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

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on June 1, 2010, at the Chancery Building, 1120 Lincoln St., Suite 801, Denver, Colorado, 80203, for an order granting an exception location for the Twin Creek 12-4D1 Well in the NW¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M.

FINDINGS

The Commission finds as follows:

1.             Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

2.             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.

3.             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.  Rule 318.c. provides, in pertinent part, that the Director may grant an operator’s request for a well location exception to the requirements of Rule 318. or any order because of geologic, environmental or topographical conditions provided that a waiver or consent signed by the lease owner toward whom the well location is proposed to be moved agrees that said well may be located at the point at which the operator proposes to drill the well and where correlative rights are protected.  Further, Rule 318.d. provides that, in a unit operation approved by federal or state authorities, a well drilled in excess of 2,500 feet shall be located not less than 600 feet from the exterior or interior boundary of the unit area, unless authorized by the order of the Commission after proper notice to owners outside of the unit area.  The NW¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M. is subject to these Rules for the Williams Fork Formation.

4.             On April 8, 2010, EnCana Oil & Gas (USA) Inc. (“EnCana”), by its attorneys, filed with the Commission a verified application for an order to allow an exception location for the Twin Creek #12-4D1 Well (the “Well”), to be located at a bottomhole location of 1,035 feet from the north line (“FNL”) and 660 feet from the west line (“FWL”) in the NW¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation.  The Well is located in Uncommitted Tract A (S½ S½ NW¼ NW¼ of said Section 12) adjacent to the exterior boundaries of the federal Hunter Mesa Unit (“Unit”).  EnCana seeks an exception to drill and complete the Well at the bottomhole location because the Well is:

a.             Approximately 51 feet south of the northern lease line of Uncommitted Tract A and 279 feet north of the southern lease line of Uncommitted Tract A;

b.             Approximately 525 feet from the bottomhole location of the proposed Twin Creek #12-5A2 Well located in the SW¼ NW¼ of said Section 12 and within the exterior boundaries of the Unit; and

c.             Approximately 490 feet from the bottomhole location of the proposed Twin Creek #12-4A1 Well located in the NW¼ NW¼ of said Section 12 and within Uncommitted Tract B (N½ S½ NW¼ NW¼ and N½ NW¼ NW¼ of said Section 12) which is adjacent to the exterior boundary of the Unit.

There will be no well pads on the NW¼ NW¼ of said Section 12.  The proposed surface location of the Well is to be 2,549 feet FNL and 1,590 feet FWL in said Section 12, and is to be located in the Unit on the proposed EnCana F12E Well Pad in the SE¼ NW¼ of said Section 12, which is a common pad to accommodate at least eight wells.

5.            On May 17, 2010, the Commission received a letter of protest from Ms. Lisa Bracken, Mr. Blair Bracken, and Ms. Emma Eicher, mineral lessors in Uncommitted Tract B.

6.            On or about May 19, 2010, EnCana filed a Motion to Dismiss the protest. 

7.            On May 20, 2010, a pre-hearing conference was held, during which Ms. Bracken appeared telephonically and chose, on behalf of all the protestants, to convert the letter of protest to a sworn statement under Rule 510.  EnCana did not object.

8.            EnCana thereafter presented testimony and exhibits in support of its application.

9.         Land testimony indicated that EnCana owns 100% of the leasehold interest in Uncommitted Tract A containing the proposed exception location for the Well.

10.       Testimony and exhibits showed that EnCana intends to drill and complete the Well with the following bottomhole location: 1,035 feet FNL, 660 feet FWL in Section 12, Township 7 South, Range 92 West, 6^th P.M.  Testimony and exhibits showed that the bottomhole location of the Well would be on Uncommitted Tract A adjacent to the exterior boundaries of the Unit.

11.       Further testimony indicated that EnCana seeks an exception from Rule 318.a. in that it seeks to drill and complete the Well as a directional well at the following bottomhole location:

a.         Approximately 51 feet south of the northern lease line of Uncommitted Tract A and 279 feet north of the southern lease line of said tract;

b.         Approximately 525 feet from the proposed Twin Creek 12-5A2 Well located in the SW¼NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M., which is within the exterior boundaries of the Unit; and

c.         Approximately 490 feet from the proposed Twin Creek 12-4A1 Well located in the NW¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M. and within Uncommitted Tract B, which is adjacent to the exterior boundary of the Unit.

12.       Further testimony and exhibits demonstrated that EnCana did not plan to locate any well pads on Uncommitted Tract A.  Testimony indicated that the surface location of the Well is 2,549 feet FNL and 1,590 feet FWL of Section 12, Township 7 South, Range 92 West, 6^th P.M. and is located on proposed Well Pad F12E in the SE¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M. within the Unit.  Further testimony indicated that the Well may share a common pad with at least eight wells.

13.       EnCana provided reservoir engineering testimony, supported by geologic testimony, that showed that the Well is necessary for the recovery of reserves from the Williams Fork Formation that would not be economically and efficiently recovered by the existing wells in the area.

14.          Testimony and exhibits submitted in support of the application showed that notice was provided to interested parties in accordance with Rule 507.b.(5). 

15.       Testimony and exhibits indicated that EnCana has complied with the requirements of Rule 318.c.

16.       EnCana agreed to be bound by oral order of the Commission.

17.       In order to prevent waste and protect the correlative rights of all owners in the area surrounding the proposed bottomhole location, it is reasonable and equitable to permit an exception location to allow the drilling and completion of the Well at the described exception (bottomhole) location. 

18.       Based on the facts stated in the verified application, the testimony and exhibits in support of the application, having no active protests, and based on the Hearing Officer review of the application under Rule 511.d., the Commission should enter an order to allow the drilling and completion of the Well at the described exception (bottomhole) location.

ORDER

NOW, THEREFORE IT IS ORDERED, that the Twin Creek 12-4D1 Well may be drilled and completed for the production of gas and associated hydrocarbons from the Williams Fork Formation at the bottomhole location described as follows:

a.             Approximately 1,035 feet FNL, 660 feet FWL in Section 12, Township 7 South, Range 92 West, 6^th P.M.;

b.         Approximately 51 feet south of the northern lease line of Uncommitted Tract A (S½ S½ NW¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M.) and 279 feet north of the southern lease line of said tract, which is adjacent to the exterior boundaries of the Hunter Mesa Unit;

c.         Approximately 525 feet from the proposed Twin Creek 12-5A2 Well located in the SW¼NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M., which is within the exterior boundaries of the Hunter Mesa Unit; and

d.              Approximately 490 feet from the proposed Twin Creek 12-4A1 Well located in the NW¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M., within Uncommitted Tract B (N½ S½ NW¼ NW¼ and N½ NW¼ NW¼ of said Section 12), which is adjacent to the the exterior boundary of the Hunter Mesa Unit.

IT IS FURTHER ORDERED, that the surface location of the Twin Creek 12-4D1 Well shall be located on the proposed Well Pad F12E in the SE¼ NW¼ of Section 12, Township 7 South, Range 92 West, 6^th P.M. within the Hunter Mesa Unit. 

                        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 this order.

                        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, 2010, as of June 1, 2010.

                                                                        OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By____________________________________

            Carol Harmon, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 29, 2010