BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND                                 )                     CAUSE NO. 510

ESTABLISHMENT OF FIELD RULES TO GOVERN                             )

OPERATIONS IN THE GRAND VALLEY FIELD                                     )                     ORDER NO. 510-25

GARFIELD COUNTY, COLORADO                                                         )                      CORRECTED

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission at 8:30 a.m. on August 16, 2006, in the Meeker Town Hall, 345 Market Street, Meeker Colorado, for an order to establish various drilling and spacing units for certain lands in Townships 5 and 6 South, Ranges 96 and 97 West, 6th P.M, and to allow the equivalent of one (1) well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary.

FINDINGS

                        The Commission finds as follows:

                        1. Berry Petroleum Company ("Berry"), 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. The below-listed lands are subject to this rule:

Township 5 South, Range 96 West, 6th P.M.

Section 19: Lot 1 (N½ NW¼)

Section 33: S½ N½ and the West 32 rods of the NW¼ NW¼

Township 6 South, Range 97 West, 6th P.M.

Sections 1 and 2: N½

Section 34: W½

                        5. On July 12, 2004, the Commission issued Order No. 510-11, which among other things, allowed optional drilling of wells for the production of gas and associated hydrocarbons from the Williams Fork Formation, the equivalent of one (1) well per 10 acres with the permitted wells to be located anywhere within the application lands but no closer than 100 feet from the boundaries of the lease line without exception being granted by the Director, except that with respect to lease lines abutting or cornering lands for which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the lease line so abutting or cornering such lands:

Township 6 South, Range 96 West, 6th P.M.

Section 5: W½ SE¼

                        6. On March 22, 2005, the Commission issued Order No. 510-13, which among other things, allowed optional drilling of wells for the production of gas and associated hydrocarbons from the Williams Fork Formation, the equivalent of one (1) well per 10 acres, with the permitted wells to be located anywhere within the application lands but no closer than 100 feet from the boundary of any lease line without exception being granted by the Director, except that with respect to lease lines abutting or cornering lands for which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, the well shall be located downhole no closer than 200 feet from the lease line so abutting or cornering such lands, and no more than four (4) Williams Fork wells should be drilled downhole per governmental quarter quarter section:

Township 5 South, Range 96 West, 6th P.M.

Section 36: SW¼

                        7. On June 26, 2006, Berry Petroleum Company, by its attorney, filed with the Commission a verified application for an order to establish various drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation for the below-listed lands and to allow the equivalent of one (1) well per 10 acres, with the permitted well to be located no closer than one hundred (100) feet from the unit boundary. That as to all future Williams Fork wells to be drilled upon the application lands, each well may be located anywhere downhole in the established drilling and spacing unit but no closer than one hundred (100) feet from the boundaries of the unit or any lease line, without exception being granted by the Director, except that with respect to units or lease lines abutting or cornering lands for which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, the well shall be located downhole no closer than two hundred (200) feet from the boundary of the drilling unit or lease line so abutting or cornering such lands, and no more than four (4) Williams Fork Formation wells should be drilled downhole per governmental quarter quarter section. In addition, wells to be drilled under this application will 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.

Township 5 South, Range 96 West, 6th P.M.

Section 19: Lot 1 (N½ NW¼), containing 51.29 acres

Section 33: S½ N½ and the West 32 rods of the NW¼ NW¼, containing 176 acres, more or less

Section 36: SW¼, containing 160 acres more or less

 

Township 6 South, Range 96 West, 6th P.M.

Section 5: W½ SE¼, containing 80 acres more or less

 

Township 6 South, Range 97 West, 6th P.M.

Section 1: N½, containing approximately 553 acres more or less

Section 2: N½, containing approximately 551 acres more or less

Section 34: W½, containing approximately 108 acres, more or less

                        8. Testimony and exhibits presented at the administrative hearing showed that the application lands will fill in surrounding areas where previous orders were issued allowing 10-acre density for production from the Williams Fork Formation.

                        9. Testimony and exhibits presented at the administrative hearing showed that Chevron and the Bureau of Land Management are the two (2) mineral owners in the application lands and that there are five (5) surface owners in the application lands.

                        10. Testimony and exhibits presented at the administrative hearing showed that Berry, Petroleum Development Corporation and Williams Production have the leasehold in the application lands. Additional testimony showed that Petroleum Development Corporation and Williams Production are in agreement with the application, and that Sections 5 and 36 of the application lands are currently spaced and only 10-acre density is being requested for these lands in the application.

                        11. Testimony and exhibits presented at the administrative hearing showed that the Williams Fork Formation is continuous throughout the application lands, and that the Williams Fork Formation is composed of lenticular fluvial sandstones with interbedded siltstone and shale.

                        12. Testimony and exhibits presented at the administrative hearing showed that the net Williams Fork Formation sand thickens to the north, that the average porosity is five (5) percent, and that the sands are not continuous between wells even though they appear to be similar.

                        13. Testimony and exhibits presented at the administrative hearing showed that the application area is continuous and consistent with the surrounding 10-acre density areas, and that it is necessary to develop the Williams Fork Formation on 10-acre density to ensure that a majority of the reservoir sands are penetrated resulting in a much higher recovery factor.

                        14. Testimony and exhibits presented at the administrative hearing showed that the original gas in place on a 10-acre basis is 2.13 BCF and that sixty-eight (68) percent of the gas in place will be recovered on 10-acre density.

                        15. Testimony and exhibits presented at the administrative hearing showed the average initial production is 1.5 MMCF per well with an average estimated ultimate recovery of 1.453 BCF.

                        16. The above-referenced testimony and exhibits show that the proposed drilling and spacing units and well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

                        17. Berry Petroleum Company agreed to be bound by oral order of the Commission.

                        18. 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 various drilling and spacing units for certain lands in Townships 5 and 6 South, Ranges 96 and 97 West, 6th P.M, and to allow the equivalent of one (1) well per 10 acres, with the permitted well to be located no closer than 100 feet from the unit boundary.

ORDER

                                         NOW, THEREFORE, IT IS ORDERED, that the drilling and spacing units described below are hereby established for the production of gas and associated hydrocarbons from the Williams Fork Formation, and the equivalent of one (1) well per 10 acres is hereby allowed:  

Township 5 South, Range 96 West, 6th P.M.

Section 19: Lot 1 (N½ NW¼), containing 51.29 acres

Section 33: S½ N½ and the West 32 rods of the NW¼ NW¼, containing 176 acres, more or less

Section 36: SW¼, containing 160 acres more or less

 

Township 6 South, Range 96 West, 6th P.M.

Section 5: W½ SE¼, containing 80 acres more or less

 

Township 6 South, Range 97 West, 6th P.M.

Section 1: N½, containing approximately 553 acres more or less

Section 2: N½, containing approximately 551 acres more or less

Section 34: W½, containing approximately 108 acres, more or less

                        IT IS FURTHER ORDERED, that as to all future Williams Fork Formation wells to be drilled upon the application lands, each well shall be located anywhere downhole in the established drilling and spacing unit but no closer than one hundred (100) feet from the boundaries of the unit or any lease line, without exception being granted by the Director, except that with respect to units or lease lines abutting or cornering lands for which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, the well shall be located downhole no closer than two hundred (200) feet from the boundary of the drilling unit or lease line so abutting or cornering such lands.

                        IT IS FURTHER ORDERED, that no more than four (4) Williams Fork Formation wells shall be drilled downhole per governmental quarter quarter section. In addition, wells 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.

                        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 25TH day of August, 2006, as of August 16, 2006.

 

CORRECTED this_________day of July, 2007, as of August 16, 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

July 6, 2007