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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 DIVIDE CREEK FIELD, GARFIELD COUNTY, COLORADO
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CAUSE NO. 143
ORDER NO. 143-4 |
This cause came on for hearing before the Commission at 9:00 a.m. on April 24, 2006, Suite 801, in The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to delete certain lands in Township 7 South, Range 91 West, 6th P.M. from the provisions of Order No. 143-1 and Order No. 143-2 (Corrected) and place the lands under the provisions of the Rules and Regulations of the Oil and Gas Conservation Commission.
FINDINGS
The Commission finds as follows:
1. Maralex Resources, Inc. (“Maralex”) 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 April 26, 1960, the Commission entered Order No. 143-1 which, among other things, established 640-acre drilling and spacing units for the production of gas from the Mesaverde Formation in the Divide Creek Field for certain lands including Townships 7 through 9 South, Ranges 90 and 91 West, 6th P.M., with the permitted well to be located no closer than 900 feet to the boundaries of the drilling unit upon which it is located and no closer than 3750 feet to the nearest well drilling to or capable of production from the Mesaverde Formation. On November 20, 1989, the Commission entered Order No. 143-2 (Corrected) which deleted certain lands contained in the Divide Creek Federal Unit from those lands established by Order No.143-1.
5. On April 13, 1977, the Bureau of Land Management established the Garfield II Federal Unit for certain lands, including the lands described below. The Garfield II Unit was contracted to the lands described below effective as of July 21, 1983:
Township 7 South, Range 91 West, 6th P.M.
Section 14: S½ SW¼
Section 23: NW¼
Section 24: SE¼ SW¼
Section 25: W½ NE¼, SE¼ NE¼, W½, W½ SE¼
Section 26: All
Section 27: NE¼, NE¼ NW¼, S½ NW¼, S½
Section 34: N½ NE¼, NE¼ NW¼
Section 35: N½ N½
6. On March 3, 2006, Maralex, by its attorney, filed with the Commission a verified application for an order to delete the below-listed lands from the provisions of Order No. 143-1 and Order No. 143-2 (Corrected) and place the lands under the provisions of the Rules and Regulations of the Oil and Gas Conservation Commission:
Township 7 South, Range 91 West, 6th P.M.
Sections 13 through 15: All
Sections 23 through 29: All
Section 35: All
7. On April 9, 2006, a protest to the application was filed by Barry Stout. On April 11, 2006, a prehearing conference was held with the parties, at which time Maralex indicated that Mr. Stout’s mineral interests were not included in the application lands. Mr. Stout concurred that his lands were north of the application lands, but reiterated his concerns about drilling activity near his property. The Hearing Officer found that Mr. Stout was not a party to the application, even though he had received notice as a party, and deemed the protest moot. An administrative hearing was then held.
8. Testimony and exhibits presented at the administrative hearing showed that the sands in the application area are highly discontinuous, lenticular stacked sands. Additional testimony showed that an estimated ultimate recovery for a 640-acre drilling and spacing unit is approximately 100 BCF, and that allowing only well on a section will recover just 2.0 BCF.
9. Testimony and exhibits presented at the administrative hearing showed that the Divide Creek Field area is analogous to the Rulison, Grand Valley and Parachute Fields. Additional testimony showed that increased density wells in these fields have the same initial pressure as parent wells, and that increased density wells in the Divide Creek Field are expected to perform similarly.
10. Testimony and exhibits presented at the administrative hearing showed that the three (3) producing wells and the one idle well in the application lands are located in the Garfield II Federal Unit, and the granting of the application will not affect how the wells are paid out.
11. Testimony and exhibits presented at the administrative hearing showed a map taken from the Stout Ranch website, which show the lands owned by Barry Stout, confirming that Mr. Stout’s property is approximately one-half mile from the application lands.
12. The above-referenced testimony and exhibits show that vacating the drilling and spacing units will allow more efficient drainage, will prevent waste, will not violate correlative rights and will assure a greater ultimate recovery of gas and associated hydrocarbons.
13. Maralex Resources, Inc. agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to delete certain lands in Township 7 South, Range 91 West, 6th P.M. from the provisions of Order No. 143-1 and Order No. 143-2 (Corrected) and place the lands under the provisions of the Rules and Regulations of the Oil and Gas Conservation Commission
ORDER
NOW, THEREFORE, IT IS ORDERED, that the below-listed lands are hereby deleted from the provisions of Order No. 143-1 and Order No. 143-2 (Corrected) and the lands are placed under the provisions of the Rules and Regulations of the Oil and Gas Conservation Commission:
Township 7 South, Range 91 West, 6th P.M.
Sections 13 through 15: All
Sections 23 through 29: All
Section 35: All
IT IS FURTHER ORDERED, that the below-listed lands remain subject to Order No. 143-1, which established 640-acre drilling and spacing units for the production of gas from the Mesaverde Formation with the permitted well to be drilled no closer than 3750 feet to the nearest well in the same formation and no closer than 900 feet to the boundaries of the unit:
Township 7 South, Range 91 West, 6th P.M.
Sections 16 through 22: All
Sections 30 through 34: All
Section 36: All
Township 7 South, Range 92 West, 6th P.M.
Section 13: All
Sections 24 and 25: All
Section 36: All
* Township 8 South, Range 90 West, 6th P.M.
Sections 7 and 8: All
Section 17: W½
Sections 18 through 20: All
Sections 29 through 31: All
Section 32: W½
Township 8 South, Range 91 West, 6th P.M.
Sections 1 through 30: All
Section 31: E½
Sections 32 through 36: All
Township 8 South, Range 92 West, 6th P.M.
Section 1: All
Section 12: All
Section 13: E½
* Township 9 South, Range 90 West, 6th P.M.
Sections 5 through 8: All
Township 9 South, Range 91 West, 6th P.M.
Sections 1 through 12: All
(*) Unsurveyed lands which when surveyed will probably be as above described.
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.
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 12, 2006