BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION ) CAUSE NOS. 139 & 510
AND ESTABLISHMENT OF FIELD RULES TO )
GOVERN OPERATIONS IN THE RULISON FIELD, ) ORDER NOS. 139-59 &
GARFIELD AND MESA COUNTIES, COLORADO ) ; 510-19 CORRECTED
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on April 24, 2006, Suite 801, in The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish 40-acre drilling and spacing units for certain lands located in Townships 7 and 8 South, Ranges 94 through 96 West 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing up to one (1) well per ten (10) acres with the option of up to four (4) wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conservation Commission. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section unless exception is authorized by order of the Commission upon hearing.
FINDINGS
The Commission finds as follows:
1. Noble Energy, Inc. ("Noble"), 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. Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. The following lands are subject to Rule 318.a.:
Township 7 South, Range 96 West, 6th P.M.
Section 35: S½ SE¼
Township 8 South, Range 95 West, 6th P.M.
Section 5: Lots 6, 7, 8, 10
Section 8: W½ E½ NE¼, W½ NE¼, W½, NW¼ SE¼, W½ SW¼ SE¼, NE¼ SW¼ SE¼, NW¼ SE¼ SE¼
Section 17: Lots 2, 3, 4, 5, 6, 7 and 9, SE¼ SW¼ NE¼, W½ W½ NE¼, NW¼, NW¼ SE¼
Section 18: Lots 7, 8, 9, 10 and 11, E½ NE¼
Resurvey Tracts 45 and 46 as located in Sections 16, 17, 20, and 21
5. On November 5, 2002, the Bureau of Land Management approved the Orchard Federal Unit Agreement. The below-listed lands are located within the boundaries of the Orchard Federal Unit but are not committed to the unit and are not bound by the terms of the Orchard Federal Unit Agreement. The lands are therefore subject to Rule 318.a. and d.(3) of the Rules and Regulations of the Commission:
Township 8 South, Range 96 West, 6th P.M.
Section 14: SW¼ SW¼
Section 15: SE¼ SE¼
Section 22: E½ NE¼
Section 23: W½ NW¼
6. On May 16, 1994, the Commission issued Order No. 510-1, which among other things, established new setback rules allowing permitted wells to be located no closer than 400 feet from the boundaries of any lease line and no closer than 800 feet from any existing Williams Fork Formation well for certain lands including the SW¼ of Section 35, Township 7 South, Range 96 West, 6th P.M. Subsequent Order No. 510-14, corrected on February 28, 2006, established 160-acre drilling and spacing units for certain lands including the SW¼ of Section 35, Township 7 South, Range 96 West, 6th P.M., and allowed the equivalent of one well per 10-acres, for production of gas and associated hydrocarbons from the Williams Fork Formation.
7. On May 19, 1990, the Commission issued Order No. 139-16 which among other things, established 640-acre drilling and spacing units for the production of gas from the Mesaverde Formation, for the below-listed lands:
Township 7 South, Range 94 West, 6th P.M.
Sections 17 through 20: All
Section 30: All
Township 7 South, Range 95 West, 6th P.M.
Section 32: S½, S½ N½
8. Subsequent Order No. 139-31 amended Order No. 139-16 and among other things, allowed sixteen (16) wells to be drilled on the 640-acre drilling and spacing units consisting of Section 17, Township 7 South, Range 94 West, 6th P.M. and Section 32, Township 7 South, Range 95 West, 6th P.M.
9. On February 13, 2004, the Commission issued Order No. 139-43, which among other things, increased the number of wells to be drilled on certain 320-acre drilling and spacing units for production of gas from the Williams Fork Formation to the equivalent of one (1) well per 40 acres for lands including Section 30, Township 7 South, Range 94 West, 6th P.M.
10. Subsequent Order No. 139-53, among other things, allowed the number of wells to be drilled for production of gas and associated hydrocarbons from the Williams Fork Formation, the equivalent of one (1) well per 10 acres for lands including Sections 19 and 30, Township 7 South, Range 94 West, 6th P.M.
11. On February 28, 2005, the Commission issued Order No. 139-45, which among other things, established 40-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation and allowed the equivalent of one (1) well per 10 acres, for certain lands including Lots 5 and 6, Section 18, Township 8 South, Range 95 West, 6th P.M. On November 30, 2005, the Commission entered Order No. 139-51, which established 40-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Iles Formation and allowed the equivalent of one (1) well per 10 acres, including lands in Lots 5 and 6, Section 18, Township 8 South, Range 95 West, 6th P.M.
12. On March 6, 2006, Noble, by its attorney, filed with the Commission a verified application for an order to establish 40-acre drilling and spacing units for the below-listed lands for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing up to one (1) well per ten (10) acres with the option of up to four (4) wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conservation Commission. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless exception is granted by the Director of the Oil and Gas Conservation Commission.
Township 7 South, Range 96 West, 6th P.M.
Section 35: S½ SE¼
Township 8 South, Range 95 West, 6th P.M.
Section 5: Lots 6 through 8 and 10
Section 8: W½ E½ NE½, W½ NE¼, W½, NW¼ SE¼, W½ SW¼ SE¼, NE¼ SW¼ SE¼, NW¼ SE¼ SE¼
Section 17: Lots 2 through 7 and 9, SE¼ SW¼ NE¼, W½ W½ NE¼, NW¼, NW¼ SE¼
Section 18: Lots 5 through 11, E½ NE¼
Resurvey Tracts 45 and 46 as located in Sections 16, 17, 20, and 21
Further, the order should establish 40-acre drilling and spacing units for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, for the below-listed lands, allowing up to one (1) well per ten (10) acres with the option of up to four (4) wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conservation Commission. The parties have agreed that the setbacks for each well located on that portion of the Orchard Unit Application Lands within the Federal Orchard Unit should adhere to EnCana’s existing unit setbacks of six hundred (600) feet as to the East and West lines of the Unit Application Lands and two hundred (200) feet setback on the North and South lines of the Unit Application Lands. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless exception is granted by the Director of the Oil and Gas Conservation Commission.
Township 8 South, Range 96 West, 6th P.M.
Section 14: SW¼ SW¼
Section 15: SE¼ SE¼
Section 22: E½ NE¼
Section 23: W½ NW¼
Further, the order should establish a 160-acre drilling and spacing unit for production of gas and associated hydrocarbons from the Iles Formation and allow the equivalent of one (1) well per 10 acres to be drilled on said unit for the SW¼ of Section 35, Township 7 South, Range 96 West, 6th P.M., with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless exception is granted by the Director of the Oil and Gas Conservation Commission.
Further, the order should allow up to one (1) well per 10 acres for production of gas and associated hydrocarbons from the Iles Formation, for the below listed lands, with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless exception is granted by the Director of the Oil and Gas Conservation Commission.
Township 7 South, Range 94 West, 6th P.M.
Sections 17 through 20: All
Section 30: All
Township 7 South, Range 95 West, 6th P.M.
Section 32: S½, S½ N½
Further, the order should also clarify that Lots 5 and 6, Section 18, Township 8 South, Range 95 West, 6th P.M., are covered by Order Nos. 139-45 and 139-51, which established 40-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations. In addition, the order should allow one well per 10 acres for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless exception is granted by the Director of the Oil and Gas Conservation Commission.
13. On April 10, 2006, Noble’s attorney notified the Hearings Manager that it had not provided notice to the local government designees ("LGDs") for Garfield and Mesa Counties in accordance with the Commission’s rules. Noble immediately sent copies of its application and exhibits to both county LGDs, and on Monday, April 17, 2006, appeared at the Garfield County Board of Commission’s hearing to discuss its application. Subsequently, the Garfield County attorney notified the Hearings Manager that it did not intend to intervene on the application. On April 19, 2006, Mesa County notified the Hearings Manager that it did not intend to intervene on the application. At the time of the administrative hearing, Noble amended its application, upon Garfield County’s request, to request that a Commission order be obtained should Noble wish to use more than one well pad per quarter quarter in the application lands.
14. Testimony and exhibits presented at the administrative hearing showed that based on the geological interpretation that 10-acre well density would be required to properly drain the Williams Fork and Iles Formations within the application area.
15. Testimony and exhibits presented at the administrative hearing showed that one (1) well located near the application area would drain 7.8 acres and have an estimated ultimate recovery of 534.5 MMCF of gas from the Williams Fork and Iles Formations. Additional testimony showed that another well located near the application area would drain 8.7 acres and have an estimated ultimate recovery of 1091 MMCF of gas from the Williams Fork Formation.
16. Testimony and exhibits presented at the administrative hearing showed that the project is feasible from engineering and economical standpoints, and that 10-acre well density would be required to properly drain the Williams Fork and Iles Formations within the application lands.
17. No protests to the application have been filed with the Commission or the Applicant.
18. Noble Energy, Inc. agrees to be bound by oral order of the Commission.
19. 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 establish 40-acre drilling and spacing units for certain lands located in Townships 7 and 8 South, Ranges 94 through 96 West 6th P.M., for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, allowing up to one (1) well per ten (10) acres with the option of up to four (4) wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conservation Commission. Said wells will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section unless exception is authorized by order of the Commission upon hearing.
ORDER
NOW, THEREFORE, IT IS ORDERED, that 40-acre drilling and spacing units are hereby established for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, for the below-listed lands allowing up to one (1) well per ten (10) acres with the option of up to four (4) wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conservation Commission. Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless authorized by order of the Commission upon hearing.
Township 7 South, Range 96 West, 6th P.M.
Section 35: S½ SE¼
Township 8 South, Range 95 West, 6th P.M.
Section 5: Lots 6 through 8 and 10
Section 8: W½ E½ NE½, W½ NE¼, W½, NW¼ SE¼, W½ SW¼ SE¼, NE¼ SW¼ SE¼, NW¼ SE¼ SE¼
Section 17: Lots 2 through 7 and 9, SE¼ SW¼ NE¼, W½ W½ NE¼, NW¼, NW¼ SE¼
Section 18: Lots 5 through 11, E½ NE¼
Resurvey Tracts 45 and 46 as located in Sections 16, 17, 20, and 21
IT IS FURTHER ORDERED, that 40-acre drilling and spacing units are hereby established for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, for the below-listed lands, allowing up to one (1) well per ten (10) acres with the option of up to four (4) wells, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conservation Commission. Setbacks for each well located on that portion of the Orchard Unit Application Lands within the Federal Orchard Unit shall adhere to EnCana’s existing unit setbacks of six hundred (600) feet as to the East and West lines of the Unit Application Lands and two hundred (200) feet setback on the North and South lines of the Unit Application Lands. Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless authorized by order of the Commission upon hearing.
Township 8 South, Range 96 West, 6th P.M.
Section 14: SW¼ SW¼
Section 15: SE¼ SE¼
Section 22: E½ NE¼
Section 23: W½ NW¼
IT IS FURTHER ORDERED, that a 160-acre drilling and spacing unit is hereby established for production of gas and associated hydrocarbons from the Iles Formation, for the SW¼ of Section 35, Township 7 South, Range 96 West, 6th P.M., allowing the equivalent of one (1) well per 10 acres to be drilled on said unit for the SW¼ of Section 35, Township 7 South, Range 96 West, 6th P.M., with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed. Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless authorized by order of the Commission upon hearing.
IT IS FURTHER ORDERED, that one (1) well per 10 acres shall be allowed to be drilled for production of gas and associated hydrocarbons from the Iles Formation, with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed, for the below listed lands. Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless authorized by order of the Commission upon hearing.
Township 7 South, Range 94 West, 6th P.M.
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Section 30: All
Township 7 South, Range 95 West, 6th P.M.
Section 32: S½, S½ N½
IT IS FURTHER ORDERED, that Lots 5 and 6, Section 18, Township 8 South, Range 95 West, 6th P.M. are covered by Order Nos. 139-45 and 139-51, which established 40-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, and that one well per 10 acres is hereby allowed for production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the unit boundary and no closer than 200 feet from the unit boundary where 10-acre density has not been allowed. Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section, unless authorized by order of the Commission upon hearing.
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 9th day of May, 2006, as of April 24, 2006.
CORRECTED this _______ day of November, 2006, as of April 24, 2006.
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
November 15, 2006