IN THE MATTER OF THE PROMULGATION                CAUSE NO. 315

AND ESTABLISHMENT OF FIELD RULES TO              

GOVERN OPERATIONS IN THE VERNON                    ORDER NO. 315-8

FIELD, YUMA COUNTY, COLORADO                          

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 10:00 a.m. on June 4, 2002 in the Anasazi Room, La Plata County Courthouse, 1060 E. 2nd Avenue, Durango, Colorado on the verified application of Samedan Oil Corporation for an order to allow an additional well to be drilled on certain 160-acre drilling and spacing for lands in the Vernon Field for the production of gas and associated hydrocarbons from the Niobrara Formation, with the permitted well to be located no closer than 560 feet from the boundaries. 

 

FINDINGS

 

The Commission finds as follows:

 

1.  Samedan Oil Corporation 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.

 

4.  On January 17, 1977, the Commission issued Order No. 315-1, which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation with the permitted well to be located no closer than 990 feet from the unit boundary underlying certain lands in the Vernon Field.  The spaced area was extended by Order No. 315-2 issued November 17, 1977.  By Order No. 315-3, dated August 22, 1978 and upheld by Order No. 315-4 dated September 9, 1981, the size of the drilling and spacing units within the spaced area was reduced to 160-acres with the permitted well to be located no closer than 900 feet from the unit boundaries for the below-listed lands:

 

Township 1 South, Range 44 West, 6th P.M.

Sections 3 thru 10:    All

Sections 16 thru 21:  All

Sections 27 thru 34:  All

 

Township 2 South, Range 44 West, 6th P.M.

Sections 3 thru 6:      All

 

Township 1 North, Range 44 West, 6th P.M.

Sections 32 and 33:  All

 

5. Subsequent Order Nos. 315-5 and 315-6 allowed additional wells to be drilled and completed on the 160-acre drilling and spacing units for the below-listed lands:

 

Township 1 South, Range 44 West, 6th P.M.

Section 3:    NW

Section 7:    All

Section 8:    All

Section 17:  E

Section 29:  W and E

Section 31:  All

Section 32:  All

Section 33:  W

 

Township 2 South, Range 44 West, 6th P.M.

Section 5:    N

 

6.  On April 19, 2002, Samedan Oil Corporation by its attorney filed with the Commission a verified Application for an order to allow an additional well to be drilled on the 160-acre drilling and spacing units on the lands described below for the production of gas and associated hydrocarbons from the Niobrara Formation with the permitted well to be located no closer than 560 feet from the boundaries.  For any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.

 

Township 1 South, Range 44 West, 6th P.M.

Section 4:    All

Section 27:  NW, S

Section 28:  NW, S

Section 30:  SW

Section 31:  NE

Section 33:  E

 

Township 2 South, Range 44 West, 6th P.M.

Section 6:  All

 

7.  At the time of the hearing, Samedan withdrew Section 6 from the application area and subsequently on May 21, 2002 filed a written withdrawal with the Commission. 

 

8.  Testimony and exhibits presented at the administrative hearing showed the location of the application lands and indicated that all mineral leases on those parcels are owned by Samedan.

 

9.  Testimony and exhibits presented at the administrative hearing indicated the Niobrara Formation is a blanket chalk with some local faulting, and that gas production is better in areas of structural highs within the application lands.

 

10.  Testimony and exhibits presented at the administrative hearing showed calculations for the Republican Field adjacent to the Vernon Field to have an average drainage of 77 acres.  Additional testimony and exhibits also indicated that the drilling of additional wells will be economic with a gas price of $2.50 MCF and a 24.3% rate of return.

 

11.  Testimony indicated that in order to prevent waste and protect correlative rights optional second wells should be allowed within the established drilling units to ensure efficient and economic incremental gas recovery from the Niobrara Formation in the application lands. 

                       

12.  At the time of the administrative hearing, Samedan Oil Corporation agreed to be bound by oral order of the Commission.

 

13.    Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order allowing one additional well to be drilled on each 160-acre drilling and spacing unit for the lands described in Finding 6, at the option of the operator, for the production of gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that an order be approved to allow an additional well to be drilled on the 160-acre drilling and spacing units on the lands described as amended for the production of gas and associated hydrocarbons from the Niobrara Formation with the permitted well to be located no closer than 560 feet from the boundaries. 

 

Township 1 South, Range 44 West, 6th P.M.

Section 4:    All

Section 27:  NW, S

Section 28:  NW, S

Section 30:  SW

Section 31:  NE

Section 33:  E

 

IT IS FURTHER ORDERED, that for any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing 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 any and/or all of the above orders.

 

ENTERED this 7th day of June 2002, as of June 4, 2002.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 801 Patricia C. Beaver, Secretary 1120 Lincoln Street Denver, Colorado 80203 June 7, 2002.

(315#8)