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 ) ORDER NO. 510-47
FIELD, GARFIELD COUNTY, COLORADO ) CORRECTED
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 9:00 a.m. on January 13, 2009, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish 40-acre and 80-acre drilling and spacing units and allow one well per 10 acres, with the permitted well to be located no closer than 100 feet to the unit for certain lands in Sections 31 through 33, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork 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 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. Sections 31 through 33, Township 7 South, Range 96 West, 6th P.M. are subject to this Rule.
5. On May 16, 1994, the Commission issued Order No. 510-1, which among other things, established setbacks for the permitted wells to be no closer than 400 feet from the boundaries of any lease line and no closer than 800 feet from any existing Williams Fork Formation well for Sections 31 through 33, Township 7 South, Range 96 West, 6th P.M.
6. On November 20, 2008, Williams, by its attorneys, filed with the Commission a verified application to establish approximate 40-acre and 80-acre drilling and spacing units and allow the equivalent of one (1) well per 10 acres for the below-listed lands, for production of gas and hydrocarbons from the Williams Fork Formation:
Township 7 South, Range 96 West, 6th P.M.
Section 31: SE¼ SE¼ (approximately 40 acres)
Section 32: E½ NE¼ (approximately 80 acres)
Section 32: W½ NE¼ (approximately 80 acres)
Section 32: E½ SE¼ (approximately 80 acres)
Section 32: NW¼ SE¼ (approximately 40 acres)
Section 32: SW¼ SE¼ (approximately 40 acres)
Section 32: SE¼ NW¼ (approximately 40 acres)
Section 32: NE¼ SW¼ (approximately 40 acres)
Section 32: SE¼ SW¼ (approximately 40 acres)
Section 32: SW¼ SW¼ (approximately 40 acres)
Section 33: N½ NW¼ (approximately 80 acres)
Section 33: S½ NW¼ (approximately 80 acres)
Section 33: N½ SW¼ (aka NW¼ SW¼ and Lot 3) (approximately 80 acres)
Section 33: SW¼ SW¼ (aka part of Lot 9) (approximately 40 acres)
Section 33: N½ NE¼ (approximately 80 acres)
Section 33: S½ NE¼ (aka Lots 1 and 2) (approximately 80 acres)
The permitted Williams Fork Formation well on a given drilling and spacing unit should be located downhole anywhere within the unit but no closer than 100 feet from the boundary or boundaries of the unit provided, however, that in cases where a 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 Williams Fork Formation wells, the well should be located downhole within that unit, no closer than 200 feet from the boundary or boundaries of such drilling unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.
7. On January 2, 2009, Williams, by its attorneys, 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 Williams is the sole leasehold owner of the application lands, and that the application lands are adjacent to lands that have been approved for 10-acre well density for production from the Williams Fork Formation.
9. Testimony and exhibits submitted in support of the application showed that the Williams Fork Formation underlying the application lands is a member of the Mesaverde Group and is a common source of supply, and that is the productive sandstones found throughout the formation are laterally discontinuous, naturally fractured, and have microdarcy permeability with an average porosity between 6% and 10%. Additional testimony showed that due to the depositional environment and characteristics of the sandstones found in the Williams Fork Formation underlying the application lands, 10-acre well density is necessary to efficiently recover the reserves.
10. Testimony and exhibits submitted in support of the application showed that increasing density from 40-acre or 20-acre to 10-acre development, for the Williams Fork Formation underlying the application lands, increases recovery factors from 18% to 73% of the gas-in-place. Additional testimony indicated that, by not increasing well density, over 60% of the gas-in-place would be left in the ground and wasted. Further testimony showed that pressure testing in similarly situated wells confirm the geologic model, and, even with some pressure reduction, 10-acre density wells will produce substantial incremental gas reserves. Testimony indicated that approval of 10-acre density for the Williams Fork Formation underlying the application lands will increase the fracture stimulation effectiveness of the productive sands which can be compromised if differing pressured sands are encountered during well completions. Further testimony showed that approval of 10-acre density for lands under this application will allow for the ability to optimally place bottom hole locations that will in turn minimize well interference and maximize the ultimate recovery of gas-in-place.
11. 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.
12. Williams Production RMT Company agreed to be bound by oral order of the Commission.
13. 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 establish 40-acre and 80-acre drilling and spacing units for certain lands in Sections 31 through 33, Township 7 South, Range 96 West, 6th P.M., and allow the equivalent of one well per 10 acres to be drilled in said units, for the production of gas and associated hydrocarbons from the Williams Fork Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that approximate 40-acre and 80-acre drilling and spacing units are hereby established for the below-listed lands, with the equivalent of one well per 10 acres allowed to be drilled in said units, for the production of gas and associated hydrocarbons from the Williams Fork Formation:
Township 7 South, Range 96 West, 6th P.M.
Section 31: SE¼ SE¼ (approximately 40 acres)
Section 32: E½ NE¼ (approximately 80 acres)
Section 32: W½ NE¼ (approximately 80 acres)
Section 32: E½ SE¼ (approximately 80 acres)
Section 32: NW¼ SE¼ (approximately 40 acres)
Section 32: SW¼ SE¼ (approximately 40 acres)
Section 32: SE¼ NW¼ (approximately 40 acres)
Section 32: NE¼ SW¼ (approximately 40 acres)
Section 32: SE¼ SW¼ (approximately 40 acres)
Section 32: SW¼ SW¼ (approximately 40 acres)
Section 33: N½ NW¼ (approximately 80 acres)
Section 33: S½ NW¼ (approximately 80 acres)
Section 33: N½ SW¼ (aka NW¼ SW¼ and Lot 3) (approximately 80 acres)
Section 33: SW¼ SW¼ (aka part of Lot 9) (approximately 40 acres)
Section 33: N½ NE¼ (approximately 80 acres)
Section 33: S½ NE¼ (aka Lots 1 and 2) (approximately 80 acres)
IT IS FURTHER ORDERED, that all future Williams Fork Formation wells to be drilled upon the application lands shall be located downhole anywhere within the application lands but no closer than 100 feet from the boundary of boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where a 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 Williams Fork Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the unit so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation 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 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.
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 26th day of January, 2009, as of January 13, 2009.
CORRECTED this__________day of March, 2009, as of January 13, 2009.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert A. Willis, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
March 5, 2009