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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 AND PARACHUTE FIELDS, GARFIELD COUNTY, COLORADO
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CAUSE NO. 139 AND 440
ORDER NO. 139-99 AND 440-54 |
This cause came on for hearing before the Commission at 9:00 a.m. on September 22, 2008, in the Sabin-Cleere Conference Room, Building A, Colorado Department of Public Health and Environment, 4300 Cherry Creek Drive South, Denver, Colorado, for an order to allow the equivalent of one (1) well per 10 acres for Sections 11 and 16, Township 7 South, Range 94 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. 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 pursuant to the Oil and Gas Conservation Act.
4. On February 21, 1961, the Commission issued Order No. 139-2 which, among other things, established 640-acre drilling and spacing units for certain lands, including Sections 11 and 16, Township 7 South, Range 94 West, 6th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.
5. On February 21, 1995, the Commission issued Order Nos. 139-28 and 440-16 which, among other things, authorized up to 16 wells per 640-acre drilling and spacing unit for certain lands, including Section 11, Township 7 South, Range 94 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation, with the permitted well to be located no closer than 400 feet from the boundaries of the unit and no closer than 800 feet from any existing Williams Fork Formation well or wells.
6. On July 1, 1997, the Commission issued Order Nos. 139-31 and 440-18 which, among other things, authorized up to 16 wells per 640-acre drilling and spacing unit for certain lands, including Section 16, Township 7 South, Range 94 West, 6th P.M., 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 boundaries of the unit and no closer than 800 feet from any existing Williams Fork Formation well or wells.
7. On September 25, 2005, the Commission issued Order No. 139-50 which, among other things, allowed one (1) well per 20 acres to be drilled on certain lands, including Sections 11 and 16, Township 7 South, Range 94 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 200 feet from the boundaries of the unit and no closer than 400 feet from any existing Williams Fork Formation or Iles Formation well or wells.
8. On August 7, 2008, EnCana, by its attorneys, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres for Sections 11 and 16, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
All future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands should be located downhole anywhere within the application 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. 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 Williams Fork Formation and Iles Formation 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.
Except as previously authorized by order of the Commission, 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 (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception. In addition, all wells drilled to the Iles Formation will be drilled only in connection with the drilling of Williams Fork Formation wells.
9. On September 4, 2008, EnCana, by its attorneys, 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.
10. Testimony and exhibits submitted in support of the application showed that EnCana is the majority leasehold owner for the application lands, and that lands in the immediate vicinity of the application lands have been approved for 10-acre well density, for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations. Additional testimony indicated that the E˝ of Section 11 and all of Section 16, Township 7 South, Range 94 West, 6th P.M. are federal minerals, with the remaining W˝ of Section 11 being fee owned minerals.
11. Testimony and exhibits submitted in support of the application showed that the Mesaverde Group is composed of the Williams Fork Formation and the Iles Formation, which is further composed of the Rollins Sandstone and Cozzette and Corcoran Members. Additional testimony and exhibits indicated that the original gas-in-place (“OGIP”) for the Williams Fork Formation underlying the application lands is between 80 and 100 BCF per section, with an average porosity of 7.4 %, and an average permeability for the Williams Fork Formation underlying the application lands of 2.1 millidarcies. Further testimony illustrated the fluvial nature of the Williams Fork Formation with highly lenticular and heterogeneous deposition of the sands and that increased well density is necessary to efficiently and economically recover the gas reserves located under the application lands.
12. Testimony and exhibits submitted in support of the application showed that, by increasing well density from 20-acre to 10-acre, the incremental recovery factor for the Williams Fork Formation underlying the application lands will increase from 44% to 64% of OGIP, which will yield additional gas reserves by an approximate 16 BCF per section. Additional testimony showed that 10-acre drilling density will result in positive economic returns. Further testimony showed that approving 10-acre density for the Williams Fork and Iles Formations underlying the application lands will prevent waste, protect correlative rights, and assure the greatest ultimate recovery of gas and associated hydrocarbons from the reservoir.
13. 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.
14. EnCana Oil & Gas (USA) Inc. agreed to be bound by oral order of the Commission.
15. 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 (1) well per 10 acres for Sections 11 and 16, Township 7 South, Range 94 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 (1) well per 10 acres is hereby approved for Sections 11 and 16, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
IT IS FURTHER ORDERED, that all future Williams Fork Formation and IIes Formation wells to be drilled upon the application lands shall be located downhole anywhere within the application 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. 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 Williams Fork Formation and Iles Formation 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 except as previously authorized by order of the Commission, 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 (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception. In addition, 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 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 September, 2008, as of September 22, 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
September 23, 2008