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

 

IN THE MATTER OF THE PROMULGATION                   )           CAUSE NO. 290

AND ESTABLISHMENT OF FIELD RULES TO               )          

GOVERN OPERATIONS IN THE BIG HOLE                    )           ORDER NO. 290-3

FIELD, MOFFAT COUNTY, COLORADO                         )          

           

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on February 25, 2008, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow 3 additional wells, for a total of 4, in the 320-acre drilling and spacing units in certain lands in Township 10 North, Ranges 93 and 94 West, 6th P.M., with the permitted well to be located no closer than 990 feet from the outer unit boundary.

 

FINDINGS

 

The Commission finds as follows:

 

 1.  Cohort Energy Company (Cohort), 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 March 19, 1974, the Commission issued Order No. 290-1, which among other things, established 320-acre drilling and spacing units for Sections 18, 19, and 30, Township 10 North, Range 93 West, 6th, P.M., and Sections 1, 12, 13, and 24, Township 10 North, Range 94 West, 6th P.M., with said units consisting of either the E and W or N and S of each section, for production of gas from the Middle Lewis Formation.  On March 17, 2003, the Commission issued Order No. 290-2, which allowed up to 4 wells to be drilled on certain 320-acre drilling and spacing units in Township 10 North, Range 94 West, 6th P. M.           

 

5.  On January 7, 2008, Cohort, by its attorney, filed with the Commission a verified application for an order to allow 3 additional wells, for a total of 4, in the 320-acre drilling and spacing units for the below-listed lands, for production from the Middle Lewis Formation, with the permitted well to be located no closer than 990 feet from the outer unit boundary:

 

Township 10 North, Range 93 West, 6th P.M.

Section 18:                            S

Section 19:                            All

Section 30:                            All

 

Township 10 North, Range 94 West, 6th P.M.

Section 1:                               All

Sections 12 and 13:             All

Section 24:                            All

 

The Applicant requests the Commission to authorize the Director to grant an exception to the well location setbacks specified in Order No. 290-1, as corrected, and as modified by this application, up to and including 100 feet, but not beyond, to avoid archaeological sites without notice and hearing, and without the necessity to obtain consent from the lease owners or the mineral interest owners of the lands toward whom the well location is proposed to be moved.

 

                        6.  On February 12, 2008, Cohort, 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.

 

                        7.  Testimony and exhibits submitted in support of the application showed that except for certain lands owned by Kodiak Oil & Gas (USA) Inc., Cohort owns all or some of the working interest in the application lands.  Additional testimony and exhibits indicated that the minerals in the application lands are owned by the Bureau of Land Management (BLM), Cohort, Moffat County or other fee owners, and that the BLM owns approximately 69% of the surface within the application lands, with the remainder being held in fee.  Further testimony indicated that Cohort has surface use agreements with some surface owners and intends to try to negotiate surface use agreements with other surface owners where necessary.  

8.  Testimony and exhibits submitted in support of the application showed the depositional environment of formations in northwest Colorado, indicating that the Lewis Shale Formation lies immediately below the Fox Hills Formation and above the Mesaverde Group, and that the Turbidite Sandstones developed within the Lewis Shale Formation are the productive intervals in the Big Hole Field.  Additional testimony and exhibits indicated that the dip is to the northwest and fairly uniform throughout the field.  Further testimony referred to the testimony submitted in support of Order No. 290-2 indicated that the Middle Lewis Formation is continuous across the application lands and the individual sands are discontinuous across the application lands. 

9.  Testimony and exhibits submitted in support of the application showed that the Govt. 15-1 Well, located in the SW NW of Section 15, Township 10 North, Range 94 West, 6th P.M., has produced 0.752 BCF and has an estimated ultimate recovery of 1.026 BCF; that the Federal Land Bank 14-1 Well, located in the NW SW of Section 14, Township 10 North, Range 94 West, 6th P.M., has produced 2.381 BCF and has an estimated ultimate recovery of 3.49 BCF; and that the Govt.14-2 Well, located in the NE SE of Section 14, Township 10 North, Range 94 West, 6th P.M., has produced 1.017 BCF and has an estimated ultimate recovery of 1.428 BCF.  Additional testimony and exhibits indicated that the drainage area in the Middle Lewis Formation in the Big Hole and Great Divide Fields can vary significantly, from 3 to 562 acres, with an average drainage area of 80 acres.  Further testimony indicated that a reasonable drilling and spacing unit consisting of 80-acres would be appropriate to recover oil and gas in the application area. 

10.  The above-referenced testimony and exhibits, and previous findings of the Commission, show that drilling Middle Lewis Formation wells on an 80-acre density basis will allow for efficient reservoir drainage, will prevent waste, will assure the greatest ultimate recovery of gas and associated hydrocarbons, and will not violate correlative rights.

 

                        11.  Cohort Energy Company agreed to be bound by oral order of the Commission.

 

12.  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 allow 3 additional wells, for a total of 4, in the 320-acre drilling and spacing units in certain lands in Township 10 North, Ranges 93 and 94 West, 6th P.M., with the permitted well to be located no closer than 990 feet from the outer unit boundary.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that 3 additional wells, for a total of 4, are hereby approved in the 320-acre drilling and spacing units for the lands described below, for production from the Middle Lewis Formation, with the permitted well to be located no closer than 990 feet from the outer unit boundary:

 

Township 10 North, Range 93 West, 6th P.M.

Section 18:                            S

Section 19:                            All

Section 30:                            All

 

Township 10 North, Range 94 West, 6th P.M.

Section 1:                               All

Sections 12 and 13:             All

Section 24:                            All

 

IT IS FURTHER ORDERED, that the Director is hereby authorized to grant an exception to the well location setbacks specified in Order No. 290-1, as corrected, and as modified by this application, up to and including 100 feet, but not beyond, to avoid archaeological sites without notice and hearing, and without the necessity to obtain consent from the lease owners or the mineral interest owners of the lands toward whom the well location is proposed to be moved.

 

          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 March, 2008, as of February 25, 2008.

           

                                                                        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

March 11, 2008