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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. 139-55 |
This cause came on for hearing before the Commission at 8:30 a.m. on March 20, 2006, Ramada Inn, 124 West 6th Street, Glenwood Springs, Colorado, for an order to vacate the existing 640-acre drilling and spacing unit and establish a 160-acre drilling and spacing unit consisting of the N˝ N˝ of Section 32, Township 7 South, Range 95 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formation, and to allow the option of up to eight (8) wells, with the permitted well to be located no closer than 200 feet from the unit boundary, and no closer than 400 feet from any existing Williams Fork Formation or Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission.
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 pursuant to the Oil and Gas Conservation Act.
4. On April 20, 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 with the permitted well to be located 990 feet from the unit boundaries for the below-described lands:
Township 7 South, Range 95 West, 6th PM.
Sections 12 through 14: All
Sections 19 through 36: All
5. On July 30, 1997, the Commission issued Order Nos. 139-31 and 440-18, which allowed the optional drilling of additional wells, up to sixteen (16) wells per 640-acre drilling and spacing for the below-described lands in the Rulison and Parachute Fields for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, with the permitted well to be located no closer than 400 feet from the outer boundaries of the drilling unit and no closer than 800 feet to any well or wells producing from the same formation.
Township 7 South, Range 94 West, 6th P.M.
Sections 16 and 17: All
Township 7 South, Range 95 West, 6th P.M.
Section 10: W˝
Sections 15 and 16: All
Sections 19 through 22: All
Sections 27 through 34: All
Township 7 South, Range 96 West, 6th P.M.
Sections 24 and 25: All
Section 36: All
6. On January 30, 2006, EnCana, by its attorney, filed with the Commission a verified application for an order to vacate the existing 640-acre drilling and spacing unit and establish a 160-acre drilling and spacing unit consisting of the N˝ N˝ of Section 32, Township 7 South, Range 95 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formation and to allow the option of up to eight (8) wells, with the permitted well to be located no closer than 200 feet from the unit boundary, and no closer than 400 feet from any existing Williams Fork Formation or Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
7. Testimony and exhibits presented at the administrative hearing showed the mineral and lease ownership of the application area and that all offset owners have been notified and that no protests have been received. Additional testimony showed that no wells have been drilled within the application boundary.
8. Testimony and exhibits presented at the administrative hearing showed gas reserves of approximately 30 BCF per section calculated for the Iles Formation in the application area.
9. Testimony and exhibits presented at the administrative hearing showed gas reserves of approximately 60 BCF per section calculated for the Williams Fork Formation in the application area.
10. Testimony and exhibits presented at the administrative hearing showed the mean well in the area has an estimated ultimate recovery of 1 BCF and a mean drainage area of 22 acres.
11. Testimony and exhibits presented at the administrative hearing showed that allowing wells to be drilled on 20 acre spacing would increase estimated ultimate recovery from the Williams Fork Formation by 15 BCF per section.
12. Testimony and exhibits presented at the administrative hearing showed reducing well spacing in the Iles Formation from 640 acres per well to 20 acres per well would increase estimated ultimate recovery from the Iles Formation by 10.9 BCF per section. Additional testimony showed that the Iles Formation is not considered to be economic on a stand alone basis but can be produced in conjunction with the Williams Fork Formation to increase the profitability of a well.
13. The above-referenced testimony and exhibits show that the proposed spacing and density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
14. EnCana Oil and Gas (USA) Inc. agreed to be bound by an oral order of the Commission.
15. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to vacate the existing 640-acre drilling and spacing unit and establish a 160-acre drilling and spacing unit consisting of the N˝ N˝ of Section 32, Township 7 South, Range 95 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formation, and allow the option of up to eight (8) wells, with the permitted well to be located no closer than 200 feet from the unit boundary, and no closer than 400 feet from any existing Williams Fork Formation or Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission.
ORDER
NOW, THEREFORE IT IS ORDERED, that a 160-acre drilling and spacing unit consisting of the N˝ N˝ of Section 32, Township 7 South, Range 95 West, 6th P.M. is hereby established for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing the option of up to eight (8) wells.
IT IS FURTHER ORDERED, that the permitted well shall be located no closer than 200 feet from the unit boundary, and no closer than 400 feet from any existing Williams Fork Formation or Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission.
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.
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