BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE BUZZARD CREEK, VEGA, AND BRUSH CREEK FIELDS, MESA COUNTY, COLORADO

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CAUSE NOS. 369, 399 and 429

 

ORDER NOS.  369-6, 399-6 and 429-11

CORRECTED

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on March 30, 2009, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish certain drilling and spacing units in Township 9 South, Ranges 92 and 93 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.    Delta Petroleum Corporation (Delta), 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 February 25, 2008, the Commission issued Order Nos. 1-124, 369-4 and 399-4 which, among other things, allowed the equivalent of one well per 10 acres for certain lands, including the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the boundaries of the lease line:

Township 9 South, Range 92 West, 6th P.M.

Section 6:      Lots 1 (47.66 acres), 2 (47.70), 3 (49.40), 4 (40.82), 5 (40.35), and 6 (39.92), S NE and SE

                        Containing 505.85 total acres, more or less.

 

Section 7:      Lots 1 (39.70), 2 (39.68), 3 (39.46), and 4 (39.10) and E

                        Containing 477.94 total acres, more or less.

 

Section 18:    Lots 1 (38.87), 2 (38.64), 3 (38.4), and 4 (38.17), N NE, SW NE, and SE

            Containing 434.08 total acres, more or less.

 

Section 19:    Lots 1 (37.93), 2 (37.66), 3 (37.38), and 4 (37.11) and E

                        Containing 470.08 total acres, more or less.

 

Township 9 South, Range 93 West, 6th P.M.

Section 21:    S

                        Containing 320.00 acres, more or less.

 

Section 22:    S N

                        Containing 160.00 acres, more or less.

 

Section 28:    All

                        Containing 640.00 acres, more or less.

 

Section 29:    E NW, NE SW, and E

                        Containing 440.00 acres, more or less.

 

5.    On September 25, 2008, the Commission issued Order Nos. 1-127, 369-5, 386-4, 399-5, and 429-10 which, among other things, allowed the equivalent of one well per 10 acres for certain lands, including the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the boundaries of the lease line:

Township 9 South, Range 93 West, 6th P.M.

Section 8:      W

                        Containing 320.00 acres, more or less.

Section 17:    N

                        Containing 320.00 acres, more or less.

 

Section 18:    E

                        Containing 320.00 acres, more or less.

 

Section 29:    W W and SE SW

                        Containing 200.00 acres, more or less.

 

6.    On February 9, 2009, Delta, by its representative, filed with the Commission a verified application for an order requesting that the below-described drilling and spacing units be established for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, for the below-listed lands:

 

Township 9 South, Range 92 West, 6th P.M.

Section 6:      Lots 1 (47.66 acres), 2 (47.70), 3 (49.40), 4 (40.82), 5 (40.35), and 6 (39.92), S NE and SE

                        Containing 505.85 total acres, more or less.

 

Section 7:      Lots 1 (39.70), 2 (39.68), 3 (39.46), and 4 (39.10) and E

                        Containing 477.94 total acres, more or less.

 

Section 18:    Lots 1 (38.87), 2 (38.64), 3 (38.4), and 4 (38.17), N NE, SW NE and SE

            Containing 434.08 total acres, more or less.

 

Section 19:    Lots 1 (37.93), 2 (37.66), 3 (37.38), and 4 (37.11) and E

                        Containing 470.08 total acres, more or less.

 

Township 9 South, Range 93 West, 6th P.M.

Section 8:      W

                        Containing 320.00 acres, more or less.

 

Section 17:    N

                        Containing 320.00 acres, more or less.

 

Section 18:    E

                        Containing 320.00 acres, more or less.

 

Section 21:    S

                        Containing 320.00 acres, more or less.

 

Section 22:    S N

                        Containing 160.00 acres, more or less.

 

Section 28:    E

                        Containing 320.00 acres, more or less.

 

Section 28:    W

                        Containing 320.00 acres, more or less.

 

Section 29:    E

                        Containing 320.00 acres, more or less.

                         

Section 29:    W

                        Containing 320.00 acres, more or less.

 

All future Williams Fork Formation and IIes Formation wells to be drilled upon the above-described lands should continue to be drilled in accordance with the previously established orders described in Findings 4 and 5 above, allowing the downhole equivalent of one well per 10 acres on each of the proposed drilling and spacing units, with wells to be located downhole anywhere within said lands but no closer than 100 feet from the boundaries of said units without exception being granted by the Director of the Oil and Gas Conservation Commission.  In cases where the above-described lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of said units so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

 

Except as previously authorized by order of the Commission, wells to be drilled on the above-described lands will continue to be drilled in accordance with the previously established orders, with wells drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.  In addition, all wells drilled to the Iles Formation will continue to be drilled, in accordance with the previously established orders, only in connection with the drilling of Williams Fork Formation wells.

 

7.    On March 17, 2009, Delta, by its representative, 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 mineral interests underlying the application lands are a mixture of fee and federal and that Delta is the majority leasehold owner, with EnCana Oil & Gas (USA) and Antero Resources being minority leasehold owners, for these lands.  Additional testimony showed that some of the application lands are adjacent to several federal units and to previously established drilling and spacing units.  Further testimony showed that the application lands have previously been approved for reduced setbacks and 10-acre downhole well density.  Testimony indicated that establishing the proposed drilling and spacing units will facilitate formation of communitization agreements with the Bureau of Land Management and will address irregular sections, both of which will provide equitable allocation of payment to mineral owners.

 

9.    Testimony and exhibits submitted in support of the application showed that the geologic model for the Mesaverde Group underlying the application lands has regionally extensive gas accumulation in discontinuous fluvial sandstones that are lenticular in profile with low porosity of less than 13% and low permeability of less than 0.1 millidarcy.  Additional testimony showed that the drainage ellipse for a wellbore in the application lands is oriented east-west, not symmetrical, making correct placement for bottom hole well locations crucial for optimal drainage from the Mesaverde Group.  Further testimony indicated that establishing the proposed drilling and spacing units will allow for optimal bottom hole well placement necessary to develop the Williams Fork and Iles Formations underlying the application lands while preventing waste and protecting correlative rights.

 

10.  Testimony and exhibits submitted in support of the application indicated that establishing the proposed drilling and spacing units for the Williams Fork and Iles Formations of the Mesaverde Group will facilitate equitable allocation of payment to federal and fee mineral owners, while minimizing surface disturbance by consolidating surface facilities.  Additional testimony indicated that the establishment of drilling and spacing units will allow Delta to efficiently and economically produce gas reserves from the application lands.

 

11.  The above-referenced testimony and exhibits show that the proposed drilling and spacing units will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

 

12.  Delta Petroleum 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 based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to establish the drilling and spacing units described in Finding 6 above, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that various drilling and spacing units are hereby established for the below-listed lands, continuing to allow the downhole equivalent of one well per 10 acres for those lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:

 

Township 9 South, Range 92 West, 6th P.M.

Section 6:      Lots 1 (47.66 acres), 2 (47.70), 3 (49.40), 4 (40.82), 5 (40.35), and 6 (39.92), S NE and SE

                        Containing 505.85 total acres, more or less.

 

Section 7:      Lots 1 (39.70), 2 (39.68), 3 (39.46), and 4 (39.10) and E

                        Containing 477.94 total acres, more or less.

 

Section 18:    Lots 1 (38.87), 2 (38.64), 3 (38.4), and 4 (38.17), N NE, SW NE and SE

            Containing 434.08 total acres, more or less.

 

Section 19:    Lots 1 (37.93), 2 (37.66), 3 (37.38), and 4 (37.11) and E

                        Containing 470.08 total acres, more or less.

 

Township 9 South, Range 93 West, 6th P.M.

Section 8:      W

                        Containing 320.00 acres, more or less.

 

Section 17:    N

                        Containing 320.00 acres, more or less.

 

Section 18:    E

                        Containing 320.00 acres, more or less.

 

Section 21:    S

                        Containing 320.00 acres, more or less.

 

Section 22:    S N

                        Containing 160.00 acres, more or less.

 

Section 28:    E

                        Containing 320.00 acres, more or less.

 

Section 28:    W

                        Containing 320.00 acres, more or less.

 

Section 29:    E

                        Containing 320.00 acres, more or less.

                         

Section 29:    W

                        Containing 320.00 acres, more or less.

 

IT IS FURTHER ORDERED, that all future Williams Fork Formation and IIes Formation wells to be drilled upon the above-described lands shall continue to be drilled in accordance with the previously established orders described above, allowing the downhole equivalent of one well per 10 acres on each of the proposed drilling and spacing units, with wells to be located downhole anywhere within said lands but no closer than 100 feet from the boundaries of said units without exception being granted by the Director of the Oil and Gas Conservation Commission.  In cases where the above-described lands abut or corner lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of said units so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

 

IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled on the above-described lands shall continue to be drilled in accordance with the previously established orders, with wells drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.  In addition, all wells drilled to the Iles Formation shall continue to be drilled, in accordance with the previously established orders, only in connection with the drilling of Williams Fork Formation wells.

 

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 1st day of April, 2009, as of March 30, 2009.

 

CORRECTED this ______ day of February, 2010, as of March 30, 2009.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Carol Harmon, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

February 1, 2010