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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 PLATEAU FIELD, MESA COUNTY, COLORADO
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CAUSE NO. 166
ORDER NO. 166-28 |
This cause came on for hearing before the Commission at 8:00 a.m. on July 15, 2008, in Ballroom B of the Brown Palace Hotel, 321 Seventeenth Street, Denver, Colorado, for an order to establish a 640-acre drilling and spacing unit consisting of Section 1, Township 10 South, Range 96 West, 6th P.M., with the permitted well to be located no closer than 600 feet from any lease line absent an exception from the Director of the Commission, for the production of gas and associated hydrocarbons from the Niobrara Formation.
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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation 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 1, Township 10 South, Range 96 West, 6th P.M. is subject to this Rule for the Niobrara Formation.
5. On May 23, 2008, EnCana, by its attorney, filed with the Commission a verified application for an order to establish a 640-acre drilling and spacing unit consisting of Section 1, Township 10 South, Range 96 West, 6th P.M., for production from the Niobrara Formation. EnCana plans to drill one horizontal well in the application lands from the existing Niobrara Formation and Dakota Formation well pad in the SEĽ of said Section 1, allowing the proposed horizontal well to penetrate the productive formation no closer than 600 feet from any lease line and with an interwell setback of not less then 250 feet from any producible well in the Niobrara Formation without exception being granted by the Director of the Commission.
6. On July 2, 2008, EnCana, 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 showed that EnCana is the leaseholder for the Niobrara Formation in the application lands.
8. Testimony and exhibits submitted in support of the application showed that the Niobrara Formation is a common source of supply underlying the application lands. Additional testimony showed that original gas-in-place (“OGIP”) for the Niobrara Formation in the application lands is approximately 50 BCF per section. Further testimony showed that core data for an area well indicated that the Niobrara Formation has an average porosity of 6.0% and average permeability of 0.008 millidarcies.
9. Testimony and exhibits submitted in support of the application showed that a horizontal well will have an estimated ultimate recovery (“EUR”) of 2.0 to 3.0 BCF from an OGIP of 85 BCF per section. Additional testimony showed that future production data from the proposed horizontal well on application lands will be required to validate the EUR calculations for the requested 640-acre spacing.
10. The above-referenced testimony and exhibits show that the proposed drilling and spacing unit will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
11. EnCana Oil & Gas (USA) Inc. 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 establish a 640-acre drilling and spacing unit consisting of Section 1, Township 10 South, Range 96 West, 6th P.M., for production from the Niobrara Formation, allowing a proposed horizontal well to penetrate the productive formation no closer than 600 feet from any lease line and with an interwell setback of not less than 250 feet from any producible well in the Niobrara Formation without exception being granted by the Director of the Commission.
NOW, THEREFORE IT IS ORDERED, that a 640-acre drilling and spacing unit is hereby established consisting of Section 1, Township 10 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Niobrara Formation.
IT IS FURTHER ORDERED, that one horizontal well shall be approved to be drilled in the application lands from the existing Niobrara Formation and Dakota Formation well pad in the SEĽ of said Section 1, allowing the proposed horizontal well to penetrate the productive formation no closer than 600 feet from any lease line and with an interwell setback of not less than 250 feet from any producible well in the Niobrara Formation without exception being granted by the Director of 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 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 July, 2008, as of July 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
July 21, 2008