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 MAMM CREEK ) ORDER NO. 510-40
FIELD, GARFIELD COUNTY, COLORADO )
REPORT OF THE COMMISISON
This cause came on for hearing before the Commission at 9:00 a.m. on January 15, 2008, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to vacate the 320-acre drilling and spacing units established in Order No. 510-18 and establish certain lands in Sections 5 and 6, Township 6 South, Range 96 West, 6th P.M. as various drilling and spacing units for the production of gas and associated hydrocarbons for the Williams Fork Formation.
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. On February 8, 2006, the Commission issued Order No. 510-18, which among other things, established 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Williams Fork Formation for certain lands in Townships 5 South and 6 South, Range 96 and 97 West, 6th P.M., and allowed the number of wells which can be optionally drilled into and produced from the Williams Fork Formation the equivalent of one well per 10 acres. Wells shall be located anywhere downhole in the established 320-acre drilling and spacing unit but no closer than 100 feet from the boundaries of the unit or lease line, without exception being granted by the Director, except that with respect to units 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 of the drilling unit so abutting or cornering such lands, and no more than four (4) Williams Fork Formation wells shall be drilled downhole per governmental quarter quarter section. Wells shall be drilled, on average, if topographically feasible throughout the lands, 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.
5. On November 21, 2007, amended December 11, 2007, Berry, by its attorney, filed with the Commission a verified application, for an order to vacate the 320-acre drilling and spacing units established in Order No. 510-18 and establish the below-listed drilling and spacing units for the production of gas and associated hydrocarbons for the Williams Fork Formation:
Township 6 South, Range 96 West, 6th P.M.
Section 5: Lots 1-4 (containing approximately 137.53 acres)
Section 5: Lots 5-12 (containing approximately 337.63 acres)
Section 6: Lots 1-8 (containing approximately 239.35 acres)
Lots 9-16 (containing approximately 327.83 acres)
Lots 17 & 18 and SW¼, W½ SE¼ aka S½ (containing 327.77 acres) (a total of 894.95 acres more or less)
Wells will continue to be drilled in accordance with Order No. 510-18, for production of gas and associated hydrocarbons from the Williams Fork Formation.
6. On January 7, 2008, Berry, 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 that Sections 5 and 6, Township 6 South, Range 96 West, 6th P.M. are irregular sections, and that the proposed drilling and spacing units are configured to accommodate the irregular sized sections. Additional testimony and exhibits indicated that there are a total of five proposed drilling and spacing units consisting of various numbers of acres contained in the N½ of Section 5 and all of Section 6, Township 6 South, Range 96 West, 6th P.M. Further testimony and exhibits submitted in support of the application showed that Chevron USA owns 100% of the surface and minerals in the application lands and that Berry, Marathon Oil and Petroleum Development Corporation have leased all of these lands.
8. Testimony and exhibits submitted in support of the application indicated that the Williams Fork Formation is a fluvial sandstone with interbedded siltstones and shale, that it is continuous across the region although the sands are very discontinuous between wells, and that it ranges in thickness from 2,500 to 3,500 feet. Additional testimony and exhibits indicated that based on the geologic model for the Williams Fork Formation, 10-acre well density is necessary to ensure that a majority of the reservoir sands are penetrated resulting in a higher recovery factor.
9. Testimony and exhibits submitted in support of the application showed that the gas recovery factor increases from 17% to 68% when well density increases from 40 acres to 10 acres, with an estimated ultimate recovery of 1.45 BCF. Additional testimony indicated that at today’s costs and gas prices, the proposed 10-acre density wells are economic.
10. The above-referenced testimony and exhibits show that the proposed spacing will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
11. Berry Petroleum Company agreed to be bound by oral order of the Commission.
12. Based on the facts stated in the verified application, having received no protests, and based on the Hearing Officer review of the amended application under Rule 511.b., the Commission should enter an order to vacate the 320-acre drilling and spacing units established in Order No. 510-18 and establish certain lands in Sections 5 and 6, Township 6 South, Range 96 West, 6th P.M. as various drilling and spacing units for the production of gas and associated hydrocarbons for the Williams Fork Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that the below-described drilling and spacing units are hereby established for the production of gas and associated hydrocarbons for the Williams Fork Formation:
Township 6 South, Range 96 West, 6th P.M.
Section 5: Lots 1-4 (containing approximately 137.53 acres)
Section 5: Lots 5-12 (containing approximately 337.63 acres)
Section 6: Lots 1-8 (containing approximately 239.35 acres)
Lots 9-16 (containing approximately 327.83 acres)
Lots 17 & 18 and SW¼, W½ SE¼ aka S½ (containing 327.77 acres) (a total of 894.95 acres more or less)
IT IS FURTHER ORDERED, that wells shall be allowed to be drilled on the drilling and spacing units the equivalent of one well per 10 acres.
IT IS FURTHER ORDERED, that wells shall be located anywhere downhole in the established drilling and spacing unit but no closer than 100 feet from the boundaries of the unit or lease line, without exception being granted by the Director, except that with respect to units 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 of the drilling unit so abutting or cornering such lands, with no more than 4 Williams Fork Formation wells to be drilled downhole per governmental quarter quarter section.
IT IS FURTHER ORDERED, that wells shall be drilled, on average, if topographically feasible throughout the lands, 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.
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 January, 2008, as of January 15, 2008.
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 23, 2008