BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE APPLICATION OF CAERUS PICEANCE LLC FOR AN ORDER TO ESTABLISH AN APPROXIMATE 80-ACRE DRILLING AND SPACING UNIT LOCATED IN SECTION 14, TOWNSHIP 7 SOUTH, RANGE 96 WEST, 6TH P.M. AND ESTABLISH DENSITY AND SETBACK RULES FOR THE WILLIAMS FORK AND ILES FORMATIONS, GRAND VALLEY FIELD, GARFIELD COUNTY, COLORADO

)

)

)

)

)

)

)

)

CAUSE NO. 510

 

DOCKET NO. 1309-SP-1152

 

ORDER NO. 510-66

 

CORRECTED

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on September 16, 2013, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 80-acre drilling and spacing unit for Section 14, 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 May 16, 1994, the Commission entered Order No. 510-1 which, among other things, authorized wells to be drilled to the Williams Fork Formation of the Mesaverde Group 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 or wells.  Section 14, Township 7 South, Range 96 West, 6th P.M. is subject to this Order for the Williams Fork and Iles Formations.

 

5.         On July 18, 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 80-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, 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 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 14:      E½ SE¼

 

Applicant stated the Nolte 14-43D Well (API No. 05-045-07469) was drilled in the NE¼ SE¼ of Section 14, and the Nolte 14-44 Well (API No 05-045-07482) was drilled in the SE¼ SE¼ of Section 14.  Consistent with the relief requested herein, the Nolte 14-43D Well and the Nolte 14-44 Well will continue to pay to the owners in each quarter quarter section in the same manner they had been paid prior to the effective date of this Order.  

 

Applicant requested that the Commission take administrative notice of Order Nos. 510-58 and 510-54 which granted similar well density and setbacks for wells drilled to the Williams Fork and Iles Formations in the adjacent SW¼ of Section 13 and the NE¼ of Section 35, both in Township 7 South, Range 96 West, 6th P.M. 

 

Applicant stated that all wells will be drilled from no more than two multi-well pads located within the unit, with no more than one per quarter quarter section, without exception being granted by the Director.

 

6.         On September 3, 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.

 

7.         Land testimony and exhibits submitted in support of the Application by N. Arthur Boland, Land Manager for Caerus, showed that Caerus holds oil and gas leasehold interests in the Williams Fork and Iles Formations in the Application Lands.

 

8.         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 that such formations are present throughout the Application Lands.  Testimony concluded the Williams Fork Formation consists of sand bodies which are highly discontinuous in nature, with a mean sand width identified at 526 feet.

 

9.         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.  Additional testimony concluded that granting the proposed order will prevent waste by ensuring the pool as a whole may be efficiently and economically developed.

 

10.       The Commission takes administrative notice of Order Nos. 510-58 and 510-54 which granted similar well density and setbacks for wells drilled to the Williams Fork and Iles Formations in the adjacent SW¼ of Section 13 and the NE¼ of Section 35, both in Township 7 South, Range 96 West, 6th P.M. 

 

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 80-acre drilling and spacing unit for Section 14, 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 80-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, with 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 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 14:      E½ SE¼

 

IT IS FURTHER ORDERED:

 

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  11th  day of October, 2013, as of September 16, 2013.     

CORRECTED this   8th   day of October, 2014, as of September 16, 2013.

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary