BEFORE THE OIL
OF THE STATE OF
|
IN
THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE BUZZARD CREEK AND VEGA UNIT FIELDS, |
) ) ) ) |
CAUSE
NOS. 369 and 399 ORDER
NOS. 369-3 and 399-3 |
REPORT
OF THE COMMISSION
This
cause came on for hearing before the Commission at 9:00 a.m. on
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 20, 1981, the Commission issued Order No. 369-1,
which among other things, established 320-acre drilling and spacing units,
including Sections 23 through 26, Township 9 South, Range 93 West, 6th
P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.
5. On
May 16, 1983, the Commission issued Order No. 399-1, which among other things,
established approximate 320-acre drilling and spacing units for Sections 1 and
2, Township 10 South, Range 93 West 6th P.M., for the production of
gas and associated hydrocarbons from the Mesaverde Formation.
6. On
Township 8 South, Range 92 West, 6th P.M.
Section 31: SW¼
SE¼
Township 9 South, Range 92 West, 6th P.M.
Section 6: Lots 1-6, S½ NE¼, SE¼ (All)
Section 7: Lots 1-4, E½ (All)
Section 18: Lots
1-4, E½ (All)
Section 19: Lots
1-4, E½ (All)
Township 8½ South, Range 93 West, 6th P.M.
Section 1: Lots 1-3 (All)
Township 9 South, Range 93 West, 6th P.M.
Section 1: Lots 2, 5, 6, 7, SW¼ NE¼, NW¼ SE¼ (all that part of the E½ of Section 1,
outside of
the Buzzard Creek Unit), Lots 3 & 4, S½ NW¼
Section 13: S½ S½
Section 14: SE¼ SE¼
Section 21: S½
Section 22: S½
N½, S½
Sections 23 through 28: All
Section 35: N½
NE¼
Section 36: All
Township 10 South, Range 93 West, 6th P.M.
Section 1: Lots
7-10, S½ NW¼, that part of Tract 37 lying in the S¼ NW¼ and N½
SW¼
Section 2: Lots 5-12, SW¼ NE¼, NW¼ SE¼, that part of
Tract 37 lying in the NE¼ SE¼
Section 3: S½ N½, N½ S½, SE¼ SE¼
That
as to all future Williams Fork Formation and Iles Formation wells to be drilled
upon the application lands within the 320-acre drilling and spacing units, each
well may be located anywhere downhole in the established drilling and spacing
unit but no closer than 200 feet from the boundaries of the unit and 400 feet
from any existing Williams Fork Formation well, without exception being granted
by the Director of the Oil and Gas Conservation Commission.
For lands outside the
320-acre drilling and spacing units, each well may be located anywhere downhole
in the established drilling and spacing unit but no closer than 200 feet from
any lease line, and 400 feet from any existing Williams Fork Formation and Iles
Formation wells, without exception being granted by the Director of the Oil and
Gas Conservation Commission.
That all Williams Fork Formation and Iles Formation wells drilled upon the application lands will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission. In addition, both the Williams Fork and Iles Formations will be reached from a single wellbore, i.e., separate wells will not be drilled to reach each formation.
7. On
April 24, 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.
Sworn written testimony and exhibits were submitted in support of the
application.
8. Testimony
and exhibits submitted in support of the application showed that EnCana is the
majority leasehold owner in the application lands. The application lands are located
predominately adjacent to the Buzzard and Vega Federal Exploratory Units.
9. Testimony
and exhibits submitted in support of the application showed that the Williams
Fork and Iles Formations are members of the Mesaverde Group and are common
sources of supply, but due to the heterogeneity of the formations increased
density is necessary to recover the reserves.
10. Testimony
and exhibits submitted in support of the application indicated that numerous
exhibits have been presented in support of previous applications which showed
the fluvial nature of the Williams Fork Formation, its extreme heterogeneity,
and the necessity of increased well density on a 20-acre basis to efficiently
and economically recover the resources.
The Commission takes administrative notice of the testimony and exhibits
previously presented and submitted.
11. Testimony
and exhibits submitted in support of the application showed the Swanson’s mean
of the original gas in place (“OGIP”) associated with the analog wells is 72.6
BCFE per 640 acres.
12. Testimony
and exhibits submitted in support of the application indicated approximately
1.8 BCFE for a well from Section 21 drilled in/just outside the application
lands, reflecting a steep initial decline for Mesaverde Formation wells, with
an effective decline hyperbolic exponent of 1.2 and an exponential outer decline
of approximately 7%.
13. Testimony
and exhibits submitted in support of the application indicate that one well per
20 acres will recover incremental reserves preventing waste, while minimizing
interference between wells and prevent the drilling of unnecessary wells.
14. Testimony
and exhibits submitted in support of the application showed that the current
well density will not effectively drain the Williams Fork and Iles Formations. Additional testimony indicated that an average
of approximately 20 acres are drained by one well in the application area.
15. Testimony
and exhibits submitted in support of the application showed that increasing the
well density to 20 acres in the application area will increase the estimated
ultimate recovery per section for the Williams Fork and Iles Formations. Additional testimony indicated that one well
per 320 acres provides a recovery factor of gas in place of 6%. Further testimony indicated that if 16 wells
per 320 acres are allowed, the percentage increases to 30%. The incremental BCFE in recoverable reserves
is 10.1 or 24%.
16. Testimony
and exhibits submitted in support of the application indicated that partial
depletion is minimized and incremental recovery will be maximized in the
application area by drilling bottomhole locations stacked along an elliptical
drainage pattern. Additional testimony indicated that the drainage
ellipses are tectonically controlled by principle stress and the resulting
orientation of the hydraulic fracture. This fact can be demonstrated and
verified through comparing the projected ultimate recoveries of the Currier
#9-15 Well located in Section 9, Township 9 South, Range 93 West, 6th
P.M., drilled in 2005 and completed in the Williams Fork and Iles Formations,
to the two direct offsets approximately 45 degrees to the south-west and
south-east bottom hole to bottom hole which are respectively: the Currier
Family #16-3 Well and the Buzzard Creek #16-1 Well, both located in Section 16,
Township 9 South, Range 93 West, 6th P.M. The Currier Family
16-3 Well and the Buzzard Creek 16-1 Well bottomhole locations are aligned
directly along the principle stress direction, whereas the Currier #9-15 Well
is approximately 45 degrees out of the principle stress plane defined by the
two wells and approximately 1,900 feet. Comparatively, the Currier #9-15
Well is currently projected to ultimately produce 1.8 BCFE as compared to 0.45
BCFE and 0.36 BCFE projected to ultimately be recovered from the Buzzard Creek
16-1 Well and the Currier Family #16-3 Well, respectively.
17. No
protests to the application have been filed with the Commission or the
Applicant.
18. EnCana
Oil & Gas (USA) Inc. agreed to be bound by oral order of the Commission.
19. 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 establish 320-acre drilling and spacing
units for the S½ of Section 22 and all of Section 27, Township 9 South, Range
93 West, 6th P.M., and to allow the equivalent of one well per 20
acres for certain lands in Townships 8 through 10 South, Ranges 92 and 93 West,
6th P.M., for production of gas and associated hydrocarbons from the
Williams Fork and Iles Formations (including but not limited to the Rollins,
Cozzette and Corcoran).
ORDER
NOW, THEREFORE, IT IS
ORDERED, that 320-acre drilling and
spacing units are hereby established for the S½ of Section 22 and all of
Section 27, Township 9 South, Range 93 West, 6th P.M., for
production of gas and associated hydrocarbons from the Williams Fork and Iles
Formations (including but not limited to the Rollins, Cozzette and Corcoran).
IT IS FURTHER ORDERED, that
additional wells, the equivalent of one well per 20 acres, are hereby allowed
to be optionally drilled into and produced from the Williams Fork and Iles Formations
(including but not limited to the
Rollins, Cozzette and Corcoran), for the below-listed lands, and that for the lands within
the 320-acre drilling and spacing units the setback requirements shall be 200
feet from the boundaries of the drilling and spacing unit and 400 feet from any
existing Williams Fork Formation or Iles Formation well absent an exception
from the Commission. For the lands
outside the currently spaced 320-acre drilling and spacing units, the setback
requirements shall be 200 feet from any lease line, and 400 feet from any
existing Williams Fork Formation or Iles Formation well absent an exception
from the Commission.
Township 8 South, Range 92 West, 6th P.M.
Section 31: SW¼
SE¼
Township 9 South, Range 92 West, 6th P.M.
Section 6: Lots 1-6, S½ NE¼, SE¼ (All)
Section 7: Lots 1-4, E½ (All)
Section 18: Lots
1-4, E½ (All)
Section 19: Lots
1-4, E½ (All)
Township 8½ South, Range 93 West, 6th P.M.
Section 1: Lots 1-3 (All)
Township 9 South, Range 93 West, 6th P.M.
Section 1: Lots 2, 5, 6, 7, SW¼ NE¼, NW¼ SE¼ (all that part
of the E½ of
Section 1, outside of the Buzzard Creek Unit), Lots 3
& 4, S½ NW¼
Section 13: S½ S½
Section 14: SE¼ SE¼
Section 21: S½
Section 22: S½
N½, S½
Sections 23 through 28: All
Section 35: N½
NE¼
Section 36: All
Township 10 South, Range 93 West, 6th P.M.
Section 1: Lots
7-10, S½ NW¼, that part of Tract 37 lying in the S¼ NW¼ and N½
SW¼
Section 2: Lots 5-12, SW¼ NE¼, NW¼ SE¼, that part of
Tract 37 lying in the NE¼ SE¼
Section 3: S½ N½, N½ S½, SE¼ SE¼
IT
IS FURTHER ORDERED, that wells to be drilled under this application shall be
drilled from the surface either vertically or directionally from no more than
one well pad located on a given quarter quarter section unless exception is
granted by the Director of the Colorado Oil and Gas Conservation 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 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 May, 2007, as of May 10,
2007.
OIL
OF
THE STATE OF
By____________________________________
Patricia
C. Beaver, Secretary
Dated at
May 25, 2007