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 MAMM CREEK FIELD,

GARFIELD COUNTY, COLORADO

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CAUSE NO.   191

 

ORDER NO.   191-33

 

REPORT OF THE COMMISSION

 

                        This cause came on for hearing before the Commission at 8:30 a.m. on August 16, 2006, in the Meeker Town Hall, 345 Market Street, Meeker Colorado, for an order to establish a 40-acre drilling and spacing unit consisting of the NE¼ SE¼ of Section 16, Township 6 South, Range 92 West, 6th P.M., for the production of gas from the Williams Fork Formation of the Mesaverde Group, and to allow the equivalent of one (1) well per 10 acres with the option of up to four (4) wells to be drilled on said unit. 

FINDINGS

 

                        The Commission finds as follows:

 

            1.  Dolphin Energy Corporation (“Dolphin”), 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 two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.  Section 16, Township 6 South, Range 92 West, 6th P.M. is subject to this rule.

 

                        5.  On June 26, 2006, Dolphin, by its attorney, filed with the Commission a verified application for an order to establish a 40-acre drilling and spacing unit consisting of the NE¼ SE¼ of Section 16, Township 6 South, Range 92 West, 6th P.M., for the production of gas from the Williams Fork Formation of the Mesaverde Group, and to allow the equivalent of one (1) well per 10 acres with the option of up to four (4) wells to be drilled on said unit.  For all future Williams Fork Formation wells to be drilled on these lands, the well should be located downhole no closer than one hundred (100) feet from the boundaries of the unit unless such unit abuts or corners lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill Williams Fork Formation 10-acre density wells, in which event the wells should be drilled downhole no closer than two hundred (200) feet from the unit which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.  In addition, wells drilled on the application lands will be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by the Colorado Oil and Gas Conservation Commission.

 

                        6.  On August 1, 2006, Dolphin, by its attorney, filed with the Commission a written request in accordance with Rule 511.b. to approve the application based on the merits of the verified application and the supporting exhibits.   Sworn written testimony and twenty-one (21) exhibits were submitted in support of the application.

 

                        7.  Testimony submitted in support of the application showed that 10-acre well density has been granted for lands surrounding the application lands, including all of Section 15 and the N½ NE¼, SE¼ NE¼, SE¼ SE¼, S½ SE¼ and the SW¼ of Section 16. 

 

                        8. Testimony submitted in support of the application showed that the geology of the Williams Fork Formation in the application lands is the same as that of the surrounding lands, that   the Williams Fork Formation in the area of the application lands is a basin-centered gas deposit involving point bar and meander belt sandstone reservoirs with depositional discontinuities and average sand widths of about 400 feet.  Additional testimony submitted in support of the application showed that production may be influenced by basement level thrust systems or fracture zones, although the fractures appear to be vertically and laterally limited in extent and for the most part do not extend beyond lithologic boundaries. 

 

                        9.  Testimony submitted in support of the application showed that Dolphin expects wells drilled in the application lands will have production histories and well characteristics typical of Williams Fork Formation wells in other areas where the Commission has authorized 10-acre well densities. 

                        10.  Testimony submitted in support of the application showed that there has been no evidence of interference between the existing Williams Fork Formation wells in the area near the application lands and none is expected to occur in wells drilled in the application lands.

 

                        11.  Testimony submitted in support of the application showed that increased well density will increase gas production and would increase the ultimate gas recovery from the Williams Fork Formation in the application lands.  Additional testimony submitted indicated that 10-acre well densities will allow more efficient drainage of the Williams Fork Formation of the Mesaverde Group and will obtain greater ultimate recovery of gas from the Williams Fork Formation without causing waste or injuring correlative rights.

                       

                        12.  No protests to the application have been filed with the Commission or the Applicant.

 

                        13.  Dolphin Energy Corporation 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 based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to establish a 40-acre drilling and spacing unit consisting of the NE¼ SE¼ of Section 16, Township 6 South, Range 92 West, 6th P.M., for the production of gas from the Williams Fork Formation of the Mesaverde Group, and allow the equivalent of one (1) well per 10 acres with the option of up to four (4) wells to be drilled on said unit.

 

ORDER

 

                        NOW, THEREFORE, IT IS ORDERED, that a 40-acre drilling and spacing unit is hereby established for the NE¼ SE¼ of Section 16, Township 6 South, Range 92 West, 6th P.M., for the production of gas from the Williams Fork Formation of the Mesaverde Group, allowing the equivalent of one (1) well per 10 acres with the option of up to four (4) wells to be drilled on said unit.

 

IT IS FURTHER ORDERED, that for all future Williams Fork Formation wells to be drilled on these lands, the wells shall be located downhole no closer than one hundred (100) feet from the boundaries of the unit unless such unit abuts or corners lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill Williams Fork Formation 10-acre density wells, in which event the wells shall be drilled downhole no closer than two hundred (200) feet from the unit which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.

 

IT IS FURTHER ORDERED, that wells drilled on the application lands shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by 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 August, 2006, as of August 16, 2006.

                        

                                                                        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

August 25, 2006