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 AND PARACHUTE

FIELDS, GARFIELD COUNTY, COLORADO

)

)

)

)

CAUSE NO.   139  &  440

 

ORDER NO.   139-64  &  440-35

 

REPORT OF THE COMMISSION

 

            This cause came on for hearing before the Commission at 9:00 a.m. on July 10, 2006, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one (1) well per 10 acres to be drilled on certain lands in Townships 6 and 7, Ranges 95 and 95 West, 6th P.M., for production from the Williams Fork Formation of the Mesaverde Group.

 

FINDINGS

 

                        The Commission finds as follows:

 

            1.  Williams Production RMT Company (“Williams”), 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, corrected November, 1990, which among other things, established 640-acre drilling and spacing units for certain lands including the below-listed, for the production of gas and associated hydrocarbons from the Mesaverde Formation:

 

Township 6 South, Range 94 West, 6th P.M.

Section 34:      W½ W½

 

Township 7 South, Range 94 West, 6th P.M.

Section 3:        All

Section 4:        All

Section 5:        All

Section 6:        All

Section 7:        All

Section 8:        All

Section 9:        All

 

Township 7 South, Range 95 West, 6th P.M.

Section 12:      All

Section 13:      All

Section 14:      All

Section 23:      All       

 

In addition, the order established 320-acre drilling and spacing units, for certain lands including the below-listed, for the production of gas and associated hydrocarbons from the Mesaverde Formation:

 

Township 6 South, Range 94 West, 6th P.M.

Section 19:      SW¼ SW¼

Section 28:      S½ NW¼, SW¼, W½ SE¼

Section 29:      S½ NE¼, SE¼, W½ NW¼

Section 30:      All

Section 32:      All

                                    Section 33:      All

 

                        5.  On April 20, 1990, the Commission issued Order No. 440-12, which among other things, established 640-acre drilling and spacing units for certain lands including the below-listed, for the production of gas and associated hydrocarbons from the Mesaverde Formation:

 

Township 7 South, Range 95 West, 6th P.M.

Section 3:        W½ NE¼, SE¼ NE¼

Section 4:        SW¼, S½ SE¼, NE¼ SE¼

 

In addition, the order established 320-acre drilling and spacing units, for certain lands, including the below-listed, for the production of gas and associated hydrocarbons from the Mesaverde Formation:

 

Township 6 South, Range 95 West, 6th P.M.

Section 25:      NE¼ NE¼, S½ NE¼, SE¼ NW¼, SE¼, E½ SW¼, SW¼ SW¼

Section 26:      SE¼ SE¼

Section 36:      N½, N½ S½, S½ SE¼, SE¼ SW¼

 

Township 7 South, Range 95 West, 6th P.M.

Section 1:        All

Section 2:        S½ NE¼, SE¼, SE¼ NW¼

Section 15:      W½

Section 16:      E½

                       

                        6.  On February, 21, 1995, amended April 26, 1995, the Commission issued Order Nos. 139-28, 440-16 and 479-5, which among other things, allowed sixteen (16) wells to be optionally drilled on 640-acre drilling and spacing units, for certain lands including the below-listed, for production from the Williams Fork Formation, with the permitted well to be located no closer that 400 feet from the boundaries of the unit and no closer than 800 feet from any existing Williams Fork Formation well or wells:

 

Township 6 South, Range 94 West, 6th P.M.

Section 34:      W½ W½

 

Township 7 South, Range 94 West, 6th P.M.

Sections 3 through 9:  All

 

Township 7 South, Range 95 West, 6th P.M.

Section 3:        W½ NE¼, SE¼ NE¼

Section 4:        SW¼, S½ SE¼, NE¼ SE¼

Section 12:      All

           

In addition, the order allowed eight (8) wells to be optionally drilled on 320-acre drilling and spacing units, for certain lands, including the below-listed, for production from the Williams Fork Formation, with the permitted well to be located no closer that 400 feet from the boundaries of the unit and no closer than 800 feet from any existing Williams Fork Formation well or wells:

 

Township 6 South, Range 94 West, 6th P.M.

Section 19:                  SW¼ SW¼

Section 28:                  S½ NW¼, SW¼, W½ SE¼

Section 29:                  S½ NE¼, SE¼, W½ NW¼

Section 30:                  All

Sections 32 and 33:    All

 

Township 6 South, Range 95 West, 6th P.M.

Section 25:      NE¼ NE¼, S½ NE¼, SE¼ NW¼, SE¼, E½ SW¼, SW¼ SW¼

Section 26:      SE¼ SE¼

Section 36:      N½, N½ S½, S½ SE¼, SE¼ SW¼

 

Township 7 South, Range 95 West, 6th P.M.

Section 1:        All

Section 2:        S½ NE¼, SE¼, SE¼ NW¼

 

                        7.  On October 30, 2000, the Commission issued Order Nos. 139-34, 440-19, 479-7 and 510-4, which among other things, allowed the equivalent of one (1) well per 20 acres for production from the Williams Fork Formation, for certain lands, including the lands described below.  The permitted well shall be located no closer than 200 feet from the boundaries of a drilling unit and no closer than 400 feet from any existing Williams Fork Formation well or wells.  In cases where the application lands constitute only a portion of an existing drilling and spacing unit, each Williams Fork Formation well upon such application lands shall be located no closer than 200 feet from the boundaries of the drilling unit, no closer than 200 feet from the boundary of the application lands and no closer than 400 feet from any existing Williams Fork Formation well.

 

Township 6 South, Range 94 West, 6th P.M.

Section 28:          SW¼, S½ NW¼, W½ SE¼

Section 29:          S½, S½ NE¼, SE¼ NW¼

Section 33:          S½, W½ NE¼, N½ NW¼, SE¼ NW¼, SE¼ NE¼, Lot 2

Section 34:          W½ SW¼, SW¼ NW¼

 

Township 7 South, Range 94 West, 6th P.M.

Section 3:            NW¼ NW¼

Section 4:            W½, NE¼

 

Township 7 South, Range 95 West, 6th P.M.

Section 3:            N½

 

                        8.  On May 12, 2006, Williams Production RMT Company, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres to be drilled on the below-listed 640-acre and 320-acre drilling and spacing units, for production from the Williams Fork Formation of the Mesaverde Group:

 

Township 6 South, Range 94 West, 6th P.M.

Section 19:                  SW¼ SW¼

Section 28:                  S½ NW¼, SW¼, W½ SE¼

Section 29:                  S½ NE¼, SE¼, W½ NW¼

Section 30:                  All

Sections 32 and 33:    All

Section 34:                  W½ W½

 

Township 6 South, Range 95 West, 6th P.M.

Section 25:      NE¼ NE¼, S½ NE¼, SE¼ NW¼, SE¼, E½ SW¼, SW¼ SW¼

Section 26:      SE¼ SE¼

Section 36:      N½, N½ S½, S½ SE¼, SE¼ SW¼

 

Township 7 South, Range 94 West, 6th P.M.

Sections 3 through 9:  All

 

Township 7 South, Range 95 West, 6th P.M.

Section 1:                                All

Section 2:                                S½ NE¼, SE¼, SE¼ NW¼

Section 3:                                W½ NE¼, SE¼ NE¼

Section 4:                                SW¼, S½ SE¼, NE¼ SE¼

Sections 12 through 14:          All

Section 15:                              W½

Section 16:                              E½

Section 23:                              All

 

All future Williams Fork Formation wells should be located downhole anywhere upon such lands but no closer than 100 feet from the outside boundary of the drilling and spacing unit unless such unit boundary abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, in which event the well may be drilled downhole no closer than 200 feet from that portion of the unit boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.  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 Colorado Oil and Gas Conservation Commission.

 

                        9.  On June 26, 2006, EnCana Oil and Gas (USA) Inc. filed with the Commission a protest to the application.  On June 28, 2006, a prehearing conference was held and on June 29, 2006 the protest was withdrawn.

 

                        10.  At the time of the administrative hearing, Williams withdrew the W½ of Section 15 and the E½ of Section 16, both in Township 7 South, Range 95 West, 6th P.M. from the application lands.

 

                        11.  Testimony and exhibits presented at the administrative hearing showed that the application lands cover approximately 12,200 acres.

 

                        12.  Testimony and exhibits presented at the administrative hearing showed that gas is present in the lower sands of the Williams Fork Formation, the discontinuous nature of the Williams Fork Formation sands, and that wells drilled on 10-acre density will penetrate different sand bodies.

                       

                        13.  Testimony and exhibits presented at the administrative hearing showed that wells drilled in line with exact fracture orientation will interfere with each other.

 

                        14.  Testimony and exhibits presented at the administrative hearing showed that 78% of the wells in the Grand Valley Field and 90% of the wells in the Rulison Field encountered no depletion from offset wells drilled on 10-acre density.

 

15.  Testimony and exhibits presented at the administrative hearing showed that wells drilled on 10-acre density produced at equivalent rates to wells drilled on 40-acre or 20-acre density, and that increased density will allow additional gas reserves to be produced that will otherwise be left in the ground.

 

16.  A statement under Rule 510. was filed by twenty-five (25) citizens concerned about 160-year old springs near the application lands which are direct tributaries to the Colorado River and potential contamination from increased well density.  A South of the River Field Operations Plan was presented at the administrative hearing that Williams intends to follow, along with a document that outlines William’s response to the issues raised in the Rule 510. Statement.  These documents along with the COGCC rules will adequately address any public health, safety, welfare and environmental issues raised from the drilling of additional wells.

 

            17.  The above-referenced testimony and exhibits show that the proposed density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

 

                        18.  Williams Production RMT Company 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 having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow additional wells to be drilled on 640-acre and 320-acre drilling and spacing units, on certain lands in Townships 6 and 7 South, Ranges 94 and 95 West, 6th P.M., the equivalent of one well per ten (10) acres for production from the Williams Fork Formation of the Mesaverde Group.

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per ten (10) acres is hereby approved to be drilled on the below-listed 640-acre and 320-acre drilling and spacing units, for production from the Williams Fork Formation of the Mesaverde Group:

 

Township 6 South, Range 94 West, 6th P.M.

Section 19:                              SW¼ SW¼

Section 28:                              S½ NW¼, SW¼, W½ SE¼

Section 29:                              S½ NE¼, SE¼, W½ NW¼

Section 30:                              All

Sections 32 and 33:                All

Section 34:                              W½ W½

Township 6 South, Range 95 West, 6th P.M.

Section 25:      NE¼ NE¼, S½ NE¼, SE¼ NW¼, SE¼, E½ SW¼, SW¼ SW¼

Section 26:      SE¼ SE¼

Section 36:      N½, N½ S½, S½ SE¼, SE¼ SW¼

 

Township 7 South, Range 94 West, 6th P.M.

Sections 3 through 9: All

 

Township 7 South, Range 95 West, 6th P.M.

Section 1:                                All

Section 2:                                S½ NE¼, SE¼, SE¼ NW¼

Section 3:                                W½ NE¼, SE¼ NE¼

Section 4:                                SW¼, S½ SE¼, NE¼ SE¼

Sections 12 through 14:          All

Section 23:                              All

 

                        IT IS FURTHER ORDERED, that all future Williams Fork Formation wells shall be located downhole anywhere upon such lands but no closer than one hundred (100) feet from the outside boundary of the drilling and spacing unit unless such unit boundary abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, in which event the well may be drilled downhole no closer than two hundred (200) feet from that portion of the unit boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.

 

IT IS FURTHER ORDERED, that wells shall be drilled from the surface either vertically or directionally from no more than one (1) 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 July, 2006, as of July 10, 2006.

                        

                                                                        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 28, 2006