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 FOR THE WILLIAMS FORK AND ILES FORMATIONS, VEGA FIELD, MESA COUNTY, COLORADO

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CAUSE NO. 399

 

DOCKET NO. 1404-SP-2043

 

ORDER NO. 399-9

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on April 28, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to: 1) vacate two approximate 320-acre drilling and spacing units established by Order Nos. 399-6, 369-6 and 429-11 for Section 28, Township 9 South, Range 93 West, 6th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 28, Township 9 South, Range 93 West, 6th P.M. and approve the equivalent of one well per 10 acres density for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Piceance Energy, LLC (“Piceance” or “Applicant”), 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 March 30, 2009, the Commission entered Order Nos. 399-6, 369-6 and 429-11 which established two appropriate 320-acre drilling and spacing units, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

5.         On June 1, 2010, the Commission entered Order No. 399-7 which provided that wells shall be drilled on the surface from no more than three pads, and ground disturbing activities shall be restricted to no more than one well site from January 1 to March 31 in any year.  The Order also provided that the operator shall comply with other applicable requirements of the 1200-Series Rules including, without limitation, Rule 1203 (General Operating Requirements in Sensitive Wildlife Habitat and Restricted Surface Occupancy Areas); Rule 1204 (Other General Operating Requirements); and Rule 1205 (Requirements in Restricted Surface Occupancy areas). 

 

 

6.         On February 27, 2014, Piceance, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to: 1) vacate two approximate 320-acre drilling and spacing units established  by Order Nos. 399-6, 369-6 and 429-11 for Section 28, Township 9 South, Range 93 West, 6th P.M.; 2) establish an approximate 640-acre drilling and spacing unit for the Williams Fork and Iles Formations; 3) approve the equivalent of one well per 10 acres density. In cases where the 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 and Iles Formation wells, the wells shall be located down hole no closer than 200 feet from the boundaries of the lands so abutting or cornering such lands, without exception being granted by the Director:

 

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

Section 28:      All

Operator states the proposed unit will comply with Order Nos. 399-7, 1-151, 369-7, and 429-12.

 

7.         On April 15, 2014, Piceance, by its attorneys, 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.         Land testimony and exhibits submitted in support of the Application by Tom Rutledge, Senior Land Manager for Laramie Energy II, LLC, the operator of the Piceance properties, showed that Piceance holds oil and gas leasehold interests in the Application Lands.  Further testimony showed that certain adjacent lands have been spaced on no greater than a 640-acre basis, with 10-acre well density, for production from the Williams Fork and Iles Formations.  

 

9.         The Applicant requested that the Commission take administrative notice of geologic testimony and exhibits previously submitted in support of Orders 429-13, 399-6 and 369-6, which showed that the Williams Fork and Iles Formations underlie and are drilling objectives for wells drilled on the Application Lands. 

 

10.       Engineering testimony and exhibits submitted in support of the Application by Robert G. Hea, Executive Vice President of Engineering and Chief Operating Officer of Laramie Energy II, LLC, the operator of Piceance's properties, showed that a 640-acre drilling and spacing unit consisting of the Application Lands is not less than the maximum area which can be efficiently, economically and effectively drained by a well producing oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations, and development of the Williams Fork and Iles Formations from a 640-acre unit composed of the Application Lands will serve to prevent waste and be an efficient manner of draining the reservoirs.

 

11.       The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

 

12.       Piceance 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, the Commission should enter an order to: 1) vacate two approximate 320-acre drilling and spacing units established by Order Nos. 399-6, 369-6 and 429-11 for Section 28, Township 9 South, Range 93 West, 6th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 28, Township 9 South, Range 93 West, 6th P.M. and approve the equivalent of one well per 10 acres density for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Two approximate 320-acre drilling and spacing units established  by Order Nos. 399-6, 369-6 and 429-11 for Section 28, Township 9 South, Range 93 West, 6th P.M., are hereby vacated.

 

2.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established,  and the equivalent of one well per 10 acres density, is hereby approved, for the production of oil, gas and associated hydrocarbons from  the Williams Fork and Iles Formations:

 

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

Section 28:      All

 

3.         Wells subject to this Application shall be located downhole anywhere within the Application Lands, but no closer than 100 feet from a lease line or the boundaries of the Application Lands without exception being granted by the Director of the Commission.  In cases where the Application 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 for said Formations, wells shall be located down hole no closer than 200 feet from the boundaries of the Application Lands so abutting or cornering such lands, without exception being granted by the Director of the Commission.

            4.         The Operator shall comply with Order Nos. 399-7, 1-151, 369-7 and 429-12.

 

IT IS FURTHER ORDERED:

 

1.         The provisions contained in the above order shall become effective immediately.

 

2.         The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

 

3.         Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.

 

4.         An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

 

            ENTERED this   23rd  day of May, 2014, as of April 28, 2014.                     

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary