BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ) CAUSE NO. 527
ESTABLISHMENT OF FIELD RULES TO GOVERN )
OPERATIONS IN THE SULFUR CREEK FIELD, ) ORDER NO. 527-1
RIO BLANCO COUNTY, COLORADO )
) SECOND CORRECTED
This cause came on for hearing before the Commission at 8:30 a.m. on March 20, 2006, Ramada Inn, 124 West 6th Street, Glenwood Springs, Colorado, for an order to allow wells to be optionally drilled on ten (10) acre density for production from the Williams Fork Formation of the Mesaverde Group for certain lands in Townships 2 and 3 South, Ranges 97 and 98 West, 6th P.M., with the permitted well to be located downhole anywhere upon the lands but no closer than 100 feet from the outside boundary of the application lands 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 wells, in which event the Williams Fork Formation wells to be drilled upon the application lands should be drilled downhole no closer than 200 feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.
The Commission finds as follows:
1. Whiting Oil and Gas Corporation (“Whiting”), 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 Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.
5. On January 26, 2006, Whiting, by its attorney, filed with the Commission a verified application for an order to allow wells to be optionally drilled on ten (10) acre density for production from the Williams Fork Formation of the Mesaverde Group underlying the below-described lands, with the permitted well to be located downhole anywhere upon the lands but no closer than 100 feet from the outside boundary of the application lands 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 wells, in which event the Williams Fork Formation wells to be drilled upon the application lands should be drilled downhole no closer than 200 feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission. That, except as previously authorized by order of the Commission, wells to be drilled under this Application will be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.
Township 2 South, Range 97 West, 6th P.M.
Section 19: SE¼ SW¼, S½ SE¼, Lot 4
Section 20: SW¼ SW¼
Section 29: NW¼ NW¼
Section 30: E½ NE¼, NE¼ SE¼
Township 2 South, Range 98 West, 6th P.M.
Section 23: S½ S½
Section 24: S½ S½
Section 26: NW¼ NW¼
Section 27: NE¼ SW¼, NW¼ SE¼, S½ NE¼
Section 28: SE¼ SE¼
Section 32: S½ SE¼, NE¼ SE¼
Section 33: S½ NW¼, NE¼ NW¼, N½ NE¼
Township 3 South, Range 98 West, 6th P.M.
Section 5: S½ NW¼, NW¼ NE¼, NW¼ SW¼
Section 6: E½ SE¼
Section 7: NE¼ NE¼
6. Testimony and exhibits presented at the administrative hearing showed that the application lands which consist of 1520.47 acres of fee lands are located approximately 20 miles north of Rifle, Colorado. Additional testimony showed that the majority of the surface and minerals in the application lands are owned 50% by ExxonMobil and 50% by Whiting, with the balance of the application lands owned 50% by ExxonMobil, and 25% each owned by Atlantic Richfield and Whiting. Further testimony showed that Whiting has from 4% to 50% working interest in the application lands.
7. Testimony and exhibits presented at the administrative hearing showed that the geologic model for the nearby I-70 corridor area where 10-acre density has been approved, has been firmly established and that the application lands are lithologically the same. Additional testimony indicated that the application lands are structurally on strike with the previously spaced areas to the south.
8. Testimony and exhibits presented at the administrative hearing showed a composite of the depositional model of the Williams Fork Formation, the descriptive classification of the fluvial sand bodies, and a statistic summary of the sand body dimensional data statistical graph, to show that sand widths range from 81 feet to 600 feet, with a median sand width of 400 feet. Additional testimony showed that the sand bodies are discrete, lenticular and isolated by mudstones, and that each sand is likely to be encountered in only one well, and without 10-acre density may be missed entirely.
9. Testimony and exhibits presented at the administrative hearing compared the Williams Fork Formation in the Rulison and Love Ranch areas, and showed that the Williams Fork Formation in the Love Ranch area has approximately 40% more single story sands than in the Rulison area. Additional testimony showed that the lithology is continuous from the Love Ranch area to the application lands, and that sands are not able to be correlated from wells 940 feet apart. Further testimony showed that this is an unconventional continuous resource play that may actually be better to the north where Whiting’s application lands are located.
10. Testimony and exhibits presented at the administrative hearing showed that estimated ultimate recovery is calculated at 11.21 BCF for 10-acre density wells, with new reserves estimated from 64.3% to 75.7%.
11. Testimony and exhibits presented at the administrative hearing showed summaries of 10-acre performances in Mamm Creek, Rulison and, Grand Valley Fields, indicating that increasing well density from twenty (20) to ten (10) acres increased recovery factors, and that approximately 88% of new gas was recovered.
12. Testimony and exhibits presented at the administrative hearing showed a summary of considerations for early 10-acre density development, to show that drilling costs can be reduced, fracture stimulation can be more effective and bottomhole locations can be optimally configured if 10-acre density is allowed at the beginning of a project.
13. Testimony and exhibits presented at the administrative hearing showed that additional reserves will be recovered, that waste will be prevented and that correlative rights will be protected if the application is approved.
14. Whiting Oil and Gas Corporation agreed to be bound by oral order of the Commission.
15. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow wells to be optionally drilled on ten (10) acre density for production from the Williams Fork Formation of the Mesaverde Group for certain lands in Townships 2 and 3 South, Ranges 97 and 98 West, 6th P.M., with the permitted well to be located downhole anywhere upon the lands but no closer than 100 feet from the outside boundary of the application lands 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 wells, in which event the Williams Fork Formation wells to be drilled upon the application lands should be drilled downhole no closer than 200 feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.
ORDER
NOW, THEREFORE IT IS ORDERED, that wells are hereby allowed to be optionally drilled on ten (10) acre density for production from the Williams Fork Formation of the Mesaverde Group for the below-described lands, with the permitted well to be located downhole anywhere upon the lands but no closer than 100 feet from the outside boundary of the application lands:
Township 2 South, Range 97 West, 6th P.M.
Section 19: SE¼ SW¼, S½ SE¼, Lot 4
Section 20: SW¼ SW¼
Section 29: NW¼ NW¼
Section 30: E½ NE¼, NE¼ SE¼
Township 2 South, Range 98 West, 6th P.M.
Section 23: S½ S½
Section 24: S½ S½
Section 26: NW¼ NW¼
Section 27: NE¼ SW¼, NW¼ SE¼, S½ NE¼
Section 28: SE¼ SE¼
Section 32: S½ SE¼, NE¼ SE¼
Section 33: S½ NW¼, NE¼ NW¼, N½ NE¼
Township 3 South, Range 98 West, 6th P.M.
Section 5: S½ NW¼, NW¼ NE¼, NW¼ SW¼
Section 6: E½ SE¼
Section 7 NE¼ NE¼
IT IS FURTHER ORDERED, that 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 wells, the well shall be
located downhole no closer than 200 feet from the boundary or boundaries of the
drilling unit so Application Lands 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 Application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.
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.
CORRECTED this 31st day of July, 2006, as of March 20, 2006.
CORRECTED this 9th day of February, 2017, as of March 20, 2006.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Julie Murphy, Secretary