BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION                             )           CAUSE NO. 191

AND ESTABLISHMENT OF FIELD RULES TO                         )          

GOVERN OPERATIONS IN THE MAMM CREEK                     )           ORDER NO. 191-65

FIELD, GARFIELD COUNTY, COLORADO                               )

           

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on June 11, 2009, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to amend Rule 318.d.(3), to establish new setback rules for certain lands within the Gibson Gulch II Unit area, located in Sections 19 through 21 and 28 through 33 of Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.    Bill Barrett Corporation (BBC), 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 September 13, 1990, the Bureau of Land Management (BLM) approved the Gibson Gulch Unit as a federal exploratory unit and the below-listed lands are a portion of the lands that fall within the Gibson Gulch Unit:

 

            Township 6 South, Range 91 West, 6th P.M.

Section 19: SE NW, SW NE, and S

Section 20: S

Section 21: W SW

Section 28: W and W SE

Section 29: All

Section 30: All

Section 31: N, N SW, and SE

Section 32: N, N S, S SW, and SW SE

Section 33: N NW and SW NW

 

Colorado Oil and Gas Conservation Commission (Commission) Rule 318.d.(3) provides that no well in excess of 2,500 feet in depth shall be located less than 600 feet from the exterior boundary of a federal unit, unless authorized by the Commission after notice to owners outside the federal unit area.

 

5.    On February 14, 2005, corrected February 28, 2006, the Commission issued Order No. 191-9,  among other things, allowed an exception to the permitted well location for wells to be located less than 600 feet from the boundary of the Gibson Gulch II Federal Unit for the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork Formation, such that a Williams Fork Formation well shall be located downhole anywhere upon the lands but no closer than 100 feet from the boundaries of the exterior or interior (if there be one) boundary unless such boundary abuts or corners 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 wells, in which event the wells shall be located downhole no closer than 200 feet from the exterior or interior (if there be one) boundary, unless exception is granted by the Director of the Commission:

 

            Township 6 South, Range 91 West, 6th P.M.

Section 19: SE NW, SW NE, and S

Section 20: S

Section 21: W SW

Section 28: W and W SE

Section 29: All

Section 30: All

Section 31: N, N SW, and SE

Section 32: N, N S, S SW, and SW SE

Section 33: N NW and SW NW

 

6.    On April 16, 2009, BBC, by its attorney, filed with the Commission a verified application for an order to amend Rule 318.d.(3) to establish new setback rules applicable to the drilling of Iles Formation wells within the Gibson Gulch Unit area comprised of the below-listed lands such that a Iles Formation well should be located downhole anywhere upon the lands but no closer than 100 feet from the boundaries of the exterior or interior (if there be one) boundary unless such boundary abuts or corners 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 in which event the wells should be located downhole no closer than 200 feet from the exterior or interior (if there be one) boundary, unless exception is granted by the Director of the Commission:

           

Township 6 South, Range 91 West, 6th P.M.

Section 19: SE NW, SW NE, and S

Section 20: S

Section 21: W SW

Section 28: W and W SE

Section 29: All

Section 30: All

Section 31: N, N SW, and SE

Section 32: N, N S, S SW, and SW SE

Section 33: N NW and SW NW

 

7.    On May 27, 2009, BBC, 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.

 

8.    Testimony and exhibits submitted in support of the application showed that the majority of the lands surrounding the unit had previously been approved for 10-acre well density for the Iles Formation.  Additional testimony requested that the Hearing Officer take administrative notice of the geological and engineering testimony and exhibits submitted in support of the application approved under Order No. 191-57, which applied to lands, approved for 10-acre well density for the Iles Formation, contiguous to the application lands.  Further testimony indicated that the sandstones of the Iles Formation are laterally continuous, however, gas production within those reservoirs is relatively discontinuous.  Testimony showed that the Iles Formation underlying the application lands has microdarcy permeability which restricts reservoir drainage, and that a 10-acre density Iles Formation well on the application lands will yield an estimated ultimate recovery of 133 MCF.

 

9.    The above-referenced testimony and exhibits show that the proposed new setback rules for the Iles Formation underlying the application lands will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

10.  Bill Barrett Corporation agreed to be bound by oral order of the Commission. 

 

11. 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.c., the Commission should enter an order to amend Rule 318.d.(3), to establish new setback rules for certain lands within  the Gibson Gulch II Unit area, located in Sections 19 through 21 and 28 through 33 of Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that Rule 318.d.(3) is hereby amended to allow an exception to the permitted well location for wells to be located less than 600 feet from the boundary of the Gibson Gulch II Federal Unit for the below-listed lands, for the production of gas and associated hydrocarbons from the Iles Formation, such that a Iles Formation well shall be located downhole anywhere upon the lands but no closer than 100 feet from the boundaries of the exterior or interior (if there be one) boundary unless such boundary abuts or corners 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 in which event the wells shall be located downhole no closer than 200 feet from the exterior or interior (if there be one) boundary, unless exception is granted by the Director of the Commission:

 

            Township 6 South, Range 91 West, 6th P.M.

Section 19: SE NW, SW NE, and S

Section 20: S

Section 21: W SW

Section 28: W and W SE

Section 29: All

Section 30: All

Section 31: N, N SW, and SE

Section 32: N, N S, S SW, and SW SE

Section 33: N NW and SW NW

 

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 June, 2009, as of June 11, 2009.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 18, 2009