BEFORE THE OIL AND GAS CONSERVATION
COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE SULPHUR CREEK FIELD, RIO BLANCO COUNTY, COLORADO |
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CAUSE NO. 527
ORDER NO. 527-7
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This cause came on for hearing before the Commission at 9:00 a.m. on October 21, 2010, at West Garfield Campus, Colorado Mountain College, 3695 Airport Road, Rifle, Colorado, for an order to establish a 160-acre drilling and spacing unit consisting of the NE¼ of Section 16, Township 3 South, Range 97 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations (including the Sego member of the Iles Formation).
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 NE¼ of Section 16, Township 3 South, Range 97 West, 6th P.M., is subject to this Rule for the Williams Fork and Iles Formations.
5. On January 11, 2010, the Commission issued Order No. 527-6, which among other things, approved the equivalent of one well per 10 acres for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations (including the Sego member of the Iles Formation). The NE¼ of Section 16, Township 3 South, Range 97 West, 6th P.M., is subject to this order.
6. On July 26, 2010, Williams, by its attorney, filed with the Commission a verified application for an order to establish a 160-acre drilling and spacing unit consisting of the following lands (“Application Lands”):
Township 3 South, Range 97 West, 6th P.M.
Section 16: NE ¼
and continue to allow the equivalent of one well per 10 acres, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations (including the Sego member of the Iles Formation).
7. Due to email malfunctions, notice of the above-described application was either not sent by the Commission or not received by the newspaper in the county where the application lands are located. Therefore, notice of the application was not timely published for the September hearing of the Commission; and the application was continued to the October hearing in order to publish the notice of application as required by the Oil and Gas Conservation Act and to set a new protest date.
8. On September 7, 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. Sworn written testimony and exhibits were submitted in support of the application.
9. Testimony and exhibits submitted in support of the application showed that the surface and mineral estates in the Application Lands are federal and that Williams owns a leasehold interest in both leases.
10. Additional testimony and exhibits submitted in support of the application indicated that Williams has drilled two wells on the Application Lands, the Federal RG 531-16-397 Well (API No. 05-103-11518, spud July 8, 2010) and the Federal RG 41-16-397 Well (API No. 05-103-11517, spud July 25, 2010).
11. Further testimony and exhibits submitted in support of the application indicated that on February 2, 2010, Williams sent a draft operating agreement to OXY USA WTP, L.P. (“OXY”) and Vantage Energy Piceance, L.L.C. (“Vantage”), the two other working interest owners in the Application Lands, and that neither of them executed the agreement or requested any changes or modifications to the agreement.
12. Further testimony and exhibits submitted in support of the application indicated that on June 23, 2010, Williams sent Authorizations for Expenditure (“AFEs”) to OXY and Vantage indicating their respective shares of the approximate cost of drilling the Federal RG 531-16-397 Well and the Federal RG 41-16-397 Well and that neither party responded to the AFEs.
13. Further testimony indicated that the Application Lands had been approved for 10- acre density for the Williams Fork Formation and the Iles Formation and that Applicant is requesting the establishment of an approximate 160-acre drilling and spacing unit for the Application Lands because the other working interest owners in the wells have not agreed to participate, and Williams would like to avail itself of the force pooling provisions of the Colorado Oil and Gas Conservation Act.
14. Pursuant to §34-60-116, C.R.S., as amended, the existence of a drilling and spacing unit forms the basis of an involuntary pooling order; therefore, a drilling and spacing unit must be established prior to involuntary pooling.
15. The above-referenced testimony and exhibits show that granting the application will promote efficient reservoir drainage, will prevent waste, will allow greater ultimate recovery of oil and gas, will protect correlative rights, and that the requested drilling and spacing unit is not smaller than the area that can be efficiently drained by one well.
16. Williams agreed to be bound by oral order of the Commission.
17. 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 a 160-acre drilling and spacing unit consisting of the NE¼ of Section 16, Township 3 South, Range 97 West, 6th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations (including the Sego member of the Iles Formation).
ORDER
NOW, THEREFORE IT IS ORDERED, that a 160-acre drilling and spacing unit, is hereby established, consisting of the below-listed lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations (including the Sego member of the Iles Formation):
Township 3 South, Range 97 West, 6th P.M.
Section 16: NE¼
IT IS FURTHER ORDERED, that all Williams Fork and Iles Formation wells to be drilled on the Application Lands shall continue to be authorized for ten (10) acre density drilling thereon with each well to be located down hole no closer than 100 feet from the boundary or boundaries of the drilling unit unless such boundary abuts or corners lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill Williams Fork Formation ten (10) acre density wells in which event the wells shall be drilled down hole no closer than 200 feet from the unit boundary which so abuts or corners the lands in respect of which ten (10) are density drilling for Williams Fork wells has not been ordered by the Commission without exception being granted by the Director of the Oil and Gas Conservation Commission.
IT IS FURTHER ORDERED that Iles Formation wells shall be drilled only in conjunction with the drilling of Williams Fork Formation wells.
IT IS FURTHER ORDERED that wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one well pad located on a given quarter-quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.
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 November 2010, as of October 21, 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
November 22, 2010