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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. 112-203 |
report of the commission
This cause came on for hearing before the Commission at 9:00 a.m. on August 28, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow up to four (4) wells in each of the 320-acre drilling and spacing units consisting of the S½ of Section 13 and the N½ of Section 24, Township 34 North, Range 10 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. Chevron USA Inc. (“Chevron”), 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.
4. On June 17, 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 including certain lands in Townships 33 and 34, North, Ranges 10 and 11 West, N.M.P.M., with the permitted well to be located, when north of the north line of Township 32 North in the NW¼ and SE¼ of the section, and when south of the north line of Township 32 North in the NE¼ and SW¼ of the section, and no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line. Subsequently, on December 17, 1990, the Commission issued Order No. 112-85 (corrected November 8, 1999) which among other things, established additional field rules for the lands subject to Order No. 112-60.
5. On July 1, 2000, the Commission issued Order No. 112-157 which granted, at the discretion of the operator, an additional well within the units consisting of the S½ of Section 13 and the N½ of Section 24, both in Township 34 North, Range 10 West, for production from the Fruitland coal seams, with permitted wells to be located in the center of the NE¼ and SW¼ of the section, and no closer than 990 feet to any outer boundary of the unit, nor closer than 130 feet to any interior quarter section line, subject to the Director approving exceptions for the permitted well location geological, topographic or surface location concerns.
6. On June 21, 2007, Chevron, by its attorney, filed with the Commission a verified application for an order to allow up to four (4) wells in each of the 320-acre drilling and spacing units consisting of the below-listed lands for the production of gas and associated hydrocarbons from the Fruitland coal seams:
Township 33 North, Range 10 West, N.M.P.M.
Section 8: W½
Section 17: N½ and S½
Township 33 North, Range 11 West, N.M.P.M.
Section 29: E½ and W½
Section 32: E½ and W½
Township 34 North, Range 10 West, N.M.P.M.
Section 13: S½
Section 24: N½
Chevron requested that the bottomhole for each well should be located within each 320-acre drilling and spacing unit no closer than 660 feet to any outer boundary of the unit and no closer than 130 feet to any interior section line, with the Director having the right to approve exceptions to the permitted well locations for geological, topographic or surface location concerns.
7. On August 15, 2007, Chevron, by its attorney, filed with the Commission an amendment to the application removing all of the application lands except the following from the request for an order:
Township 34 North, Range 10 West, N.M.P.M.
Section 13: S½
Section 24: N½
8. On August 15, 2007, Chevron, by its attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting testimony and exhibits. Sworn written testimony and exhibits were submitted in support of the application.
9. Testimony and exhibits submitted in support of the application showed that both the surface estate and the mineral estate of the application lands are owned by the Southern Ute Indian Tribe. Additional testimony indicated that the lands generally surrounding the application lands previously have been approved for 80-acre well density for the production of gas and associated hydrocarbons from the Fruitland coal seams. Further testimony indicated that Chevron intends to minimize surface disturbance by drilling directionally or horizontally from existing well pads.
10. Testimony and exhibits submitted in support of the application showed that the Fruitland coal seams display highly variable and heterogeneous reservoir properties in both a vertical and lateral direction, similar to the coal seams in the nearby areas where increased well density has been approved. Additional testimony indicated that because of stratigraphic and structural barriers to vertical and horizontal flow, more wells are needed to efficiently drain the gas contained within these coal seams.
11. Testimony and exhibits submitted in support of the application showed that existing wells producing from the Fruitland coal seams recover approximately 28% of the gas in place and that 160-acre infill wells recover an additional 22% of the gas in place, for a total recovery factor of 50%. Additional testimony and exhibits indicated that 80-acre well density will recover additional reserves of approximately 2 BCF per well from the Fruitland coal seams on the 320-acre drilling and spacing units.
12. Testimony and exhibits submitted in support of the application showed that 80-acre well density within the Fruitland coal seams on the 320-acre drilling and spacing units of the application lands will increase recovery efficiency and that increased well density is an economically viable investment.
13. The above-referenced testimony and exhibits show that the proposed density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
14. On August 10, 2007, the Bureau of Land Management filed with the Commission, after consultation with the Southern Ute Indian Tribe, written notification of its support of the amended application.
15. Chevron USA Inc. agreed to be bound by oral order of the Commission.
16. Based on the facts stated in the verified amended application, having received no protests, and based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to establish up to four (4) wells in each of the 320-acre drilling and spacing units consisting of the S½ of Section 13 and the N½ of Section 24, both in Township 34 North, Range 10 West, N.M.P.M., for the production of gas and associated hydrocarbons from the Fruitland coal seams.
ORDER
NOW, THEREFORE, IT IS ORDERED, that up to four (4) additional wells are hereby allowed to be optionally drilled into and produced in each of the 320-acre drilling and spacing units consisting of the below-listed lands for the production of gas and associated hydrocarbons from the Fruitland coal seams:
Township 34 North, Range 10 West, N.M.P.M.
Section 13: S½
Section 24: N½
IT IS FURTHER ORDERED, that the bottomhole for each well shall be located within each 320-acre drilling and spacing unit no closer than 660 feet to any outer boundary of the unit and no closer than 130 feet to any interior section line, with the Director having the right to approve exceptions to the permitted well locations 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 filing for judicial review.
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 11, 2007