BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 191
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE MAMM CREEK FIELD, ) ORDER NO. 191-34
GARFIELD COUNTY, COLORADO )
This cause came on for hearing
before the Commission at 9:00 a.m. on September 18, 2006, in Suite 801, The
Chancery Building, 1120 Lincoln Street, Denver Colorado, for an order to establish various drilling
and spacing units for the production of gas and associated hydrocarbons from
the Williams Fork and Iles Formations for the below-listedcertain
lands
in Township 6 South, Range 92 West, 6th P. M. and to
allow the equivalent of one (1) well per 10 acres.
Township 6 South, Range 92 West, 6th
P.M.
Section 8: SW½ SW¼
(80-acre drilling and spacing unit)
Section 16: NW¼
(160-acre drilling and spacing unit)
Section 16: SW¼ NE¼
(40-acre drilling and spacing unit)
Section 23: NW¼ NE¼ and
NE¼ NW¼ (80-acre drilling and spacing unit)
The Commission finds as follows:
1. Antero Resources Corporation (“Antero”), 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 Colorado Oil and Gas Conservation Commission requires wells drilled in excess of 2,500 feet in depth to be located not less than 600 feet from any lease line, and 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. The below-listed lands are subject to this rule:
Township 6 South, Range 92 West, 6th P.M.
Section 8: S½ SW¼
Section 16: NW¼, SW¼ NE¼
Section 23: NW¼ NE¼ and NE¼ NW¼
5. On July 12, 2006, Antero, by its attorney, filed with the Commission a verified application for an order to establish various drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations for the below-listed lands and to allow the equivalent of one (1) well per 10 acres:
Township 6 South, Range 92 West, 6th P.M.
Section 8: S½ SW¼ (80-acre drilling and spacing unit)
Section 16: NW¼ (160-acre drilling and spacing unit)
Section 16: SW¼ NE¼ (40-acre drilling and spacing unit)
Section 23: NW¼ NE¼ and NE¼ NW¼ (80-acre drilling and spacing unit)
That as to all future Williams
Fork Formation wells to be drilled upon the application lands, each well may be
located anywhere downhole in the established drilling and spacing unit but no
closer than one hundred (100) feet from the boundaries of the unit, without
exception being granted by the Director, except that with respect to units or
lease lines abutting or cornering lands for which the Commission has not at the
time of the drilling permit application granted the right to drill 10-acre
density wells, the well shall be located downhole no closer than 200 two hundred
(200) feet from the boundary of the drilling unit so abutting or cornering such
lands.
That as to all future Iles Formation wells to be drilled upon the
application lands within drilling and spacing units (granted pursuant to this aApplication),
the well should be located downhole anywhere in the drilling and spacing unit
but no closer than one hundred (100) feet from the
boundaries of the unit 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 Iles Formation wells, the well should be located
downhole no closer than four hundred (400)
feet from the boundary or boundaries of the drilling unit so abutting or
cornering such lands without exception being granted by the Director of the Oil
and Gas Conservation Commission.
6. On May 23, 2006, Antero, 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.
· 7.
Testimony and exhibits submitted in support of the application showed the
proximity of the lands in the vicinity of the Application application
lands which have been previously approved by the COGCC for
increased density in the Williams Fork and Iles Formations. Antero controls
between 75 to 100 percent of the leasehold within the lands covered by each
proposed drilling and spacing unit. The multiple parcels require Antero to
space the lands to coordinate efficient development. Additional testimony
indicated that all of the unleased mineral interest owners within or
immediately abutting theApplication application area
have received notice of this Applicationapplication. We haveAntero has
not received any notice of objection or protest to this Application application.
8.
Testimony and exhibits submitted in support of the application showed that the
Williams Fork and the Iles Formations are common sources of supply underlying
the application lands. The Williams Fork Formation is a highly discontinuous
reservoir with units which were deposited in a series of sinuous fluvial
systems. The Iles Formation is a marine sandstone and shale sequence and
contains a series of marine sandstone members know as the Rollins, Corcoran,
and Cozette. Additional testimony indicated that the median channel width
of the Williams Fork Formation is approximately four hundred (400) feet’.
9. Testimony
and exhibits submitted in support of the application described the pilot
projects at Grand Valley and Rulison Fields to show that these infill drilling
programs are increasing the recovery of gas in the pilot by contacting “new”
gas. Additional testimony showed that the wells drilled on 10- acre
density are tracking closely to the wells drilled on 80’ acres and 40’
acres.
10. Testimony and exhibits presented at the administrative hearing showed that increasing well density from twenty (20) to ten (10) acres has increased estimated ultimate recovery by 9.09 BCF within the development area located nearby in Section 32, Township 6 South, Range 92 West, 6th P.M.
11. Testimony
and exhibits submitted in support of the application showed that wells will
have a 14.4% rate of return and 5 year payout. These economics meet Antero’s
requirement for drilling the wells. Additional testimony indicates that wells
must be drilled on less than 20- acre well
density in order to effectively drain the reservoir.
12. Testimony
and exhibits submitted in support of the application showed that the Iles
Formation in the application
area concerned with this testimony could
not be economically developed with wells drilled and completed only in the Iles
Formation. The rates of return are well below 5% and the wells do not pay out
in any reasonable time frame. Reserves from the Iles Formation would not be
recovered in the foreseeable future unless they are completed as a part of the
Williams Fork Formation wells
drilled at the same location.
13. The above-referenced testimony and exhibits show that the proposed drilling and spacing units will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
14. Antero Resources Corporation 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 establish various drilling and spacing units
for the production of gas and associated hydrocarbons from the Williams Fork
and Iles Formations for the below-listedcertain lands in
Township 6 South, Range 92 West, 6th
P. M. and to allow the equivalent of one (1) well per 10 acres.
ORDER
NOW, THEREFORE, IT IS ORDERED, that the below listed drilling and spacing units are hereby established for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations and the equivalent of one (1) well per 10 acres is hereby approved:
Township 6 South, Range 92 West, 6th P.M.
Section 8: S½ SW¼ (80-acre drilling and spacing unit)
Section 16: NW¼ (160-acre drilling and spacing unit)
Section 16: SW¼ NE¼ (40-acre drilling and spacing unit)
Section 23: NW¼ NE¼ and NE¼ NW¼ (80-acre drilling and spacing unit)
IT
IS FURTHER ORDERED, that all future Williams
Fork Formation wells shall be drilled upon the application lands,
each well may be located anywhere downhole in the established
drilling and spacing unit but no closer than one hundred (100) feet from the
boundaries of the unit, without exception being granted by the Director, except
that with respect to units or lease lines abutting or cornering lands for which
the Commission has not at the time of the drilling permit applicationapplication
granted the right to drill 10-acre density wells, the well shall be located
downhole no closer than 200 hundred (200) feet from the boundary of the
drilling unit so abutting or cornering such lands.
IT
IS FURTHER ORDERED, that all future
Iles Formation wells shall be drilled upon the application lands within drilling
and spacing units (granted pursuant to this Application), the
well should be located downhole anywhere in the drilling and
spacing unit but no closer than 100 feet from the boundaries of the unit
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 Iles
Formation wells, the well should be located downhole no closer than 400 feet
from the boundary or boundaries of the drilling unit 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 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.
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
October 11, 2006