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 WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

ORDER NO. 407-397

 

 

REPORT OF COMMISSION

 

This cause came on for hearing before the Commission on May 16, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to approve a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the NE¼ of Section 24, Township 4 North, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell or Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.    EnCana Oil & Gas (USA) Inc. (“EnCana” 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 December 19, 1983, the Commission issued Order No. 407-1 (amended on March 29, 2000), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons for the Codell Formation underlying certain lands, including the NE¼ of Section 24, Township 4 North, Range 66 West, 6th P.M., with the unit to be designated by the operator upon drilling the first well in the quarter section. The permitted well shall be located in the center of either 40-acre tract within the unit with a tolerance of 200 feet in any direction. The operator shall have the option to drill an additional well on the undrilled 40-acre tract in each 80-acre drilling and spacing unit.

 

5.    On February 19, 1992, the Commission issued Order No. 407-87 (amended August 20, 1993), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas from the Niobrara Formation underlying certain lands, including the NE¼ of Section 24, Township 4 North, Range 66 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.

 

6.    On April 27, 1998, the Commission adopted Rule 318A., which among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface.  On December 5, 2005, Rule 318A. was amended to, among other things, allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  The NE¼ of Section 24, Township 4 North, Range 66 West, 6th P.M. is included in this Rule.  Rule 318A.f. provides that there shall be no more than eight producing completions in the Codell or Niobrara Formations in any 160-acre governmental quarter section.

 

7.    On February 2, 2011, EnCana, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to approve a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the NE¼ of Section 24, Township 4 North, Range 66 West, 6th P.M. (the “Application Lands”), for the production of oil, gas and associated hydrocarbons from the Codell or Niobrara Formations.

 

8.    On May 4, 2011, EnCana, 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 as is provided for by Rule 511. Sworn written testimony and exhibits were submitted in support of the Application.

 

9.    Testimony and exhibits submitted in support of the Application by Cynthia Owens, Land Negotiator for EnCana, showed that EnCana is the sole leasehold owner of the Application Lands.  Additional testimony indicated that EnCana plans to drill the Segal #1A-24H Well (the “Well”) on the Application Lands from a surface location that is within an established Greater Wattenberg Area (“GWA”) drilling window.  Further testimony showed that, depending on the method in which horizontal wellbores are counted by the Commission, the well orientation of the Well could result in a total of up to nine producing completions for the Codell and Niobrara Formations for the Application Lands.

 

10.  Testimony and exhibits submitted in support of the Application by Stacy M. Tincher, Geologist for EnCana, showed that the Niobrara Formation underlies the entirety of the Application Lands with a total thickness ranging from about 280 to 290 feet and is a common source of supply.

 

11.  Testimony and exhibits submitted in support of the Application by Patrick Ash, Reservoir Engineer for EnCana, showed that those wells presently drilled on the Application Lands in the Codell and Niobrara Formations are ultimately expected to recover about 7% of the original gas-in-place (“OGIP”), with the proposed horizontal well having the potential to increases ultimate recovery to about 15% OGIP.  It is anticipated that the proposed horizontal well drilled in the Application Lands could recover approximately 4.8 BCF equivalent gas, and is economically attractive and a more efficient method to drain the reservoir.

 

12.  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 gas, and will not violate correlative rights.

 

13.  EnCana agreed to be bound by 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., the Commission should enter an order approving a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the NE¼ of Section 24, Township 4 North, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell or Niobrara Formations.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that a variance from Rule 318A.f. authorizing a total of up to nine producing completions for the NE¼ of Section 24, Township 4 North, Range 66 West, 6th P.M. is hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell or Niobrara Formations.

 

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

           

                        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      23rd      day of May, 2011, as of May 16, 2011.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Robert A. Willis, Acting Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

May 23, 2011