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 FOR THE WILLIAMS FORK FORMATION, PARACHUTE FIELD, GARFIELD COUNTY, COLORADO |
) ) ) ) ) |
CAUSE NO. 440
DOCKET NO. 1406-UP-126
ORDER NO. 440-74 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 17, 2014, at the Rifle Branch Library, Garfield County Public Library District, 207 East Avenue, Rifle, Colorado, upon an application for an order to pool all interests within an approximate 320-acre drilling and spacing unit established for Section 7, Township 7 North, Range 95 West, 6th P.M., and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of 26 Williams Fork Formation wells authorized by Order 440-61.
FINDINGS
The Commission finds as follows:
1. WPX Energy Rocky Mountain, LLC (“WPX” or “Applicant”), 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 May 18, 1990, the Commission entered Order No. 440-12 which, among other things, established an approximate 320-acre drilling and spacing unit for the Application Lands, and approved the option to drill a total of up to two wells in each operator-designated unit, for the production of gas and associated hydrocarbons from the Mesaverde Formation, including the Williams Fork Formation. Section 7, Township 7 North, Range 95 West, 6th P.M. is subject to this Order for the Williams Fork Formation.
5. On June 1, 2010, the Commission entered Order No. 440-61 which approved the equivalent of one well per 10 acres well density for the Application Lands, for the production of gas and associated hydrocarbons from the Williams Fork Formation. Section 7, Township 7 North, Range 95 West, 6th P.M. is subject to this Order for the Williams Fork Formation.
6. On April 17, 2014, WPX, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to pool all interests in an approximate 320-acre drilling and spacing unit established for the below-described lands (“Application Lands”), for the development and operation of the Williams Fork Formation, effective as of the date of the Application, and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of the initial Williams Fork Formation well and any other wells authorized by Order No. 440-61:
Township 7 North, Range 95 West, 6th P.M.
Section 7: N˝
6. On June 3, 2014, WPX, by its attorneys, 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.
7. Land testimony and exhibits submitted in support of the Application by Christy Sirola, Staff Landman for the Piceance Basin for WPX, showed that all nonconsenting interest owners were notified of the Application and received an Authority for Expenditure ("AFE") and offer to participate in each Well. Further testimony concluded that the AFE sent by the Applicant to the interest owners was a fair and reasonable estimate of the costs of the proposed drilling operation and was received at least 30 days prior to the June 17, 2014 hearing date.
8. Land testimony showed the Applicant complied with the requirements of Rule 530, and is entitled to the cost recovery provisions pursuant to §34-60-116(7), C.R.S., for the following 26 wells authorized by Order 440-61 for the Williams Fork Formation, but did not provide testimony for any subsequent wells.
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Well Name/Number |
API Number |
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PA 321-7 |
05-045-22230 |
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PA 11-7 |
05-045-18102 |
|
PA 322-7 |
05-045-22220 |
|
PA 312-7 |
05-045-22231 |
|
PA 12-7 |
05-045-22236 |
|
PA 411-7 |
05-045-22228 |
|
PA 311-7 |
05-045-22226 |
|
PA 531-7 |
05-045-22222 |
|
PA 431-7 |
05-045-22235 |
|
PA 331-7 |
05-045-22232 |
|
PA 421-7 |
05-045-22223 |
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PA 512-7 |
05-045-20162 |
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PA 522-7 |
05-045-20165 |
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PA 422-7 |
05-045-20164 |
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PA 332-7 |
05-045-20158 |
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PA 32-7 |
05-045-20161 |
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PA 532-7 |
05-045-20163 |
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PA 542-7 |
05-045-20155 |
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PA 432-7 |
05-045-20154 |
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PA 41-7 |
05-045-20160 |
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PA 342-7 |
05-045-20150 |
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PA 42-7 |
05-045-20156 |
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PA 442-7 |
05-045-20159 |
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PA 341-7 |
05-045-20157 |
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PA 441-7 |
05-045-20153 |
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PA 541-7 |
05-045-20152 |
9. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.
10. WPX agreed to be bound by oral order of the Commission.
11. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Unit review of the Application under Rule 511., the Commission should enter an order to pool all interests within an approximate 320-acre drilling and spacing unit established for Section 7, Township 7 North, Range 95 West, 6th P.M., and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S. for 26 wells authorized by Order 440-61, for the development and operation of the Williams Fork Formation.
ORDER
IT IS HEREBY ORDERED:
1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, all interests in the approximate 320-acre drilling and spacing unit established for the below-described lands, are hereby pooled, for the development and operation of the Williams Fork Formation, effective as of the earlier of the date of the Application, for the drilling of the following wells:
|
Well Name/Number |
API Number |
|
PA 321-7 |
05-045-22230 |
|
PA 11-7 |
05-045-18102 |
|
PA 322-7 |
05-045-22220 |
|
PA 312-7 |
05-045-22231 |
|
PA 12-7 |
05-045-22236 |
|
PA 411-7 |
05-045-22228 |
|
PA 311-7 |
05-045-22226 |
|
PA 531-7 |
05-045-22222 |
|
PA 431-7 |
05-045-22235 |
|
PA 331-7 |
05-045-22232 |
|
PA 421-7 |
05-045-22223 |
|
PA 512-7 |
05-045-20162 |
|
PA 522-7 |
05-045-20165 |
|
PA 422-7 |
05-045-20164 |
|
PA 332-7 |
05-045-20158 |
|
PA 32-7 |
05-045-20161 |
|
PA 532-7 |
05-045-20163 |
|
PA 542-7 |
05-045-20155 |
|
PA 432-7 |
05-045-20154 |
|
PA 41-7 |
05-045-20160 |
|
PA 342-7 |
05-045-20150 |
|
PA 42-7 |
05-045-20156 |
|
PA 442-7 |
05-045-20159 |
|
PA 341-7 |
05-045-20157 |
|
PA 441-7 |
05-045-20153 |
|
PA 541-7 |
05-045-20152 |
:
Township 7 North, Range 95 West, 6th P.M.
Section 7: N˝
2. The production obtained from the drilling and spacing unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within the drilling and spacing unit; each owner of an interest in the drilling and spacing unit shall be entitled to receive its share of the production of the Well located on the drilling and spacing unit applicable to its interest in the drilling and spacing unit.
3. The nonconsenting leased (working interest) owners must reimburse the consenting working interest owners for their share of the costs and risks of drilling and operating the Well (including penalties as provided by §34-60-116(7)(b), C.R.S.) out of production from the drilling and spacing unit representing the cost-bearing interests of the nonconsenting working interest owners as provided by §34-60-116(7)(a), C.R.S.
4. Any unleased owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the Well and be subject to the penalties as provided for by §34-60-116(7), C.R.S. Any party seeking the cost recovery provisions of §34-60-116(7), C.R.S., shall first comply with subsection (d) for any subsequent well(s).
5. Each nonconsenting unleased owner within the drilling and spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of its record title interest, whatever that interest may be, until such time as the consenting owners recover, only out of each nonconsenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116(7)(b), C.R.S. as amended. After recovery of such costs, each unleased nonconsenting mineral owner shall then own its proportionate 8/8ths share of the Well, surface facilities and production, and then be liable for its proportionate share of further costs incurred in connection with the Well as if it had originally agreed to the drilling.
6. The operator of the well drilled on the above-described drilling and spacing unit shall furnish the nonconsenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
7. Nothing in this order is intended to conflict with §34-60-116, C.R.S., as amended. Any conflict that may arise shall be resolved in favor of the statute.
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 8th day of July, 2014, as of June 17, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary