|
BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
|
||
|
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO |
) ) ) ) |
CAUSE NO. 112
ORDER NO. 112-155 |
This cause came before the Commission at 8:30 a.m. on October 22, 1999, in the Anasazi Room of the La Plata County Court House, 1060 E. 2nd Avenue, Durango, Colorado on the application of MarkWest Resources, Inc., for an order amending Order Nos. 112-60 and 112-61, to allow an additional well in each of the 320-acre drilling and spacing units for certain lands in the Ignacio-Blanco Field for production from the Fruitland coal seams, at the discretion of the operator, with the additional permitted wells to be located in the NW¼ and SE¼ of each section in Township 32 North, and in the NE¼ and SW¼ of each section in Township 33 North, no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line. In addition, the Director shall be authorized to grant variances without notice or hearing due to geological, topographical or surface location considerations.
FINDINGS
The Commission finds as follows:
1. MarkWest Resources, Inc. (“MarkWest”) 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. 112-60 was subsequently adopted amending Order No. 112-60 to establish additional field rules for the Fruitland coal seams.
5. On August 27, 1999, MarkWest Resources, Inc., by their attorney filed with the Commission an application for an order amending Order Nos. 112-60, 112-61 and 112-62, as applicable to permit, at the discretion of the operator, an additional well in each of the 320-acre drilling and spacing units as described below for production from the Fruitland coal seams, with the additional permitted wells to be located in the NW¼ and SE¼ of each section in Township 32 North, and in the NE¼ and SW¼ of each section in Township 33 North, no closer than 990 feet from the boundaries for the quarter section, nor closer than 130 feet to any interior quarter section line. In addition, the Director should be authorized to grant variances without notice or hearing due to geological, topographical or surface location considerations.
Township 32 North, Range 6 West, N.M.P.M.
Section 5: S½
Section 6: N½, S½
Section 7: W½
Section 8: W½
Section 17: W½
Township 32 North, Range 7 West, N.M.P.M.
Section 1: E½, W½
Section 2: E½, W½
Section 12: N½, S½
Township 33 North, Range 7 West, N.M.P.M.
Section 26: E½
Section 35: E½
Section 36: S½
6. On October 7, 1999, a Local Public Forum on the application was held in Ignacio to consider potential issues related to the environment, public health, safety and welfare. No additional conditions were recommended to be placed on the application and a Public Issues Hearing on the application was not recommended.
7. On October 7, 1999 the Southern Ute Indian Tribe, Energy Resources Division submitted a letter to the Commission in support of the Application in accordance with the conditions of the Memorandum of Understanding between the Southern Ute Indian Tribe, the BLM, the Bureau of Indian Affairs and the Commission for a total of 360-acres of Tribal minerals which are contained in three of the spacing units.
8. On October 8, 1999, La Plata County, by its attorney, submitted a Statement in Intervention to the Commission regarding the Application.
9. On October 12, 1999 the BLM submitted a letter to the Commission in support of the Application in accordance with the conditions of the Memorandum of Understanding between the BLM and the Commission for the wells located South of the Ute Line.
10. Exhibits and testimony presented at the administrative hearing showed the Fruitland Coal net pay thickness across the application area. Cross-sections of wells were provided to show the correlation of coal intervals across the application area.
11. Exhibits and testimony presented at the administrative hearing showed the maximum monthly production rate of Fruitland coal seams wells in and around the application area. Applicant interpretation of this information indicated that the production rates of existing wells in the application area are relatively low and additional wells are required to adequately drain each drilling and spacing unit.
12. Exhibits and testimony presented at the administrative hearing showed cumulative gas production, cumulative water production, original gas in place for the drilling and spacing unit, estimated ultimate recovery from existing wells, calculated recovery factors, and drainage areas for well in and around the application area. The average gas in place for the drilling and spacing unit in the area is 8.6 BCF. The average estimated ultimate recovery for wells in the area is 1.3 BCF, which is a recovery factor of 14.7% with a drainage area of 47 acres.
13. Exhibits and testimony presented at the administrative hearing showed original gas in place, estimated ultimate recovery, calculated recovery factors, and drainage areas for existing MarkWest Fruitland Coal wells on 160 acre spacing in the application area. An average of these wells indicate there is 3.6 BCF of original gas in place with an estimated ultimate recovery of 1.1 BCF. Calculated average recovery factor is 30% with an average drainage area of 48 acres.
14. Exhibits and testimony presented at the administrative hearing showed original gas in place, estimated ultimate recovery, calculated recovery factors, and drainage areas for optional MarkWest Fruitland Coal wells on 160 acre spacing in and around the application area. An average of these wells indicates there is 3.6 BCF of original gas in place with an estimated ultimate recovery of 1.0 BCF. Calculated average recovery factor is 30% with an average drainage area of 47 acres.
15. Exhibits and testimony presented at the administrative hearing described how a conventional well would be recompleted as an additional well in the Fruitland coal seams.
16. Exhibits and testimony presented at the administrative hearing showed favorable economics for the drilling of a Fruitland coal seams well in the application area.
17. Exhibits and testimony presented at the administrative hearing showed the water wells that have been tested for gas content in and around the application area.
18. Exhibits and testimony presented at the administrative hearing showed how MarkWest would address impacts to the environment and the public health, safety and welfare which may be raised by the approval of this application.
19. At the time of the administrative hearing, MarkWest presented an agreement between MarkWest and La Plata County to address water well testing, gas well bradenhead monitoring, and plugged and abandoned well soil gas vapor surveys. The implementation of these programs addressed the concerns raised by La Plata County about the environment, health, safety, and public welfare. The agreement also contained current operational practices for artificial lift and compression facilities. Future operational performance may vary depending on well performance. Based on the facts stated above, on October 13, La Plata County, by its attorney, filed with the Commission a Conditional Withdrawal of Intervention.
20. Approval of the application would provide efficient and economic incremental gas recovery from the Fruitland coal seams in the application lands, would prevent waste, would protect correlative rights, and would protect public health, safety, and welfare.
21. At the time of the administrative hearing, MarkWest agreed to be bound by oral order of the Commission.
22. Based on the facts stated in the application and the exhibits and testimony presented at the time of the administrative hearing by the applicant, the Commission should approve the request to amend Order Nos. 112-60, 112-61 and 112-62, to allow an additional well in each of the 320-acre drilling and spacing units for the lands listed in Finding #5 in the Ignacio-Blanco Field for production from the Fruitland coal seams, at the discretion of the operator, with the additional permitted wells to be located in the NW¼ and SE¼ of each section in Township 32 North, and in the NE¼ and SW¼ of each section in Township 33 North, no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line. In addition, the Director should be authorized to grant variances without notice or hearing due to geological, topographical or surface location considerations.
ORDER
NOW, THEREFORE IT IS ORDERED that Order Nos. 112-60, 112-61 and 112-62 are hereby amended to allow an additional well in each of the 320-acre drilling and spacing units for the lands listed below in the Ignacio-Blanco Field for production from the Fruitland coal seams, at the discretion of the operator, with the additional permitted wells to be located in the NW¼ and SE¼ of each section in Township 32 North, and in the NE¼ and SW¼ of each section in Township 33 North, no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line.
Township 32 North, Range 6 West, N.M.P.M.
Section 5: S½
Section 6: N½, S½
Section 7: W½
Section 8: W½
Section 17: W½
Township 32 North, Range 7 West, N.M.P.M.
Section 1: E½, W½
Section 2: E½, W½
Section 12: N½, S½
Township 33 North, Range 7 West, N.M.P.M.
Section 26: E½
Section 35: E½
Section 36: S½
IT IS FURTHER ORDERED that the Director may without further notice and hearing approve exceptions to the permitted well location due to geological, topographical or surface location considerations.
IT IS FURTHER ORDERED that the agreement between La Plata County and MarkWest shall become part of this order to address environmental and public health, safety and welfare concerns.
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 November, as of October 22 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
November 8, 1999