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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 RULISON FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 139
ORDER NO. 139-49 |
This cause came on for hearing before the Commission at 10:00 a.m. on July 11, 2005, in the New Indoor Arena Meeting Facility, Garfield County Fairgrounds, 1001 Railroad Avenue Rifle, Colorado for an order pooling the working interest of Piceance Royalty Partnership LLC (“Piceance Royalty”) in the 320-acre drilling and spacing unit consisting of the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M. for the Clough RWF #14-13 Well, for the development and operation of the Williams Fork Formation.
FINDINGS
The Commission finds as follows:
1. Williams Production RMT Company (“Williams Production”), 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.
4. On February 20, 1990, the Commission issued Order No. 139-14, which established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation underlying certain lands, including the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M.
5. On February 21, 1995, the Commission issued Order Nos. 440-16, 479-5, and 139-28 which, among other things, allowed the 320-acre drilling and spacing units established for certain lands including the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M. to have up to eight (8) wells optionally drilled into and produced from the Williams Fork Formation, with the permitted well to be located no closer than 400 feet from the boundaries of the unit and no closer than 800 feet from any existing Williams Fork Formation well or wells.
6. On May 27, 2005, Williams Production by its attorney, filed with the Commission a verified application for an order to pool all unleased mineral interests in the 320-acre drilling and spacing unit consisting of the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M., for the development and operation of the Williams Fork Formation. The Clough RWF #14-13 Well was drilled as a producing well in the S½ of Section 13. Williams has made reasonable attempts to lease or seek consent to participate in the drilling of this well from Piceance Royalty, but has been unsuccessful in these attempts.
7. Testimony and exhibits presented at the administrative hearing showed that Williams Production had a mineral lease with Ruth Pittenger for certain acreage in the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M. Additional testing indicated that the mineral lease with Mrs. Pittenger expired on August 16, 2004 and prior to the expiration of the mineral lease Mrs. Pittenger sold her mineral rights to Piceance Royalty.
8. Testimony and exhibits presented at the administrative hearing showed that Williams Production submitted a request to Piceance Royalty, dated June 10, 2004, to extend the original Ruth Pittenger mineral lease until August 16, 2005, for an extension period of one year, including a monetary settlement offered for the proposed mineral lease extension. Additional testimony indicated that Piceance Royalty did not execute the mineral lease extension request.
9. Testimony and exhibits presented at the administrative hearing showed that Williams Production offered an AFE dated October 12, 2004 to drill, complete, and equip the Clough RWF #14-13 Well to Piceance Royalty. Additional testimony indicated that Piceance Royalty did not sign the document.
10. Testimony and exhibits presented at the administrative hearing showed that an Operating Agreement dated November 4, 2004 was sent to Piceance Royalty for the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M. Additional testimony indicated that Piceance Royalty did not sign the document.
11. Testimony and exhibits presented at the administrative hearing showed that Williams Production commenced drilling the Clough RWF #14-13 Well on November 25, 2004 and completed the Well on December 16, 2004.
12. Testimony and exhibits presented at the administrative hearing showed that Williams Production has made reasonable attempts to lease or seek consent to participate in the drilling of this well from Piceance Royalty, but has been unsuccessful in these attempts.
13. Williams Production RMT Company agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified application, having received no protest and having been heard by the Hearing Officer who recommended approval, the Commission should approve the application.
ORDER
NOW, THEREFORE IT IS ORDERED that, 1. Pursuant to the provisions of §34-60-116 C.R.S. as amended, of the Oil and Gas Conservation Act of the State of Colorado, all the working interests of Piceance Royalty Partnership LLC in the 320-acre drilling and spacing unit consisting of the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M. are hereby pooled for the development and operation of the Williams Fork Formation.
2. The production obtained from each drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within each drilling unit; each owner of an interest in each drilling unit shall be entitled to receive his/her share of the production of the well located on each drilling unit applicable to his interest in each drilling unit.
3. Said owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the well(s) and be subject to the penalties as provided for by §34‑60‑116 (7), C.R.S.
4. Any nonconsenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his/her record title interest, whatever that interest may be, until such time as the consenting owner recovers, only out of the non-consenting owner's proportionate 87.5% share of production, the costs specified in §34‑60‑116 (7)(b), C.R.S. as amended. After recovery of such costs, the non-consenting mineral owner shall then own his/her proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his/her proportionate share of further costs incurred in connection with the well as if he/she had originally agreed to the drilling.
5. The operator of any well drilled on the above-described unit shall furnish all non-consenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
6. Williams Production RMT Company shall be designated as the operator for the 320-acre drilling and spacing unit consisting of the S½ of Section 13, Township 6 South, Range 94 West, 6th P.M., for the development and operation of the Williams Fork Formation.
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 July, 2005, as of July 11, 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
July 26, 2005