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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 IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO |
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CAUSE NO. 112
ORDER NO. 112-154 |
REPORT OF THE COMMISSION
This cause came on before the Commission at 8:30 a.m. on July 12, 1999, at Suite 801, 1120 Lincoln Street, Denver, Colorado on the application of Vastar Resources, Inc., for an order amending Order No. 112-61 to allow twelve (12) wells to be drilled and completed for production from the Fruitland Coal seams as optional additional wells for certain drilling and spacing units consisting of approximately 350 acres in the Ignacio-Blanco Field.
FINDINGS
The Commission finds as follows:
1. Vastar Resources, Inc. (“Vastar”) 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 of 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 the Memorandum of Understanding (“MOU”) between the Commission and the Bureau of Land Management (“BLM”).
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 when north of the north line of Township 32 North, and in the NE¼ and the SW¼ of each section when south of the north line of Township 32 North, 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 seams. Irregular drilling units previously established in Order No. 112-1 Rule 2b for Township 32 North, Ranges 6 through 11 West, N.M.P.M. lying immediately adjacent to the Colorado-New Mexico state boundary shall be the units for production of methane gas from the Fruitland coal seams.
5. On May 24, 1999, Vastar, by their attorney, filed with the Commission a verified application for an order amending Order No. 112-61 to allow twelve (12) wells to be drilled and completed for production from the Fruitland Coal seams as optional additional wells for the approximately 350-acre drilling and spacing units described below. Setbacks for the wells shall remain 990’ from the outer boundary of the units except for the specific surveyed locations below. In addition, the Director may without further notice and hearing approve exceptions to the permitted well location due to topography or surface hazards.
Surveyed Locations
Township 32 North, Range 7 West, N.M.P.M.
Section 19: W¾ of Section 19 (So. Ute #19-3 Well)
(location: 840’ FNL and 2085’ FWL of Section 19)
Section 18: E½ of Section 18 (So. Ute #18-9 Well)
(new location: 1040’ FSL and 770’ FEL of Section 18)
Township 32 North, Range 8 West, N.M.P.M.
Section 24: E¾ of Section 24 (So. Ute #24-3 Well)
(location: 1170’ FSL and 2410’ FEL in Section 24)
Unsurveyed Locations
Township 32 North, Range 8 West, N.M.P.M.
Section 19: W¾, location in the NW¼ SE¼ of Section 19
Section 21: E¾, location in the NE¼ SW¼ of Section 21
Section 22: W¾ location in the NE¼ NW¼ of Section 22
Section 23: W½ and Section 22: E¼, location in the W½ of Section 23
Section 23 and 24: E½ of Section 23 and W¼ of Section 24, location in the W¼ of Section 24 (So. Ute #24-3 Well)
Township 32 North, Range 9 West, N.M.P.M.
Section 20: E½ and Section 21: W¼, location in the SE¼ of Section 20
Section 22: W¾, location in the NW¼ of Section 22
Section 22: E¼ and Section 23: W½, location in the SW¼ of Section 23
Section 24: E¾, location in the NE¼ SW¼ of Section 24
6. On July 1, 1999 the BLM submitted a letter to the Commission in support of the Application in accordance with the conditions of the MOU between the BLM and the Commission for the wells located South of the Ute Line.
7. Exhibits and testimony presented at the administrative hearing showed the drilling windows, well locations, the mineral ownership and the surface ownership in the application area and surrounding lands. All of the wells except those located in Sections 18 and 19, Township 32 North, Range 8 West, N.M.P.M. are located on Southern Ute Indian Tribe lands. Surface owner agreements have been executed for these two locations. A topographic map was presented to show the rough, hilly terrain of the application area.
8. Exhibits and testimony presented at the administrative hearing indicated a thicker coal channel on the western edge of the application area. A cross section of wells in the area showed the correlation of coal intervals across the application area.
9. Exhibits and testimony presented at the administrative hearing using CAT scans of the Fruitland Coal core from the Southern Ute #5-2, 32-9 Well showed the face and butt cleats in the coal and that the density of the cleats are an indication of the permeability of the coal. Further, the differences in the cleat density between the two CAT scans shows the permeability of the coal over a short interval is not continuous and indicates that additional well density is required to adequately produce gas reserves in the area.
10. Exhibits and testimony presented at the administrative hearing showed water quality and estimated age of produced water from the Fruitland Coal Formation in the application area. Applicant interpretation of this information indicated that the Fruitland Coal Formation has very low permeability in the application area.
11. Exhibits and testimony presented at the administrative hearing showed the production rate of additional wells drilled during the last year are producing significant amounts of gas. This indicates the new wells will recover additional reserves that would not have been recovered without the approval of additional wells in the drilling spacing unit.
12. Exhibits and testimony presented at the administrative hearing indicated that the bottom hole pressures of additional wells recently drilled near the application area are very similar to the original bottom hole pressures of the original well in the drilling and spacing unit. This indicates the new wells will recover additional reserves that would not otherwise be recovered by the original well in the drilling and spacing unit.
13. Exhibits and testimony presented at the administrative hearing indicated the drainage radii of Fruitland Coal wells in and around the application area do not efficiently drain the reserves in the drilling and spacing units. Further testimony indicated that an additional 2.0 billion cubic feet of gas would be recovered by drilling additional wells in the drilling and spacing units.
14. Approval of the application would provide efficient and economic incremental coalbed methane recovery from the Fruitland Coal in the application lands, would prevent waste, would protect correlative rights, and would protect public health, safety, and welfare.
15. At the time of the administrative hearing, Vastar agrees to be bound by oral order of the Commission.
16. La Plata County, the Southern Ute Indian Tribe, and the private surface owners in the application area waived holding a Local Public Forum on the application.
17. Based on the facts stated in the application and the testimony and exhibits presented at the time of the administrative hearing by the applicant, the Commission should approve the request to amend Order No. 112-61 to allow twelve (12) wells to be drilled and completed for production from the Fruitland Coal seams as optional additional wells for the approximately 350-acre drilling and spacing units described in Finding #5 above. Setbacks for the wells should remain 990’ from the outer boundary of the units except for the specific surveyed locations below. In addition, the Director may without further notice and hearing approve exceptions to the permitted well location due to topography or surface hazards
ORDER
NOW, THEREFORE IT IS ORDERED that Order No. 112-61 is hereby amended to allow twelve (12) wells to be drilled and completed for production from the Fruitland Coal seams as optional additional wells for the approximately 350-acre drilling and spacing units described below. Setbacks for the wells shall remain 990’ from the outer boundary of the units except for the specific surveyed locations below:
Surveyed Locations
Township 32 North, Range 7 West, N.M.P.M.
Section 19: W¾ of Section 19 (So. Ute #19-3 Well)
(location: 840’ FNL and 2085’ FWL of Section 19)
Section 18: E½ of Section 18 (So. Ute #18-9 Well)
(new location: 1040’ FSL and 770’ FEL of Section 18)
Township 32 North, Range 8 West, N.M.P.M.
Section 24: E¾ of Section 24 (So. Ute #24-3 Well)
(location: 1170’ FSL and 2410’ FEL in Section 24)
Unsurveyed Locations
Township 32 North, Range 8 West, N.M.P.M.
Section 19: W¾, location in the NW¼ SE¼ of Section 19
Section 21: E¾, location in the NE¼ SW¼ of Section 21
Section 22: W¾ location in the NE¼ NW¼ of Section 22
Section 23: W½ and Section 22: E¼, location in the W½ of Section 23
Section 23 and 24: E½ of Section 23 and W¼ of Section 24, location in the W¼ of Section 24 (So. Ute #24-3 Well)
Township 32 North, Range 9 West, N.M.P.M.
Section 20: E½ and Section 21: W¼, location in the SE¼ of Section 20
Section 22: W¾, location in the NW¼ of Section 22
Section 22: E¼ and Section 23: W½, location in the SW¼ of Section 23
Section 24: E¾, location in the NE¼ SW¼ of Section 24
IT IS FURTHER ORDERED that the Director may without further notice and hearing approve exceptions to the permitted well location due to topography or surface hazards.
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 day of July, as of July 12, 1999.
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 30, 1999