|
BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
|
||
|
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE RULISON FIELD, GARFIELD COUNTY, COLORADO |
) ) ) ) |
CAUSE NO. 139
ORDER NO. 139-58 |
This cause came on for hearing before the Commission at 10:00 a.m. on April 25, 2006, Suite 801, in The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to pool all non-consenting interests in the 320-acre drilling and spacing unit consisting of the E˝ of Section 19, Township 6 South, Range 93 West, 6th P.M. for the development and operation of the Williams Fork Formation.
The Commission finds as follows:
1. Petrogulf Corporation (“Petrogulf”), 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 July 16, 1979, the Commission issued Order No. 139-8, which among other things, established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde formation underlying that portion of the Rulison Field described the below:
Township 6 South, Range 93 West, 6th P.M.
Sections 5 thru 8: All
Sections 17 thru 20: All
Township 6 South, Range 94 West, 6th P.M.
Sections 1 thru 3: All
Sections 8 thru 17: All
Sections 19 thru 24: All
Sections 27 thru 33: All
5. On June 20, 2005, the Commission issued Order No. 139-47, which among other things, established 320-acre drilling and spacing units for the below-listed lands as standup units (W˝ and E˝) allowing the equivalent of one Williams Fork Formation well per ten acres, with the permitted well to be located no closer than 100 feet from the boundaries of the drilling and spacing units. In cases where the Application Lands abut or corner lands in respect of which 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 shall 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 6 South, Range 93 West, 6th P.M.
Sections 19 and 20: All
6. On January 30, 2006, Petrogulf Corporation by its attorney, filed with the Commission a verified application for an order to pool all non-consenting interests in the E˝ of Section 19, Township 6 South, Range 93 West, 6th P.M. for the development and operation of the Williams Fork Formation. The applicant plans to drill and complete the Jonsson #19-2, Jonsson #19-10, Jonsson #19-12, Jonsson #19-14, Jonsson #19-22, Jonsson #19-24 and Jonsson #19-26 wells. As of the date the application was filed, these owners either had elected not to participate in such drilling and completion of these wells (or to lease their interests in the case of unleased mineral owners) or had not responded to the correspondence from Applicant making such offers.
7. On March 3, 2006, Antero Resources Corporation, EnCana Oil & Gas (USA) Inc., and Williams Production RMT Company filed with the Commission a protest to the application. On March 9, 2006, a prehearing conference was held with the parties. On March 16, 2006, the matter was continued to the April hearing. On March 28, 2006, Williams Production RMT Company withdrew its protest. On April 4, 2006, a second prehearing conference was held at which time the parties agreed to file briefs addressing their positions on the legal issues. On April 17, 2006, the parties filed their briefs with the Commission.
8. At the time of the hearing on April 25, 2006, the Hearings Manager relayed her conversation with the protestants’ attorney who confirmed that Antero Resources Corporation and EnCana Oil & Gas (USA) Inc. withdrew their protest to the application. EnCana has signed a Joint Operating Agreement (“JOA”) with Petrogulf, and as a result their working interest does not need to be involuntarily pooled. Antero has decided not to contest the granting of the application, and will not participate in the uncontested hearing.
9. The Commission heard testimony from Charles Goodin, Land and Legal Manager for Petrogulf, who testified that in the 320-acre drilling and spacing unit consisting of the E˝ of said Section 19, Petrogulf has leased 235 net acres, Williams has leased 60 net acres, EnCana has leased 20 net acres and Antero has leased 4.17 net acres. He further testified that two (2) of Petrogulf’s leases were expiring on March 15, 2006, and that those leases had been top leased by Apollo Energy.
10. Mr. Goodin testified that the City of Rifle owned 8 acres underlying the Beaver Creek Water Treatment Plant, and that on January 6, 2006 Petrogulf sent a final offer to the City to lease these minerals or to participate in the drilling of the seven (7) wells. The minerals were later leased by Antero.
11. Mr. Goodin presented Authorizations for Expenditures (“AFEs”) and testified that offers were sent to Williams and EnCana on January 18, 2006. No responses were received and Petrogulf then filed its application for involuntary pooling. Subsequent to the filing of the application at the time of the first prehearing conference, Petrogulf amended its application to request pooling for four (4) wells proposed to be drilled.
12. Mr. Goodin testified that the requirements of Rule 530. and §34-60-116, C.R.S. have been met, and that the AFEs contained the well locations, the objective depths and formations, and the costs to drill and complete the wells. He testified that the AFEs were submitted more than thirty (30) days prior to this hearing. He further testified that a well was spudded prior to the lease expiration of March 15, 2006.
13. Mr. Goodin testified that JOAs were sent to Williams and EnCana on February 7, 2006 and to Antero on February 10, 2006. He confirmed that EnCana signed a JOA just prior to this Commission hearing.
14. Based on the facts stated in the verified application and the testimony and exhibits presented at the hearing, the Commission should enter an order to pool all non-consenting interests in the E˝ of Section 19, Township 6 South, Range 93 West, 6th P.M., effective January 30, 2006, for the development and operation of the Williams Fork Formation.
ORDER
NOW, THEREFORE IT IS ORDERED that, 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 non-consenting interests in the E˝ of Section 19, Township 6 South, Range 93 West, 6th P.M. are hereby pooled effective January 30, 2006 for the development and operation of the Williams Fork Formation.
IT IS FURTHER ORDERED, that 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.
IT IS FURTHER ORDERED, that 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.
IT IS FURTHER ORDERED, that 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.
IT IS FURTHER ORDERED, that 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.
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