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.   139-82

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on November 5, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish 40-acre drilling and spacing units for the NW¼ NE¼, NE¼ NE¼ and NE¼ NW¼ of Section 3, Township 8 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group and to allow the equivalent of one (1) well per 10 acres.

 

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.

 

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.  The N½ NE¼ and the NE¼ NW¼ of Section 3, Township 8 South, Range 96 West, 6th P.M. are subject to this Rule.

 

5.  On March 20, 2006, the Commission issued Order No. 139-54, which among other things, established 40-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation, for the N½ SW¼ of Section 3 and the E½ SE¼ of Section 4, both in Township 8 South, Range 96 West, 6th P.M., allowing the equivalent of one well per 20 acres with the  permitted wells to be located downhole anywhere in the drilling and spacing unit but no closer than 200 feet from the boundaries of the drilling and spacing unit and no closer than 400 feet from any existing Williams Fork Formation well, without exception being granted by the Director.

 

6.  On June 5, 2006, the Commission issued Order No. 139-62, which among other things, established 40-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Iles Formation, for the N½ SW¼ of Section 3 and the E½ SE¼ of Section 4, both in Township 8 South, Range 96 West, 6th P.M., allowing the equivalent of one well per 20 acres with the permitted wells to be located downhole anywhere in the drilling and spacing unit but no closer than 200 feet from the boundaries of the drilling and spacing unit and no closer than 400 feet from any existing Iles Formation well, without exception being granted by the Director.

 

7.  On September 14, 2007, Noble, by its attorneys, filed with the Commission a verified application for an order to establish 40-acre drilling and spacing units for the NW¼ NE¼, NE¼ NE¼ and NE¼ NW¼ of Section 3, Township 8 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group and to allow the equivalent of one (1) well per 10 acres.

 

That as to all future Williams Fork Formation and Iles Formation wells to be drilled upon the application lands, each well may be located downhole in the established drilling and spacing 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 or Iles Formation wells has not been ordered by the Commission. 

 

Noble commits that wells to be drilled under this application 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, and that both the Williams Fork and Iles Formations will be reached from a single wellbore, i.e., separate wells will not be drilled to reach each formation.

 

8.  On October 23, 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.  Sworn written testimony and exhibits were submitted in support of the application.  At this time, Noble withdrew the NE¼ NE¼ of Section 3, Township 8 South, Range 96 West, 6th P.M. from its application.

 

9.  Testimony and exhibits submitted in support of the application showed that Noble is the majority leasehold owner in the application lands.

 

10.  Testimony and exhibits submitted in support of the application showed that the Williams Fork and Iles Formations are members of the Mesaverde Group and are common sources of supply, but due to the heterogeneity of the formations increased density is necessary to recover the reserves.

 

11.  Testimony and exhibits submitted in support of the application showed that the mean estimated ultimate recovery (EUR) for wells in the areas adjacent to the application lands is approximately 1,020 MMCF. 

 

12.  Testimony and exhibits submitted in support of the application showed a pressure gradient of 0.55 psi per foot was used to estimate the average initial pressure for the pay zones within the Williams Fork Formation for the calculation of an initial formation volume factor.  This was based on the Williams Production RMT Company (“Williams”) report dated April 24, 2006.  Williams used this reservoir pressure in support of various Commission orders, including Order No. 510-4, where reservoir pressure data was originally presented to the Commission to support increased well density applications for the Williams Fork Formation in the vicinity of the application lands.  No wireline formation test pressures have been taken on the application lands so engineering testimony relies on the pressure data from the Williams Report. 

 

13.  Testimony and exhibits submitted in support of the application showed that for a 10-acre area, the original gas in place is estimated at 1,525 MMCF.  Additional testimony indicated that based on a recovery factor of 70%, recoverable reserves of 1,020 MMCF represent a 10-acre drainage area for wells drilled within the application lands. 

 

14.  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 10 acres are drained by one well in the application area.

 

15.  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.

 

                        16.  Noble Energy Inc. agreed to be bound by oral order of the Commission.

 

17.  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 enter an order to establish 40-acre drilling and spacing units for the NW¼ NE¼ and NE¼ NW¼ of Section 3, Township 8 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group and allow the equivalent of one (1) well per 10 acres.

 

 

 

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that 40-acre drilling and spacing units are hereby established for the NW¼ NE¼ and NE¼ NW¼ of Section 3, Township 8 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group.

 

IT IS FURTHER ORDERED, that the equivalent of one (1) well per 10 acres is hereby approved for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group.

 

IT IS FURTHER ORDERED, that all future Williams Fork Formation and Iles Formation wells to be drilled upon the application lands shall be located downhole in the established drilling and spacing 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 or Iles Formation wells has not been ordered by the Commission. 

 

IT IS FURTHER ORDERED, that the wells to be drilled under this application 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 Colorado Oil and Gas Conservation Commission, and that both the Williams Fork and Iles Formations shall be reached from a single wellbore.

 

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 November, 2007, as of November 5, 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

November 9, 2007