BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 513
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE KOKOPELLI AND TIMBERLINE ) ORDER NO. 513-5
FIELDS, GARFIELD COUNTY, COLORADO )
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 320-acre drilling and spacing units for Sections 8 and 17, Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.
FINDINGS
The Commission finds as follows:
1. Orion Energy Partners, L.P. (“Orion”), 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 8 and 17 of Township 6 South, Range 91 West, 6th P.M. are subject to this Rule for the Iles Formation.
5. On December 19, 1994, corrected February 17, 1995, the Commission issued Order No. 513-1, which among other things, established 320-acre drilling and spacing units for Sections 8 and 17, Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group.
6. On July 15, 2008, the Commission issued Order No. 513-4, which among other things, approved the equivalent of one well per 10 acres for certain lands including portions Section 8 and all of Section 17, Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
7. On November 25, 2008, Orion, by its attorneys, filed with the Commission a verified application for an order to establish 320-acre drilling and spacing units for Sections 8 and 17, Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.
8. On January 6, 2009, Orion, 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.
9. Testimony and exhibits submitted in support of the application showed that Orion is the majority leasehold owner of the application lands. Additional testimony indicated that this request for 320-acre drilling and spacing units for the Iles Formation underlying the application lands is made to conform the lands with those provisions of Order No. 513-1 which had previously established 320-acre drilling and spacing units for the Williams Fork Formation.
10. Testimony and exhibits submitted in support of the application showed that cross section analysis of the Iles Formation can be correlated to the application lands and that the reservoir characteristics, including gas filled effective porosity, does not necessarily correlate between wells. Additional testimony showed that to efficiently and economically develop the Iles Formation underlying the application lands it is necessary to commingle production with that of the Williams Fork Formation. Further testimony indicated that the estimated ultimate recovery for a stand-alone Iles Formation well underlying the application lands is 0.11 BCF, and that it is uneconomical to produce the Iles Formation independent of production associated with the Williams Fork Formation.
11. The above-referenced testimony and exhibits show that the proposed spacing will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
12. Orion Energy Partners, L.P. 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 320-acre drilling and spacing units for Sections 8 and 17, Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that 320-acre drilling and spacing units are hereby established for Sections 8 and 17, Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.
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 January, 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
January 26, 2009