BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE PARACHUTE FIELD, GARFIELD COUNTY, COLORADO

)

)

)

)

CAUSE NO. 440

 

ORDER NO. 440-60

 

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission at 9:00 a.m. on February 22, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish an approximate 320-acre lay-down drilling and spacing unit consisting of the S˝ of Section 18, Township 7 South, Range 95 West, 6th P.M., and approve the equivalent of one well per 10 acres well density for said unit, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.    Antero Resources Piceance Corporation (“Antero”), 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 19, 1990, the Commission issued Order No. 440-12, which among other things, established 320-acre drilling and spacing units for certain lands, including Section 18, Township 7 South, Range 95 West, 6th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation, with the designation as either E˝ and W˝ stand-up units or N˝ and S˝ lay-down units at the discretion of the operator of the first well permitted, with the permitted well to be located on the established unit no closer than 600 feet from the boundaries of the unit and no closer than 1,200 feet from any well producing or producible from the same formation.

 

5.    On December 30, 2009, Antero, by its attorney, filed with the Commission a verified application to establish an approximate 320-acre lay-down drilling and spacing unit consisting of the S˝ of Section 18, Township 7 South, Range 95 West, 6th P.M., and approve the equivalent of one well per 10 acres well density for said unit, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

All future Williams Fork and Iles Formation wells to be drilled upon said drilling and spacing unit should be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Commission.  It is provided however that in cases where the lands abut or corner 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 and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Commission.

 

That, except as previously authorized by order of the Commission, wells to be drilled under this order should be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) and that Iles Formation wells shall be drilled and completed only in association with the drilling and completing of wells in the Williams Fork Formation, unless exception is granted by the Commission pursuant to application made for such exception.

 

6.    On February 8, 2010, the Board of County Commissioners of Garfield County (“Garfield County BOCC”), by its attorney, filed a written request to intervene pursuant to Rule 509.a. alleging concerns relating to public health, safety and welfare, including the environment and wildlife resources.

 

7. On February 8, 2010, Garfield County BOCC, by its attorney, filed a motion to continue the hearing and requested that the hearing take place in Garfield County.

 

8.    On February 10, 2010, the Hearing Officer convened a prehearing conference under Rule 527., wherein it was stipulated that this matter should be bifurcated to allow Antero to submit written testimony and exhibits in support of the verified application as those materials pertain to the downhole scientific and technical issues relating to the spacing application, and that the Garfield County BOCC would preserve its objection as to the impact the granting of the spacing application would have on the surface estate relating to public health, safety and welfare, including the environment and wildlife resources.

 

9.    On February 16, 2010, Antero, by its attorney, filed with the Commission a written request to approve the application, pursuant to the stipulation of the parties described in Finding No. 8 above, based on the merits of the verified application and the supporting exhibits as is provided for by Rule 511.  Sworn written testimony and exhibits were submitted in support of the application.

 

10.       Testimony and exhibits submitted in support of the application showed that Antero is the majority leasehold owner of the application lands.  Additional testimony showed that multiple wells have been drilled, tested and completed in the Williams Fork and Iles Formations on lands in the immediate vicinity of the application lands, and that spacing units and development rules for those adjacent lands were established in Order No. 440-52 for the Williams Fork Formation and Order No. 440-55 for the Iles Formation.  Further testimony showed that establishing a drilling and spacing unit and approving 10-acre well density on the application lands, in a manner consistent with development approved for adjacent lands, will promote economic and efficient development of the Williams Fork and Iles Formations, prevent waste, and protect correlative rights.

 

11.  The above-referenced testimony and exhibits showed that granting the application for well 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.

 

12. Antero agreed to be bound by oral order of the Commission. 

       

13.  On February 17, 2010, Garfield County BOCC, by its attorney, filed a withdrawal of its motion to intervene and its motion to continue.

 

14.  COGCC consulted with the Colorado Department of Public Health and Environment (“CDPHE”) about the application, as required by Rule 306.  CDPHE expressed concerns about addressing cumulative impacts to the Battlement Mesa Planned Unit Development (“PUD”) if Antero does not complete a voluntary Comprehensive Drilling Plan (“CDP”) by the end of 2010 and chooses, instead, to develop the minerals within the drilling and spacing unit under Applications for Permits-to-Drill (“APDs,” Form 2s) and Oil and Gas Location Assessments (“OGLAs,” Form 2As).  If development occurs under OGLAs and APDs, CDPHE is concerned that this order increases approved surface locations and would not allow cumulative effects of oil and gas development to be evaluated or addressed. 

 

The order establishes a 320-acre drilling and spacing unit with downhole 10-acre well density.  Wells cannot be drilled from more than one wellpad per quarter quarter section within the unit.  Establishing the drilling and spacing unit and the maximum number of wellpads that may be utilized in the unit does not automatically approve any particular number or location of surface wellpads.  Those decisions are made when APDs and OGLAs are submitted.

 

In the absence of a CDP, COGCC, in consultation with CDPHE, anticipates examining and addressing, if necessary, cumulative impacts to the Battlement Mesa PUD upon application for OGLAs and APDs that may be submitted to develop minerals within this drilling and spacing unit.

 

15.  Based on the facts stated in the verified application, having received one intervention that was subsequently withdrawn, and based on the Hearing Officer review of the application under Rule 511., the Commission should enter an order to establish an approximate 320-acre lay-down drilling and spacing unit consisting of the S˝ of Section 18, Township 7 South, Range 95 West, 6th P.M., and approve the equivalent of one well per 10 acres well density for said unit, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that an approximate 320-acre lay-down drilling and spacing unit for the S˝ of Section 18, Township 7 South, Range 95 West, 6th P.M. is hereby established, and the equivalent of one well per 10 acres well density is hereby approved for said unit, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

IT IS FURTHER ORDERED, that all Williams Fork and Iles Formation wells to be drilled upon said drilling and spacing unit shall be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit without exception being granted by the Director of the Commission.  It is provided however that in cases where the lands abut or corner 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 and Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the drilling unit so abutting or cornering such lands without exception being granted by the Director of the Commission.

 

IT IS FURTHER ORDERED, except as previously authorized by order of the Commission, wells to be drilled under this order shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) and that Iles Formation wells shall be drilled and completed only in association with the drilling and completion of wells in the Williams Fork Formation, unless exception is granted by the Commission pursuant to application made for such exception.

 

IT IS FURTHER ORDERED, that in the absence of a Comprehensive Drilling Plan, the Director of the Commission, in consultation with CDPHE, may address potential cumulative impacts to the PUD upon submission of APDs and OGLAs for development of minerals within this drilling and spacing unit.

 

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 March, 2010, as of February 22, 2010.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Carol Harmon, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

March 9, 2010