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 OPERATION FOR THE WILLIAMS FORK AND ILES FORMATIONS, PARACHUTE FIELD, GARFIELD COUNTY, COLORADO

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CAUSE NO. 440

 

DOCKET NO. 170700501

 

TYPE: POOLING

 

ORDER NO. 440-84

REPORT OF THE COMMISSION

 

The Commission heard this matter on November 28, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 480-acre drilling and spacing unit covering portions of Section 17, Township 7 South, Range 95 West, 6th P.M., and approve one directional well, for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Ursa Operating Company LLC (“Ursa” 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 August 18, 2009, the Commission entered Order No. 440-58, which established two approximate 240-acre DSUs consisting of the NW¼ and W½NE¼, Section 17, Township 7 South, Range 95 West, 6th P.M. (“Northern DSU”), and the SW¼ and W½SE¼ of Section 17, Township 7 South, Range 95 West, 6th P.M. (“Southern DSU”), for the production of gas and associated hydrocarbons Williams Fork and Iles Formations, and authorized the equivalent of one well per ten acres, to be located anywhere in the DSU but no closer than 100 feet from the boundaries of the DSUs without exception being granted by the Director of the Commission.  The order stated 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 DSU so abutting or cornering such lands without exception being granted by the Director of the Commission.

 

5.         Applicant drilled and completed the Watson Ranch B 32D-17-07-95 Well (API No. 05-045-22804) (“Well”) close to the border between the unit that covers NW¼ and W½NE¼, Section 17, Township 7 South, Range 95 West, 6th P.M. (“Northern DSU”), and the SW¼ and W½SE¼ of Section 17, Township 7 South, Range 95 West, 6th P.M. (“Southern DSU”).

 

6.         On May 25, 2017, Ursa, by the attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish an approximate 480-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve one directional well within the unit, for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formation:

 

Township 7 South, Range 95 West, 6th P.M.
Section 17:      W½, W½E½

7.         On July 3, 2017 (supplemented on September 12, 2017), Applicant, 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.

 

8.         Land testimony and exhibits submitted in support of the Application by N. Arthur Bollen, Land Manager for Ursa, showed that Ursa owns a leasehold ownership interest in the Application Lands. Land testimony also showed that in March of 2017, Applicant drilled and completed the Watson Ranch B 32D-17-07-95 Well (API No. 05-045- 22804) (“Well”) close to the border between the DSU that covers the NW¼ and W½NE¼ of Section 17, Township 7 South, Range 95 West, 6th P.M. (“Northern DSU”) and the DSU that covers the SW¼ and W½SE¼ of Section 17, Township 7 South, Range 95 West, 6th P.M. (“Southern DSU”).  The Subject Well was permitted to be within the Northern DSU which has setbacks of 100 feet from the DSU’s southern boundary. The Well was drilled directionally approximately southwest to northeast, and contains 10 completion stages.  The bottom 8 completion stages (stages 1-8) were all completed at legal locations at least 100 feet north of the Northern DSU’s southernmost unit boundary. However, the top two completion stages (stages 9 and 10) were inadvertently completed in the Southern DSU. The maximum encroachment for Stage 10 is 82 feet south of the boundary between the two DSUs.  The exact locations of the completion stages in relation to the DSU Boundaries are more specifically described in Applicant’s engineering testimony.  The encroachment toward the adjacent DSU raised concerns about the correlative rights of the owners in the adjacent DSU. In other words, Ursa desires to ensure that to the extent such owners’ minerals are drained by the top two stages of the Well, such owners receive a just and equitable share of the proceeds from the Well.

 

13.       Geology and engineering 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 Nos. 139-95, 440-56, 440-60, 440-46, and 440-61, for the Williams Fork and Iles Formations.  Further testimony requests that the Commission take administrative notice of the underlying orders establishing the Northern and Southern DSUs.

 

14.       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.

 

15.       Ursa 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, the Commission should enter an order to establish an approximate 480-acre drilling and spacing unit covering portions of Section 17, Township 7 South, Range 95 West, 6th P.M., and approve one directional well, for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations.

 

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, an approximate 480-acre drilling and spacing unit covering the below-described lands, is hereby established, and one directional well is hereby approved, for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations:

 

Township 7 South, Range 95 West, 6th P.M.
Section 17:      W½, W½E½

 2.        The Well drilled under this Order is the Watson Ranch B 32D-17-07-95 Well which was drilled from the surface of the drilling unit, or on adjacent lands with consent of the landowner, from no more than one surface location, unless an exception is granted by the Director.

 

3.         Under this Order, the wellbore may enter the Williams Fork and Iles Formations anywhere within the unit, or on adjacent lands, unless an exception is granted by the Director.

 

IT IS FURTHER ORDERED:

 

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 30 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 28th day of December, 2017, as of November 28, 2017.

           

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By_______________________________________                      Julie Spence Prine, Secretary