BEFORE THE OIL AND GAS CONSERVATION
COMMISSION
OF THE STATE OF
IN THE
MATTER OF THE PROMULGATION AND ) CAUSE
NO. 300
ESTABLISHMENT
OF FIELD RULES TO GOVERN )
OPERATIONS
IN THE BEECHER ISLAND FIELD, ) ORDER NO. 300-9
This cause came on for hearing before the
Commission at 10:00 a.m. on March 15, 2004 in Suite 801, The Chancery Building,
1120 Lincoln Street, Denver, Colorado on the verified application of Mountain
Petroleum Corporation for an order to allow up to four (4) wells to be drilled
within each 160-acre drilling and spacing unit for certain lands for the
production of gas and associated hydrocarbons from the Niobrara Formation, with
the permitted well to be located no closer than 560 feet to the outer boundary
of the unit and that the Director be allowed to grant an exception to the
permitted well location without prior notice or hearing upon an adequate
showing by the operator that topography makes it unreasonable to drill the
second well within a 560-foot setback, but no closer than 380 feet from the
boundary of the drilling and spacing unit, and requests for any other exception
location may be granted in accordance with Rule 318.
The Commission finds as
follows:
1. Mountain Petroleum Corporation (“Mountain
Petroleum”), 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.
5. On November 4, 1996, the Commission issued
Order No. 300-7, which allowed an additional well to be drilled on each
160-acre drilling and spacing unit in the Beecher Island Field, at the option
of the operator, for the production of gas and associated hydrocarbons from the
Niobrara Formation, with the subsequent permitted well to be located no closer
than 560 feet from the outer boundaries of said 160-acre drilling and spacing
unit. The order also allowed the
Director to grant exceptions to the permitted well locations without prior
notice or hearing upon an adequate showing by the operator that topography
makes it unreasonable to drill a second well within the 560 feet setback, but
no closer than 380 feet from the boundary of the drilling and spacing unit and
requests for any other exception location may be granted in accordance with
Rule 318.
6. On
January 26, 2004, Mountain Petroleum Corporation (“Mountain Petroleum”), by its
attorney, filed with the Commission a
verified application for an order to allow up to four (4) wells to be
drilled within each 160-acre drilling and spacing unit for the below-listed
lands for the production of gas and associated hydrocarbons from the Niobrara
Formation, with the permitted well to be located no closer than 560 feet to the
outer boundary of the unit and that the Director be allowed to grant an
exception to the permitted well location without prior notice or hearing upon
an adequate showing by the operator that topography makes it unreasonable to
drill the second well within a 560-foot setback, but no closer than 380 feet
from the boundary of the drilling and spacing unit, and requests for any other
exception location may be granted in accordance with Rule 318.
Township 1 South, Range 43 West, 6th P.M.
Sections 32 and 33: S½
Township 2 South, Range 43 West, 6th P.M.
Section 2: W½
Sections 3 through 5: All
Section 11: W½
Section 14: All
Section 16: All
Sections 19 through 21: All
Section 23: All
Section 26: All
Sections 28 through 31: All
Section 34: All
Township 2 South, Range 44 West, 6th P.M.
Section 12: All
Section 13: NW¼, S½
Section 14: E½
Section 23: E½
Section 36: E½
Township 3 South, Range 43 West, 6th P.M.
Section 3: N½
Section 6: All
Sections 7 through 9: N½
Township 3 South, Range 44 West, 6th P.M.
Section 1: All
In addition, no
more than one well productive from the
7. Testimony
presented at the administrative hearing indicated that the lease ownership in
the application area had been researched and all appropriate owners had been
identified and notified.
8.
Testimony and exhibits presented at the administrative hearing showed
that the applications submitted by Mountain Petroleum and Petroleum Development
Corporation to increase well density to four (4) wells per 160-acre drilling
and spacing unit cover the entire Beecher Island Field. Additional testimony indicated the relative
position of the
9.
Testimony and exhibits presented at the administrative hearing showed that
estimated reserves in place are 200 BCF of gas.
Additional testimony indicated the current recovery for the Beecher
Island Field is 66.4% of original gas in place and that the drilling of two (2)
additional wells per 160-acre drilling and spacing unit would recover an
additional 39.7 BCF of gas, which would allow a final recovery of 86% of the
original gas in place.
10.
Testimony and exhibits presented at the administrative hearing showed the
additional wells would be economic with a rate of return of 28.5%.
11. At
the time of the administrative hearing, Mountain Petroleum Corporation agreed to be bound by oral order of the
Commission.
12. Based
upon the facts stated in the verified application, and having been heard by the
Hearing Officers who recommended approval, the Commission should enter an order
to allow up to four (4) wells to be drilled within each 160-acre drilling and
spacing unit for the lands described in Finding No. 6 above for the production
of gas and associated hydrocarbons from the Niobrara Formation, with the
permitted well to be located no closer than 560 feet to the outer boundary of
the unit and the Director should be allowed to grant an exception to the
permitted well location without prior notice or hearing upon an adequate
showing by the operator that topography makes it unreasonable to drill the
second well within a 560-foot setback, but no closer than 380 feet from the
boundary of the drilling and spacing unit, and requests for any other exception
location may be granted in accordance with Rule 318.
NOW, THEREFORE, IT IS ORDERED, that a total
of four (4) wells are hereby allowed to be drilled within each 160-acre
drilling and spacing unit for the below-listed lands for the production of gas
and associated hydrocarbons from the Niobrara Formation, with the permitted
well to be located no closer than 560 feet to the outer boundary of the unit:
Township 1 South, Range 43 West, 6th P.M.
Sections 32 and 33: S½
Township 2 South, Range 43 West, 6th P.M.
Section 2: W½
Sections 3 through 5: All
Section 11: W½
Section 14: All
Section 16: All
Sections 19 through 21: All
Section 23: All
Section 26: All
Sections 28 through 31: All
Section 34: All
Township 2 South, Range 44 West, 6th P.M.
Section 12: All
Section 13: NW¼, S½
Section 14: E½
Section 23: E½
Section 36: E½
Township 3 South, Range 43 West, 6th P.M.
Section 3: N½
Section 6: All
Sections 7 through 9: N½
Township 3 South, Range 44 West, 6th P.M.
Section 1: All
IT IS FURTHER ORDERED, that no more than one well productive from the
Niobrara Formation shall be drilled in any governmental quarter-quarter section
or, for irregular sections, the survey lot equivalent. With respect to any existing productive
Niobrara Formation wells having a surface location in the boundary between two
40-acre tracts, between two survey lots, or between a survey lot and a 40-acre
tract, the operator of such well shall designate the 40-acre tract or survey
lot equivalent for which such well shall be the permitted well.
IT IS FURTHER ORDERED, that the Director
shall be allowed to grant an exception to the permitted well location without
prior notice or hearing upon an adequate showing by the operator that
topography makes it unreasonable to drill the second well within a 560-foot
setback, but no closer than 380 feet from the boundary of the drilling and
spacing unit, and requests for any other exception location shall be granted in
accordance with Rule 318.
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 26th day of March, 2004, as of
CORRECTED this _____ day of March, 2004, as of
OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF
By:
_____________________________
Patricia
C. Beaver, Secretary
Dated at