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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. 139-50 |
This cause came on for hearing before the Commission at 11:00 a.m. on September 26, 2005 in the Sky Ute Casino, Rolling Thunder Hall, 14826 Highway 172 North, Ignacio, Colorado for an order to increase the number of wells which can be optionally drilled into and produced from the Williams Fork and Iles Formations for certain lands in Township 7 South, Range 94 West, 6th P.M., the equivalent of one Williams Fork and Iles Formation well per 20 acres, or thirty-two wells for each 640 acre drilling and spacing unit, with each well located no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork and Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission.
FINDINGS
The Commission finds as follows:
1. EnCana Oil & Gas (USA), Inc. (“EnCana”), 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 March 21, 1961, the Commission issued Order No. 139-2, which among other things, established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation, with the permitted wells to be located in either the NW¼ or the SE¼, and no closer than 990 feet from the outer boundaries of the drilling unit. Subsequent orders established 640-acre drilling and spacing units in the Williams Fork Formation of the Mesaverde Group for the production of gas and associated hydrocarbons and allowed up to 16 wells to be drilled into and produced from the Williams Fork Formation within each drilling and spacing unit, with the permitted well to be located no closer than 400 feet from the boundaries of the drilling unit and no closer downhole than 800 feet from any existing Williams Fork Formation well or wells for the below-described lands:
Township 7 South, Range 94 West, 6th P.M.
Sections 10 and 11: All
5. On February 12, 1988, the Commission issued Order No. 139-11, which among other things, established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation, with the permitted well to be located no closer than 600 feet from the outer boundaries of the drilling unit and no closer than 1200 feet from the nearest well producing from the same source of supply, with the option of drilling two wells for the below-described lands:
Township 7 South, Range 94 West, 6th P.M.
Sections 1 and 2: All
6. On April 20, 1990, the Commission issued Order No. 139-16, which among other things, established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation, with the permitted well to be located either the NE¼ or the SW¼ and no closer than 600 feet from unit boundaries and at least 1200 feet from the nearest well producing from the same source of supply for the below-described lands. On July 1, 1997, the Commission issued Order No. 139-31, which allowed up to 16 wells to be drilled into and produced from the Williams Fork Formation of the Mesaverde Group within each designated 640-acre drilling and spacing unit, with the permitted well to be located no closer than 400 feet from the boundaries of the drilling unit and no closer than 800 feet from any well producing from the same formation for the below-described lands:
Township 7 South, Range 94 West, 6th P.M.
Section 16: All
7. On August 8, 2005, 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 Williams Fork and Iles Formations for the above-listed lands, the equivalent of one Williams Fork and Iles Formation well per 20 acres, or thirty-two wells for each 640 acre drilling and spacing unit, with each well located no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork and Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission. Applicant 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, and that both the Williams Fork and Iles Formations will be reached from a single wellbore, i.e., separate wells will not be drilled to reach each formation.
8. Testimony and exhibits presented at the administrative hearing showed that Encana is the majority Williams Fork Formation and Iles Formation leasehold owner in the application lands.
9. Testimony and exhibits presented at the administrative hearing showed that the Williams Fork and Iles Formations are subsections of the Mesaverde Group.
10. Testimony and exhibits presented at the administrative hearing showed that the Williams Fork Formation is between eight thousand (8,000) and ten thousand (10,000) feet thick in the application area.
11. Testimony and exhibits presented at the administrative hearing showed that the estimated Williams Fork Formation reserves for the application lands vary from approximately fifty (50) to one hundred fifty (150) BCF per section and that the estimated Iles Formation reserves for the application lands vary from approximately twenty-five (25) to forty-five (45) BCF per section.
12. Testimony and exhibits presented at the administrative hearing showed that core data indicates the average porosity of the Iles Formation is six percent (6%) and the average permeability is 0.009 millidarcies.
13. Testimony and exhibits presented at the administrative hearing showed that hydraulically induced fractures will propagate in a northwest-southeast orientation, creating an elliptical northwest-southeast drainage pattern in the application area.
14. Testimony and exhibits presented at the administrative hearing showed that current well density will not effectively drain the Williams Fork and Iles Formations. Additional testimony indicated that an average of approximately fourteen (14) acres are drained by one well in the application area.
15. Testimony and exhibits presented at the administrative hearing showed that increasing well density from 40 to 20 acres in the application area will increase the estimated ultimate recovery from 20.6 BCF per section to 41.3 BCF per section for the Williams Fork Formation, an incremental estimated ultimate recovery increase of 20.7 BCF per section.
16. Testimony and exhibits presented at the administrative hearing showed that increasing well density from 40 to 20 acres in the application area will increase the estimated ultimate recovery from 6.5 BCF per section to 11.2 BCF per section for the Iles Formation, an incremental estimated ultimate recovery increase of 4.7 BCF per section. Additional testimony indicated that Iles Formation wells could not be economically drilled as “stand alone” wells and that existing Williams Fork Formation wells would be deepened to the Iles Formation.
17. No protests to the application were filed with the Commission or the Applicant.
18. EnCana Oil and Gas (USA) Inc. agreed to be bound by oral order of the Commission.
19. Based on the facts stated in the verified application, having received no protests and have been heard by the Hearing Officer who recommended approval, the Commission should approve the application.
NOW, THEREFORE, IT IS ORDERED, that additional wells are hereby allowed to be optionally drilled into and produced from the Williams Fork and Iles Formations, for the below-listed lands, the equivalent of one Williams Fork and Iles Formation well per 20 acres, or thirty-two wells for each 640 acre drilling and spacing unit, with each well located no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork and Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission:
Township 7 South, Range 94 West, 6th P.M.
Sections 1 and 2: All
Sections 10 and 11: All
Section 16: All
IT IS FURTHER ORDERED, that wells to be drilled under this Application 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, and that both the Williams Fork and Iles Formations shall be reached from a single wellbore, i.e., separate wells shall not be drilled to reach each 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 October, 2005, as of September 26, 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
October 14, 2005