|
BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
|
||
|
IN THE MATTER THE PROMULGATION AND ESTABLISHMENTOF FIELD RULES TO GOVERN OPERATIONS IN THE RULISON FIELD, GARFIELD COUNTY, COLORADO
|
) ) ) ) |
CAUSE NO. 139
ORDER NO. 139-43 |
This cause came on for hearing before the Commission at 9:00 a.m. on February 10, 2004, in Room 100, 108 8th Street, Garfield County Courthouse Plaza, Glenwood Springs, Colorado for an order to amend Order No. 139-16 to increase the number of wells which can be drilled into and produced from the Williams Fork Formation of the Mesaverde Group for certain lands in the Rulison Field.
The Commission finds as follows:
1. Presco, Inc. (“Presco”) 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 18, 1990, the Commission issued Order No. 139-16, which among other things established 640-acre drilling and spacing units for production of gas from the Mesaverde Formation for certain lands in the Rulison Field, which include the application lands, with the permitted well to be located no less than 600 feet from the unit boundaries and at least 1200 feet from the nearest well producing from the same source of supply.
5. On December 22, 2003, Presco, by its attorney, filed with the Commission a verified application for an order to amend Order No. 139-16 to increase the number of wells which can be drilled into and produced from the Williams Fork Formation of the Mesaverde Group for the below-listed lands to the equivalent of one (1) well per 40 acres, with the permitted downhole location to be located no closer than 240 feet from the boundaries of the drilling and spacing unit and no closer downhole than 800 feet from any existing Williams Fork well or wells without an exception being granted by the Director.
Township 7 South, Range 94 West, 6th P.M.
Sections 30 and 31: All
Township 7 South, Range 95 West, 6th P.M.
Sections 25 and 26: All
Sections 35 and 36: All
6. Testimony and exhibits presented at the administrative hearing showed the outline of the application lands, which consists of six sections in the Rulison Field in Garfield County. A land map showed the outlines of the mineral lease ownership of Presco, Tom Brown, Inc., and Williams Production Company, as well as unleased lands, within the application lands. Additional testimony indicated that all interested parties were notified of the application, and that no protests were received.
7. Testimony and exhibits presented at the administrative hearing showed that the application lands are located in the Piceance Basin in northwest Colorado, and that the Mesaverde Group, which includes the Williams Fork Formation, is up to four thousand (4,000) feet thick in the basin. Additional testimony indicated that the Williams Fork Formation consists of numerous fluvial deposits that are discontinuous and heterogeneous in nature, with sand bodies that have an average lateral extent of less than six hundred and sixty (660) feet. Further testimony indicated that information that supported the above description was presented in depth at the Rocky Mountain Association of Geologists/American Institute of Professional Geologists October 4th and 5th, 2003 field trip entitled “Stratigraphic Architecture and Reservoir Characterics of the Mesaverde Group, Southern Piceance Basin, Colorado” that was conducted in various locations in the Piceance Basin near the application lands, and which Presco’s witness and a Commission Hearing Officer both attended.
8. Testimony and exhibits presented at the administrative hearing showed the numerous sand body objectives for natural gas production in the Williams Fork Formation, including the Cameo zone. Additional testimony and exhibits showed a Mesaverde Formation structural high to the northwest of the application lands with a general dip of the Mesaverde Formation to the northeast and the location of the wells nearby and within the application lands that have been integrated into the study area for the application. Further testimony and exhibits showed the locations of the numerous Williams Fork Formation wells in the Grand Valley, Parachute, and Rulison fields, which are located within five (5) to twelve (12) miles from the application lands, and which have previously been approved for ten (10) acre density for production from the Williams Fork Formation.
9. Testimony and exhibits presented at the administrative hearing showed an expected thickness of the Williams Fork Formation of from three thousand (3,000) feet up to three thousand and two hundred (3,200) feet for the application lands, which is an adequate thickness to support the net pay thickness of three hundred thirteen (313) feet used in the estimated ultimate recovery calculations for the application lands.
10. Testimony and exhibits presented at the administrative hearing showed that the calculated gas-in-place from the log analysis was one hundred seven and eight tenths (107.8) billion cubic feet (BCF) per section. This estimate is within the range of the previous estimates from the United States Geologic Survey 1987 Study (one hundred ten and nine tenths (110.9) BCF per section), the Rulison Multiwell Experiment (MWX) Project (one hundred twenty and nine tenths (120.9) BCF per section), the Gas Research Institute 1999 Report (seventy (70) to one hundred seventy (170) BCF per section), and the Project Rulison nuclear natural gas stimulation experiment (ninety (90) to one hundred twenty five (125) BCF per section). Additional testimony indicated that the decline curve analysis for the study area wells near the application lands resulted in an average estimated ultimate recovery of one and five tenths (1.5) BCF per well, which compares closely with ultimate recovery estimates for the numerous wells in the Grand Valley, Parachute, and Rulison fields located north of the application lands. Further testimony indicated that if the application were approved and wells were allowed to be drilled on forty (40) acre density, the sixteen (16) wells per section would result in an estimated ultimate recovery of twenty four (24) BCF per section, which would result in a recovery factor of twenty-two percent (22%) of the original gas-in-place.
11. Testimony and exhibits presented at the administrative hearing showed that the two wells used for the 1969 Project Rulison nuclear natural gas stimulation experiment, the Austral Oil Hayward #25-95 (R-E) nuclear device emplacement well and the Austral Oil Hayward #25-95 (R-EX) directionally drilled re-entry well, both located in the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M., are located within the application lands. Additional testimony indicated that as a precaution the federal government does not permit any well to be drilled below a depth of six thousand (6,000) feet within the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M. Further testimony referred to a Colorado Oil and Gas Conservation Commission May 5, 1998 literature search report by Deputy Director Brian Macke about Project Rulison which concluded that natural gas well drilling should be permitted outside of the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M. This conclusion was based on the extremely low probability of encountering gas with radiation activity due to the limited radius of the chimney cavity and fracture zone created by the nuclear detonation, the limited aerial extent of the sandstone lenses within the Williams Fork Formation, and the lack of remaining contaminated gas following the extensive production testing of the re-entry well in 1970 and 1971. Additional testimony indicated that the nearest wells to the Project Rulison site that are planned to be drilled by Presco would be one thousand two hundred (1,200) feet to the northeast and one thousand six hundred (1,600) feet to the southeast of the Austral Oil Hayward #25-95 (R-E) well, both of which are outside of the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M.
12. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, this matter was placed on the Commission’s consent agenda for approval to enter an order to amend Order No. 139-16 to increase the number of wells which can be drilled into and produced from the Williams Fork Formation of the Mesaverde Group for the lands described above in Finding No. 5 to the equivalent of one (1) well per 40 acres, with the permitted downhole location to be located no closer than 240 feet from the boundaries of the drilling and spacing unit and no closer downhole than 800 feet from any existing Williams Fork well or wells without an exception being granted by the Director.
13. At the time of the hearing, the Commission removed the matter from the consent agenda to further discuss concerns related to the Project Rulison site. After deliberations, the Commission expressed safety concerns regarding drilling near Project Rulison and approved the application with a requirement that for any wells proposed to be drilled within one half (½) mile of the Austral Oil Hayward #25-95 (R-E) Well in Lot 11 of the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M. a hearing before the Commission should be held prior to approval of any Application for Permit-to-Drill, Form 2.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Order No. 139-16 is hereby amended to increase the number of wells which can be drilled into and produced from the Williams Fork Formation of the Mesaverde Group for the below-listed lands to the equivalent of one (1) well per 40 acres, with the permitted downhole location to be located no closer than 240 feet from the boundaries of the drilling and spacing unit and no closer downhole than 800 feet from any existing Williams Fork well or wells without an exception being granted by the Director:
Township 7 South, Range 94 West, 6th P.M.
Sections 30 and 31: All
Township 7 South, Range 95 West, 6th P.M.
Sections 25 and 26: All
Sections 35 and 36: All
IT IS FURTHER ORDERED, that for any wells proposed to be drilled within one half (½) mile of the Austral Oil Hayward #25-95 (R-E) Well in Lot 11 of the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M., a hearing before the Commission shall be held prior to approval of any Application for Permit-to-Drill, Form 2.
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 February, 2004, February 10, 2004.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By _______________________________________
Dated at Suite 801 Patricia C. Beaver, Secretary
1120 Lincoln Street
Denver, Colorado 80203
February 13, 2004