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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 AND MESA COUNTIES, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-45 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on February 14, 2005 in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado for an order to establish 40-acre drilling and spacing units for certain lands, allowing up to one Williams Fork Formation well per 10 acres which can be optionally drilled into and produced from the Williams Fork Formation, located downhole anywhere in the drilling and spacing 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.
FINDINGS
The Commission finds as follows:
1. On December 27, 2004, Noble Energy Inc. (“Noble”), by its attorney, filed with the Commission a verified application for an order to establish 40-acre drilling and spacing units for the below-listed lands, allowing up to one Williams Fork Formation well per 10 acres which can be optionally drilled into and produced from the Williams Fork Formation, located downhole anywhere in the drilling and spacing 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. In cases where the below-listed lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, the well 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.
Township 8
South, Range 95 West, 6th P.M.
Section 6: All
Section 7: All
Section 18: Resurvey Tract #41; (originally
described as W½ SE¼ of Section 7, and the NW¼ NE¼, NE¼ NW¼ of Section 18
(containing 160.00 acres)
Resurvey Tract #40; (originally described as Lots 3 and 4 and SE¼ SW¼ of
Section 7)
Township 8
South, Range 96 West, 6th P.M.
Section 1: W½, W½ NE¼, W½ SE¼, SE¼ SE¼
Section 2: E½, E½ SW¼
Section 11: E½, SE¼ NW¼, NE¼ SW¼
Section 12: All
Section 13: E½ NW¼, NW¼ NE¼, SW¼ NW¼
2. Testimony and exhibits presented at the administrative hearing showed previously spaced lands in the surrounding townships near the application lands proposed for 40-acre drilling and spacing units.
3. Testimony and exhibits presented at the administrative hearing showed the eight (8) wells drilled by Noble and the proposed 40-acre drilling and spacing units in the irregular Sections 6 and 7, Township 8 South, Range 95 West, 6th P.M. Additional testimony showed that two (2) wells have been completed but are not yet producing, with the remaining wells in various stages of completion. Further testimony described the access road and the location of the production facility, and indicated that the surface owner owns a portion of the fee minerals.
4. Testimony and exhibits presented at the administrative hearing showed a copy of a typical lease that contains a surface agreement and pooling provisions, and a topographic map and an oil and gas plat map to show the areas of steep topography and the irregular sections. Additional testimony indicated that grazing is the primary surface use of the application lands.
5. Testimony and exhibits presented at the administrative hearing showed a stratigraphic chart, type log for the Piceance Basin, stratigraphic units of the Williams Fork Formation, type log of the Williams Fork Formation, and a stratigraphic cross section of the Williams Fork Formation to show the Mesaverde outcrop, the many vertically stacked fluvial, meander belt point bar sand bodies present in the Williams Fork Formation and the regional thinning of the Williams Fork Formation. Additional testimony showed that the sand bodies in the Williams Fork Formation are highly discontinuous, with very limited lateral extent, difficult to correlate, and very low permeability.
6. Testimony and exhibits presented at the administrative hearing showed gross and net continuous sand intervals and variations in the gas saturated interval in these wells. Additional testimony showed thickness variation in the Williams Fork Formation basin center gas accumulation in the Piceance Basin.
7. Testimony and exhibits presented at the administrative hearing showed sand thickness variation and differential compaction, Grand Valley South, Grand Valley and Rulison cross sections, facies characterization from image interpretation and open hole log character, scour surface and cross bedding, and classification of Williams Fork Formation fluvial sandstones, to demonstrate the lenticular nature of the sandstone with limited aerial extent, similar to the previously spaced areas.
8. Testimony and exhibits presented at the administrative hearing showed permeability plots of the Williams Fork Formation from the multi-well experiment project near Rulison Field, indicating that porosity varies from five (5) to fourteen (14) percent, and permeability varies from .001 to .02 milidarcies, requiring an increased well density to recover gas reserves.
9. Testimony and exhibits presented at the administrative hearing showed core data measured permeability, fracture permeability, natural and induced fracture orientation, fault attitude analysis, and fracture system interpretation, to show that natural fracturing significantly increases permeability and production. Additional testimony indicated that closed and mineralized fractures compartmentalize individual lenticular sands, reducing the estimated ultimate recovery and the small drainage area.
10. Testimony and exhibits presented at the administrative hearing showed the elliptical drainage pattern resulting from hydraulic fracturing and sand body orientation.
11. Testimony and exhibits presented at the administrative hearing showed that ten (10) acre density is needed to optimize Williams Fork Formation gas recovery.
12. Testimony and exhibits presented at the administrative hearing showed the analysis of production history for the wells near the application lands.
13. Testimony and exhibits presented at the administrative hearing showed the time and initial rate normalized production history for three (3) nearby Tom Brown Inc. wells with production data for more than three (3) months, and that a twenty-five percent (25%) annual decline rate was utilized to assist in predicting an estimated ultimate recovery for Noble’s wells.
14. Testimony and exhibits presented at the administrative hearing showed predicated cumulative production ranging from 336,647 MCFG to 841,617 MCFG and predicated drainage areas ranging from 7.49 acres to 15.71 acres for the three (3) wells with production data ranging from 39 months to 69 months. Additional testimony indicated that the initial production rate for Noble’s wells is most similar to the Tom Brown Inc. well draining 7.49 acres rather than the well with a larger predicted drainage area.
15. The above-referenced exhibits show that forty (40) acres is not smaller than the maximum size drilling and spacing unit that can be economically and efficiently drained by one well, and that the proposed 10-acre density will allow more efficient drainage, will prevent waste, will not violate correlative rights and will assure a greater ultimate recovery of gas and associated hydrocarbons.
16. Noble does not intend to drill more than four (4) Williams Fork Formation wells downhole per government quarter quarter section, and commits to drill wells either vertically or directionally from no more than one (1) well pad located on a given quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
17. No protests to the application have been filed with the Commission or the Applicant.
18. Noble Energy Inc. agrees to be bound by oral order of the Commission.
19. Based on the facts stated in the verified application, having received no protests to the application and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to establish 40-acre frilling and spacing units for the lands described above in Finding No. 1, with the permitted well to be located no closer than 100 feet from the unit boundary, for the production of gas and associated hydrocarbons from the Williams Fork Formation.
NOW, THEREFORE, IT IS ORDERED, that 40-acre drilling and spacing units are hereby established for the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork Formation:
Township 8
South, Range 95 West, 6th P.M.
Section 6: All
Section 7: All
Section 18: Resurvey Tract #41; (originally
described as W½ SE¼ of Section 7, and the NW¼ NE¼, NE¼ NW¼ of Section 18
(containing 160.00 acres)
Resurvey Tract #40; (originally described as Lots 3 and 4 and SE¼ SW¼ of
Section 7)
Township 8
South, Range 96 West, 6th P.M.
Section 1: W½, W½ NE¼, W½ SE¼, SE¼ SE¼
Section 2: E½, E½ SW¼
Section 11: E½, SE¼ NW¼, NE¼ SW¼
Section 12: All
Section 13: E½ NW¼, NW¼ NE¼, SW¼ NW¼
IT IS FURTHER ORDERED, that the permitted well shall be located downhole anywhere in the drilling and spacing 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. In cases where the below-listed lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, the well 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.
IT IS FURTHER ORDERED, that no more than four (4) Williams Fork Formation wells downhole per government quarter quarter section shall be allowed, and that wells shall be drilled either vertically or directionally from no more than one (1) well pad located on a given quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
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 2005, as of February 14, 2005.
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
February 28, 2005