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 NOS. 139 & 440
ORDER NOS. 139-71 & 440-41 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on February 12, 2007, in Suite 801 The Chancery Building, 1120 Lincoln Street, Denver, 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 in Section 11, Township 7 South, Range 95 West, 6th P.M.
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 February 21, 1995, the Commission issued Order Nos. 139-28 and 440-16, which among other things, allowed up to eight (8) wells per 320-acre drilling and spacing unit for certain lands, including Section 11, Township 7 South, Range 95 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group.
5. Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Section 11, Township 7 South, Range 95 West, 6th P.M. is subject to this rule for the Iles Formation.
6. On November 20, 2006, EnCana, by its attorney, filed with the Commission a verified application for an order to establish a 320-acre drilling and spacing unit consisting of the E½ of Section 11, Township 7 South, Range 95 West, 6th P.M., for production from the Iles Formation, consistent with the unit established for the Williams Fork Formation. In addition, the order should vacate the 320-acre drilling and spacing unit consisting of W½ of Section 11, Township 7 South, Range 95 West, 6th P.M. established in Order Nos. 139-28 and 440-16 for the Williams Fork Formation, and establish two (2) 160-acre drilling and spacing units consisting of the NW¼ and SW¼ for said Section 11 for production from the Williams Fork and Iles Formations, allowing the equivalent of one (1) well per 20 acres in Section 11.
That as to all future Williams Fork Formation and Iles Formation wells to be drilled upon the application lands, each well may be located anywhere downhole in the established drilling and spacing unit but no closer than two hundred (200) feet from the boundaries of the unit and four hundred (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.
That all Williams Fork Formation and Iles Formation wells drilled upon the application lands 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. In addition, wells drilled to the Iles Formation may only be drilled and completed in connection with drilling of wells to the Williams Fork Formation.
7. On January 23, 2007, EnCana, by its attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the application.
8. Testimony and exhibits submitted in support of the application showed that EnCana is the majority Williams Fork Formation and Iles Formation leasehold owner in the application lands except that Williams Production Company is the majority leasehold owner in the NW¼ of Section 11, Township 7 South, Range 95 West, 6th P.M.
9. Testimony and exhibits submitted in support of the application showed that the Williams Fork and Iles Formations are subsections of the Mesaverde Group, and that the Mesaverde Group is between five thousand (5,000) and eight thousand (8,000) feet thick underlying the application area.
10. Testimony and exhibits submitted in support of the application showed that the estimated Williams Fork Formation reserves for the application lands vary from approximately eighty (80) to ninety (90) BCF per section, and that the estimated Iles Formation reserves for the application lands vary from approximately twenty-five (25) to thirty (30) BCF per section.
11. Testimony and exhibits presented at prior administrative hearings of which the Commission took administrative notice, showed that core data indicates the average porosity of the Iles Formation is six percent (6%) and the average permeability is 0.009 millidarcies.
12. Testimony and exhibits presented at prior administrative hearing(s) showed that hydraulically induced fractures will propagate in a northwest-southeast orientation, creating an elliptical northwest-southeast drainage pattern in the application area.
13. Testimony and exhibits submitted in support of the application showed that current well density will not effectively drain the Williams Fork and Iles Formations. Additional testimony indicated that an average of approximately sixteen to twenty-one (16 to 21) acres are drained by one well in the application area.
14. Testimony and exhibits submitted in support of the application showed that increasing well density from 40 to 20 acres in the application area will increase the estimated ultimate recovery from 29.7 BCF per section to 44.1 BCF per section for the Williams Fork Formation, an incremental estimated ultimate recovery increase of 14.4 BCF per section.
15. Testimony and exhibits submitted in support of the application showed that increasing well density from 640 to 20 acres in the application area will increase the estimated ultimate recovery from 0.35 BCF per section to 11.2 BCF per section for the Iles Formation, an incremental estimated ultimate recovery increase of 10.9 BCF per section. Additional testimony indicated that Iles Formation wells could not be economically drilled as "stand alone" wells and that Williams Fork Formation wells would be deepened to the Iles Formation.
16. No protests to the application were filed with the Commission or the Applicant.
17. EnCana Oil & Gas (USA) Inc. agreed to be bound by oral order of the Commission.
18. Based on the facts stated in the verified application, having received no protests and based on the Hearing Officer review of the application under Rule 511.b., the Commission should approve the application to increase the number of wells which can be optionally drilled into and produced from the Williams Fork and Iles Formations in Section 11, Township 7 South, Range 95 West, 6th P.M., the equivalent of one Williams Fork Formation and Iles Formation well per 20 acres, or sixteen wells for the 320-acre drilling and spacing unit and eight (8) wells in the 160-acre drilling and spacing units.
ORDER
NOW, THEREFORE, IT IS ORDERED, that a 320-acre drilling and spacing unit consisting of the E½ of Section 11, Township 7 South, Range 95 West, 6th P.M. is hereby established for production from the Iles Formation, consistent with the unit established for the Williams Fork Formation, allowing the equivalent of one (1) well per 20 acres.
IT IS FURTHER ORDERED, that the 320-acre drilling and spacing unit consisting of W½ of Section 11, Township 7 South, Range 95 West, 6th P.M. established in Order Nos. 139-28 and 440-16 for the Williams Fork Formation is hereby vacated, and two (2) 160-acre drilling and spacing units consisting of the NW¼ and SW¼ of said Section 11 are hereby established for production from the Williams Fork and Iles Formations, allowing the equivalent of one (1) well per 20 acres.
IT IS FURTHER ORDERED, that the additional wells are hereby allowed to be optionally drilled into and produced from the Williams Fork Formation and Iles Formations, for the above-described lands, the equivalent of one (1) Williams Fork Formation and Iles Formation well per 20 acres, or sixteen (16) wells for each 320-acre drilling and spacing unit or eight (8) wells in each 160-acre drilling and spacing unit, with each well located no closer than two hundred (200) feet from the boundaries of the unit and no closer than four hundred (400) feet from any existing Williams Fork Formation and Iles Formation well without exception being granted by the Director of the Oil and Gas Conservation Commission.
IT IS FURTHER ORDERED, that wells 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 February, 2007, as of February 12, 2007.
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
February 20, 2007