BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 506
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE PINYON RIDGE AREA, RIO BLANCO ) ORDER NO. 506-3
AND MOFFAT COUNTIES, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission on May 24, 2004 at 1:00 p.m. in the Community Room at City Hall, 1000 10th Street, Greeley, Colorado on the application of KLT Gas Inc. for an order to vacate Order No. 506-1 and place the lands under the provisions of the Rules and Regulations of the Commission.
FINDINGS
The Commission finds as follows:
1. KLT Gas Inc. (“KLT”), 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 and the terms of the Memorandum of Understanding (“MOU”) between the Commission and the Bureau of Land Management (“BLM”).
4. On April 19, 1993, the Commission issued Order No. 506-1, which established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Cameo coal seams underlying the below-listed lands:
Township 3 North, Range 96 West, 6th P.M.
Sections 5 through 8: All
Sections 17 through 20: All
Sections 29 through 32: All
Township 3 North, Range 97 West, 6th P.M.
Sections 1 through 3: All
Sections 10 through 15: All
Sections 22 through 27: All
Sections 34 through 36: All
5. On April 2, 2004, KLT Gas Inc., by its attorney filed with the Commission a verified Application for an order to vacate Order No. 506-1 and place the lands under the provisions of the Rules and Regulations of the Commission. Based on geological, engineering and production data obtained from the drilling and production of wells within the area, KLT stated its belief that wells are incapable of adequately and efficiently draining gas and associated hydrocarbons from the 320-acre drilling and spacing units. In addition, there is not sufficient drilling and production from the Cameo coal seams in the Pinyon Ridge Area to establish a more appropriate spacing to govern development of the Cameo coal seams. Further, all shut-in and producing Cameo coal seams wells are located on Federal lands. In order to promote additional drilling and development, and determine the appropriate spacing to economically and efficiently drain the Cameo coal seams underlying the aforesaid lands, it is necessary to allow drilling under the general well location rules of the Commission.
6. Testimony and exhibits presented at the administrative hearing indicated that the Cameo coal seams are found between 5970 feet and 6220 feet underlying the application lands. Additional testimony indicated that all perforations in the coals are open and no gas, only water is currently being produced.
7. Testimony and exhibits presented at the administrative hearing indicated that production ranges from ten (10) to thirty (30) MCFPD for each of the three (3) producing wells, which were drilled at exception locations, and that there is no interference between the wells. Additional testimony indicated that the fluid level can be lowered more quickly by drilling wells closer together and the well density should be less than 160-acres but perhaps not as dense as 80-acres.
8. Testimony and exhibits presented at the administrative hearing indicated that the request to establish 320-acre units in 1993 was based on information from the Fruitland coal seams in the Ignacio-Blanco Field of La Plata and Archuleta Counties, a model that has been determined to not be analogous.
9. A letter from the Bureau of Land Management (“BLM”) in support of the application was received by the Commission on April 27, 2004, in accordance with the conditions of the Memorandum of Understanding between the BLM and the COGCC.
10. That KLT Gas Inc. 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 having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to vacate Order No. 506-1 and place the lands under the provisions of the Rules and Regulations of the Commission.
ORDER
NOW, THEREFORE IT IS ORDERED, that Order No. 506-1 is hereby vacated and the following lands shall be placed under the provisions of the Rules and Regulations of the Commission:
Township 3 North, Range 96 West, 6th P.M.
Sections 5 through 8: All
Sections 17 through 20: All
Sections 29 through 32: All
Township 3 North, Range 97 West, 6th P.M.
Sections 1 through 3: All
Sections 10 through 15: All
Sections 22 through 27: All
Sections 34 through 36: All
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 June, as of May 24, 2004
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
June 10, 2004