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. 510-41
GARFIELD COUNTY, COLORADO )
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on March 31, 2008, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres to be drilled into and produced from the Williams Fork Formation of the Mesaverde Group, for certain lands in Township 6 South, Range 97 West, 6th P.M.
FINDINGS
The Commission finds as follows:
1. Oxy USA WTP LP (“Oxy”), 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 Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located 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. Certain lands in Townships 6 and 7 South, Range 97 West, 6th P.M. are subject to this rule.
5. On January 14, 2008, Oxy, by its attorney, filed with the Commission a verified application to allow the equivalent of one well per 10 acres to be drilled into and produced from the Williams Fork Formation of the Mesaverde Group, for the below-listed lands:
Township 6 South Range 97 West, 6th P.M.
Section 19: E½ W½ NW¼
Township 7 South Range 97 West, 6th P.M.
Section 8: The E½ of Tract 39 and 1.26 acres out of the NW corner of Tract 39
Section 17: Tract 89
Section 18: Tracts 89 and 91
Section 21: Lots 112B and 112C
Section 22: Tract 112B
Section 26: Tracts 121C and 121B
6. On March 26, 2008, the Bureau of Land Management filed with the Commission a protest to the application. On April 3, 2008, Oxy filed with the Commission a request to continue the matter and the hearing was continued to May. On April 21, 2008, a prehearing conference was held with the parties, at which time Oxy withdrew all of the application lands in Township 7 South, Range 97 West, 6th P.M., leaving only the lands in Section 19, Township 6 South, Range 97 West, 6th P.M. subject to the application.
7. On March 18, 2008, Oxy, 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.
8. Testimony and exhibits submitted in support of the application showed that the application lands are contiguous to the lands previously approved for 10-acre density.
9. Testimony and exhibits submitted in support of the application showed that 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. Additional testimony indicated that 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. Further testimony indicated that 10-acre density drilling is necessary to develop the Williams Fork Formation underlying the application lands.
10. Testimony and exhibits submitted in support of the application indicated that gas-in-place calculations for 10-acre well density shows a recovery factor of 72.5% versus a recovery factor of 36.2% for 20-acre well density.
11. The above-referenced testimony and exhibits show that the proposed increased 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.
12. Oxy USA WTP LP agreed to be bound by oral order of the Commission.
13. Based on the facts stated in the verified amended 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 to be drilled into and produced from the Williams Fork Formation of the Mesaverde Group, for certain lands in Section 19, Township 6 South, Range 97 West, 6th P.M.
ORDER
NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres is hereby approved to be drilled into and produced from the Williams Fork Formation of the Mesaverde Group, for the E½ W½ NW¼ of Section 19, Township 6 South Range 97 West, 6th P.M.
IT IS FURTHER ORDERED, that all future Williams Fork Formation wells drilled upon such lands shall be located downhole anywhere but no closer than 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 upon the application lands shall be drilled downhole no closer than 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 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 pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of 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 the filing for judicial review.
ENTERED this__________day of May, 2008, as of May 8, 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
May 30, 2008