BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 334
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE GREAT DIVIDE FIELD, ) ORDER NO. 334-5
MOFFAT COUNTY, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on December 12, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver Colorado, for an order to allow three additional wells, for a total of four wells, to be drilled in the 320-acre drilling and spacing unit consisting of the S½ of Section 33, Township 10 North, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Middle Lewis Formation.
FINDINGS
The Commission finds as follows:
1. Robert L. Bayless, Producer (“Bayless”), 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 May 15, 1978, the Commission issued Order No. 334-1, which among other things, established 320-acre drilling and spacing units for certain lands including the N½ of Section 33, Township 10 North, Range 93 West, 6th P.M., for production of gas from the Middle Lewis Formation, with the permitted well to be located in the NE¼ and SW¼ of each section, no closer than 600 feet from the boundaries of the unit and no closer than 1320 feet from another producing or producible gas well from the same formation.
5. On March 17, 2003, the Commission issued Order No. 334-4, which among other things, allowed three additional wells, for a total of four wells, to be drilled for the production of gas from the Middle Lewis Formation in certain 320-acre drilling and spacing units including the N½ of Section 33, Township 10 North, Range 93 West, 6th P.M., with the wells to be located no closer than 600 feet from the boundaries of the unit and 990 feet from another well producing or producible from the same formation.
6. On October 19, 2007, Bayless, by its attorney, filed with the Commission a verified application for an order to allow three additional wells, for a total of four wells, to be drilled for the production of gas and associated hydrocarbons from the Middle Lewis Formation, in the 320-acre drilling and spacing unit consisting of the S½ of Section 33, Township 10 North, Range 93 West, 6th P.M., with the permitted well to be located no closer than 600 feet from the outer boundary of the spacing unit, and no closer than 990 feet from any other producing well within the spacing unit.
7. No protests or other objections were received by the Commission or by the Applicant in response to the application.
8. On November 27, 2007, Bayless, 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.
9. Testimony and exhibits submitted in support of the application showed that Bayless has the leasehold interest in the application lands, that there are two surface owners on the application lands, and that Bayless is committed to working with the surface owners to accommodate their rights pursuant to law. Additional testimony indicated that it is Bayless’ intention to drill additional wells from no more than one well site or multi-well site per 80-acre governmental quarter section to minimize surface impact and the amount of time spent on location.
10. Testimony and exhibits submitted in support of the application showed that the Middle Lewis Formation is an Upper Cretaceous lenticular turbidite fine-grained sandstone deposit, that these sandstones were deposited under conditions of decreasing flow regimes by multiple turbidity currents, and that there are three intervals of pay separated by shale intervals in this area that have considerable variability. Additional testimony indicated that structural dip is down dip to the northwest, that most all of Section 33 is underlain by Middle Lewis reservoir sandstones, and that there are potentially several additional well locations in this section.
11. Testimony and exhibits submitted in support of the application showed that the Alta Martin No. 1 Well, located on the application lands in the SW¼ of Section 33, will ultimately recover 1.46 BCF from a drainage area of 98 acres, a higher projected recovery than the average ultimate recovery of 1.1 BCF for wells in the area, suggesting that, on average, the remaining wells in the field will drain 80 acres or less. Additional testimony showed that the Elbert Avenue No. 1 Well located in the NE¼ of Section 33 is projected to have an ultimate recovery of 0.38 BCF and to drain 10 acres, while the Sterrett No.1 Well located in the NE¼ of Section 32 is projected to have an ultimate recovery of 3.0 BCF and to drain 199 acres. The Sterrett No. 1 Well is by far the best producer in the field and is expected to recover approximately 1.5 BCF more than the next best well, and the anomalous performance of this well has not been duplicated elsewhere in the field. Further testimony indicated that based on the highly variable production capabilities of these wells, the current well on the application lands is not capable of fully recovering the gas underlying the 320-acre drilling and spacing unit.
12. The above-referenced testimony and exhibits show that the proposed well density will allow more efficient reservoir drainage, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
13. Robert L. Bayless, Producer agreed to be bound by an oral order of the Commission.
14. 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 three additional wells, for a total of four wells, to be drilled in the 320-acre drilling and spacing unit consisting of the S½ of Section 33, Township 10 North, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Middle Lewis Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that three additional wells, for a total of four wells, are hereby allowed to be drilled in the 320-acre drilling and spacing unit consisting of the S½ of Section 33, Township 10 North, Range 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Middle Lewis Formation, with the permitted well to be located no closer than 600 feet from the outer boundary of the spacing unit, and no closer than 990 feet from any other producing well within the spacing unit.
IT IS FURTHER ORDERED, that additional wells shall be drilled from no more than one well site or multi-well site per 80-acre governmental quarter section, unless an exception is granted by the Director.
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 December 2007, as of December 12, 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
December 27, 2007