BEFORE
THE OIL AND GAS CONSERVATION COMMISSION
OF
THE STATE OF
IN THE MATTER OF THE RULES AND ) CAUSE
NO. 1
REGULATIONS OF THE
AND GAS CONSERVATION COMMISSION, ) ORDER
NO. 1-104
This
cause came on for hearing before the Commission on January 5, 2004 at 10:00
a.m. in Suite 801, the Chancery Building,
1120 Lincoln Street, Denver, Colorado, on the
application for an
order to revoke the variances and Applications for Permit-to-Drill for three
wells, all located on an existing well pad in the SW¼ SW¼ of Section 7,
Township 2 North, Range 67 West, 6th P.M. that were approved by
Director Griebling on October 1, 2003.
1. St. Vrain Partners, LLC (“St. Vrain”), 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.
4. On October 1, 2003, Colorado Oil and Gas
Conservation Commission Director Richard Griebling approved three (3)
Applications for Permit-to-Drill (“APDs”) from EnCana Oil & Gas (USA) Inc.
(“EnCana”), for the Wandell #14-7 Well, the Wandell #23-7 Well, and the Wandell
#24-7 Well (the “Wells”), all located on an existing well pad in the SW¼ SW¼ of
Section 7, Township 2 North, Range 67 West, 6th P.M. Director Griebling also approved a variance
to Rule 603.a.(1) and (2) to allow the wells to be located less than 150 feet
from the surface property line and less than 150 feet from a public road. EnCana had sent letters on
5. On
6. On
7. A prehearing conference was held on this matter
on
8. A
staff analysis was submitted to the parties on
9. On
10. On
11. At the time of the hearing, St. Vrain’s
attorney stated that St. Vrain would not be presenting witnesses during the
hearing.
TECHNICAL EVIDENCE
12. The Commission heard testimony from Pat Marx,
Engineer from EnCana, who utilized exhibits to show the location of the proposed
wells, the existing Wandell #2 Well drilled in 1973 and testified that all of
the wells are more than 350 feet from the nearest home. Mr. Marx indicated that drilling three (3)
wells at one site would minimize surface disturbance and that EnCana views the
locations as an accommodation to surface developers. He also indicated that the cost of drilling
directionally would be approximately eighty thousand dollars ($80,000) to one
hundred thousand dollars ($100,000), which would be paid for by EnCana. Mr. Marx testified that safety considerations
were taken into account by EnCana who will use Caza Drilling Rig 54 to drill the
wells, and that the location will be fenced and patrolled by a security
guard. He described the route used to
access the existing Wandell #2 Well that would also be used by Caza Drilling
for drilling the Wells, and testified that equipment moves would be limited to
daylight hours. Mr. Marx testified that
a traffic control study requested by EnCana and performed by SHE,
transportation specialists, concluded that the closure of
13. The Commission heard testimony from Larry
Lorenz, drilling supervisor for Caza Drilling, who described the 105 foot Rig
54 that will be used for the drilling of EnCana’s Wells. Mr. Lorenz stated that the three (3) motors
on the rig are silenced with mufflers and confirmed the results of a test that
was performed in October 2003 on the noise produced by rigs showing that Rig 54
meets COGCC noise standards. Mr. Lorenz
stated that dishwashers, washing machines, and window fans have similar noise
levels to Rig 54. He stated that rig lighting
can be directed downward and would be in compliance with COGCC standards.
14. The Commission heard testimony from Richard
Starkey, reservoir engineer for EnCana, who utilized exhibits to show reserve
estimates. Mr. Starkey indicated that
the total reserves equal 1.5 BCF for the three (3) Wells and the present value
equals $1 MM. He stated that waste will
occur if the Wells are not drilled, and that twenty (20) wells are needed to
recover the gas reserves. Mr. Starkey
confirmed that the Wells will be drilled in accordance with Rule 318A.
PUBLIC COMMENT/PARTICIPATION
15.
Pursuant to Rule 510., Ken Wonstolen, of the Colorado Oil and Gas
Association (“COGA”), made a statement indicating that EnCana’s proposal is in
compliance with COGCC Rules. He urged
the Commission to rule in favor of EnCana.
FINDINGS
16.
After deliberations, the Commission upheld the Director’s decision to
grant the variances and approve the APDs but expressed safety concerns
regarding the rig transport and drilling operations. Based on the testimony and exhibits
presented, the Commission finds that both applications should be denied and additional
provisions should be added as conditions to the APDs.
NOW,
THEREFORE IT IS ORDERED, that the application filed by St. Vrain Partners, LLC
for an order to revoke the variances and Applications for Permit-to-Drill
for the Wandell #14-7 Well, is hereby denied.
IT
IS FURTHER ORDERED, that the Cross-Application filed by EnCana Oil and Gas
(USA) Inc. is hereby denied.
IT
IS FURTHER ORDERED, that additional conditions are necessary to address safety
concerns regarding the rig transport and drilling operations, and the Applications for Permit-to-Drill
shall be amended to include the following conditions: All public roads and other
public access within one hundred fifty (150) feet of the wellhead including
sidewalks shall be closed during drilling rig transport and operation. It is recommended that during the transport
of the drilling rig to and from the location, pilot vehicle, flagmen, including
temporary road blocks be used to ensure the safe conduct of such transport
operations.
IT IS FURTHER ORDERED,
that the provisions contained in the above orders 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, 2004, as of
OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF
By__________________________________________
Patricia
C. Beaver, Secretary
Dated at