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 KOKOPELLI FIELD, GARFIELD COUNTY, COLORADO |
) ) ) ) |
CAUSE NO. 513
ORDER NO. 513-7 CORRECTED |
This cause came on for hearing before the Commission at 9:00 a.m. on August 12, 2010, in the Adams County Economic Development Offices, 12050 N. Pecos St., Suite 200, Westminster, Colorado, for an order establishing 10-acre well density for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations on certain lands in Township 6 South, Range 91 West, 6th P.M.
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. The following lands are subject to this Rule for the Williams Fork and Iles Formations:
Township 6 South, Range 91 West, 6th P.M.
Section 4: SE¼ SW¼
Section 7: NE¼, N½ SE¼
Section 9: W½ E½
Section 15: SW¼ SW¼
5. On December 19, 1994 (corrected February 17, 1995), the Commission issued Order No. 513-1, which among other things, established lay-down (i.e., N½ and S½) 320-acre drilling and spacing units for production from the Williams Fork Formation of the Mesaverde Group from certain lands including the following:
Township 6 South, Range 91 West, 6th P.M.
Section 8: All
6. On January 13, 2009, the Commission issued Order No. 513-5, which among other things, established 320-acre drilling and spacing units for production of gas and associated hydrocarbons from the Iles Formation from certain lands including the following:
Township 6 South, Range 91 West, 6th P.M.
Section 8: All
7. On July 15, 2008, the Commission issued Order No. 513-4, which among other things, approved the equivalent of one well per 10 acres well density for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations from certain lands including the following:
Township 6 South, Range 91 West, 6th P.M.
Section 7: S½ SE¼, SE¼ SW¼
Section 8: S½, E½ NE¼
7. On May 19, 2010, Williams, by its attorney, filed with the Commission a verified application to:
(a) Establish an approximate 320-acre drilling and spacing unit for the below-listed lands, and approve the equivalent of one well per 10 acres well density for said lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 6 South, Range 91 West, 6th P.M.
|
Section 7: |
E½ |
(b) Confirm the establishment of an approximate 320-acre drilling and spacing unit for the N½ of Section 8, Township 6 South, Range 91 West, 6th P.M., and approve the equivalent of one well per 10 acres well density for the following lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 6 South, Range 91 West, 6th P.M.
|
Section 8: |
NW¼, W½ NE¼ |
(c) Approve of the equivalent of one well per 10 acres well density for the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 6 South, Range 91 West, 6th P.M.
|
Section 4: |
SE¼ SW¼ |
|
Section 9: |
W½ E½ |
|
Section 15: |
SW¼ SW¼ |
All future Williams Fork Formation and IIes Formation wells to be drilled under this application should be located downhole anywhere within the application lands but no closer than 100 feet from the boundaries of the unit or any lease line without exception being granted by the Director of the Commission. In cases where the application lands abut or corner 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 and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundaries of the unit or any lease line so abutting or cornering such lands without exception being granted by the Director of the Commission.
That, except as previously authorized by order of the Commission, wells to be drilled under this order should 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). In addition, all wells drilled to the Iles Formation will be drilled only in conjunction with the drilling of Williams Fork Formation wells.
8. On June 14, 2010, Richard and Mary Jolley Family LLLP, by its attorney, filed a protest alleging violation of its correlative rights.
9. On July 6, 2010, Williams, by its attorney, filed an amended application removing its request to establish a 320-acre drilling and spacing for the following lands:
Township 6 South, Range 91 West, 6th P.M.
Section 7: E½
10. The amended application requested approval of the equivalent of one well per 10 acres well density for the following lands:
Township 6 South, Range 91 West, 6th P.M.
Section 7: NE¼, N½ SE¼
11. The “Application Lands” are the following:
Township 6 South, Range 91 West, 6th P.M.
Section 4: SE¼ SW¼
Section 7: NE¼, N½ SE¼
Section 8: NW¼, W½ NE¼
Section 9: W½ E½
Section 15: SW¼ SW¼
12. On July 9, 2010, Richard and Mary Jolley Family LLP, by its attorney, filed a withdrawal of its protest.
13. On July 23, 2010, Colorado Department of Public Health and Environment (“CDPHE”) submitted a letter describing its decision to recommend approval of the application and believes that granting an approval of this proposed drilling and spacing unit will result in appropriate protection of the public health, safety, welfare and environment. It should be noted, however that CDPHE reserves the right to consult on any future variance requests from rules this agency may consult on (pursuant to COGCC Rule 306) within these locations.
14. On July 30, 2010, Williams, by its attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits as is provided for by Rule 511. Sworn written testimony and exhibits were submitted in support of the application.
15. Land testimony indicated that by previous orders of the Commission ten-acre density drilling for the Williams Fork and Iles Formations has been approved for lands adjacent to the Application Lands.
16. Geological testimony indicated that the Williams Fork Formation is comprised of sandstones, shales and coal deposited in a coastal-plain setting. The productive sandstones are laterally discontinuous, are naturally fractured, have microdarcy permeability and average between 6% and 10% porosity. Many of the sands of the Williams Fork Formation are ostensibly not correlative from well to well. Outcrop studies and reservoir engineering analyses from well data, show, however, that the sands of the Williams Fork Formation are discontinuous and do not correlate when examined on spacing equivalent to 10-acre density. The nature of the depositional environment and rock properties of the sandstones of the Williams Fork Formation justifies 10-acre well density. The Iles Formation consists of shoreline-related marine mudstones and low-permeability sandstones of the Rollins, Cozzette and Corcoran members. Cross sections across the Iles Formation show that, although the Rollins, Cozette and Corcoran sands appear to correlate, porous zones within these sands are discontinuous from well to well.
17. Engineering testimony indicated that 10-acre density wells will produce substantial incremental gas reserves from the Williams Fork Formation and have little or no pressure depletion if correctly oriented. Average recovery factors based on 40-acre to 20-acre to 10-acre density increase from 18% to 37% to 73%, respectively. Limiting well density to 20-acres would leave over 60% of the gas-in-place in the reservoir. Flow test results from the Iles Formation have shown variability performance. Estimated Iles Formation drainage areas range from 2.4 to 5.1 acres, depending upon the assumed recovery factor. The incremental cost to drill and complete the Iles Formation in a commingled William Fork wellbore is the most economic and efficient development scenario.
18. 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 gas, and will not violate correlative rights.
19. Williams agreed to be bound by oral order of the Commission.
20. Based on the facts stated in the verified application, having received one protest which was withdrawn, and based on the Hearing Officer review of the application under Rule 511., the Commission should enter an order to allow the equivalent of one well per 10 acres well density for certain lands in Township 6 South, Range 91 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.
ORDER
NOW, THEREFORE IT IS ORDERED, that the equivalent of one well per 10 acres well density is hereby allowed for the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:
Township 6 South, Range 91 West, 6th P.M.
Section 4: SE¼ SW¼
Section 7: NE¼, N½ SE¼
Section 8: NW¼, W½ NE¼
Section 9: W½ E½
Section 15: SW¼ SW¼
IT IS FURTHER ORDERED, that all future Williams Fork Formation and IIes Formation wells to be drilled under this application should be located downhole anywhere within the application lands but no closer than 100 feet from the boundaries of the unit (N½ of Section 8) or any lease line without exception being granted by the Director of the Oil and Gas Conservation Commission. In cases where the application lands abut or corner 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 and Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundaries of the unit or any lease line 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 order should 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). In addition, all wells drilled to the Iles Formation will be drilled only in conjunction with the drilling of Williams Fork Formation wells.
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 8th day of September, 2010, as of August 12, 2010.
CORRECTED this ______ day of October, 2010, as of August 12, 2010.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Carol Harmon, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
October 7, 2010