BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE GRAND VALLEY FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NOS. 440, 479, & 510 ORDER NOS. 440-66, 479-21 & 510-58 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 16, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to vacate Order No. 479-2 as to the below-listed lands and establish two approximate 160-acre drilling and spacing units for Section 13, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group.
FINDINGS
The Commission finds as follows:
1. WPX Energy Rocky Mountain, LLC (“WPX” or “Applicant”), 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 May 18, 1990, the Commission issued Order No. 479-2 (corrected November 1990), establishing, among other things, 320-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde Formation, authorizing one well to be drilled in each of the drilling and spacing units, and allowing for an additional well within said unit, with the permitted well to be located on the established unit no closer than 600 feet from the boundaries of said unit and no closer than 1,200 feet from any well producing or producible from the same formation. Section 13, Township 7 South, Range 96 West, 6th P.M. is subject to this Order.
5. On February 9, 2012, WPX, by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Application”) (amended on February 29, 2012) for an order to: 1) vacate Order No. 479-2 as to the below-described lands (“Application Lands”); and 2) establish two approximate 160-acre drilling and spacing units for the Application Lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group, to allow the equivalent of one well per 10 acres where each permitted well may be located downhole anywhere within the units, provided that no such wells shall be located downhole any closer than 100 feet from the boundaries of the unit 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 Williams Fork or Iles Formation wells, in which event Williams Fork or Iles Formation wells to be drilled upon the given drilling and spacing unit shall be located downhole no closer than 200 feet from the portion of the unit boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork and Iles Formation wells has not been ordered by the Commission:
Township 7 South, Range 96 West, 6th P.M.
Section 13: NW¼
Township 7 South, Range 96 West, 6th P.M.
Section 13: SW¼
6. On April 3, 2012, WPX, 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.
7. Land Testimony and exhibits submitted in support of the Application by Annette Apperson, Staff Landman for WPX, showed WPX is a leasehold owner in the application lands. Further testimony and exhibits submitted indicated that lands in the vicinity of the application lands have been approved for 10-acre well density for the Williams Fork.
8. Geologic Testimony and exhibits submitted in support of the Application by Susan D. Anderson, Piceance Valley Geologist for WPX, showed the geologic model for the Williams Fork Formation in the Piceance Basin is well understood, consisting of extensive cross-sectional analysis, production and reservoir data from nearby wells drilled at a 10-acre density. Testimony showed that due to the nature of the depositional environment and the reservoir properties of the Williams Fork Formation underlying the application lands, 10-acre well density is justified and the most efficient and economical way to develop the resources without affecting correlative rights.
9. Engineering Testimony and exhibits submitted in support of the Application by Chris Caplis, Petroleum Engineer for WPX, demonstrated that pressure testing of the 10-acre density type wells completed in the Williams Fork Formation showed limited or no communication between the wells and that decline curve analysis is consistent with that same premise. Additional testimony showed that gas-in-place calculations for 10-acre density wells in the Williams Fork Formation support an estimated ultimate recovery of 19 billion cubic feet of natural gas with a 73% recovery factor of original gas-in-place. Testimony concluded that incremental additional recovery of approximately 30% is expected from the Williams Fork Formation underlying the application lands when well density is increased from 20-acre to 10-acre spacing.
10. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.
11. The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d. In a letter dated April 3, 2012, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the Application.
12. WPX 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., the Commission should enter an order to vacate Order No. 479-2 as to the below-listed lands and establish two approximate 160-acre drilling and spacing units for Section 13, Township 7 South, Range 96 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group.
ORDER
NOW, THEREFORE IT IS ORDERED, that Order No. 479-2 is hereby vacated as to the below-described lands:
Township 7 South, Range 96 West, 6th P.M.
Section 13: NW¼
Township 7 South, Range 96 West, 6th P.M.
Section 13: SW¼
IT IS FURTHER ORDERED, that two approximate 160-acre drilling and spacing units are hereby established for the below-described lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations of the Mesaverde Group, and the equivalent of one well per 10 acres is hereby approved where each permitted well may be located downhole anywhere within the units, provided that no such well shall be located downhole any closer than 100 feet from the boundaries of the unit 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 Williams Fork or Iles Formation wells, in which event Williams Fork or Iles Formation wells to be drilled upon the given drilling and spacing unit shall be located downhole no closer than 200 feet from the portion of the unit boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork and Iles Formation wells has not been ordered by the Commission:
Township 7 South, Range 96 West, 6th P.M.
Section 13: NW¼
Township 7 South, Range 96 West, 6th P.M.
Section 13: SW¼
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.
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 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 18th day of April, 2012, as of April 16, 2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Peter J. Gowen, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
April 18, 2012