BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION ) CAUSE NO. 510
AND ESTABLISHMENT OF FIELD RULES TO )
GOVERN OPERATIONS IN THE GRAND
VALLEY ) ORDER NO. 510-23
FIELD, GARFIELD COUNTY, COLORADO )
CORRECTED
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on July 10, 2006, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish a 160-acre drilling and spacing unit consisting of the SW¼ of Section 27, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons for the Iles Formation.
FINDINGS
The Commission finds as follows:
1. EnCana Oil & Gas (USA) Inc. (“EnCana”), 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 Colorado Oil and Gas Conservation Commission requires wells drilled in excess of 2,500 feet in depth to be located not less than 600 feet from any lease line, and not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Section 27, Township 7 South, Range 96 West, 6th P.M. is subject to this rule for the Iles Formation.
5. On March 22, 2005, the Commission issued Order No. 510-14, which among other things, established 160-acre drilling and spacing units for certain lands including the SW¼ of Section 27, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation, allowing the number of wells which can be optionally drilled into and produced from the Williams Fork Formation to the equivalent of one well per 10 acres, with the permitted well to be located downhole anywhere in the drilling and spacing unit but no closer than 100 feet from the boundaries of the unit.
6. On May 22, 2006, EnCana, by its attorney, filed with the Commission a verified application for an order to establish a 160-acre drilling and spacing unit consisting of the SW¼ of Section 27, Township 7 South, Range 96 West, 6th P.M., for production of gas and associated hydrocarbons from the Iles Formation, with the option to drill up to two (2) wells, with the permitted well to be located in the NW¼ SW¼ and the SE¼ SW¼ of said Section 27, no closer than 600 feet from the unit boundary. Wells to be drilled under this application 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 Colorado Oil and Gas Conservation Commission, and wells producing from the Iles Formation will not be drilled as stand-alone wells; rather, the Iles Formation will be reached from an existing or concurrently-drilled Williams Fork Formation well.
7. Testimony and exhibits presented at the administrative hearing showed that EnCana has 100% working interest in the Iles Formation in the SE¼ SW¼ of Section 27 and that the remaining leases are owned by Williams Production Company or are unleased. Additional testimony and exhibits showed that the application lands are owned by several parties. Further testimony showed that an Iles Formation well currently exists in the SE¼ SW¼ of Section 27.
8. Testimony and exhibits presented at the administrative hearing showed that the three (3) formations within the Iles Formation are anticipated to be present underlying the application lands, and that the top of the Iles Formation is expected to be encountered at approximately 4900 feet.
9. Testimony and exhibits presented at the administrative hearing showed that the original gas in place in the Iles Formation is estimated to be approximately 16 BCF per section in the application area. Additional testimony and exhibits showed that the original gas in place in the Williams Fork Formation is estimated to be approximately 50 to 55 BCF per section in the application area.
10. Testimony and exhibits presented at the administrative hearing showed that the core data from the Cozzette Sand averaged 9% porosity and 0.006 millidarcies permeability at reservoir pressure, and that core data from the Corcoran member averaged 9% porosity and 0.008 millidarcies permeability at reservoir pressure.
11. Testimony and exhibits presented at the administrative hearing showed an estimated ultimate recovery of 0.35 BCF in ten (10) years from an Iles Formation well.
12. Testimony and exhibits presented at the administrative hearing showed that allowing two wells to be drilled in a 160-acre drilling and spacing unit would recover an estimated 0.35 BCF of gas per well from the Iles Formation.
13. The above-referenced testimony and exhibits show that the proposed 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.
14. EnCana Oil & Gas (USA) Inc. agreed to be bound by oral order of the Commission.
15. 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 a 160-acre drilling and spacing unit consisting of the SW¼ of Section 27, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons for the Iles Formation.
ORDER
NOW, THEREFORE, IT IS ORDERED, that a 160-acre drilling and spacing unit consisting of the SW¼ of Section 27, Township 7 South, Range 96 West, 6th P.M., is hereby established for the production of gas and associated hydrocarbons from the Iles Formation, with the option to drill up to two (2) wells, with the permitted well to be located in the NW¼ SW¼ and the SE¼ SW¼ of said Section 27, no closer than six hundred (600) feet from the unit boundary.
IT IS FURTHER ORDERED, that wells drilled under this application shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission, and wells producing from the Iles Formation shall not be drilled as stand-alone wells; rather, the Iles Formation shall be reached from an existing or concurrently-drilled Williams Fork Formation well.
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 28th day of July, 2006, as of July 10, 2006.
CORRECTED this _______ day of September, as of July 10, 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
September 5, 2006