BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 316
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE SHOUT FIELD, ) ORDER NO. 316-6
YUMA COUNTY, COLORADO ) CORRECTED
REPORT OF THE COMMISSION
This Cause came on for hearing before the Commission on October 29, 2001, at 10:00 a.m. in Suite 801, 1120 Lincoln Street, Denver, Colorado after giving Notice of Hearing, as required by law on the application of Rosewood Resources, Inc., for an order to allow an optional second well to be drilled on certain 160-acre drilling and spacing units for production of gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Rosewood Resources, Inc. 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 August 22, 1978, the Commission issued Order No. 316-3 which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation, including the below-listed lands with the permitted well to be located no closer than 900 feet from the boundaries of the quarter section which it is located. On June 4, 1999, the Commission issued Order No. 316-5 which allowed an additional well to be drilled and completed in Sections 33 and 34, Township 3 North, Range 47 West, 6th P.M.
Township 2 North, Range 46 West, 6th P.M.
Section 7: All
Township 2 North, Range 47 West, 6th P.M.
Sections 3 and 4: All
Section 12: All
Township 3 North, Range 47 West, 6th P.M.
Sections 27 and 28: All
Section 35: All
5. On September 10, 2001, Rosewood Resources, Inc. (“Rosewood”) filed with the Commission a verified application for an order allowing an optional second well to be drilled on the 160-acre drilling and spacing units described above for the production of gas from the Niobrara Formation with the permitted well to be located no closer than 560 feet from the outer boundaries of 160-acre drilling and spacing unit. In addition, Rosewood requested that for any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall also be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.
6. Testimony and exhibits presented at the administrative hearing indicated that at the request of the Yuma County Local Governmental Designee, Rosewood sent letters to the fourteen (14) surface owners in the application lands advising them of Rosewood’s application. No protests were received from the surface owners. The surface use of the application lands is irrigated farmland.
7. Testimony and exhibits presented at the administrative hearing indicated that gas production is better in areas of structural highs within the application lands and that the Niobrara Formation is a very porous, low permeability blanket chalk in the application area with some local faulting present. The average thickness of the Niobrara Formation in the application lands is approximately thirty (30) to fifty (50) feet.
8. Testimony and exhibits presented at the administrative hearing indicated that the average cumulative gas production from the Niobrara Formation is 107 MMCF per well with an Estimated Ultimate Recovery of 207 MMCF per well, that the Niobrara Formation is subnormally pressured in this area, and that the initial gas in place for the application area has been calculated at 1.395 BCF, with only 15% of the gas in place recoverable. 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. Further testimony indicated that production from an additional well in the spacing unit would result in an economic well.
9. At the time of the administrative hearing, Rosewood Resources, Inc. agreed to be bound by oral order of the Commission. Rosewood Resources, Inc. further agreed that compliance with Commission rules is sufficient to protect the environment, public health and welfare without any additional plan proposed by the applicant.
10. 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 an optional second well to be drilled on each 160-acre drilling and spacing unit for the lands described in Finding 4.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Order No. 316-3 is hereby amended to allow an optional second well to be drilled and completed for the production of gas and associated hydrocarbons from the Niobrara Formation, on the 160-acre drilling and spacing units described below, at the option of the operator.
Township 2 North, Range 46 West, 6th P.M.
Section 7: All
Township 2 North, Range 47 West, 6th P.M.
Sections 3 and 4: All
Section 12: All
Township 3 North, Range 47 West, 6th P.M.
Sections 27 and 28: All
Section 35: All
IT IS FURTHER ORDERED, that for any 160-acre drilling and spacing unit which does not currently have a well, the initial well shall also be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.
IT IS FURTHER ORDERED, that compliance by Rosewood Resources, Inc. with Commission rules shall be sufficient to protect the environment, public health, safety and welfare without the need for an additional plan.
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 November, 2001, as of October 29, 2001.
CORRECTED this ________day of August, 2008, as of October 29, 2001.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203