BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NOS. 139 AND 440
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE PARACHUTE AND RULISON ) ORDER NOS. 139-95 AND 440-52
FIELDS, MESA COUNTY, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 8:00 a.m. on July 15, 2008, in Ballroom B of the Brown Palace Hotel, 321 Seventeenth Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary for certain lands in Township 7 South, Range 95 West, 6th P.M., for production from the Williams Fork Formation.
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 July 11, 2005, the Commission issued Order No. 139-48, which among other things, allowed the equivalent of one well per 20 acres or thirty-two wells per 640-acre drilling and spacing unit, for certain lands including Sections 20 and 21, Township 7 South, Range 95 West, 6th P.M., with each well located no closer than 200 feet from the boundaries of the unit, for production from the Williams Fork and Iles Formations.
5. On March 20, 2006, the Commission issued Order No. 440-30, which among other things, established 40-acre drilling and spacing units for the W½ of Section 16, Township 7 South, Range 95 West, 6th P.M., with the option of up to two wells per unit, for production from the Williams Fork and Iles Formations.
6. On November 27, 2006, the Commission issued Order No. 440-38, which among other things, allowed to be optionally drilled the equivalent of one well per 20 acres or 16 wells for each 320-acre drilling and spacing unit in the E½ of Section 16, Township 7 South, Range 95 West, 6th P.M., with each well located no closer that 200 feet from the boundaries of the unit for production from the Williams Fork and Iles Formations.
7. On May 10, 2007, the Commission issued Order No. 440-45, which among other things, allowed the equivalent of one well per 20 acres for each 320-acre drilling and spacing unit consisting of the N½ and S½ of Section 19, Township 7 South, Range 95 West, 6th P.M., with a setback of 200 feet from the boundaries of the unit, for production from the Williams Fork and Iles Formations.
8. On August 28, 2007, the Commission issued Order No. 440-48, which among other things, established 40-acre drilling and spacing units for the E½ E½ of Section 17, Township 7 South, Range 95 West, 6th P.M., for production from the Williams Fork and Iles Formation.
9. On April 21, 2008, EnCana, by its attorney, filed with the Commission a verified application to allow the equivalent of one well per 10 acres, for production from the Williams Fork Formation on certain lands described as:
Township 7 South, Range 95 West, 6th P.M.
Section 16: All
Section 17: E½ E½
Section 19: All
Section 20: All
Section 21: All
All Williams Fork Formation wells shall be located anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit, except that where the established unit abuts or corners lands in respect of which the Commission has not at the time of 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 unit.
10. On June 24, 2008, 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.
11. Testimony and exhibits submitted in support of the application showed that EnCana is the majority Williams Fork Formation leasehold owner in the application lands, which consist of both fee and federal minerals.
12. Testimony and exhibits submitted in support of the application showed that the Williams Fork Formation is a member of the Mesaverde Group and due to the highly lenticular and heterogeneous deposition of the sand bodies of the formation, increased density is necessary to efficiently and economically recover the reserves while protecting correlative rights. Additional testimony showed that the estimated original gas-in-place for the Williams Fork Formation in the application lands varies from approximately 80 to 100 BCF per section. Further testimony showed that core data from an adjacent well indicated the average porosity of the Williams Fork Formation is 10.1% and the average permeability is 0.066 millidarcies.
13. Testimony and exhibits submitted in support of the application showed that current well density will not effectively drain the Williams Fork Formation. Additional testimony showed that increasing well density from 20 acres to 10 acres in the application area will increase the estimated ultimate recovery from 53% to 67% of original gas-in-place, and that additional reserves estimated at 13 BCF per section will be recovered by the increased well density.
14. The above-referenced testimony and exhibits show that the proposed increased well 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 allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary for certain lands in Township 7 South, Range 95 West, 6th P.M.
NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved, for production from the Williams Fork Formation for the below-listed lands:
Township 7 South, Range 95 West, 6th P.M.
Section 16: All
Section 17: E½ E½
Section 19: All
Section 20: All
Section 21: All
IT IS FURTHER ORDERED, that all Williams Fork Formation wells shall be located anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit, except that where the established unit abuts or corners lands in respect of which the Commission has not at the time of 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 unit.
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 July, 2008, as of July 15, 2008.
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
July 21, 2008