BEFORE THE
OF THE STATE
OF
IN THE
MATTER OF THE PROMULGATION AND ) CAUSE
NO. 440
ESTABLISHMENT
OF FIELD RULES TO GOVERN )
OPERATIONS
IN THE PARACHUTE FIELD, ) ORDER NO. 440-47
REPORT OF THE COMMISSION
This cause came on for hearing
before the Commission at 9:00 a.m. on August 28, 2007, in Suite 801, The
Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to pool all nonconsenting interests in the
320-acre drilling and spacing unit consisting of the S½ of Section 19, Township
7 South, Range 95 West, 6th P.M., for the development and operation
of the Williams Fork and Iles Formations.
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 May 10, 2007, the Commission issued
Order No. 440-45, which among other things, segregated the 640-acre drilling
and spacing unit consisting of Section 19, Township 7 South, Range 95 West, 6th
P.M., into two 320-acre drilling and spacing units consisting of the N½ and S½
said of Section 19 for the production from the Williams Fork and Iles
Formations and allowed one well per 20 acres.
5. On
6. On
August 14, 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.
7. Testimony
and exhibits submitted in support of the application showed that the proposed
location for the initial well, the Federal 19-12 Well, has a bottomhole of
1,780 feet FSL and 660 feet FWL in said Section 19.
8. Testimony
and exhibits submitted in support of the application showed a list of all
consenting and nonconsenting parties within this unit. Additional testimony indicated that EnCana
has a 74.29% working interest within the drilling and spacing unit and that the
nonconsenting parties located within this unit comprise approximately 25.71% of
the unit. Further testimony indicated
that there are no unleased owners within this drilling and spacing unit.
9. Testimony
and exhibits submitted in support of the application showed that offers to
lease or to participate were sent to nonconsenting owners. Additional testimony submitted showed that
the offers and the Authorizations for Expenditures were fair and reasonable,
and similar to those prevailing in the area.
Further testimony submitted showed the offers were sent via mail and all
were received at least thirty (30) days prior to the August 28, 2007 hearing
date.
10. The
testimony and exhibits submitted indicate that EnCana has complied with the
requirements of Rule 530.a. and §34-60-116(7)(d), C.R.S.
11. EnCana Oil & Gas (USA) Inc. agreed to
be bound by oral order of the Commission.
12. 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 pool all nonconsenting
interests in the 320-acre drilling and spacing unit consisting of the S½ of
Section 19, Township 7 South, Range 95 West, 6th P.M., for the
development and operation of the Williams Fork and Iles Formations.
ORDER
NOW,
THEREFORE IT IS ORDERED that, 1.
Pursuant to the provisions of §34-60-116 C.R.S. as amended, of the Oil
and Gas Conservation Act of the State of Colorado, all of the nonconsenting
interests in the 320-acre drilling and spacing unit consisting of the S½ of
Section 19, Township 7 South, Range 95 West, 6th P.M., are hereby
pooled for the development and operation of the Williams Fork and Iles Formations.
2.
The production obtained from the drilling unit shall be allocated to each
owner in the unit on the basis of the proportion that the number of acres in
such tract bears to the total number of mineral acres within each drilling
unit; each owner of an interest in each drilling unit shall be entitled to
receive his/her share of the production of the well located on each drilling
unit applicable to his interest in each drilling unit.
3.
Said owners are hereby deemed to have elected not to participate and
shall therefore be deemed to be nonconsenting as to the well(s) and be subject
to the penalties as provided for by §34-60-116 (7), C.R.S.
4.
Any nonconsenting unleased mineral owner within the spacing unit shall
be treated as the owner of the landowner's royalty to the extent of 12.5% of
his/her record title interest, whatever that interest may be, until such time
as the consenting owner recovers, only out of the nonconsenting owner's
proportionate 87.5% share of production, the costs specified in §34-60-116
(7)(b), C.R.S. as amended. After recovery
of such costs, the nonconsenting mineral owner shall then own his/her
proportionate 8/8ths share of the well, surface facilities and production, and
then be liable for his/her proportionate share of further costs incurred in
connection with the well as if he/she had originally agreed to the drilling.
5.
The operator of any well drilled on the above-described unit shall
furnish all nonconsenting owners with a monthly statement of all costs
incurred, together with the quantity of oil and gas produced, and the amount of
proceeds realized from the sale of production during the preceding month.
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__________day of September, 2007, as of August 28, 2007.
OIL
OF THE STATE OF
By
Patricia
C. Beaver, Secretary
Dated at
September 10, 2007