BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF PROMULGATION AND                   )           CAUSE NO. 296

ESTABLISHMENT OF FIELD RULES TO                         )          

GOVERN OPERATIONS IN THE SLICK ROCK              )           ORDER NO. 296-2

FIELD, SAN MIGUEL COUNTY, COLORADO                 )

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on July 23, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to vacate Order No. 296-1, which established a 640-acre drilling and spacing unit for Section 8, Township 43 North, Range 17 West, 6th P.M., for the production of gas and associated hydrocarbons from the Lower Ismay Formation, and place the lands under the provisions of Rule 318. of the Rules and Regulations of the Commission.

 

FINDINGS

The Commission finds as follows:

1.  EnCana Oil & Gas (USA) Inc. ("EnCana"), 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 April 15, 1975, the Commission issued Order No. 296-1, which among other things, established a 640-acre drilling and spacing unit for Section 8, Township 43 North, Range 17 West, 6th P.M., for the production of gas and associated hydrocarbons from the Lower Ismay Formation.

 

5.  On April 19, 2007, EnCana, by its attorney, filed with the Commission a verified application for an order to vacate Order No. 296-1, which established a 640-acre drilling and spacing unit for Section 8, Township 43 North, Range 17 West, 6th P.M. for the production of gas and associated hydrocarbons from the Lower Ismay Formation and place the lands under the provisions of Rule 318. of the Rules and Regulations of the Commission.

 

6.  On May 23, 2007, EnCana, 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. 

 

7.  Testimony submitted in support of the application showed that EnCana is the majority leasehold owner in the application lands, and that EnCana has drilled the first horizontal well in the area in an attempt to test a new concept for the area.  Additional testimony indicated that if production is found, EnCana will form a Communitization Agreement with the approval of the Bureau of Land Management.

 

8.  Testimony and exhibits submitted in support of the application showed that there is presently no producing well in the application lands, with the only well ever drilled in the application lands, the Slick Rock Federal #1 Well plugged and abandoned in 1982.

 

9.  Testimony and exhibits submitted in support of the application showed that based on core analysis and open-hole logging porosity, one well cannot efficiently recover reserves in a 640-acre area.  Additional testimony and exhibits showed that vacation of Order No. 296-1 will not result in waste or the drilling of unnecessary wells and will not affect correlative rights of any parties as there has been no production in the application lands for over 24 years.

 

10.  The above-referenced testimony and exhibits show that the proposed vacation of the order will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

 

11.  EnCana Oil & Gas (USA) Inc. 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 vacate Order No. 296-1 and place the lands under the provisions of Rule 318. of the Rules and Regulations of the Commission.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that Order No. 296-1 which established a 640-acre drilling and spacing unit for Section 8, Township 43 North, Range 17 West, 6th P.M., is hereby vacated and the lands are now hereby subject to the provisions of Rule 318. of the Rules and Regulations of the Commission.

 

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 August, 2007, as of July 23, 2007.

                        

                                                                        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

August 15, 2007