BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE APPLICATION OF CAERUS PICEANCE LLC FOR AN ORDER TO ESTABLISH AN APPROXIMATE 76.9-ACRE DRILLING AND SPACING UNIT LOCATED IN SECTION 24, TOWNSHIP 7 SOUTH, RANGE 96 WEST, 6TH P.M., FOR THE WILLIAMS FORK AND ILES FORMATIONS, GRAND VALLEY FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 510
DOCKET NO. 1310-SP-1203
ORDER NO. 510-64
CORRECTED |
REPORT OF THE COMMISSION
The Commission heard this matter on October 28, 2013, at the Limon Community Center, 477 D Avenue, Limon, Colorado, upon application for an order to establish an approximate 76.9-acre drilling and spacing unit for Section 24, Township 7 South, Range 96 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations.
FINDINGS
The Commission finds as follows:
1. Caerus Piceance LLC (“Caerus” 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 July 1, 1997, the Commission entered Order Nos. 139-31 and 440-18 which, among other things, approved 40-acre density for wells drilled to the Williams Fork Formation of the Mesaverde Group, with the productive interval of the wellbore to be located no closer than 400 feet from the unit boundaries and no closer than 800 feet from the productive interval of any other wellbore located in the unit. Section 24, Township 7 South, Range 96 West, 6th P.M. is subject to these Orders for the Williams Fork and Iles Formations.
5. On June 17, 2013, the Commission entered Order No. 139-116 which established an approximate 563.1-acre drilling and spacing unit and approved 10-acre bottomhole density for production of oil, gas and associated hydrocarbons from the Williams Fork Formation. That portion of Section 24, Township 7 South, Range 96 West, 6th P.M. which is located south of the Colorado River is subject to this Order for the Williams Fork Formation.
6. On August 29, 2013, Caerus, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to establish an approximate 76.9-acre drilling and spacing unit for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations, and to approve the equivalent of one well per 10-acres where each permitted well may be located downhole anywhere within the unit, provided that no such wells shall be located downhole any closer than 100 feet from the boundary 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 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 or Iles Formation wells has not been ordered by the Commission, without exception being granted by the Director:
Township 7 South, Range 96 West, 6th P.M.
Section 24: Lots 2, 3 & 4 (North of the center line of the Colorado River)
7. On October 15, 2013, Caerus, 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. Land testimony and exhibits submitted in support of the Application by N. Arthur Bollen, Land Manager for Caerus, showed that Caerus holds oil and gas leasehold interests in the Williams Fork and Iles Formations within the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Stephen Sunnenberg, Geologist for Caerus, included an analysis of cross-sections from Williams Fork and Iles Formations wells located in the vicinity of the Application Lands showing the hydrocarbons are deposited within a series of highly discontinuous sand bodies, with a mean sand width identified at 526 feet, supporting the request for 10-acre density.
10. Engineering testimony and exhibits submitted in support of the Application by Jeffery S. Baldauf, Production and Reservoir Engineer for Caerus, showed that the estimated drainage areas for analogue wells to Williams Fork Formation are not greater than 10-acres. Testimony further showed an estimated ultimate recovery (“EUR”) of 1.34 BCF of gas per vertical well. Additional testimony concluded that granting the proposed order will prevent waste by ensuring the pool as a whole may be efficiently and economically developed.
11. 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.
12. Caerus 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 establish an approximate 76.9-acre drilling and spacing unit for Section 24, Township 7 South, Range 96 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 76.9-acre drilling and spacing unit for the below-described lands, is hereby established, for the production of oil, gas and associated hydrocarbons from the Williams Fork and Iles Formations, and the equivalent of one well per 10-acres, is hereby approved, where each permitted well may be located downhole anywhere within the unit, provided that no such wells shall be located downhole any closer than 100 feet from the boundary 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 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 or Iles Formation wells has not been ordered by the Commission, without exception being granted by the Director:
Township 7 South, Range 96 West, 6th P.M.
Section 24: Lots 2, 3 & 4 (North of the center line of the Colorado River)
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. 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.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 8th day of November, 2013, as of October 28, 2013.
CORRECTED this 9th day of January, 2014, as of October 28, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary