BEFORE THE OIL
OF THE STATE OF
IN
THE MATTER OF THE PROMULGATION
ESTABLISHMENT
OF FIELD RULES TO GOVERN )
OPERATIONS
IN THE PARACHUTE FIELD, ) ORDER NO. 440-50
REPORT OF THE COMMISSION
This cause came on for
hearing before the Commission at 9:00 a.m. on November 5, 2007, in Suite 801, The
Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an
order to establish a 320-acre drilling and spacing unit for the E½ of Section
15, Township 7 South, Range 95 West, 6th P.M., for the production of gas and
associated hydrocarbons from the Iles Formation, and to allow the equivalent of
one well per 20 acres for both the Williams Fork and 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.
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
5. Rule 318.a. of the Commission Rules and
Regulations requires that wells drilled in excess of 2500 feet in depth be
located not less than 600 feet from any lease line, and located not less than
1200 feet from any other producible or drilling oil or gas well to the same
common source of supply. Section 15,
Township 7 South, Range 95 West, 6th P.M. is subject to this Rule for the Iles
Formation.
6. On
7. On October 23, 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 indicated that the mineral and surface ownership of the application
lands is both fee and federal, and that EnCana is the majority leasehold owner
of the application lands.
9. Testimony and exhibits submitted in support
of the application showed that the original gas-in-place for the Iles Formation
is estimated to average between 20 and 25 BCF per section, and that the
original gas-in-place for the Williams Fork Formation is estimated to average
between 75 and 80 BCF per section.
Additional testimony and exhibits from nearby core data indicated that
the Cozzette member of the Iles Formation has an average porosity of 6.0% and
an average permeability of 0.009 md., and that the Williams Fork Formation has
an average porosity of 9.4% and an average permeability of 0.039 md.
10. 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, but due to the
heterogeneity of the formations increased well density is necessary to recover
the reserves.
11. Testimony and exhibits submitted in support
of the application showed that the average estimated ultimate recovery in the
most mature area of South Parachute for the Williams Fork Formation is approximately
0.98 BCF per well, and that the average drainage radius is between 17 acres and
22 acres per well.
12. Testimony and exhibits submitted in support
of the application showed that 20-acre well density versus 40-acre well density
in the application area will increase the recovery factor of gas-in-place from
the Williams Fork Formation from 33% to 53%, with an incremental recovery of 16.0
BCF.
13. Additional testimony and exhibits showed that
the average estimated ultimate recovery for the Iles Formation is approximately
0.35 BCF per well. Testimony indicated
that while the Iles Formation is not economic as a stand alone horizon, it is
clearly economic as an add-on to Williams Fork Formation development.
14. 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.
15. EnCana Oil & Gas (USA) Inc. agreed to be
bound by oral order of the Commission.
16. 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 establish a 320-acre drilling and spacing
unit for the E½ of Section 15, Township 7 South, Range 95 West, 6th P.M., for
the production of gas and associated hydrocarbons from the Iles Formation, and
allow the equivalent of one well per 20 acres for both the Williams Fork and
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.
ORDER
NOW, THEREFORE, IT IS
ORDERED, that a 320-acre drilling and spacing unit is hereby established for
the E½ of Section 15, Township 7 South, Range 95 West, 6th P.M., for the production
of gas and associated hydrocarbons from the Iles Formation.
IT IS FURTHER ORDERED, that
the equivalent of one well per 20 acres is hereby approved for both the
Williams Fork and 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 pad located on a given
quarter quarter section unless exception is granted by the Director of the
Colorado Oil and Gas Conservation Commission, and that both the Williams Fork and
Iles Formations shall be reached from a single wellbore.
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 November, 2007, as of November
5, 2007.
OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF
By____________________________________
Patricia
C. Beaver, Secretary
Dated
at
November
9, 2007