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 PARACHUTE AND RULISON                             )                    ORDER NO. 510-31

FIELDS, GARFIELD COUNTY, COLORADO                                           )

report of the commission

                        This cause came on for hearing before the Commission at 9:00 a.m. on January 8, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres, for certain lands in Township 6 South, Ranges 95 through 96 West, 6th P.M., for production from the Williams Fork and Iles Formations (including the Sego member of the Iles Formation).

FINDINGS

                        The Commission finds as follows:

                        1. Williams Production RMT Company ("Williams"), 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. Certain lands in Township 6 South, Ranges 95 and 96 West, 6th P.M. are subject to this Rule.

                        5. On November 20, 2006, Williams Production RMT Company, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres to be drilled in the below-described lands for production from the Williams Fork and Iles Formations (including the Sego member of the Iles Formation):

Township 6 South, Range 95 West, 6th P.M.

Section 11:

Those portions of the S½ as the same is embraced and bounded by the Sheridan Placer Nos. 16-20 placer mining claims.

Section 12:

Those portions of the W½ SW¼ as the same is embraced and bounded by the Sheridan Placer No. 20 placer mining claim.

Section 13:

Those portions of the W½ W½ as the same is embraced and bounded by the Sheridan Placer No. 20 and La Paz No. 2 placer mining claims.

Section 14:

All as the same is embraced and bounded by the Sheridan Placer Nos. 16-20 and La Paz Nos. 2, 3, and 6 placer mining claims.

Section 15:

Those portions of the E½ and E½ W½ as the same is embraced and bounded by the Sheridan Placer Nos. 14, 15, 16 and La Paz Nos. 5 and 6 placer mining claims.

Section 22:

Those portions of the E½ as the same is embraced and bounded by the La Paz Nos. 4 and 6 placer mining claims.

Section 23:

Those portions of the N½ and W½ SW¼ as the same is embraced and bounded by the La Paz Nos. 2-4 and 6 placer mining claims.

Section 24:

Those portions of the NW¼ NW¼ as the same is embraced and bounded by the La Paz No. 2 placer mining claim.

   

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

Section 11:

All

Section 12:

All

Section 13:

N½ N½

Section 14:

Section 15:

E½ E½

Section 24:

                        All future Williams Fork Formation wells on the application lands should be located downhole anywhere upon such lands but no closer than 100 feet from the outside boundary of the drilling and spacing unit unless such unit abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density downhole drilling for the Williams Fork Formation, in which event the Williams Fork Formation wells to be drilled upon the application lands should be drilled downhole no closer than 200 feet from the portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for the Williams Fork Formation wells has not been ordered by the Commission.

                        All future Iles Formation wells on the application lands should be located downhole anywhere upon such lands but no closer than 100 feet from the boundaries of the unit unless such unit abuts or corners lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Iles Formation wells, in which event Iles Formation wells to be drilled upon the application lands should be drilled downhole no closer than 400 feet from the portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for the Iles Formation wells has not been ordered by the Commission. It is further understood that Iles Formation wells may be drilled only in conjunction with the drilling of Williams Fork Formation wells.

                        That all wells to be drilled under the verified 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 Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

                        6. On December 22, 2006, Williams, by its attorney, 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.

                        7. Testimony and exhibits submitted in support of the application showed the following:

(a) The geologic model of the Williams Fork Formation in the major producing areas of the Piceance Basin is well understood and consists of extensive log, completion, and reservoir engineering data from wells inside current 10-acre density areas and the extremely useful and representative nearby outcrops of producing rocks. Based upon outcrop studies, the majority of the discontinuous sand bodies within the Williams Fork Formation are smaller than the distance between wells drilled on a 10 acre density basis. Therefore, 10-acre density drilling is necessary to develop the Williams Fork Formation underlying the application lands.

(b) Pressure measurements taken within Williams’ two pilot areas confirm the geologic model.

(c) Production data taken from wells in the area during different time frames also confirm the geologic model.

(d) Gas in place calculations indicate that 10-acre density drilling is necessary to maximize production of the resource.

                        8. Testimony and exhibits presented in support of the application show that the proposed increased density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

                        9. No protests to the application have been filed with the Commission or the applicant.

                        10. Williams Production RMT Company 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 based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to allow the equivalent of one well per 10-acres for the Williams Fork Formation and Iles Formation (including the Sego member of the Iles Formation), with each permitted well to be located no closer downhole than 100 feet from the boundary of the application lands for the Williams Fork Formation and no closer downhole than 400 feet from the boundary of the application lands for the Iles Formation (including the Sego member of the Iles Formation).

ORDER

                        NOW, THEREFORE IT IS ORDERED, that 10-acre density is hereby approved for wells to be drilled on the below-listed lands, for production of gas and associated hydrocarbons from the Williams Fork and Iles Formation (including the Sego member of the Iles Formations):

                                                            Township 6 South, Range 95 West, 6th P.M.

Section 11: Those portions of the S½ as the same is embraced and bounded by the Sheridan  Placer Nos. 16-20 placer mining claims.

Section 12: Those portions of the W½ SW¼ as the same is embraced and bounded by the Sheridan Placer No. 20 placer mining claim.

 

Section 13: Those portions of the W½ W½ as the same is embraced and bounded by the Sheridan Placer No. 20 and La Paz No. 2 placer mining claims.

 

Section 14: All as the same is embraced and bounded by the Sheridan Placer Nos. 16-20 and La Paz Nos. 2, 3, and 6 placer mining claims.

 

Section 15: Those portions of the E½ and E½ W½ as the same is embraced and bounded by the Sheridan Placer Nos. 14, 15, 16 and La Paz Nos. 5 and 6 placer mining claims.

 

Section 22: Those portions of the E½ as the same is embraced and bounded by the La Paz Nos. 4 and 6 placer mining claims.

 

Section 23: Those portions of the N½ and W½ SW¼ as the same is embraced and bounded by the La Paz Nos. 2-4 and 6 placer mining claims.

 

Section 24: Those portions of the NW¼ NW¼ as the same is embraced and bounded by the La Paz No. 2 placer mining claim.

 

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

Section 11: All

Section 12: All

Section 13: N½ N½

Section 14: N½

Section 15: E½ E½

Section 24: W½

                        IT IS FURTHER ORDERED, that for the Williams Fork Formation wells, the permitted well shall be located downhole no closer than one hundred (100) feet from the outside boundary of the application lands, unless such boundary abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, in which event the Williams Fork Formation wells to be drilled on the application lands shall be drilled downhole no closer than two hundred (200) feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.

                        IT IS FURTHER ORDERED, that for the Iles Formation (including the Sego Member of the Iles Formation) wells, the permitted wells shall be located no closer than four hundred (400) feet from the outside boundary of the application lands, and that Iles Formation wells shall be drilled only in conjunction with the drilling of Williams Fork Formation wells.

                        IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be 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 Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

                        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 filing for judicial review.

                        ENTERED this__________day of January, 2007, as of January 8, 2007.

                                                        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

January 18, 2007