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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 COUNTY, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-46 |
This cause came on for hearing before the Commission at 9:00 a.m. on March 22, 2005 in Room 201, Las Animas County Courthouse, 200 East First Street, Trinidad, Colorado for an order to increase the number of wells which can be optionally drilled into and produced from the Iles Formation for certain lands, the equivalent of one Iles Formation well per 20 acres, with each well located downhole in the established drilling and spacing unit, no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission.
The Commission finds as follows:
1. On June 26, 1962, the Commission issued Order No. 139-3, which established 640-acre drilling and spacing units for the production of gas from the Mesaverde Formation, with the permitted well to be located no closer than 990 feet to the boundaries of the quarter section upon which it is located, including the below-listed lands:
Township 7 South, Range 95 West, 6th P.M.
Section 30: All
Section 31: All
Township 7 South, Range 96 West, 6th P.M.
Section 25: All
Section 36: All
2. On January 10, 2005, the Commission issued Order No. 139-44 to increase the number of wells which can be optionally drilled into and produced from the Williams Fork Formation for the above-described lands, the equivalent of one Williams Fork Formation well per 20 acres, with each well located downhole in the established drilling and spacing unit, no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork Formation well without exception being granted by the Colorado Oil and Gas Conservation Commission. The order was requested by Tom Brown Inc. (“TBI”) who committed that wells to be drilled in these lands would be drilled from the surface either vertically or directionally from no more than one well pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission.
3. On January 31, 2005, EnCana Oil and Gas (USA) Inc. (“EnCana”), by its attorney, filed with the Commission a verified application for an order to increase the number of wells which can be optionally drilled into and produced from the Iles Formation for the above-listed lands, the equivalent of one Iles Formation well per 20 acres, with each well located downhole in the established drilling and spacing unit, no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission. EnCana commits that wells to be drilled under this Application will be drilled from the surface either vertically or directionally from no more than one well pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission.
4. Testimony and exhibits presented at the administrative hearing showed that the the application area is located three (3) miles due south of Parachute, Colorado, that the Bureau of Land Management is the major surface owner in the area, and that TBI, Daybreak Realty, LLC and Larry and Karen Klebold own the remaining surface. Additional testimony showed the majority of the minerals in the area are owned by the Bureau of Land Management and leased by TBI, with EnCana having leased approximately eighty percent (80%) of all minerals in the area.
5. Testimony and exhibits presented at the administrative hearing showed that the Iles Formation is a subsection of the lower Mesaverde Group and includes the Cozzette and Corcoran Formations. Additional testimony and exhibits presented showed the Iles Formation is six hundred (600) feet thick in the application area and is at an approximate depth of six thousand (6000) to sixty five hundred (6500) feet.
6. Testimony and exhibits presented at the administrative hearing showed the estimated reserves for this area are 19 BCF per section. Additional testimony and exhibits showed the average porosity of the Iles Formation is 10% and average permeability is 0.3 and 0.4 millidarcies.
7. Testimony and exhibits presented at the administrative hearing showed the necessity of drilling the Iles Formation on 20 acre spacing in the application area.
8. Testimony and exhibits presented at the administrative hearing showed an additional 10.85 BCF of gas will be recovered per section if drilling is allowed for one well per 20 acres. Additional testimony showed that all Iles Formation wells drilled would be deepenings of Williams Fork Formation wells and Iles Formation wells could not be economically drilled as “stand alone” wells. Further testimony showed that additional Iles Formation wells drilled on 20 acre spacing would drain approximately fifty-nine percent (59%) of the original gas.
9. No protests to the application have been filed with the Commission or the Applicant.
10. EnCana Oil and Gas (USA) Inc. agrees to be bound by oral order of the Commission.
11. 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 increase the number of wells which can be optionally drilled into and produced from the Iles Formation for the above-listed lands, the equivalent of one Iles Formation well per 20 acres, with each well located downhole in the established drilling and spacing unit, no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission. The order should specifiy that wells to be drilled under this Application will be drilled from the surface either vertically or directionally from no more than one well pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission.
NOW, THEREFORE, IT IS ORDERED, that Order No. 139-3 is hereby amended to increase the number of wells which can be optionally drilled into and produced from the Iles Formation for the below-listed lands, the equivalent of one Iles Formation well per 20 acres, with each well located downhole in the established drilling and spacing unit, no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission:
Township 7 South, Range 95 West, 6th P.M.
Section 30: All
Section 31: All
Township 7 South, Range 96 West, 6th P.M.
Section 25: All
Section 36: All
IT IS FURTHER ORDERED, that wells drilled under this order shall be drilled from the surface either vertically or directionally from no more than one well pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado 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 April, 2005, as of March 22, 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
April 1, 2005