|
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. 139-73 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on March 26, 2007 and on May 10, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish 40-acre drilling and spacing units for certain lands located in Township 7 South, Ranges 94 and 95 West 6th P.M. for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing up to one well per 10 acres with the option of up to four wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conversation 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 authorized by order of the Commission upon hearing.
FINDINGS
The Commission finds as follows:
1. Noble Energy, Inc. (“Noble”), 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, with the exception of EnCana Oil & Gas (USA), Inc (“EnCana”). EnCana was inadvertently excluded from Noble’s List of Parties. However, upon learning this fact, Noble immediately served EnCana with its January 31, 2007 Verified Application and obtained EnCana’s waiver of notice and consent to the drilling and spacing requests set forth therein.
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. Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless authorized by order of the Commission upon hearing. The below-listed lands are subject to this rule:
Township 7 South, Range 94 West, 6th P.M.
Section 5: SW¼, S½ SE¼
5. On April 20, 1990, the Commission issued Order No. 139‑16 which, among other things, established the following:
a. For Sections 16, 18, 19, 20, 29, 30 and 32, Township 7 South, Range 94 West, 6th P.M. one well per 640 acres was approved for the Mesaverde Group, which includes both the Williams Fork and the Iles Formations.
b. For Sections 16 and 18, Township 7 South, Range 94 West, 6th P.M. wells were to be located in the NE¼ or the SW¼ no less than 600 feet from the unit boundaries and at least 1200 feet from the nearest well producing from the same source of supply.
c. For Sections 19, 20, 29, 30, and 32, Township 7 South, Range 94 West, 6th P.M. the wells were to be located in the NW¼ or the SE¼, no less than 990 feet from the unit boundaries and, (iii) for Sections 5, 8 and 17, Township 7 South, Range 94 West, 6th P.M. a total two (2) wells were authorized to be drilled for each six hundred and forty (640) acre drilling and spacing unit for production of gas and associated hydrocarbons from the Mesaverde Formation with the wells to be located no less than 600 feet from the unit boundaries and at least 1,200 feet from the nearest well producing from the Mesaverde Formation.
6. On February 21, 1995, and corrected on February 21, 2000, the Commission issued Order No. 139-28 which, among other things, allow up to 16 wells per 640-acre drilling and spacing unit to be optionally drilled into and produced from the Williams Fork Formation with the permitted well to be no closer than 400 feet from the boundaries of the unit and no closer than 800 feet from any existing Williams Fork Formation well for the below-listed lands:
Township 7 South, Range 94 West, 6th P.M.
Section 5: All
Section 8: All
7. On July 1, 1997, the Commission issued Order No. 139‑31 which amended Cause No. 139 in its entirety and established the optional drilling of additional wells, up to 16 wells per 640‑acre drilling and spacing unit, 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. Order No. 139‑31 further amended Cause No. 139 to allow the drilling of the first well in any undrilled section to be located in accordance with the above-described drilling pattern to apply to wells drilled, completed or recompleted in the Williams Fork Formation and to allow the Director of the Commission to approve exception locations if certain conditions exist.
8. On February 10, 2004, the Commission issued Order No. 139‑43 which increased the number of wells which could be drilled into and produced from the Williams Fork Formation of the Mesaverde Group to the equivalent of one well per 40 acres with the permitted downhole location to be located no closer than 240 feet from the boundaries of the drilling and spacing unit and no closer downhole than 800 feet from any existing Williams Fork Formation well, without an exception being granted by the Director of the Commission, for the below-listed lands:
Township 7 South, Range 94 West, 6th P.M.
Section 30: All
9. On December 6, 2005, the Commission issued Order No. 139‑53 which, among other things, increased the number of wells that could be drilled into and produced from the Williams Fork Formation of the Mesaverde Group to one well per 10 acres and, among other things, permitted downhole locations for each Williams Fork Formation well to be located anywhere within the unit but no closer than 100 feet from the unit boundary unless the 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 shall 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, for the below-listed lands:
Township 7 South, Range 94 West, 6th P.M.
Section 19: Lot 4, SE¼ SW¼, W½ SW¼ SE¼
Section 29: All
Section 30: All
Section 32: All
Township 7 South Range 95 West, 6th P.M.
Section 24: Lots 14, 15, 16, 20
10. On April 24, 2006, the Commission issued Order No. 139-59 which established, among other things, 10-acre density for production from the Iles Formation with the permitted well to be located no closer than one hundred (100) feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed. Order No. 139-59 also established that wells would be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless authorized by order of the Commission upon hearing, for the below-listed wells:
Township 7 South, Range 95 West, 6th P.M.
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Section 30: All
11. On June 5, 2006, the Commission issued Order No. 139-61 which established, among other things, 10-acre density for production from the Williams Fork Formation with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed. Order No. 139-59 also established that wells would be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless authorized by order of the Commission upon hearing, for the below-listed lands:
Township 7 South, Range 95 West, 6th P.M.
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Section 30: All
12. On June 5, 2006, the Commission issued Order No. 139-63 which, among other things, vacated the SW¼ and the S½ SE¼ of Section 5, Township 7 South, Range 94 West, 6th P.M. from Cause No. 139 and placed the lands under the provisions of Rule 318. of the Rules and Regulations of the Commission. Order No. 139-63 also established a bottomhole location for the permitted well on the remaining acreage of Section 5, Township 7 South, Range 94 West, 6th P.M. (N½, N½ SE¼) of no closer than 100 feet from the boundary line separating the SW¼ and the S½ SE¼ of Section 5, Township 7 South, Range 94 West, 6th P.M.
13. On January 31, 2007, Noble Energy, Inc., by its attorney, filed with the Commission a verified application for an order to establish 40-acre drilling and spacing units for the below-listed lands for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception bring granted by the Director of the Oil and Gas Conservation Commission. Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a give quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission:
Township 7 South, Range 94 West, 6th P.M.
Section 5: SW¼, S½ SE¼
Section 8: All
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Section 29: All
Section 30: All
Section
32: N½ N½
Township 7 South, Range 95 West, 6th P.M.
Section 24: All
Previous Orders issued by the Commission approved 10 acre density for the Williams Fork and Iles Formations in Sections 17, 18, 19, 20, and 30, Township 7 South, Range 94 West, 6th P.M. in previous orders. The order should allow up to one (1) Williams Fork Formation well per ten (10) acres and one Iles Formation well per 10 acres that can be optionally drilled into and produced from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception bring granted by the Director of the Oil and Gas Conservation Commission. Said wells shall 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 on the following application lands:
Township 7 South, Range 94 West, 6th P.M.
Section 5: SW¼, S½ SE¼
Section 8: All
Township 7 South, Range 95 West, 6th P.M.
Section 24: All
The order should also allow up to one Iles Formation well per 10 acres that can be optionally drilled into and produced from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception bring granted by the Director of the Oil and Gas Conservation Commission. Said wells shall 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 on the following application lands:
Township 7 South, Range 94 West, 6th P.M.
Section 29: All
Section 32: N½ N½
Pursuant to an agreement with Garfield County, any Commission order obtained as a result of Noble’s verified application should provide that if Noble desires to use more than one well pad per quarter quarter section on Sections 17, 18, 19, 20, and 30, Township 7 South, Range 94 West, 6th P.M. of the application lands, then Noble shall obtain an order from the Commission.
14. On March 12, 2007, Noble, 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. In addition, testimony and exhibits were presented to the Hearing Officers during an April 18, 2006 administrative hearing on nearby and adjacent lands to these application lands.
15. Testimony and exhibits submitted in support of the application indicated that the total acreage in the application lands is 5,360 acres; 2,350.63 acres are federal lands and 3,009.37 acres are fee lands. Additional testimony indicated that Noble owns or holds a portion of the mineral interests underlying the application lands. The remaining acreage is owned or held by various third parties, including Joan Savage and Savage Resources, LLC, who have consented to Noble’s application and the spacing and density requests set forth therein. In certain areas, the mineral estate and surface estate has been severed as to certain parcels of the application lands and Noble is presently negotiating Surface Damage Agreements with certain of the surface owners. At the present time, Noble has not drilled any wells on the application lands and, once drilling commences, Noble does not intend to drill more than four Williams Fork Formation and Iles Formation wells downhole per government quarter quarter section. Noble also does not intend to have more than one wellpad per 40-acre drilling and spacing unit.
16. Testimony and exhibits submitted in support of the application indicated that the Williams Fork and Iles Formations of the Mesaverde Group represent a significant gas resource within the Piceance Basin. A geological study of these gas reservoirs within the South Parachute area using subsurface well logs was conducted to determine the feasibility of drilling Williams Fork Formation and Iles Formation sand gas wells on 10-acre density rather than 40-acre density. The purpose of the study was to determine whether additional gas reserves could be accessed through higher density drilling in the application lands. The conclusion of the geologic study is that gas wells in this area currently drain approximate 10-acre areas on average. Sandstone reservoirs are numerous and are laterally discontinuous throughout the region. A level of continuous gas saturation exists within the Williams Fork Formation sands and extends nearly 2000 feet into the Cameo and Iles Formations. Testimony concluded that 10-acre well density would be required to properly drain the Williams Fork and Iles Formations within the application area.
17. Testimony and exhibits presented with Noble’s written request to approve the application showed that one well located near the application area would drain approximately eight acres and have an estimated ultimate recovery of 1,168 MMCF of gas from the Williams Fork Formation.
18. Testimony and exhibits submitted in support of the application showed the recoverable reserves and the drainage area for a Williams Fork Formation well within the application lands. The proposed spacing for the application lands will prevent waste within the application area, and the wells in the application lands based on the proposed spacing rules are economically viable. Testimony indicated that the project is feasible from engineering and economical standpoints, and that 10-acre well density would be required to properly drain the Williams Fork and Iles Formations within the application lands.
19. At the time of the March hearing, the Commission removed the matter from the consent agenda and requested that additional reservoir engineering data be provided. On April 10, 2007, supplemental testimony was submitted addressing reservoir pressure data questions raised by the Commission at the March 26, 2007 hearing. The reservoir pressure data was utilized from a Williams Production RMT Company report dated April 24, 2006 because Noble does not have detailed reservoir pressure data for the Williams Fork Formation for the application lands or for nearby areas. The reservoir pressure from the Williams report would be similar or analogous to any future pressure data tests conducted on the application lands. Testimony indicated that while the total production rate in the application lands may increase, the result of the requested increased well density will prevent waste and increase the recovery of gas resources within the application lands.
20. No protests to the application have been filed with the Commission or the Applicant.
21. Noble Energy, Inc. agreed to be bound by oral order of the Commission.
22. Based on the facts stated in the verified application, having received no protests, based on the Hearing Officer review of the application under Rule 511.b. and the supplemental testimony, the Commission should enter an order to establish 40-acre drilling and spacing units for certain lands located in Township 7 South, Ranges 94 and 95 West 6th P.M. for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing up to one well per 10 acres with the option of up to four wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conversation Commission. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a give quarter quarter section unless exception is authorized by order of the Commission upon hearing.
ORDER
NOW, THEREFORE, IT IS ORDERED, that 40-acre drilling and spacing units are hereby established for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, for the below listed lands, allowing up to one well per 10 acres with the option of up to four wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception bring granted by the Director of the Oil and Gas Conservation Commission. Said wells shall 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:
Township 7 South, Range 94 West, 6th P.M.
Section 5: SW¼, S½ SE¼
Section 8: All
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Section 29: All
Section 30: All
Section
32: N½ N½
Township 7 South, Range 95 West, 6th P.M.
Section 24: All
IT IS FURTHER ORDERED, that one Williams Fork Formation well per 10 acres and one Iles Formation well per ten 10 acres is hereby approved to be optionally drilled into and produced from the Williams Fork and Iles Formations for the below-listed lands, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception bring granted by the Director of the Oil and Gas Conservation Commission. Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a give quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission on the following application lands:
Township 7 South, Range 94 West, 6th P.M.
Section 5: SW¼, S½SE¼
Section 8: All
Township 7 South, Range 95 West, 6th P.M.
Section 24: All
IT IS FURTHER ORDERED, that one Iles Formation well per 10 acres is hereby approved to be optionally drilled into and produced from the Williams Fork and Iles Formations for the below-listed lands, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception bring granted by the Director of the Oil and Gas Conservation Commission. Said wells shall 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 on the following application lands:
Township 7 South, Range 94 West, 6th P.M.
Section 29: All
Section 32: N½ N½
IT IS FURTHER ORDERED, that if Noble desires to use more than one wellpad per quarter quarter section on Sections 17, 18, 19, 20, and 30, Township 7 South, Range 94 West, 6th P.M. of the application lands, then Noble shall obtain an order from the 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 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 May, 2007, as of May 10, 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
May 25, 2007