate 40-acre drilling and spacing unit established by Order No. 139-73 for the NEĽNEĽ of Section 19, Township 7 South, Range 94 West, 6th P.M., shall be deemed vacated.
3. An approximate 600-acre drilling and spacing unit for the below-described lands, is hereby established, and the drilling of one well per 10 acres within the unit is hereby approved, for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 7 South, Range 94 West, 6th P.M.
Section 19: Lots 1-4, E˝W˝, E˝ (All)
4. The bottom-hole location of the approved wells shall be no less than 100 feet from the north and south unit boundaries and no less than 600 feet from the east and west unit boundaries, unless such east or west boundary abuts or corners lands for which the Commission has, at the time of the drilling permit application, granted the right to locate the bottom-hole of the wellbore closer than 600 feet from the east or west boundary of the proposed unit. Provided, however, that if the Commission has, at the time of the drilling permit application, granted to the owners of the adjacent or cornering lands the right to locate the bottom-hole location of a wellbore on such adjacent or cornering lands closer than 600 feet to the east or west proposed unit boundary, then the bottom-hole location of the wellbores within the proposed unit shall be located no closer to the east or west unit boundaries than a distance equivalent to that permitted on the adjacent or cornering lands, without exception being granted by the Director. Further, if the Commission has, at the time of the drilling permit application, issued a field-wide order covering the Application Lands and lands adjacent thereto establishing unit boundary setbacks less than those proposed herein, then the bottom-hole location of the wellbores within the proposed unit are authorized to be located consistent with such order, without exception being granted by the Director.
5. All wells permitted under this Order shall be drilled either vertically or directionally from no more than one wellpad per quarter-quarter section, unless the Director grants an exception.
IT IS FURTHER ORDERED:
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 22nd day of August, 2018, effective as of July 30, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Julie Spence Prine, Secretary