BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO	) ) ) )	CAUSE NO.   112 ORDER NO.   112-143 AMENDED

REPORT OF THE COMMISSION

            This cause came on for hearing before the Commission on April 29, 1998, at 8:30 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law, on the application of Red Willow Production Company, Cedar Ridge, LLC, EnerVest San Juan Acquisition Limited Partnership and SG Interests I, Ltd. for an order amending Order No. 112-61 to allow an additional well in certain 320-acre drilling and spacing units, for production from the Fruitland Coal seams.

FINDINGS

                        The Commission finds as follows:

                        1.  Red Willow Production Company, Cedar Ridge, LLC, EnerVest San Juan Acquisition Limited Partnership and SG Interests I, Ltd., as applicants herein, are interested parties 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 terms of a Memorandum of Understanding between the Commission and the Bureau of Land Management.

                        4.  On June 15, 1988, the Commission issued Order No. 112‑60 which established 320‑acre drilling and spacing units for the production of gas and associated hydrocarbons from the Fruitland coal seams, underlying certain lands in the Ignacio‑Blanco Field, with the units to consist of a governmental half section and the permitted well to be located in the NW¼ and the SE¼ of each section, no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line.  Order No. 112-61 was subsequently adopted amending Order No. 112-60 to establish additional field rules for the Fruitland Coal Formation.

                        5.  The Applicants propose to drill an additional well in each of the 320-acre drilling and spacing units listed below, for production from the Fruitland Coal seams.  Applicants propose that the second optional well in each 320-acre unit be drilled, completed or recompleted in the NE¼ or SW¼ of the section, no closer than 990 feet to any outer boundary of the unit and no closer than 130 feet to any interior quarter section line.

Township 33 North, Range 10 West, N.M.P.M.

Section  7 - 8:  All

Section  9:  W½

Section 17:  All

Section 18:  N½

Township 33 North, Range 11 West, N.M.P.M.

Section 12:  All

                        6.  On April 8, 1998, Hallwood Petroleum, Inc. submitted a letter in support of the application.

                        7.  On April 14, 1998, Vastar Resources, Inc. submitted a letter in support of the application.

                        8.  On April 21, 1998, The Southern Ute Indian Tribe, Energy Resources Division, submitted a letter in support of the application.

                        9.  On April 22, 1998, the Bureau of Land Management submitted a letter in support of the application.

                        10.  Evidence presented at the administrative hearing indicated that the mineral ownership is entirely tribal coal/tribal oil and gas except for 120 acres on the north edge of the application area consisting of the N½ NE¼ and the NE¼ NW¼ of Section 7, Township 33 North, Range 10 West, N.M.P.M., which is tribal coal/fee oil and gas.  The surface ownership is entirely tribal except for the same 120 acres consisting of the N½ NE¼ and the NE¼ NW¼ of Section 7, Township 33 North, Range 10 West, N.M.P.M., which is fee surface ownership.

                        11.  Engineering testimony presented at the administrative hearing showed that the gas in place for the 320-acre units ranges from 18.5 to 22 BCF per unit, for a recovery factor of approximately 45.3% for one well in a 320-acre unit.  The average drainage area is approximately 160 acres per well.  The approval of ten (10) additional Fruitland Coal seam wells will add an incremental 22 BCF to the Estimated Ultimate Recovery for the application lands.

                        12.  Evidence presented at the administrative hearing indicated that one well will not efficiently and economically drain the 320‑acre drilling and spacing units, and that additional wells are necessary to prevent waste, protect correlative rights, and to recover gas and associated hydrocarbons from the Fruitland Coal seams.

                        13.  At the time of the administrative hearing, the Applicant agreed to be bound by oral order of the Commission.

                        14.  Based on the facts stated in the application and the testimony and exhibits presented at the time of the administrative hearing by the applicants, the Commission should approve the request to amend Order No. 112-61 to allow an additional well in said 320-acre drilling and spacing units, for production from the Fruitland Coal seams as described in Finding #5.  Applicants propose that the second optional well in each 320-acre unit be drilled, completed or recompleted in the NE¼ or SW¼ of the section, no closer than 990 feet to any outer boundary of the unit and no closer than 130 feet to any interior quarter section line.

ORDER

                        NOW, THEREFORE, IT IS ORDERED that Order No. 112-61 is hereby amended to allow an additional well in each of the 320-acre drilling and spacing units listed below, for production from the Fruitland Coal seams, with the second optional well in each 320-acre unit to be drilled, completed or recompleted in the NE¼ or SW¼ of the section, no closer than 990 feet to any outer boundary of the unit and no closer than 130 feet to any interior quarter section line.

Township 33 North, Range 10 West, N.M.P.M.

Section  7 - 8:  All

Section  9:  W½

Section 17:  All

Section 18:  N½

Township 33 North, Range 11 West, N.M.P.M.

Section 12:  All

                        IT IS FURTHER ORDERED, that in accordance with G.4.b. paragraph 2 of the MOU of August 22, 1991, between the BLM and COGCC, this order is hereby deemed to be an order by the BLM.  As such, any appeal or challenge of this order with respect to Indian lands shall go through the BLM State Director Review process outlined in 43 CFR 3165.3.

                        IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

                        IT IS FURTHER ORDERED that the provisions contained in the above order shall become effective forthwith, as the party agreed to accept the verbal order of the Commission.

                        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.

                        ENTERED this       21st           day of May, 1998, as of April 29, 1998.

                        AMENDED this ____________ day of May, 1998, as of April 29, 1998.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                           OF THE STATE OF COLORADO

                                                                        By

                                                                                     Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

July 5, 2018