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 MAM CREEK FIELD,

GARFIELD COUNTY, COLORADO

 

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CAUSE NO. 191

 

ORDER NO. 191-9

CORRECTED

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on February 14, 2005 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 applicable to the drilling of Williams Fork Formation wells within the Gibson Gulch II Unit area comprised of certain lands such that a Williams Fork 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 Williams Fork 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.

 

FINDINGS

 

The Commission finds as follows:

 

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

 

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

Section 19: SE NW, SW NE, S

Section 20: S

Section 21: W SW

Section 28: W, W SE

Section 29: ALL

Section 30: ALL

Section 31: N, N SW, SE

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

Section 33: N NW, SW NW

 

2. 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.

 

3. On December 22, 2004, Bill Barrett Corporation (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 Williams Fork Formation wells within the Gibson Gulch II Unit area comprised of the lands described above in Finding No. 1 such that a Williams Fork 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 Williams Fork 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. BBC and others have drilled, tested and completed multiple wells in the Williams Fork Formation of the Mesaverde Group upon these and other nearby lands.

 

4. Testimony and exhibits presented at the administrative hearing showed BBC acreage, the existing and proposed setbacks for the application lands, the existing drilling and spacing unit sizes, and the existing vertical and directional wells in the application lands.

 

5. Testimony and exhibits presented at the administrative hearing showed the many vertically stacked fluvial, meander belt point bar sand bodies present in the Williams Fork Formation in the application area. The Williams Fork Formation, which is approximately 3,500 feet thick in the area, consists of sandstones, shales and coals which were deposited in a non-marine, meandering stream environment. The lower portion of the formation consists of a continuously gas saturated interval. The sands that are completed for gas production are in the gas saturated interval. Additional testimony showed that the sand bodies in the Williams Fork Formation are highly discontinuous, with very limited lateral extent and very low permeability.

 

6. Testimony and exhibits presented at the administrative hearing showed that the average lateral extent of the one hundred thirty-six (136) sand bodies that were measured is approximately five hundred twenty-six (526) feet, and that approximately eighty percent (80%) of the sand bodies measured had a lateral extent of seven hundred (700) feet or less, and that 60% of the sand bodies measured had a lateral extent of five hundred (500) feet or less. Additional testimony indicated that this data provides good documentation that the sands are discontinuous, and the data is very consistent with a theoretical ten (10) acre density lateral extent of six hundred and sixty (660) feet.

7. Testimony and exhibits presented at the administrative hearing showed that many of the meander belt point bar sand bodies are not correlatable between existing wells with setbacks as close as six hundred eighty-six (686) feet. Additional testimony showed that wells drilled under setbacks equivalent to ten (10) acre density would intersect very few, if any, of the same sand bodies, and that only gas from the sand bodies that are intersected by a well is produced into the well.

8. Testimony and exhibits presented at the administrative hearing showed that wells drilled as close as six hundred sixty (660) feet, which is equivalent to ten (10) acre density, would not penetrate the same sand bodies, even though they would appear to correlate on cross section created from logs from the four (4) wells.

9. Testimony and exhibits presented at the administrative hearing indicated that the average estimated ultimate recovery is seven hundred twenty-three (723) MMCFG, with a statistical mean of seven hundred sixty-three (763) MMCFG.

 

10. Testimony and exhibits presented at the administrative hearing showed the estimated volumetric gas in place on a 10-acre basis for the wells in the application lands, indicating that the average original gas in place is nine hundred ninety-three (993) MMCFG and the average recoverable gas in place is seven hundred ninety-four (794) MMCFG.

11. The above-referenced testimony and exhibits show that the proposed setbacks will allow more efficient drainage, will prevent waste, will not violate correlative rights and will assure a greater ultimate recovery of gas and associated hydrocarbons.

 

12. That Bill Barrett Corporation agrees to be bound by oral order of the Commission.

 

13. Based on the facts stated in the verified application, having received no protests to the application and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order 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 lands described above in Finding No. 1, for the production of gas and associated hydrocarbons from the Williams Fork 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 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, S

Section 20: S

Section 21: W SW

Section 28: W, W SE

Section 29: ALL

Section 30: ALL

Section 31: N, N SW, SE

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

Section 33: N NW, 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 28th day of February, 2005, as of February 14, 2005.

 

CORRECTED this_______ day of February, 2006, as of February 14, 2005.

 

 

 

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

February 28, 2006