BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF PROMULGATION AND

ESTABLISHMENT OF FIELD RULES TO

GOVERN OPERATIONS IN THE RULISON

FIELD, GARFIELD COUNTY, COLORADO

)

)

)

)

CAUSE NO.   139

 

ORDER NO.   139-84

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on January 15, 2008, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres, for certain lands in Section 29, Township 7 South, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

FINDINGS

 

                        The Commission finds as follows:

 

1.  Laramie Energy II, LLC (“Laramie”), 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.  Section 29, Township 7 South, Range 93 West, 6th P.M. is subject to this Rule.

 

5.  On November 27, 2007, Laramie, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one well per 10 acres, for the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:

 

Township 7 South, Range 93 West, 6th P.M.

Section 29:      Tract 64 (aka W½ NW¼ NE¼, SE¼ NW¼ NE¼, W½ SW¼ NE¼, NE¼ SW¼ NE¼, E½ NE¼ NW¼, SE¼ NW¼ SE¼ SW¼ NW¼, N½ NE¼ SW¼ and NW¼ NW¼ SE¼) 

 

That as to all future Williams Fork Formation and Iles Formation wells to be drilled on the application lands, the wells should be located downhole anywhere upon such lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission.  It is provided, however, that 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 wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. 

 

In addition, all wells drilled to the Iles Formation will be drilled only in connection with the drilling of Williams Fork Formation wells.  Further, 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.

 

                        6.  On January 3, 2008, Laramie, 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.

 

7.  Testimony and exhibits submitted in support of the application indicated that lands to the west and north of the application lands previously have been granted 10-acre density drilling for the Williams Fork Formation.  Additional testimony indicated that 10-acre density wells could be drilled in the federal unit located to the east of the application lands. 

8.  Testimony and exhibits submitted in support of the application indicated that the geologic model of the Williams Fork Formation in the major producing areas of the Piceance Basin is well understood and consists of extensive log, completion and reservoir engineering data from wells inside current 10-acre density areas and the extremely useful and representative nearby outcrops of producing rocks.  Additional testimony indicated that based upon outcrop studies, the majority of the discontinuous sand bodies within the Williams Fork Formation are smaller than the distance between wells drilled on a 10-acre density basis.  Further testimony indicated that 10-acre density drilling is necessary to develop the Williams Fork Formation underlying the application lands.

9.  Testimony and exhibits submitted in support of the application indicated that from gas in place calculations, it has been determined that a typical Williams Fork Formation well will drain approximately 10.7 acres and a typical Iles Formation well will drain approximately 17 acres.   Additional testimony indicated that the Iles Formation cannot be economically developed by the drilling of stand alone wells but can be developed economically if drilled together with the Williams Fork Formation.    

 

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

 

11.  Laramie Energy II, LLC agreed to be bound by oral order of the Commission.

 

12.  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 allow the equivalent of one well per 10 acres, for certain lands in Section 29, Township 7 South, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved for the below-listed lands for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:

 

Township 7 South, Range 93 West, 6th P.M.

Section 29:      Tract 64 (aka W½ NW¼ NE¼, SE¼ NW¼ NE¼, W½ SW¼ NE¼, NE¼ SW¼ NE¼, E½ NE¼ NW¼, SE¼ NW¼ SE¼ SW¼ NW¼, N½ NE¼ SW¼ and NW¼ NW¼ SE¼) 

 

IT IS FURTHER ORDERED, that the wells shall be located downhole anywhere upon such lands but no closer than 100 feet from a lease line or the boundaries of the application lands without exception being granted by the Director of the Oil and Gas Conservation Commission.  It is provided, however, that 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 wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. 

 

IT IS FURTHER ORDERED, that all wells drilled to the Iles Formation shall be drilled only in connection with the drilling of Williams Fork Formation wells. 

 

IT IS FURTHER ORDERED, that all Williams Fork Formation and Iles Formation wells drilled upon the application lands 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.

 

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 January, 2008, as of January 15, 2008.

           

                                                                        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

January 23, 2008