BEFORE THE OIL AND GAS CONSERVATION
COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE MOUNT PEARL FIELD, CHEYENNE COUNTY, COLORADO |
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CAUSE NO. 426
ORDER NO. 426-19
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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 vacate the 80-acre drilling and spacing units established for Section 33, Township 13 South, Range 47 West, 6th P.M., causing the lands to revert to unspaced lands under Rule 318.a., for the production of oil, gas and associated hydrocarbons from the Morrow Formation.
FINDINGS
The Commission finds as follows:
1. Vecta Oil & Gas, Ltd. (“Vecta” 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 January 17, 1986, the Commission entered Order No. 426-3, which among other things, amended Order No. 426-1 to establish 80-acre drilling and spacing units for certain lands, including Sections 33, Township 13 South, Range 47 West, 6th P.M., for the production of oil and associated hydrocarbons from the Morrow Formation.
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6. On May 3, 2011, Vecta, 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.
7. Land testimony and exhibits submitted in support of the Application by Vern George, Contract Landman for Vecta, shows that the established 80-acre drilling and spacing units consist of either the E½ and W½ or the N/2 and S/2 of each quarter section with the option of the operator drilling the first well in the quarter section to designate the unit. Order 426-3 further provided that the permitted well shall be located in the center of the NW¼ and SE¼ of each quarter section with a tolerance of 200 feet in any direction. The testimony further showed that Anadarko E&P Company LP and/or Anadarko Land Corp. (“Anadarko”) own 100% of the minerals of the Application Lands. Vecta owns the right to drill into and produce from the Application Lands, and to appropriate the oil and gas therefrom for itself and Anadarko as royalty owner, pursuant to a Farmout and Farmout Option Contract between Vecta and Anadarko. Mr. George’s written testimony further demonstrates that the Applications are not included in the Mount Pearl Unit, the Rhoades Unit, or the Mull Unit/Sorrento Field Area, and there is no production on the Application Lands.
8. Geologic testimony and exhibits submitted in support of the Application by Mathew Goolsby, Geologist and Vice President of Operations for Vecta, shows that the sand underlying the Application Lands is not in communication with the Mount Pearl Field to the north, and that that the existing spacing is counterproductive to Vecta’s needs to identify drilling locations with consideration for both sand development and structural position in the reservoir. The testimony further concludes that the Morrow Formation underlying the Application Lands constitutes an underground reservoir containing a common accumulation of oil and/or gas, and that in order to adequately and efficiently drain the oil and associated hydrocarbons from the Morrow Formation, it is necessary to vacate the drilling units established under Orders 426-1 and 426-3 and allow exploration and development for oil and associated hydrocarbons to proceed under Rule 318.a.
9. 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.
10. Vecta agreed to be bound by oral order of the Commission.
11. 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 vacating the 80-acre drilling and spacing units established for Section 33, Township 13 South, Range 47 West, 6th P.M., causing the lands to revert to unspaced lands under Rule 318.a., for the production of oil, gas and associated hydrocarbons from the Morrow Formation.
ORDER
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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