STATE OF COLORADO OIL AND GAS CONSERVATION COMMISSION

IN THE MATTER OF THE PROMULGATION AND                                         )             CAUSE NO. 112

ESTABLISHMENT OF FIELD RULES TO GOVERN                                     )

OPERATIONS IN THE IGNACIO-BLANCO FIELD,                                         )             ORDER NO. 112-176

LA PLATA COUNTY, COLORADO                                                                   )

 

REPORT OF THE COMMISSION

                This cause came on for hearing before the Commission at 10:00 a.m. on August 16, 2004, in the Birch Banquet Room, Ramada Inn & Suites, 124 W. 6th Street, Glenwood Springs, Colorado after giving Notice of Hearing as required by law, on the verified application of Red Willow Production Company for an order to allow a second well to be drilled within the existing 320-acre drilling and spacing units for the W½ of Sections 6 and 7, Township 33 North, Range 6 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams.

FINDINGS

                The Commission finds as follows:

                1. Red Willow Production Company, ("Red Willow") 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 pursuant to the Oil and Gas Conservation Act and the terms of the Memorandum of Understanding ("MOU") between the Commission and the Bureau of Land Management ("BLM").

                4. On July 11, 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, including Sections 6 and 7, Township 33 North, Range 6 West, N.M.P.M., with the permitted well to be located in the center of the NW¼ and the SE¼ of the section and no closer than 900 feet from the boundaries of the quarter section upon which it is located, nor closer than 130 feet to any interior quarter section line. Subsequent orders allowed a second well on certain nearby 320-acre drilling and spacing units, not including Section 6 and 7, Township 33 North, Range 6 West, N.M.P.M.

                5. On May 25, 2004, Red Willow, by its attorney, filed with the Commission a verified application for an order to allow a second well to be drilled within the existing 320-acre drilling and spacing units for the W½ of Sections 6 and 7, Township 33 North, Range 6 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams, with the permitted wells to be located in the center of the SW¼ of Section 6 and the center of the NW¼ of Section 7, with tolerances in any direction of 200 feet for geological, topographic or surface location concerns.

               6. Testimony and exhibits presented at the administrative hearing described the Southern Ute Indian Tribe mineral and surface ownership and leasehold in the application lands, and the location of the existing and proposed additional wells in the application lands. Additional testimony indicated that the application lands are adjacent to the lands previously approved for increased density.

               7. Testimony and exhibits presented at the administrative hearing identified the water wells in proximity to the proposed wells in Sections 6 and 7, and indicated that Red Willow would voluntarily perform the water well testing required in Order No. 112-157.

                8. Testimony and exhibits utilized at the administrative hearing showed that approximately forty-seven(47) to fifty (50) feet of coal is anticipated to underlie the application lands, and the that the proposed additional wells will encounter the Fruitland coal seams.

                9. Testimony and exhibits presented at the administrative hearing described average daily gas production rates from Fruitland Coal wells in and around the application lands and that the production ranges from 46 MCFPD to 1,115 MCFPD in the area. Additional testimony indicated that the well in Section 7 has produced 109,625 MCFG. Further testimony and exhibits utilized at the administrative hearing indicated that the incremental production from the two (2) proposed infill wells ranges from 1.9 BCF to 2.2 BCF.

                10. Testimony and exhibits presented at the administrative hearing indicated that approval of the application would provide efficient and economic incremental gas recovery from the Fruitland coal seams in the application lands. would prevent waste and would protect correlative rights, all in a manner that would protect public health and the environment.

                11. At the time of the administrative hearing, Red Willow Production Company agreed to be bound by oral order of the Commission.

                12. Based on the facts stated in the verified application, having received no protests to the application and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow a second well to be drilled within the existing 320-acre drilling and spacing units for the W½ of Sections 6 and 7, Township 33 North, Range 6 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams, with the permitted wells to be located in the center of the SW¼ of Section 6 and the center of the NW¼ of Section 7, with tolerances in any direction of 200 feet for geological, topographic or surface location concerns.

ORDER

                NOW, THEREFORE IT IS ORDERED, that Order No. 112-60 is hereby amended to allow a second well to be drilled within the existing 320-acre drilling and spacing units for the W½ of Sections 6 and 7, Township 33 North, Range 6 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams.

                IT IS FURTHER ORDERED, that the permitted wells shall be located in the center of the SW¼ of Section 6 and the center of the NW¼ of Section 7, with tolerances in any direction of 200 feet for geological, topographic or surface location concerns.

                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 __________ day of September, as of August 16, 2004.

            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

September 9, 2004