BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND                      )           CAUSE NO. 440

ESTABLISHMENT OF FIELD RULES TO GOVERN                  )

OPERATIONS IN THE PARACHUTE FIELD,                               )           ORDER NO. 440-51

GARFIELD COUNTY, COLORADO                                               )          

 

report of the commission

 

This cause came on for hearing before the Commission at 9:00 a.m. on December 12, 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 S½ of Section 25, Township 6 South, Range 95 West, 6th P.M., and establish a 160-acre drilling and spacing unit consisting of the SE¼, an 80-acre drilling and spacing unit consisting of the S½ SW¼, and a 40-acre drilling and spacing unit consisting of the NE¼ SW¼, all in said Section 25, for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, and continue to allow wells to be drilled in accordance with Order Nos. 139-64 and 440-35.

 

FINDINGS

 

The Commission finds as follows:

 

1.  Williams Production RMT Company (“Williams”), 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 25, Township 6 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.  On July 28, 2006, the Commission issued Order Nos. 139-64 and 440-35, which, among other things, allowed the equivalent of one well per 10 acres to be drilled on certain lands, including the S½ of Section 25, Township 6 South, Range 95 West, 6th P.M., for production from the Williams Fork Formation of the Mesaverde Group, with the permitted well to be located no closer than 100 feet from the outside boundary of the drilling and spacing unit unless such unit boundary abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, in which event the well may be drilled downhole no closer than 200 feet from that portion of the unit boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for the Williams Fork Formation wells has not been ordered by the Commission.

6.  On October 16, 2007, Williams, by its attorney, filed with the Commission a verified application for an order to vacate the 320-acre drilling and spacing unit consisting of the S½ of Section 25, Township 6 South, Range 95 West, 6th P.M., and establish a 160-acre drilling and spacing unit consisting of the SE¼, an 80-acre drilling and spacing unit consisting of the S½ SW¼, and a 40-acre drilling and spacing unit consisting of the NE¼ SW¼, all in said Section 25, for the production of gas and associated hydrocarbons from the Mesaverde Group, and continue to allow wells to be drilled in accordance with Order Nos. 139-64 and 440-35.

 

7.  On November 23, 2007, the Bureau of Land Management (“BLM”) filed with the Commission a protest to the application.  On November 28, 2007, Williams amended its application to apply only to the Williams Fork Formation of the Mesaverde Group, maintaining the S½ of said Section 25 as the drilling and spacing unit for the Iles Formation.  On December 3, 2007, the BLM filed a withdrawal of its protest with the Commission based on the amended application.

8.  On November 30, 2007, Williams, 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.

9.  Testimony and exhibits submitted in support of the application indicated that Williams owns leasehold interests in the SE¼, S½ SW¼ and NE¼ SW¼ of said Section 25, all of which are fee mineral lands.  Additional testimony indicated that the oil and gas mineral estate underlying the NW¼ SW¼ of Section 25 is owned by the United States of America, is unleased and is not expected to be leased in the near future.  Further testimony indicated that Williams has expiring leases on the application lands and needs to drill and establish production in order to prevent the leases from expiring, and that vacating the 320-acre drilling and spacing unit and establishing the requested drilling and spacing units will allow the these lands to be timely drilled for the production of gas and associated hydrocarbons from the Williams Fork Formation.

10.  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.

 

                        11.  Williams Production RMT Company agreed to be bound by oral order of the Commission.

 

12.  Based on the facts stated in the verified application, having resolved the BLM’s  protest, 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 S½ of Section 25, Township 6 South, Range 95 West, 6th P.M., and establish a 160-acre drilling and spacing unit consisting of the SE¼, an 80-acre drilling and spacing unit consisting of the S½ SW¼, and a 40-acre drilling and spacing unit consisting of the NE¼ SW¼, all in said Section 25, for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, and continue to allow wells to be drilled in accordance with Order Nos. 139-64 and 440-35.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that the 320-acre drilling and spacing unit consisting of the S½ of Section 25, Township 6 South, Range 95 West, 6th P.M., is hereby vacated and the following drilling and spacing units are hereby established:  1) a 160-acre drilling and spacing unit consisting of the SE¼, 2) an 80-acre drilling and spacing unit consisting of the S½ SW¼, and 3) a 40-acre drilling and spacing unit consisting of the NE¼ SW¼, all in Section 25, Township 6 South, Range 95 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group.

 

IT IS FURTHER ORDERED, that all future Williams Fork Formation wells shall be drilled upon each of these newly established drilling and spacing units in accordance with Order Nos. 139-64 and 440-35 such that wells shall be located downhole anywhere in the unit but no closer that 100 feet from the boundary of the unit, without exception being granted by the Director, except that with respect to lands abutting or cornering the boundary of a given unit for which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, the well shall be located downhole no closer than 200 feet from the boundary of the drilling and spacing unit so abutting or cornering such lands.

IT IS FURTHER ORDERED, that all Williams Fork Formation wells drilled upon the SE¼, S½ SW¼ and NE¼ SW¼ of said Section 25 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.

                        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 December, 2007, as of December 12, 2007.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________          

                                                                                    Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 27, 2007