BEFORE THE OIL
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. 440-48
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 vacate the 320-acre
drilling and spacing unit consisting of the E½ of Section 17, Township 7 South,
Range 95 West, 6th P.M. and establish 40-acre drilling and spacing
units for the E½ E½ of Section 17, Township 7 South, Range 95 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. 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 April 20, 1990, the
Commission issued Order No. 440-12, which among other things, established
320-acre drilling and spacing units for certain lands including Section 17,
Township 7 South, Range 95 West, 6th P.M., for the production of gas
and associated hydrocarbons from the Mesaverde Formation, with the permitted
well to be located no closer than 600 feet from the boundaries of said unit and
no closer than 1200 feet from any well producing or producible from the same
formation.
5. Rule 318.a. of the Commission Rules and
Regulations requires that wells drilled in excess of two thousand five hundred
(2500) feet in depth be located not less than six hundred (600) feet from any
lease line, and located not less than one thousand two hundred (1200) feet from
any other producible or drilling oil or gas well to the same common source of
supply. Section 17, Township 7 South,
Range 95 West, 6th P.M. is subject to this Rule for the Iles
Formation.
6. On
7. 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.
8. Testimony
and exhibits submitted in support of the application showed that EnCana is the majority leasehold owner in the application
lands.
9. Testimony
and exhibits submitted in support of the application showed that the Williams
Fork and Iles Formations are members of the Mesaverde Group and are common
sources of supply. Additional testimony
indicated that due to the heterogeneity of the formations, increased density is
necessary to recover the reserves.
10. Testimony
and exhibits submitted in support of the application showed that the average estimated
ultimate recovery (EUR) for a well drilled in lands surrounding the application
lands is approximately 0.97 BCF for a Williams Fork Formation well. Additional testimony and exhibits showed that the average drainage radius is between 17 acres and 22
acres for each well.
11. Testimony
and exhibits submitted in support of the application showed that well density
of 20 acres in the application area will increase the EUR per section for the
Williams Fork Formation. Additional
testimony indicated that one well per 20 acres versus one well per 40 acres
provides an increased recovery factor of gas in place from 33% to 53%, with an incremental
recovery of 18.0 BCF.
12. Testimony
and exhibits submitted in support of the application showed that the Iles Formation reservoir
model results in production of approximately 0.35 BCF from the Iles Formation
during the first 10 years of production.
Additional testimony indicated that while the Iles Formation is not
economic as a stand alone horizon, it is clearly economic as an add-on to the
Williams Fork Formation development.
13. Testimony
and exhibits submitted in support of the application showed that there is less
original gas in place (OGIP) for the Iles Formation than for the Williams Fork
Formation, averaging between 25 to 35
14. Testimony
and exhibits submitted in support of the application showed that the
OGIP for the application lands is between 90 and 100
15. Testimony and
exhibits submitted in support of the application showed that based on core data obtained in the Federal 20-10 Well, the
Williams Fork Formation has an average porosity of 9.4% and an average
permeability of 0.039 md. Additional
testimony indicated that based on core data obtained in the
16. The
above-referenced testimony and exhibits show that the proposed spacing and
density, will allow more efficient reservoir drainage, will prevent waste, will
assure a greater ultimate recovery of gas, and will not violate correlative
rights.
17. EnCana Oil & Gas (USA) Inc. agreed to be
bound by oral order of the Commission.
18. 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 vacate the 320-acre drilling and spacing unit consisting of
the E½ of Section 17, Township 7 South, Range 95 West, 6th P.M. and
establish 40-acre drilling and spacing units for the E½ E½ of Section 17,
Township 7 South, Range 95 West, 6th P.M., for the production of gas
and associated hydrocarbons from the Williams Fork and Iles Formations.
ORDER
NOW, THEREFORE, IT IS
ORDERED, that the 320-acre drilling and spacing unit consisting of the E½ of
Section 17, Township 7 South, Range 95 West, 6th P.M. is hereby
vacated and 40-acre drilling and spacing units are hereby established for the
E½ E½ of Section 17, Township 7 South, Range 95 West, 6th P.M., for
the production of gas and associated hydrocarbons from the Williams Fork and
Iles Formations.
IT IS FURTHER ORDERED, that the equivalent of one well
per 20 acres is hereby approved for the Williams Fork and the Iles Formations,
with the permitted well to be located 200 feet from the boundaries of the
drilling and spacing unit and 400 feet from any existing Williams Fork
Formation or Iles Formation well absent an exception from the Commission.
IT IS FURTHER ORDERED, that wells to be drilled under
this application shall be drilled from the surface either vertically or
directionally from no more than one well pad located on a given quarter quarter
section unless exception is granted by the Director of the Colorado Oil and Gas
Conservation Commission.
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