|IN THE MATTER Of THE PROMULGATION AND ESTABLISHMENT Of FIELD RULES TO GOVERN OPERATIONS IN THE BUCKBOARD FIELD, YUMA COUNTY, COLORADO||Cause No. 331 Order No. 331-2|
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission on August 21, 1978 at 9:00 A.M. in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as the result of Order No. 331-1 for the Buckboard Field, issued November 21, 1977 which, among other things, ordered that the Commission review in nine (9) months, additional data in order to determine whether the 640-acre drilling and spacing units for the production of gas from the Niobrara formation as established by Order No. 331-1 should remain.
The Commission finds as follows:
1. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
2. 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.
3. On November 21, 1977, the Commission issued its Order No. 331-1 which established 640-acre drilling and spacing units for the production of gas from the Niobrara formation underlying the Buckboard Field.
4. Geological and engineering evidence presented at the hearing indicate that the Niobrara formation underlies an extensive area in northeastern Colorado. The accumulation of the gas in the field is due to the low-relief anticlinal structure rather than a stratigraphic trap which lends itself to more uniform withdrawals on large size spacing units. Unpredictable faulting is present in the formation. The producing zone is tight with relatively high porosities and low permeabilities. Water saturations are higher in wells located down structure which make the location of the well on the struc-ture critical.
5. Different size fracture treatments have been used upon the completion of the wells, which treatment has an effect upon the initial production and drainage area of the well. Large size treatments have been tried in order to increase production and increase the areal extent of drainage.
6. While some changes in production from various size fracture treat-ments were shown, a reliable correlation between the size of the treatment and well performance was not documented. Rather, the structural position of the well appears to be the main influence on the effectiveness of the fracture treatment, assuming utiliza-tion of a reasonable size treatment. An additional serious complication in this formation is the presence of substantial faulting. Thus, even in those situations where structural position did not affect the fracture treatment, the faulting provides an impervious barrier to the effective radial extent of the fracture treatment. It should be noted that where there were no structural or faulting problems, the evidence was not persuasive that a correlation exists between the size of the fracture treatment and the effective radial drainage achieved by the treatment, and in view of the water encroachment problem and the field geology, it would be inappropriate to rely on large fracture treatments and wide spacing as the primary method to be used for producing gas from the formation. (over)
7. Sufficient production history is available together with the geological and engineering data for the Commission to conclude that for the reasons heretofore stated, 640-acre spacing and reliance upon large fracture treatment techniques will not economically and efficiently drain the gas from the Niobrara formation in this field. This field is located on one of the many anticlinal structures in the area that are small in size and to date three (3) wells have been drilled which are capable of production. In addition, faulting often limits the acreage that could effectively and economically be drained by one well. Therefore, unless closer well spacing is permitted, smaller struc-tures may be missed and the gas underlying the acreage which might be assumed to be drained by a well will be left unrecovered. Closer spacing will also more precisely define structural well position which, as previously mentioned, is a critical factor in this formation.
8. All of the parties at the hearing opposed 320-acre spacing units. While this might have some appeal as an interim order, based on the evidence presented, the Commission concludes that 160-acre spacing units eventually must be utilized to econo-mically and efficiently drain the gas from this formation. Therefore, in order to promote long-range orderly development of the Niobrara formation, to prevent waste and protect correlative rights, l60-acre drilling and spacing units should be established at this time.
9. Order No. 331-1 should be amended and an order should be made establishing l60-acre drilling and spacing units for the production of gas from the Nio-brara formation, common source of supply underlying the lands as described in Order No. 331-1 that said units should be 160-acres, consisting of a quarter section, according to the governmental survey thereof, and that the permitted well should be located no closer than 900 feet from the boundaries of the quarter section upon which it is located, and that the existing producing wells or wells capable of production be considered the permitted wells for the units upon which they are located. In addition, the Director may, without additional notice and hearing, grant exceptions to the permitted well locations provided the owners of the contiguous and cornering drilling units toward which the pro-posed location would be moved, file a waiver or consent, in writing, agreeing to said exception.
10. That all available geological and engineering data concerning said Niobrara formation indicate that one well will efficiently and economically drain an area of approximately 160-acres, and that the drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently and economically drained by one well producing from said Niobrara formation.
NOW, THEREFORE, IT IS ORDERED, that Order No. 331-1 establishing 640-acre drilling and spacing units for the production of gas from the Niobrara formation is hereby amended and the following rules and regulations shall apply hereafter to wells drilled, completed, or re-completed in the Niobrara formation underlying the area described herein.
Rule 1. One hundred-sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas from the Niobrara formation underlying the following described lands in the Buckboard Field, Yuma County, Colorado, to-wit:
Township 3 North, Range 46 West, 6th P.M. Sections 7 thru 11, 14 thru 23
Rule 2. Said drilling units shall consist of one hundred-sixty (160) acres, and each such drilling unit shall consist of a quarter section, according to the govern-mental survey thereof, and that the permitted well shall be located no closer than 900 feet from the boundaries of the quarter section upon which it is located; however, the presently producing wells or wells capable of producing shall be the permitted wells for the units upon which each is located.
-- 2 --(#331-2)
IT IS FURTHER ORDERED, that the Director may, without additional notice and hearing, grant exceptions to the permitted well locations provided the owners of the contiguous and cornering drilling units toward which the proposed location would be moved, file a waiver or consent in writing agreeing to said exceptions.
IT IS FURTHER ORDERED, that the provisions contained in this 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 part of and/or all of the above rules and orders.
ORDERED this 22nd day of August, 1978.
THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By Frank J. Piro, Secretary -- 3 --(#331-2)