BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF ENCANA OIL & GAS (USA), INC. FOR AN ORDER TO
ESTABLISH WELL LOCATION RULES FOR SECTIONS 29 AND 32, TOWNSHIP 7 SOUTH, RANGE 92
WEST, 6TH P.M. AND SECTIONS 5 AND 8, TOWNSHIP 8 SOUTH, RANGE 92 WEST,
6TH P.M., FOR THE WILLIAMS FORK AND ILES FORMATIONS OF THE MESAVERDE
GROUP, MAMM CREEK FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 191
DOCKET NO. 1306-EX-01
ORDER NO. 191-96 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 17, 2013, at the Two Rivers
Convention Center, 159 Main Street, Grand Junction, Colorado, upon application
for an order to establish setback rules applicable to the drilling and producing
of wells from two federal exploratory units, the Hunter Mesa Unit and the
Middleton Creek Unit, for the Williams Fork and Iles Formations of the Mesaverde
Group.
FINDINGS
The Commission finds as follows:
1.
Encana Oil & Gas (USA), Inc. (“Encana” or "Applicant"), 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.d.(3) of the
Rules and Regulations of the Oil and Gas Conservation Commission provides that
in a unit operation, approved by federal or state authorities, Rule 318 shall
not apply except that no well in excess of two thousand five hundred (2,500)
feet in depth shall be located less than 600 feet from the exterior or interior
boundary of the unit area and no well less than 2,500 feet in depth below the
surface shall be located less than 200 feet from the exterior or interior (if
there be one) boundary of the unit area unless otherwise authorized by the order
of the Commission after proper notice to owners outside the unit area. Sections 29 and 32, Township 7 South,
Range 92 West, 6th P.M. and Sections 5 and 8, Township 8 South, Range
92 West, 6th P.M. are subject to Rule 318.d.(3) for the Williams Fork
and Iles Formations of the Mesaverde Group.
5.
Encana is the operator of two federal exploratory units: the Hunter Mesa
Unit approved on November 30, 1993 by the Bureau of Land Management (“BLM”) and
the Middleton Creek Unit approved by the BLM on August 24, 2005.
6.
On January 13, 2011, the Commission entered Order No. 191-83 which, among
other things, established unit setbacks and well density rules for the Hunter
Mesa and Middleton Creek Federal Units.
This Application is subject to Order 191-83 for the Williams Fork and
Iles Formations.
7.
On April 18, 2013, Encana, by
its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a
verified application (“Application”) for an order to establish setback rules
applicable to the drilling and producing of wells from two federal exploratory
units in the Williams Fork and Iles Formations of the Mesaverde Group in
Garfield County, such that a Williams Fork and/or Iles Formation well should be
located downhole anywhere on the below-described lands (“Application Lands”),
but no closer than 100 feet from the boundaries of the exterior or interior (if
applicable) unit boundary unless such boundary abuts or corners lands of which
the Commission has not at the time of drilling permit application granted the
right to drill 10-acre density Williams Fork and/or Iles Formation wells in
which event the wells should be located downhole no closer than 200 feet from
the exterior or interior (as applicable) unit boundary, without exception being
granted by the Director:
Township 7 South, Range 92 West, 6th P.M.
Section 29:
E½
Section 32:
E½
Township 8 South, Range 92 West, 6th P.M.
Section 5:
W½ N½ N½, SW¼ NW¼, W½ SW¼
Section 8:
W½ W½
Encana
requested to reduce the setbacks for the eastern side of the Hunter Mesa and the
western side of the Middleton Creek Federal Unit boundaries. Encana did not request to change or
modify the current spacing or density of the Application Lands or the 600 foot
unit boundary setback for the remaining portions of the Hunter Mesa Federal Unit
and the Middleton Creek Federal Unit boundaries.
8.
On June 5, 2013, Encana, by its attorneys, 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.
9.
Land testimony and exhibits submitted in support of the Application by
Jessica Sellyei, Land Negotiator for Encana, showed that the surface is
comprised of fee and federal lands, and that Encana holds a 100% leasehold
interest in the Application Lands.
10. Geologic
testimony and exhibits submitted in support of the Application by Christopher F.
Cassle, Geologist for Encana, showed the Williams Fork and Iles Formations is
present throughout the Application Lands.
11.
Engineering testimony and exhibits submitted in support of the Application by
Lafell T. Loveland, Reservoir Engineer for Encana, showed the current 600 foot
setbacks between the Hunter Mesa Federal Unit and the Middleton Creek Federal
Unit will result in an estimated 52 stranded potential well locations and 25.5
billion cubic feet in undeveloped natural gas resources. Testimony concluded that reduced
setbacks, from 600 feet to 100 feet, for the shared boundary of the Hunter Mesa
Federal Unit and Middleton Creek Federal Unit will prevent waste, will increase
the ultimate recovery of the hydrocarbons, and will not endanger correlative
rights.
12. The
above-referenced testimony and exhibits show that granting the Application will
allow more efficient reservoir drainage, will prevent waste, will assure a
greater ultimate recovery of hydrocarbons, and will not violate correlative
rights. Encana 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, the Commission should enter an order to establish setback rules whereby a
well shall be located downhole no closer than 100 feet from the boundaries of
the exterior or interior (if applicable) unit boundary unless such boundary
abuts or corners lands of which the Commission has not at the time of drilling
permit application granted the right to drill 10-acre density Williams Fork
and/or Iles Formation wells in which event the wells shall be located downhole
no closer than 200 feet from the exterior or interior (as applicable) unit
boundary for the Williams Fork and Iles Formations.
ORDER
IT IS HEREBY ORDERED:
1.
All wells drilled to the Williams Fork and/or Iles Formation within the
below-described lands shall be located downhole no closer than 100 feet from the
boundaries of the exterior or interior (if applicable) unit boundary unless such
boundary abuts or corners lands of which the Commission has not at the time of
drilling permit application granted the right to drill 10-acre density Williams
Fork and/or Iles Formation wells, in which event the wells shall be located
downhole no closer than 200 feet from the exterior or interior (as applicable)
unit boundary, without exception being granted by the Director:
Township 7 South, Range 92 West, 6th P.M.
Section 29:
E½
Section 32:
E½
Township 8 South, Range 92 West, 6th P.M.
Section 5:
W½ N½ N½, SW¼ NW¼, W½ SW¼
Section 8:
W½ W½
1.
The provisions contained in the above order shall become effective
immediately.
2.
The Commission expressly reserves its right, after notice and hearing, to
alter, amend or repeal any and/or all of the above orders.
3.
Under the State Administrative Procedure Act the Commission considers
this Order to be final agency action for purposes of judicial review within 30
days after the date this Order is mailed by the Commission.
4.
An application for reconsideration by the Commission of this Order is not
required prior to the filing for judicial review.
ENTERED THIS
8th
day of July, 2013, as of June 17, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary